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IINCOME MAINTENANCE PROGRAMS
HEARINGS
BEFORE THE
SUBCOMMITTEE ON FISCAL POLICY
OF THE
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
NINETIETH CONGRESS
SECOND SESSION
JUNE 11, 12, 13, 18, 19, 20, 25, 26, AND 27, 1968
Volume II: APPENDIX MATERIALS
Printed for the use of the Joint Economic Committee
U.S. GOVERNMENT PRINTING OFFICE
96-602 0 WASHINGTON : 1968
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.25
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SENATE
JOHN SPARKMAN, Alabama
J. W. FULBRIGHT, Arkansas
HERMAN E. TALMADGE, Georgia
STUART SYMINGTON, Missouri
ABRAHAM RIBICOFF, Connecticut
JACOB K. JAVITS, New York
JACK MILLER, Iowa
LEN B. JORDAN, Idaho
CHARLES H. PERCY, Illinois
WILLIAM H. MOORE
RICHARD F. KAUFMAN
ROBERT H. HAVEMAN
JOHN R. KARLICK
HOUSE OF REPRESENTATIVES
RICHARD BOLLING, Missouri
HALE BOGGS, Louisiana
HENRY S. REUSS, Wisconsin
MARTHA W. GRIFFITHS, Michigan
WILLIAM S. MOORHEAD, Pennsylvania
THOMAS B. CURTIS, Missouri
WILLIAM B. WIDNALL, New Jersey
DONALD RUMSFELD, Illinois
W. E. BROCK 3D, Tennessee
FRAZIER KELLOGG
DOUGLAS C. FRECHTLING (Minority)
SUBCOMMITTEE ON FIsCAL POLICY
MARTHA W. GRIFFITHS, Michigan, Chairman
SENATE
WILLIAM PROXMIRE, Wisconsin
HERMAN E. TALMADGE, Georgia
STUART SYMINGTON, Missouri
JACOB K. JAVITS, New York
JACK MILLER, Iowa
CHARLES H. PERCY, Illinois
NELSON D. MCCLUNG, Economic Consultant
(II)
JOINT ECONOMIC COMMITTEE
[Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.]
WILLIAM PROXMIRE, Wisconsin, Chairman
WRIGHT PATMAN, Texas, Vice fJllairnlam
JOHN R. STARK, Executive Director
JAMES W. KNOWLES, Director of Research
ECONOMISTS
HOUSE OF REPRESENTATIVES
HALE BOGGS, Louisiana
WILLIAM S. MOORHEAD, Pennsylvania
WILLIAM B. WIDNALL, New Jersey
DONALD RUMSFELD, Illinois
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CONTENTS
APPENDIX 1: Report from the steering committee of the Arden House Con- Page
ference on Public Welfare 445
APPENDIX 2: Challenge and Response: Areport to Gov. Nelson A. Rocke-
feller by the New York State Board of Social Welfare, May 1968 492
APPENDIX 3: "No One Can Stop It-Except Us," 101st Annual Report of
the New York State Board of Social Welfare and the New York State
Department of Social Services, 1967 499
APPENDIX 4: "The Family Allowance," by Martin Schnitzer, professor of
finance, Virginia Polytechnic Institute 520
APPENDIX 5: "Innovation in Public Assistance: The Case of Eligibility
Declaration," by Sydney E. Bernard, associate professor of social work,
School of Social Work, University of Michigan 529
APPENDIX 6: "The Poverty Line. What Is It?", prepared by Edwin A. Day,
associate director for research, Poverty/Rights Action Center, Washing-
ton, D.C 538
APPENDIX 7: "Tax Policy and Children's Allowances," by Harvey E.
Brazer, University of Michigan 575
APPENDIX 8: U.S. Commission on Civil Rights: Staff reports 582
Farm programs 582
Employment 591
Interim staff reports: Alabama hearing, Montgomery, Ala., April 27-
May 2, 1968-Statement of William L. Taylor, Staff Director,
U.S. Commission on Civil Rights, June 14, 1968 600
Staff report: Education 604
Staff report: Health, welfare, and food programs 612
APPENDIX 9: "The Challenge of Urbanization," by Philip M. Hauser,
University of Chicago 619
"Anti-poverty and the Cities," by Philip M. Hauser 628
APPENDIX 10: "Eliminating the Purchasing Power Gap Through Two-
Factor Theory and the Second Income Plan," by Louis 0. Kelso and
Patricia Hetter, San Francisco, Calif 633
APPENDIX 11: "Ownership and Income," a policy statement adopted by
the executive committee of the National Catholic Rural Life Conference,
Des Moines, Iowa, June 19, 1968 653
APPENDIX 12: Statement of the National Association of Manufacturers~ - 658
APPENDIX 13: Testimony of Lawrence Podell, professor of urban studies,
Graduate Division, City University of New York 663
APPENDIX 14: Statement of Howard M. Squadron on behalf of the American
Jewish Congress 668
APPENDIX 15: Policy Statement on Poverty, Jobs, and Incomes: Friends
Committee on National Legislation, submitted by E. Raymond Wilson,
executive secretary emeritus 671
APPENDIX 16: "Fallacies of the Negative Income Tax," by Henry Haziltt. 674
APPENDIX 17: Statement by Harold Watts, University of Wisconsin pro-
fessor of economics, and director of IRP 675
Statement by Harold M. Groves, University of Wisconsin professor
of economics 675
A Statement by Economists on Income Guarantees and Supplements~ 676
APPENDIX 18: Materials submitted by the National Association of Social
Workers:
"A Way To End the Means Test," by Edward E. Schwartz, George
Herbert Jones Professor, School of Social Service Administration,
University of Chicago 691
"Alternatives in Income Maintenance," by Alvin L. Schorr, Deputy
Chief, Research and Planning, Office of Economic Opportunity,
Washington, D.C 703
Lifting the Poor Out of Poverty: A Background Paper, prepared by
Alan D. Wade, associate professor, School of Social Service Ad-
ministration, University of Chicago 711
(III)
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APPENDIX 1
REPORT FROM THE STEERING COMMITTEE OF THE ARDEN HOUSE
CONFERENCE ON PUBLIC WELFARE*
STAFF
Victor Weingarten, Conference Director
Joanna Barnes
Janice Blau
Mrs. Richard W. Dammann
John W. Gerber
Mrs. Erasmus Kioman
Mrs. Frank A. Rodda
CONTENTS
Page
Arden House Steering Committee 446
Foreword
Highlights 452
Profile of Poverty and Welfare 455
Summary of major findings and recommendations - 461
Additional comments and suggestions 471
Summaries of position papers and related data 473
Chart: Schematic for a systems approach to poverty and welfare 483
Arden House conferees 486
Sources of philanthropic support 489
Bibliography for steering committee report 490
*Appointed by Governor Nelson A. Rockefeller; commemorating the 100th Anniversary
of the New York State Board of Social Welfare.
