Wednesday, February 16, 2011

Some fundamental misunderstandings about welfare

Gordon Campbell has written a piece called 10 myths about welfare. Some of it is accurate; some is not.

The vast majority of people want to work. The history of the last ten years in particular shows that when jobs exist, people work.


The "history of the last ten years" shows almost the opposite. During the economic boom numbers on the DPB dropped by a maximum of 15 percent and numbers on the sickness and invalid benefits continued to grow. Only the dole total dropped significantly.

"...the NZ figures on DPB recipients do not bear out Key’s specific assertion about ‘significant numbers of very young women going onto the DPB and staying there for a lifetime.”

In fact, only 3.1 % of those on the DPB are under 20 years of age – and that figure has barely flickered since 2005, when the figure was 2.9 %. Put another way, 97% of the people on the DPB are NOT the ‘very young women’ of Key’s lurid imagination. There are in fact, significantly more people on the DPB over 55 years of age (5.6%) than there are ‘very young women’ receiving this benefit."


Campbell repeats a widespread misunderstanding here. If Key's assertion is correct then we would expect to see exactly the kind of percentages Campbell describes. When people stay on welfare a long time they progressively appear in older age bands. The most important fact is that at least a third of current sole parents became parents as teenagers. I have shown that probably around a half of the DPB population first began on welfare as a teenager. The current age of a DPB recipient is irrelevant.

"...more DPB recipients are engaged in part-time work (16%) than those on the dole."


This claim is based on the DPB fact sheet showing 15.7 percent of recipients have 'declared earnings' for the year. It does not necessarily mean that they are currently working.

Most of the people on welfare are unmarried mothers – many of them teenagers – who have extra children so that they can get more money.




Not most. But 27,219 is significant. Certainly the public perception is grounded in reality.

Lots of people are on welfare for years and years, and then their children and grandchildren become welfare dependent.

This myth is based on stereotypes about the chronically shiftless and teemingly fertile poor. Lets stick with the DPB for a moment. Since the DPB involves the care of children who are dependent at least until they are 18, you’d think it would reflect lifetime dependency very strongly. Yet instead, over two thirds of DPB recipients (67.7%) are on the DPB for less than four years. More than a quarter of them (26%) are on it for less than a year, even during the recession. If this is a lifestyle choice, it is hardly a fashionable one.


Again, a fundamental misunderstanding of the data. Campbell has pulled figures from the benefit fact sheets that show current spell on a benefit. Many people have repeated spells thus increasing the time they spend dependent. MSD research most clearly explains this misinterpretation;

On average, sole parents receiving main benefits had more disadvantaged backgrounds than might have been expected:

• just over half had spent at least 80% of the history period observed (the previous 10 years in most cases) supported by main benefits
• a third appeared to have become parents in their teenage years.

This reflects the over-representation of sole parents with long stays on benefit among those in receipt at any point in time, and the longer than average stays on benefit for those who become parents as teenagers.

Had the research considered all people granted benefit as a sole parent, or all people who received benefit as a sole parent over a window of time rather than at a point in time, the overall profile of the group would have appeared less disadvantaged.


Inter-generational dependence is a proven phenomenon. Academic research provides evidence. Some part of it works through the much higher likelihood that a teenage parent will have a daughter who also becomes a teenage parent. Additionally it occurs because of the transmission of attitudes towards welfare.

Young people need welfare reform in order to teach them the value of work.


Far from being a myth young people do need to grow up with at least one working parent to understand the value of work. Building an expectation of independence is probably one of the most important goals of reforming the DPB especially.

The current rate of Maori unemployment is a catastrophic 36.7%.


This claim was not intended to be a "myth" but ironically, it is. The Maori rate of unemployment in December 2010 was 15.5 percent.

People are usually in hardship for economic reasons, and not due to a lack of moral fibre. The churn of jobs and the likelihood of multiple careers in one’s working life – ie the labour ‘flexibility’ so beloved by Treasury and its corporate friends – means that it is more and more likely that at any given time in their working lives, more people (and their children and grandchildren ) will be at risk of needing temporary welfare assistance during thedir job transitions.


Granted people are in hardship for economic reasons but also because of personal choices they make. Go back to the MSD quote. Is the economy to be held responsible for a teenage birth that results in many years reliant on a benefit?

10 comments:

mist said...

Unemployment vs Sickness/Invalid Benefit [rise].

The last decade has seen WINZ (or whatever they've rebranded themselves at the time of reading) working hard to see people in jobs to push down unemployment. The government is happy, the rate of unemployment is dropping.

But when you've stood in the dole lines and gone through the interviews you'll notice that they have just become more rigorous in applying the selection criteria.

For Unemployment one has to be capable of any work. So any medical reason for non-work gets shipped to a GP for sign off to sickness benefit. Been on the sickness benefit too long? Off to the invalids benefit.
Note that WINZ has a mandate to encourage the unemployed back to work.
Note also that they do not have the same responsibility for sickness and invalids (as retraining and finding niche jobs is much harder/expensive.)
So the unemployment rate drops and the forgotten trouble folks can just be swept under the "no one cares" carpet.

mist said...

