I wrote last month about the great economic success that North Carolina has had relative to other states. That good news has continued with a difference between state revenues and expenditures exceeding $600 million through the first half of the fiscal year.
I noted that we don’t “feel” richer because so many rainy day funds had been plundered and the legislature is now replenishing them. It is the right strategy, but the current administration won’t get credit for this wise move because there is no building or program to show for it.
Readers contacted me about a side topic of the article, which was about how government social service programs are not likely to have a long-term positive effect on people — something that many readers were surprised to learn.
President John Adams wrote that facts are stubborn things. The easiest evidence to spot is the number of people the government provides such benefits to. Perhaps the easiest program to illustrate is foodstamps, now called SNAP.
This program began in 1964 and by 1974 there were 15 million participants, about 7.5 percent of the population. There have been changes in eligibility requirements over the years — for example,immigrants became eligible in 2000 — so it isn’t possible to make apples-to-apples comparisons.
But recently as many as 45 million, nearly one in six, Americans were receiving food stamps. President Obama has told us that the economy has improved, but this number has remained stubbornly high. Before the last recession, the poverty rate in 2007 still stood at 12.5 percent despite services and benefit programs exceeding a trillion dollars during the previous 40 years.
One factor that will reduce that number slightly is that many states are no longer covering able-bodied adults who do not take care of children. It’s a positive step because these people will now find jobs and improve their lives.
As a society, we need to help people who, for whatever reason, have had something bad happen to them. If they are handicapped, for example, they may need assistance for their entire lifetimes. If they have lost a job, they may need support for months while they obtain new employment. But outside of those helpful types of support, payments over long periods of time essentially create dependency and rob people of their dignity.
Most of the world, including the United States and England, suffered through this recent economic downturn. England chose to help people in a way that allowed them to recover far better than we did in the United States. To have money to pay any benefits, we need the vast majority of able-bodied people to work to help the people who are less fortunate.
We’ve recently seen our labor-force participation rates for 25- to 54-year-olds drop by 3.1 percent. During the same span of time, England saw its rates increase by 2.2 percent.
How did they do it?
President Obama’s Council of Economic Advisers wrote in its 2015 Economic Report of the President that England “introduced more stringent job-search requirements for some welfare recipients.” When these individuals could not depend on handouts, they simply went to work in large numbers.
If able people have fallen on hard times, our policies should primarily be designed to help them restore their human dignity by going to work.
In the United States, we made unemployment insurance more generous in several ways, reduced eligibility rules for SNAP and granted more waivers from work requirements. England reduced tax rates on income and consumption, modified the disability program to make more accurate and frequent assessments of recipients’ ability to work, imposed benefit caps and accelerated the Universal Credit system to help the unemployed find work faster, stay employed and keep more of what they earn.
Both approaches were designed by policy makers with good intentions. One approach enhances human dignity and decreases the need for payments. The other creates dependency and locks us in to high levels of payments to a stubbornly high percentage of the population.
Eric Dent is a business professor at Fayetteville State University who lives in Lumberton.