(445)
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ARDEN HOUSE STEERING COMMITTEE
JOSEPH C. WILsON: Chairman of the Board of Directors and Chief Executive
Officer of Xerox Corporation. He is a trustee of the Alfred P. Sloan Foundation,
and of the Committee for Economic Development. Mr. Wilson is also honorary
Chairman of the University of Rochester Board of Trustees and a past president
of the Rochester Chamber of Commerce.
JOSEPH L. BLOCK: Chairman of the Executive Committee of Inland Steel Com-
pany. He is a director of the Commonwealth Edison Company, the First National
Bank of Chicago, and the National Merit Scholarship Corporation. Mr. Block
also serves as a trustee of the Illinois Institute of Technology and the Committee
for Economic Development. He is a director and past president of the Chicago
Community Fund and has won several awards for civic and welfare activities.
JOHN A. COLEMAN: A senior partner of the New York Stock Exchange firm
of Adler, Coleman & Company. He has served as a Governor of the Exchange and
as Vice Chairman and Chairman of its Board of Governors. Mr. Coleman holds
directorships in several corporations, including the New York Telephone Company,
the Chrysler Corporation, and the General Aniline and Film Corporation. He
serves on the boards of several foundations.
GILBERT W. FITZHUGH: Chairman of the Board and Chief Executive Officer of
the Metropolitan Life Insurance Company. He is also a director of Chase Man-
hattan Bank and the Singer Company, and a trustee of Consolidated Edison
Company of New York, Inc. Mr. Fitzhugh serves on the Board of the Economic
Development Council of New York City, the Commerce and Industry Association
of New York, and the New York City Public Development Corporation. He is also
a trustee of the National Industrial Conference Board and the Committee for
Economic Development, and Vice President of the New York Chamber of
Commerce.
PHILIP M. KLUTZNICK: Chairman of the Urban Investment and Development
Co., Chicago. He is also Chairman of the Board of American Bank and Trust Com-
pany of New York City. Mr. Klutznick is a member of the State of Illinois
Medical Commission and a Governor of the Metropolitan Housing and Planning
Council of Chicago. In public service related to urban development, Mr. Klutz-
nick has served by presidential appointment in the Federal Government since
1935. He was Representative of the United States to the Economic and Social
Council of the United Nations in 1961-62.
GUSTAVE L. LEVY: Chairman of the Board of Governors of the New York Stock
Exchange. A partner in the firm of Goldman; Sachs & Co., he is a director of many
industrial and business organizations. Mr. Levy is General Chairman of the
United Jewish Appeal, past president of the Federation of Jewish Philanthropies
of New York, President of Mount Sinai Hospital, and Treasurer of the Lincoln
Center for the Performing Arts.
BALDWIN MAULL: Chairman of the Board of Marine Midland Corporation.
In 1965 he headed the New York State Citizens' Committee on Welfare Costs, and
earlier had served on the Moreland Act Commission on Public Welfare. Mr.
Maull is a director of several corporations. He is also a member of the Board of
Managers, State Communities Aid Association, and has been affiliated with
numerous community organizations, including the Community Welfare Council
of Buffalo and Erie County.
ARJAY MILLER: Vice-Chairman of the Ford Motor Company. He is a member
of the Boards of Trustees of the Brookings Institution, the Committee for Eco-
nomic Development, and the National Industrial Conference Board. Mr. Miller
serves as Chairman of the Visiting Committee of the University of California at
Los Angeles Graduate School of Business Administration and as a member of the
Harvard Business School Visiting Committee.
ALFRED C. NEAL: President of the Committee for Economic Development, New
York City. An economist and research executive, he is a member of the President's
(446)
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447
Public Advisory Committee on Trade Negotiations and an advisor to the Office of
Economic Opportunity. A former Vice President of the Federal Reserve Bank of
Boston. Mr. Neal taught economics at Brown University and is the author of
several books in that field.
ALBERT L. NICKER50N: Chairman of the Board and Chief Executive Officer of
Mobil Oil Corporation. He is a director of the Federal Reserve Bank of New York,
Chairman of the Balance of Payments Committee of the U.S. Department of
Commerce, and Vice Chairman of the Business Council. A trustee of Rockefeller
University and the American Museum of Natural History, Mr. Nickerson is also
a member of the Corporation of Radio Free Europe, a Harvard College Fellow,
and a trustee emeritus of International House.
HARVEY C. RussEr~: Vice President, Community Affairs, Pepsico, Inc. He is
a member of the Advisory Council of President Johnson's "Plans For Progress,"
the U.S. State Department Advisory Council on African Affairs, and the Business
Leaders Advisory Council of the Office of Economic Opportunity. Mr. Russell was
a member of the New York State Citizens' Committee on Welfare Costs, and is
a director of the Westcheoter Adoption Service and a member of the Board of'
Managers of the New York State Communities Aid Association. He is also a
trustee of Tougaloo College, Mississippi.
SAMUEL J. SILBERMAN: Chairman of the Board of Consolidated Cigar Cor-
poration. He is President of the Federation of Jewish Philanthropies of New
York and a trustee of the National Conference of Christians and Jews. Mr.
Silberman is also a member of the Board of the Greater New York Fund and
the National Committee for Social Work Education of the Council on Social
Work education.
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foreword
In March, 1967, as part of the observance of the 100th Anniversary of the
New York State Board of Social Welfare, Governor Nelson A. Rockefeller
invited 100 of the nation's leaders in industry, labor, news media, philan-
thropic foundations and government to participate in a conference "to
help plan new approaches to public welfare in the United States."
Participants from 14 states and from 12 cities within New York State
accepted the Governor's invitation and challenge which, essentially was:
"If the problem of public welfare was given to you, what would you rec-
ommend as sound public policy for the next decade?"
In convening the group, Governor Rockefeller said: "It is largely the
private sector of the nation that has historically demonstrated ingenuity
and inventiveness, the resources and resourcefulness that made America
what it is today."