Opps forgot to mention it. But with regards to sickness benefits (and medical leave forms). Several "corporatised doctors" seem to be regarding this as a customer service. Alongside short visits, high fees, and bloodtests/pills for everything this is another they "offer".
Once it was a professional opinion based on the facts and medical support available to find a remedy, now it is a product which is expected and paid for; you want a medical document you go to the doc with a list of symptoms and _buy_the_document_you_want_. You pay the lady at the counter on the way out (their factual interest seems to stop at their paycheck too). As long as it doesn't expose them to business fraud everythings ok, right? (except for employers and taxpayers, but everyone knows they're just greedy rich whiners)

Anonymous said...

I haven't read what Key's policy is but I don't think that the government should pay the DPB to teenage mothers. If teenage mothers weren't given the DPB, fewer teenagers would get pregnant, and those who get pregnant, would have to adopt their children out, terminate their pregnancy or work to support themselves and their child. I know it sounds harsh but it's no harsher than letting an innocent child be raised by an uncaring and neglectful parent. Most solo mothers will never be in a position where they can support themselves and their children without government assistance, which is why is it better to encourage people to have children after they are financially independent or when they are in a permanent relationship.

Gloria

Anonymous said...

I am ignorant of much academic literature on poverty, but it seems to me that many who promote the meme that poverty causes social dysfunction are simply pointing out the basic correlation that many poor people are often dysfunctional. But they don't really explain how poverty causes social dysfunction -- they just make an assumption. But if you acquaint yourself with the poor you can watch them make bad choices right before your very eyes -- like choosing to get a tatoo rather than save for their mortgage. But virtually everyone (even social-democratic academics) is acquainted with a ne'er do well. If there are ne'er-do-wells born into the middle-class, surely there are ne'er-do-wells among the lumpenproletariat. How do poverty "experts" control for ne'er do wells and those who are allegedly "victims" of circumstance?

rob said...

Gosh, you are an idiot. Didn't take more than a few sentences to demonstrate the rest was a deserted intellectual wasteland :)

Anonymous said...

Rob, your simplistic statement has me confused as to who you are referring to, and to why that person, in your opinion, is an idiot?

Anonymous said...

"Most of the people on welfare are unmarried mothers – many of them teenagers – who have extra children so that they can get more money."

Some great data there Lindsay. Are you aware however that correlation doesn't necessarily equal causation?

I don't know what your grasp of human nature is (hopefully better than your grasp of what it's like to live on a benefit), but since when was having children a purely economic choice? Do you have a little data table for how many people in NZ plan their births?

Anonymous said...

1. ‘The most important fact is that at least a third of current sole parents became parents as teenagers. I have shown that probably around a half of the DPB population first began on welfare as a teenager’
Where have you shown this?

2. ‘• just over half had spent at least 80% of the history period observed (the previous 10 years in most cases) supported by main benefits
• a third appeared to have become parents in their teenage years.’

There is nothing in the cited information to suggest that the people who became parents in their teenage years are over-represented amongst those who have spent at least 80% of the history period observed supported by main benefits. Without further clarification, we do not know to what extent those two groups overlap. Also, there is no evidence presented as to what proportion of the third of DPB recipients who became parents in their teenage years first accessed the DPB at that time. Therefore, this information, in and of itself, does not support a claim that ‘significant numbers of very young women going onto the DPB and staying there for a lifetime.’

3. ‘Is the economy to be held responsible for a teenage birth that results in many years reliant on a benefit?’

You could as well ask, is a teenage birth to be held responsible for many years reliant on a benefit? If young parents are supported by a strong economy and a socially ethical government representing a society that promotes equality over individualistic pursuit of wealth, are they not far more likely to have the motivation and the ability to participate in the workforce? Why on earth would anyone choose to spend a lifetime living in poverty if there was a viable alternative? On the other hand, if you make scapegoats of young parents at every opportunity, perpetuating a view that they represent nothing more than a drain on society, are they not more likely to be alienated from said society, thereby discouraging any kind of positive participation?

Anonymous said...

Further, on DPB beneficiaries having more children to get more money:
I am fairly certain that you would find that even conservative estimates of the cost of raising a child exceed the amount of extra assistance that can be gained through having another.

Lindsay Mitchell said...

For the additional information you want

http://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/research/sole-parenting/understanding-sub-groups-of-sole-parents-receiving-main-benefits.doc

Note that the estimate therein was at least a third of people on the DPB started there as teenage parents. They explain why the estimate is a minimum figure.

At 7 December 2006 of the 94,444 single parents on the DPB 37,609 had started on welfare as teenagers (not necessarily the DPB initially. For instance pregnant teenagers often draw the sickness benefit).40 percent. But this is an undercount because the data (supplied by MSD) only records benefits that commenced after 1 January 1993. Anyone over 34 was not captured in the data. Given over half of the DPB population was older than 34 at that time it is likely the 40 percent will be significantly higher. In support, US data showed that 55 percent of AFDC expenditure was attributable to families begun by a teenage birth (End of Welfare, Michael Tanner).

I don't make scapegoats of teenage parents. I was almost one. But they are fundamental to understanding welfare dependence and child poverty.

And if a female has grown up on welfare low income is the norm. They don't necessarily choose a benefit but default to one. The income that comes from the DPB, AS, FTC combined is on par with working at the minimum wage.