The Conference was planned to utilize these assets to help find possible
new approaches to deal more effectively with the persistence of welfare
dependency in a nation of plenty.
It was recognized at the outset that the public welfare laws, and par-
ticularly the public assistance portion, were extraordinarily complex, and
that few of the Conference participants had had any prior knowledge of,
involvement with or responsibility for the subject.
The hope was that creative minds, unencumbered by past involvements,
could take a fresh, objective look at the situation as it exists, analyze the
available data, assess its strengths and weaknesses, attribute a variety of
values to what it found and, where indicated, recommend some other
approaches and possible solutions.
To help provide a framework for discussion, three position papers re-
flecting diverse political, social and economic points of view, as well as
supplemental data from governmental and private sources, were sent to
all delegates several months before the Conference with a request that,
after reviewing and studying the material, they respond in writing to the
data sent, or submit views of their own which could be discussed. These
responses were collated and sent to all participants prior to the Confer-
ence, so delegates had the advantage of a preliminary exchange of views
prior to the start of the actual meeting.
(449)
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450
The Conference was held at Arden House on November 2-3, 1967. All
costs relating to it were met by contributions from private foundations.
No public funds were, or have been, used for either pre- or post-Conference
activities. After 24 hours of plenary sessions and workshops, during which
discussion was lively, informative, and the proposals made impressively
varied, it became obvious that it would be difficult to arrive at any valid
consensus without much further analysis of the comments made and the
points of view expressed.
The Governor, therefore, asked 12 of the participants to serve as an
ad hoc steering committee to review the data emanating from the Con-
ference, as well as the information which preceded the meeting, and to
make, if possible, some specific recommendations which could be con-
veyed to the group as a whole.
Initially, no firm time limit was set for the activities of the Committee,
although the Governor asked its members to agree to serve for at least
three and possibly up to four months.
Two subsequent developments have helped set a limit upon the Com-
mittee's activities:
1. President Johnson, on January 3, 1968, appointed a Commission on
Income Maintenance with a specific charge to examine all possible
forms of income maintenance proposals as one possible approach
to the public welfare problem. The Ad Hoc Steering Committee wel-
comed this appointment because its own thinking was tending to
move in the direction of recommending further study of income main-
tenance proposals, and it could turn over to the new Committee,
headed by Ben W. Heineman of Chicago, its own findings and
recommendations.
2. The Committee for Economic Development planned to devote its
Public Policy Forum in May, 1968, to a discussion of public welfare,
with the report of this Steering Committee as its agenda. It proposed
the entire group which met at Arden House be reconvened and be
joined by a large group of CED trustees and other business leaders.
This would enable the Arden House discussion to continue under the
auspices of a respected, viable organization whose membership com-
prised substantially the same kind of business leadership as was
represented at Arden House.
In accepting the CED proposal, therefore, the responsibility of the
Steering Committee will officially end with the submission of its report
to that combined Arden House/CED meeting.
This report essentially reflects the views of the Steering Committee
and is not binding upon anyone else. An effort has been made, however,
to reflect the thinking of the Arden House conferees, and the Commit-
tee believes this report is an accurate reflection, noting, of course, that
individual conferees may not fully subscribe to all of its conclusion and
recommendations.
Special acknowledgement must be made to Hugh H. Jones, Chairman,
and George F. Berlinger, Vice Chairman, of the New York State Board
of Social Welfare, and to the competent staff of the State Welfare De-
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451
partment headed by Commissioner George K. Wyman. The Committee
is also indebted to the generosity of the various philanthropic founda-
tions, noted elsewhere in this report, whose contributions made the Con-
ference possible. It also wishes to acknowledge the efforts and contribu-
tions of the Conference staff, headed by Victor Weingarten, who was
Conference Director.
For many of us, this close exposure to a national problem of such
magnitude, which naturally has implications for the health of our econ-
omy but, more important, so vitally effects the lives and well being of a
significant number of Americans, has been an educational as well as a
stimulating experience and challenge.
The Committee feels itself privileged to have participated in all activi-
ties surrounding the Governor's Conference, including the additional de-
liberations which have resulted in these conclusions. As a group of in-
dustrialists, businessmen and private citizens, we feel honored to have
been asked to formulate some policy recommendations concerning the
problems of public welfare. We terminate our activities at this time
humbled by the magnitude of the task, but wiser as a result of our par-
ticipation. As a group, we are committed to the idea that the facts and
figures as we have come to know them be made available to all Americans.
We know that both our personal and social responsibilities have only just
begun. Armed with comparable knowledge, we are convinced that the
American public will join in the effort required to close the poverty gap
of their 30-million fellow Americans.
We express our appreciation to the Governor, therefore, for this oppor-
tunity to participate in a consideration of this vital problem of our day.
JOSEPH C. WILSON
Chairman
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452
h~ghUghts
1. The present system of public assistance does not work well. It
covers only 8-million of the 30-million Americans living in poverty. It
is demeaning, inefficient, inadequate, and has so many disincentives
built into it that it encourages continued dependency.
2. It should be replaced with an income maintenance system, pos-
sibly a negative income tax, which would bring all 30-million Ameri-
cans up to at least the official Federal poverty line. Such a system
should contain strong incentives to work, try to contain regional cost
of living differentials, and be administered by the Internal Revenue
Service to provide greater administrative efficiency and effectiveness
than now exists.
3. A system of uniform national ~tandards for public welfare should
be established to provide a Federal floor below which no state would
be permitted to fall and no person would be expected to live.
4. Much more effective and intensive family planning information
should be made available to all families on public assistance.
5. A systems approach to poverty and public welfare is worth explor-
ing to see if it might yield some data or show some relationships
which are not now known.
6. Solid research is virtually unknown in public welfare. Less than
1/10 of 1% of welfare funds are spent for that purpose. Rarely has so
costly a program operated with so little knowledge. More research
is urged in all aspects of the public assistance and public welfare
programs.
7. Until a new system of income maintenance, after thorough study,
is adopted, the present welfare system needs drastic and immediate
reform. Among the major changes urged are:
a) The aged, blind and disabled, who constitute one-third the
public assistance roll, should be transferred to Social Security.
b) The "man in the house" rule, still in effect in 28 States and
the district of Columbia, should be abolished because it destroys
family stability, encourages deceit and deception, costs more money
to enforce than it is worth.
c) Incentives to work should be liberalized, and all possible
steps, including "transition" allowances, should be taken to en-
courage the move from welfare to work.
d) A large expansion of day care facilities is vital to enable welfare
mothers with pre-school aged children to work, if they can. These
programs should be educational, as well as custodial.
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453
e) An affidavit system to determine eligibility, with spot checks
similar to those used by the Internal Revenue Service, should re-
place the costly, demeaning and inefficient investigations now used
almost universally. This would free scarce staff to try to keep people
off the assistance roll, instead of making certain they should stay on.
8. Staff turnover in public welfare departments averages close to 30
per cent a year with some states in excess of 40 per cent. This is evi-
dence of crippling inefficiency. Of the 110,000 people emp]oyed in the
field, less than 2,000 have a degree in social work or the equivalent.
This professional group also has a job turnover in excess of 20 per
cent a year. With this condition, there can be little effective casework
or continuity between client and staff.
9. Improved health, education and housing are vital if the cycle of
dependency is to be broken. Unless welfare recipients, and par-
ticularly the youngsters, are given the strengths, capabilities and re-
sources to break that cycle, future generations will bear the high
social and economic costs of this discrimination. Failure to act con-
tinues a trend toward polarization of the country into white and
non-white communities-a type of apartheid by default.
10. Jobs and training for jobs are vital parts of any effort to reduce
dependency on .welfare. While the private sector can do much, and
is now making a considerable effort to provide such jobs and training
opportunities, Government, as a long-range goal, should pursue poli-
cies and actions leading to productive employment for all who can
work.
11. The lack of legislative action on various proposals for obvious
reform costs taxpayers huge sums, as well as prevent effective and
efficient change.
12. Unless our country, including our northern cities, solves the prob-
lems of the slum areas, the nation stands in danger of being torn
apart.
13. The Committee does not expect that its recommendations can be
carried out without further analyses, studies, public awareness, ex-
perimentation and demonstration, but it urges that these not be used
as excuses for inaction but rather that steps be taken as quickly as
possible to implement these suggestions.
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454
In addition to the 30 million
classified as poor, 15 million
others are just over the
poverty line
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455
prof~e of
poverty and w&fare
Despite continued economic prosperity and relatively full employment,
almost 8-million Americans are presently receiving public assistance. This
number is increasing each year (In March, 1967, when invitations to the
Arden House Conference were mailed, the number on public assistance
was 71/2 million. By October, seven months later, it had increased by
almost 500,000).
Another 22-million people are now living on submarginal incomes be-
low the $3,300 poverty level established by the Federal Government for a
family of four°. This number is decreasing slightly. (In March, 1967,
22'/2 million were in this category.)
Many of the 22-million who are not covered by present programs are
in families which have a low wage earner or a wage earner whose family
size is so large that his income is too small to meet a minimum standard.
In all, about 30-million Americans are currently classified as "poor"
by official Government standards. Stated another way, about 15 per cent
of the population are living below what is admittedly a minimum standard.
In addition, it is estimated that about 15-million others are "near poor"
in that they hover just above the so-called poverty mark. The Arden
House Conference was aware of this group, but its main responsibilities
were directed toward the 30-million living below the poverty line.
Of all persons classified as "poor," slightly over one-fourth receive any
public assistance. The remainder receive no public aid at all. A few may
receive some financial support from private or voluntary charity.
The current combined costs of Federal, State and local public assistance
programs is approaching $8-billion. This sum, a record high, represents
slightly less than 1 per cent of the nation's present personal income.
Although the dollar amount continues to rise, the proportion has remained
fairly constant for the past decade.
*The "poverty line" is fixed by the U.S. Government and is based largely on providing
a total expenditure of 75c a day for all food, per person (in an average 4-person
family), with twice this amount in addition for all family living items other than food.
Except to allow for price increases, the poverty index has not been changed since 1959.
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457
Of those receiving public assistance, most are too old, too young, too
sick or too disabled to be self-supporting. The most recent figures supplied
by the U.S. Department of Health, Education and Welfare, as of October,
1967 show:
More than 2-million persons, mostly women, are 65 or over. Their
average age is 72.
More than 700,000 are totally blind or disabled.
Almost 4-million are children whose parents cannot support them.
1,250,000 are the parents of those children.
About 1,100,000 are their mothers; approximately 160,000 are their
fathers.
100,000 of the fathers are physically or mentally incapacitated and un-
able to work; about 60,000 are able-bodied, are capable of being trained
or re-trained and can be made self-supporting. This 60,000 turns over
every two years.
Millions
Of Those Receiving Public Assistance:
4
96-602 O_68-V01. iI-2
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458
Of the 1.1-million mothers, it is estimated that about 300,000 have some
skills or could become self-supporting with some training and could work
outside their homes, if suitable facilities were available to care for their
children.*
In the entire country, day care or family day care centers are available
for only 310,000 children. Most of these are run by independent operators
for profit. (The new Social Security law provides for a limited expansion
of public day care facilities.)
In the entire country
day care facilities are
available for only
310.000 children
Insofar as payments to recipients in all categories of public assistance
are concerned:
Each state determines its own level of payments. Twenty-one states
fail to take advantage of the availability of Federal funds for this purpose.
The greatest financial burdens fall on the most liberal states, i.e., Cali-
fornia, Illinois, New York and Pennsylvania. Together, they account for
almost half of the $8-billion spent for public assistance.
The range of payments varies widely. For dependent children it goes
from a low of $8.35 per month in the lowest state to $60.15 in the highest.
For the aged, payments range from $38.65 per month to $125.10. (The
new Social Security legislation which mandates an eligibility freeze on
dependent children programs, will reduce financial assistance to the
children while providing for a 13 per cent average increase in Social
*A recent survey conducted by the City University in New York and reported in The
New York Times, January 22, 19t~8, stated that nearly 70 per cent of a sampling of
welfare mothers in New York City would prefer to work rather than stay at home.
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459
Range of Public Assistance Payments
Security benefits for the aged. In many states, including New York, the
aged receive no benefit from this increase because the additional sum is
deducted from their welfare payment, leaving their net income un-
changed.)
Most aged persons receiving public assistance are on the rolls because
they never qualified for Social Security benefits or because the benefits
they receive under Social Security are too low to provide an acceptable
minimum standard of living in the State in which they reside.
Forty states have eligibility requirements of one year's residence
before providing assistance and, for some specific programs, require five
years residence. *
Dollars
per
month
Dependent
children
Aged
-
siju
High
S 125.10
~
~
*Several Federal courts to which the issue has been submitted have recently held dura-
tional residence requirements to be unconstitutional.
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- 1uu'yo
One fourth of
all nalion's
children are
still living
in poverty
75
0
Of the 30-million persons living below the so-called poverty level, more
than half are children under 18. The Social Security Administration re-
ported in October, 1967 that even after a most continuous period of pros-
perity and steadily rising income, one-fourth of all the nation's children
are still living in poverty or are in families classified as "near poor,"-
hovering just above the poverty line.
Other factors comprising the poverty profile are:
From 1940-1966 the recipient rate for dependent children under 18 rose
from 22 per 1,000 population to 48 per 1,000.
For youth reaching 18, approximately one white child in 10 and six
non-white children in 10 had at some time been supported by public
assistance.
Approximately 80 per cent of children on public assistance live in homes
without fathers. Although Federal legislation now permits the presence
of "a man in the house" in determining a family's eligibility for welfare,
28 states and the District of Columbia still deny such aid if there is "a
man in the house." In those states, many fathers, unable to find employ-
ment, abandon their families in order to have them qualify for public
assistance.
460
Millions More than half
of persons
living below
poverty level
are children
under 18
10
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461
summary of
major findings
and recommendations
The responsibility of this Steering Committee, having examined the avail-
able data, was to try to advance some proposals which are more clearly
able to meet both the best interests of those in need and the public in-
terest as well.
In arriving at its recommendations the Committee was guided by the
principal conclusions drawn from the Arden House materials, workshop
discussions, and all supporting data. Its major findings and recommenda-
tions follow:
1. THE PRESENT SYSTEM OF PUBLIC ASSISTANCE DOES NOT WORK
Public assistance fails to reach three-quarters of those in need and
delivers inadequate sums and inefficient services-on an uneven basis-
to the remaining one-fourth.
The present system is demeaning. It frequently violates privacy through
regular searches of recipients' homes. It has so many disincentives built
into it that it encourages continued dependency on welfare. It is virtually
impossible for recipients to determine what rights they have and to what
assistance they are entitled.
The vast majority covered by public assistance are either too young, too
old, too sick or too disabled to be self-supporting. Only a small proportion
of the adults can be helped to be self-supporting. Lack of clear under-
standing of the composition of this group leads to frequent misunder-
standing and proposals to force the "loafers" off the rolls. Deeply-rooted
myth and misconception are a frequent basis for these moves.
Without adequate awareness about the composition of the public as-
sistance rolls, expectations for such new programs as "work aid," now
under consideration, will be disappointing because only a small percentage
of those receiving welfare payments can participate or benefit from them.
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The Committee foimd little in the past record of amendments and so-
called legislative reform to justify any high hopes or promise that the
present public assistance system will be substantially improved. Basically
poor programs are not improved with overlays. It is doubtful that more
tinkering will evolve a more satisfactory program.
2. INCOME MAINTENANCE
The fact that public assistance helps only one-fourth of those living
below an acceptable standard, apart from its other deficiencies, caused
attention to be paid to other possible approaches to poverty. Included in
these discussions were a variety of proposals for income maintenance, with
family or children's allowances, negative income taxes, guaranteed annual
wage and other possibilities figuring prominently in those discussions.
The Committee believes that the public interest would be served if a
practical system of income maintenance could be devised which would re-
place the present system of welfare payments and would provide some
benefits to all of the 30-million below the poverty line, instead of only the
8-million now on the welfare rolls. Provision should also be made for social
services to those in special need of them.
There was strong agreement that such a system should contain incen-
tives to work, be closely tied to the Internal Revenue System to provide
greater administrative efficiency and effectiveness than now exists, and
should try to contain regional cost of living differentials.
Of the two major proposals discussed, the Steering Committee leans
toward a negative income tax rather than a family or children's allow-
ance assuming that more research, analyses and experimentation indicates
its soundness. Under a negative income tax, all of the funds paid out
would go to those families or individuals in greatest need. Under a uni-
versal family or children's allowance system, about 70 to 80 per cent of
the funds would go to the families who need it least, with the government
then recouping its money through the tax system. This is a costly way to
deliver funds to the group that needs it most. Other weaknesses noted in
the family allowance system, as proposed at Arden House, are that no pro-
vision is made for individuals or couples without children who are in need;
the payments proposed would be inadequate as an anti-poverty measure,
and the infusion of a work-incentive principle would be difficult.
Under a payment system such as a negative income tax, in place of
the present public assistance program, the Federal Government would
assume the major financial obligations and the responsibility of the States
and local governments would be largely to provide the supporting services
which will be required no matter what kind of system is adopted. Such
services would include social work counselling, home maker services,
family planning, etc.
A negative income tax would automatically achieve two sought but
heretofore unattainable goals-need as the basis for financial assistance,
and a uniform national minimum standard.
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The Steering Committee believes that the nation is now at a stage in its
history when it can afford to give serious consideration to such a plan
which would raise all 30-million Americans to at least the poverty level.
We recognize the need, however, to reexamine the country's financial re-
sources and priorities if we are to add expenditures of the magnitude that
appear necessary.
Economists appear to agree that the poverty gap in the United States
today is about $11~billion.* We now spend about $8-billion to give in-
adequate assistance to 8-million people. For about $11-billion more, we
can lift all 30-million Americans to the poverty threshold.
This is an exciting and exhilarating challenge and the new Commission
on Income Maintenance appointed by President Johnson has been given
that assignment. This Steering Committee applauds and welcomes its ap-
pointment. It offers its full cooperation to the new Commission. The pro-
posed types, varieties and forms of income maintenance are many, and
they deserve careful study and scrutiny. It is the direction which this
Committee believes must be taken.
The Steering Committee watches with interest the experiment with a
negative income tax now under way with 1,000 families in New Jersey
under the auspices of the University of Wisconsin and funded by the
Office of Economic Opportunity. It would look with favor upon additional
experimentation with a variety of forms of income maintenance before
enactment of any such major program.
The Committee further recommends that the Congress consider passing
legislation which would enable those states which wish to experiment with
various income maintenance proposals to do so. It would hope that New
York State, under whose auspices the Arden House meeting was convened,
would implement such enabling legislation as quickly as possible.
Parenthetically, the Committee would point out that the more success-
ful the nation is in providing jobs and employment opportunities to those
now unemployed or underemployed, the smaller will be the financial com-
mitment it must make for income maintenance.
Finally, the Committee notes that while it leans in the direction of a
negative income tax, it recognizes that any income maintenance program
must be carefully evolved and tested because most programs it is criticis-
ing in this report were sold as being ideal and good at some stage in our
history. The Committee is less concerned at this time with the kind of
income maintenance that is finally evolved than it is with the acceptance,
as a national goal, of the objective that basic economic support, at the
poverty level, at least, be assured all our people.
3. NATIONAL STANDARDS
The Arden House conferees believe serious consideration should be
given to the inequalities that exist throughout the country because no
*The U.S. Department of Health, Education and Welfare, Central Population Survey,
estimated on March 1, 1968, that the poverty gap is about $10.8-billion.
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effective Federal standards governing public assistance are in existence.
Each state promulgates its own rules and regulations, with the result that
the welfare system really comprises 50 different programs.
The range of benefits, payments and practices is extreme. More than 20
states still do not accept all of the Federal funds available to help needy
families because of their reluctance or inability to appropriate matching
funds.
The result is a "crazy quilt" pattern that discriminates against the poor
in many states and imposes a greater burden on more liberal states.
Various commissions have recommended the adoption of uniform na-
tional standards for welfare which, in effect, would establish a Federal
floor below which no state would be permitted to fall and no person would
be expected to live. The Committee endorses such a step in principle.
A uniform system, possibly adjusted to take into account regional dif-
ferentials in living costs, would be more effective and efficient than the
present system. (One method to implement such a concept is contained in
the report of the Advisory Council on Public Welfare entitled, "Having the
Power, We Have the Duty," June 1966, which was made available to all
Arden House conferees.)
Under such a system, the Federal Government would guarantee the
minimum, with the states supplying the overlay, based upon per capita
and other considerations. Such a minimum is implicit in the negative in-
come tax.
4. FAMILY PLANNING
There was wide agreement at Arden House that more intensive and
effective family planning information should be made as available to fami-
lies on public assistance as it is to others. An increased effort in this di-
rection is mandated in the new Federal legislation, which appropriated
an initial $15-million for this purpose, and is welcomed by the Steering
Committee.
But since family planning must be part of comprehensive social service,
these Federal funds are not enough to take care of our population prob-
lems despite the decrease in the national birth rate. In some of the slum
neighborhoods of the country, the birth rate is higher than those of India
and Pakistan. Children born in these areas are often premature, weak,
sickly and die before they are a year old.
The evidence presented at Arden House showed clearly that poor fam-
ilies tend to have more children-thus raising family needs without a
commensurate increase in family income. Half of the poor children were
in families with five or more children.
5. SYSTEMS APPROACH TO POVERTY AND PUBLIC WELFARE
Threaded throughout all of the data submitted to the Arden House
conferees was the admission by the professionals and other experts in the
field that, in many areas, they were "flying blind;" that there was a
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465
paucity of sound research affecting vital parts of the poverty picture and
welfare problems. In fact, evidence indicates that less than one-tenth of
one per cent of the welfare dollar was spent for research. Such parsimony
is short-sighted considering the magnitude of the problem and the many
areas relating to it about which too little is known.
The number, complexity and interrelatedness of social welfare problems
calls for a substantial research and analytical effort with three aims:
1. To identify problems precisely
2. To develop and evaluate alternative approaches to these problems
consistent with objectives
3. To monitor existing programs to insure that both successes and fail-
ures in accomplishing program goals are reflected directly in changes
in the level or design of these programs
Systems analysis is a method for dealing with large scale problems and
has been applied for some time in the Department of Defense, other Gov-
ernment agencies and private industry.
The Steering Committee is indebted to one of its members, Arjay
Miller, vice-chairman of the Board, Ford Motor Company, who has taken
the initiative to work out, with his staff, a rough schematic which indicates
that a systems approach to the problem of poverty and public welfare
might yield some data, or show some relationships which have not hereto-
fore been easily available.
The "first stage" schematic, incomplete and unrefined as it is, is en-
closed in this report as an appendix because it suggests a possible ap-
proach to the problem.
It was not within the purview of this Committee to pursue this ap-
proach, but it strongly recommends to Government and philanthropy that
the idea bears great merit and deserves careful consideration and in-
vestigation.
6. REFORM OF PRESENT WELFARE LAWS
While the Steering Committee recommends that the present system of
public assistance be replaced with an income maintenance system, it
recognizes that until such legislation is enacted, the present system is in
need of major reform.
Insofar as "reform" of the present program is concerned, a review of
the record indicates that many sound proposals from competent and
knowledgeable groups have largely gone unheeded. The most recent offi-
cial group proposing major reform was the Advisory Council on Public
Welfare, appointed at the direction of the Congress by the U.S. Secretary
of Health, Education and Welfare. On the basis of sound business and
management judgment, as well as sound public policy, it would appear
that taxpayer funds are being wasted by the lack of legislative action on
various thoughtful and well-designed proposals for obvious reform. We
believe attention should be paid to certain costly fundamental deficiencies.
Among them are:
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466
a. Transfer of Aged, Blind and Disabled to Social Security
The aged, blind and disabled comprise one-third the public assistance
roll. This group will never be less aged, blind or disabled, yet $238-million
a year of public funds are spent to administer this portion of the program,
much of the funds being used to determine and check eligibility. In New
York City alone, it was reported, more than 2,250 persons are employed
at this task at an annual cost of $15-million a year.
We believe the administration of this entire category might be trans-
ferred to the Social Security System, with payments made automatically
at far less administrative cost. The financing of these payments would, of
course, be separate from the financing of the Social Security System itself.
While the intent is not to save funds on payments, because the sums allo-
cated by most states are already too low, the administrative savings and
increase in bureaucratic efficiency would be marked. It deserves serious
study.
b. "Man in the House" Rule
Continuation of the "man in the house" rule by 28 states and the Dis-
trict of Columbia adversely affects family stability, encourages deceit and
deception, and in the long run costs the public far more in terms of money
and social problems than it is worth. In practice, the policy is destructive
of family life. We recommend the rule be abolished.
c. Incentive to Work
Until the new welfare legislation went into effect January 3, there was
no incentive to work as part of the assistance structure. In practice, the
disincentives were an integral part of the system. The Committee wel-
comes, as a start, the new law that permits a welfare recipient to retain
the first $30 a month and 30 per cent of the remainder of his earnings,
even though it believes the $30 is too low to do the job. * It hopes the
effect of this will be watched closely, and the amount liberalized if the
evidence warrants it. We believe an incentive to work is a vital dimension
and encourage all such moves. Based upon other data examined, we be-
lieve welfare administrators should en on the side of liberality to en-
courage all who can to experiment with work, without fear of suffering
economic hardship during the transition from welfare to work. Testimony
from the poor indicates that the backlog of deprivation frequently requires
partial assistance for more adequate clothing, furnishings and housing
during the transition process than is presently allowed. Regulations which
dilute the incentive to work should be reviewed. If necessary, a "transi-
tion" grant should be available to recipients to encourage them to seek
employment without being penalized.
*Ne~y York City, on a demonstration basis, reports excellent results with an incentive
closer to the model developed by the Office of Economic Opportunity, by allowing an
exemption of $85 a month and 30 per cent of the balance earned. More than 1,200
welfare recipients, some of whom have not worked for more than five years, have ob-
tained employment since this incentive program began September 1, 1967.
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d. Expansion of Day Care
A large expansion of day care facilities is necessary to enable those
mothers with young children to work outside their homes, if they can.
The Committee is pleased that the new welfare legislation makes pro-
vision for expansion of this hitherto limited program. In welcoming it, the
Committee is also cognizant of the fact that not all mothers should work
outside their home, and that not all children should be in day care. The
expansion, however, is vitally needed and desirable, and the new facilities
might, in part, be staffed by trained women on assistance, thereby further
reducing the welfare rolls.
The Committee believes that day care should be viewed not as a cus-
todial and baby sitting agency but as an educational and cultural pro-
gram, and that positive fruits of research in early childhood education
should be applied in these facilities so that, in effect, they become early
year-round "Head Start" programs.
e. Abolition of "Mandatory Verification"
Evidence that "red tape" strangles efficient operation is great. The Com-
mittee believes that given the enormous staff turnover, high cost of ad-
ministration, poor and uneven quality of social services, that substitution
of an "affidavit" system to determine eligibility, rather than requiring
individual verification in each case, would be more desirable and, in the
long run, promote greater efficiency and even economy. In addition, it is
less degrading and demeaning to the applicant. Such a system, with spot
checks used in a fashion similar to the Internal Revenue Service, would
free staff to spend their time as counsellors and helpers rather than in-
vestigators. The public interest would be as well, and possibly better
served, if more time were spent helping people on assistance get off the
rolls, rather than in investigating them to make certain they should re-
main on assistance. Experimentation in New York City in two centers
has shown a creditably low level of ineligibility using the affidavit
approach.
The affidavit system is used to determine eligibility for the medical as-
sistance program in New York State with a random sampling of not
more than 5 per cent of the cases selected for investigation and verifica-
tion. This method has proved successful in determining the eligibility
for more than 21/2 million persons under this program. Based upon this
experience, the New York State Department of Social Services is plan-
ning expansion of the method to part or all of the public assistance pro-
gram throughout New York State.
7. ADMINISTRATIVE CHANGES
By any standard of sound management practice, the administration of
the public welfare program is almost hopelessly inefficient. More than
110,000 persons are employed in the public welfare program, of whom
more than 80,000 are in the Federally-aided assistance programs. The
annual turnover averages close to 30 per cent, with some states in excess
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468
of 40 per cent. This turnover itself is evidence of crippling inefficiency.
With this condition, there can be little effective casework or continuity be-
tween client and staff. It is noted that lack of job satisfaction is given as
one of the key reasons for leaving.
It is also worth noting that of the 110,000, less than 2,000 have a degree
in social work or the equivalent, and are mostly in administrative posi-
tions. This professional group also has a job turnover in excess of 20
per cent a year. In addition, the ratio of professionally trained person-
nel available for those needing skilled rehabilitative services is so abys-
mally low as to constitute a pretense of a social services program.
An expansion of cooperation between voluntary and government agen-
cies could do much to close this gap.
The shift of the aged, disabled and blind to Social Security will ease the
demand for social workers and permit the reintroduction of professional-
ism. An ultimate shift to a negative income tax or a similar form of income
maintenance would provide still more opportunity to strengthen the social
work aspect of the program.
8. PRIORITIES FOR CHILDREN
The conferees felt, and the Steering Committee agreed, that special
considerations and priorities should be given the children in welfare fam-
ilies, as well as those in the poverty and near-poverty families, so that
they could be helped to break out of the cycle of dependency and ulti-
mately take their place in our society as productive citizens.
Such considerations must include far more effective programs provid-
ing better education and educational opportunities, increased and im-
proved health care, and better housing than now exists for them.
Unless special emphasis is placed on health, education and housing for
these youngsters, it is doubtful that they will have the strengths, re-
sources or capabilities of breaking out of the poverty cycle. The high
social and economic cost of continued ineffectiveness and inaction in
this area will be borne by coming generations. To this equation must also
be added the factor of racial discrimination which has taken its toll not
only of non-white children and adults who are the victims of it, but of the
general population who bear the financial, social and moral responsibility
for it. There was acceptance at Arden House of the statement that unless
our country, including our Northern cities, solve the problems of the
slum areas, the nation stands in danger of being torn apart or perma-
nently divided into white and non-white communities-a type of apart-
heid by default.
9. JOBS AND JOB TRAINING
The Committee agrees that industry can and should play an important
role in helping to provide jobs and job training opportunities for young-
sters old enough to work, and for all adults able to work. It welcomes the
appointment by President Johnson of a national organization of leading
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469
businessmen, headed by Henry Ford II, through which industry and gov-
ernment will cooperate.
In its own deliberations, the Committee made the following proposals
for job training and job creation:
a. Stepped-up job recruitment and training in slum areas.
b. Radical revision of testing procedures and hiring standards, with
greater awareness of historic, cultural and educational deficiencies in rela-
tion to normal application forms and personnel practices.
c. Establishment of job preparation centers in slums to provide counsel-
ling, literacy training, skill training, work testing and motivation.
d. Expansion of programs to provide funds to small businesses in ghetto
areas for on-the-job training.
e. Provision of training, with built-in opportunities for advancement and
promotion to higher wage levels, in such service occupations as restaurant
worker, nurse's aide, hospital attendant, repairman, etc.
f. Increased training for skilled jobs where shortages exist today.
g. More adequate transportation in order to help slum-dwellers to
reach jobs in outside areas. This problem was seen as particularly acute
in many places, such as Southern California, Long Island, and other parts
of the country where public transportation is both scarce and costly.
Some of the above could be implemented in the following ways:
1. Encouragement of business in slum neighborhoods, if possible, through
existing organizations of the private, public and governmental sectors
which are already working in these areas.
2. Tax incentives, insurance off-sets, and other subsidies to aid business
investment.
3. Government assumption of responsibility for some training programs
through cost plus or fixed price arrangements.
4. A Domestic Development Bank, modeled after the World Bank. Such
a new institution would replace the Small Business Administration, which
does some of this work, but has lacked adequate funds and strength to
make its performance effective.
5. A Human Investment Act to expand tax credit for job training.
It was generally recognized that while the Federal Government was
making an increased financial commitment in the area of work and work
training (more than $2-billion has been appropriated for such programs
in fiscal 1968), the backlog of need was so great that such programs would
probably have to be expanded substantially. In addition, companies which
had already had some experience in trying to provide jobs for heretofore
unemployed, untrained, uneducated young people, were encountering poor
motivation and work habits that were requiring special skills in success-
fully meeting such problems.
While it was apparent that much more was being attempted by the pri-
vate sector than was commonly realized, it was acknowledged that the
problem was massive, required more than good-will and high motivation
by management, and that effective support from Government, particularly
insofar as the un-economic aspects of job training are concerned, was
necessary.
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470
The general consensus, however, was that industry, with labor's coopera-
tion and participation, could and should play an aggressive and vital role
in accepting a major degree of responsibility in this area.
It is important that restrictions on entry to an occupation be elimi-
nated or reduced wherever they exist, to provide as much opportunity as
possible for poor people to obtain better jobs through their own efforts.
The Committee also believes that as a long range goal, Government
should pursue policies and actions leading to productive employment for
all who can work.
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471
~ddft~ona~ comments
~nd. suggestions
Each participant in the Arden House Conference was asked to respond in
writing to the position papers and other data they received prior to the
Conference. Their response included comments about the information sent,
as well as views of their own.
Almost 75 per cent of the participants made such responses. Without
exception, their contributions were thoughtful, provocative, interesting
and, in some instances, opened new areas for discussion which went far
beyond those contained in their earlier "homework." The comments were
summarized, collated and recirculated to the conferees in advance of the
Arden House meeting so that each delegate had the benefit of everyone
else's point of view.
It would be impossible to impart the spirit or flavor of these comments,
nor can justice be done to them in a brief summary. Neither can a written
report capture the discussions in the various workshops and plenary ses-
sions. Nevertheless, the Steering Committee believes that some of the
Arden House highlights not embodied in the "Summary and Recom-
mendations" deserve circulation and subsequent discussion.
Many participants stressed the need for more research, admitted that
the more they learned, the less sure they were of possible solutions for
many of the problems presented. The more they explored the field, they
said, the more they saw how limited their knowledge was. This limitation,
they felt, also applied in some measure to the data provided by "experts."
Evidence presented to the Steering Committee indicated that less than
one-tenth of 1 per cent of the public welfare expenditure is devoted to
research. This is an appallingly low percentage considering how very little
is known about so many vital aspects of so important a problem. The Com-
mittee feels that a far greater research expenditure would be warranted in
virtually all aspects of the assistance program. It therefore believes that
far more experimentation and innovation would be useful to determine
whether particular changes are practical, and even when found to be prac-
tical, could be improved as a result of experimentation.
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472
An aspect of the welfare problem that emerged was the plight of the
19-million children living in poverty or near poverty. Providing hope and
opportunity and translating this into concrete, attainable programs for
children was proposed as an area of high priority.
Opinion was unanimous that special efforts must be made by Govern-
ment and industry alike to help end the conditions of dependency and
despair that seem to lead to perpetuation of poverty from one generation
to another.
Additional suggestions for dealing with this and other problems included
the following:
1. EDUCATION
There was agreement at Arden House that improving educational op-
portunities, as well as the quality of education for deprived children, was
an essential step if they were to be helped to break out of the cycle of
dependency. While this subject was not a major topic at Arden House, the
need for paying attention to it was stressed in many of the delegates' writ-
ten statements, and it was a sine qua non in many of the workshops.
Three main proposals were suggested:
A. That day care centers be linked with Head Start programs and that
efforts be made to apply the techniques of early childhood education to
pre-school aged youngsters in such facilities.
B. Vocational schools in all sizable cities should offer a two-year ac-
credited course as part of a cooperative effort between business and educa-
tion with the curriculum geared to the needs of business within that com-
munity to give reasonable assurance that youngsters would be trained for
jobs that exist, and upon graduation could be absorbed into the local labor
force.
C. Initiation of a Federal master plan which would seek to establish
minimum national standards of achievement in education.
2. HOUSING
There was general recognition that poor housing, as well as discrimina-
tion in housing, played an important role in perpetuating poverty and de-
pendency, in creating problems of motivation and in a variety of other
areas that tended to minimize the chance of a slum resident's becoming
self-supporting. Most of the suggestions for improving the conditions of the
poor, insofar as housing is concerned, were related to industry's own know-
how and experience. Some of these suggestions included:
A. Business become a participant in the construction and ownership of
housing for the low income groups.
B. Industry receive incentives to relocate in poor neighborhoods and
that such incentives include land written down to a reasonable reuse value,
low interest, long term loans and intensive utilization, of land in cities
through multi-story plans or in multi-purpose buildings which would pro-
vide space for business with housing above.
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473
&imrnaries of
position papers
and r&ated data
To help define problems that would be discussed at the Conference, all
participants received three position papers prepared specifically for the
Conference, which set forth diverse~political, social and economic points of
view. In addition, a variety of other materials to help delegates have a
clearer view of the welfare picture and problem were also distributed.
The three position papers were written by Dr. Daniel P. Moynihan,
Director, Joint Center for Urban Studies (M.I.T. and Harvard); Leland
Hazard, Consultant, Pittsburgh Plate Glass Company, and Dr. Eveline
Burns, Columbia University School of Social Work.
The full text of these papers and major related data have been published
and are available from the New York State Department of Social Services,
112 State Street, Albany, N. Y. 12201.
Daniel P. Moynihan, titled his position paper, The Crisis in Welfare.
He stat~d that the promise that economic expansion would end poverty
had been cruel to the poor who believed it. He pointed to the rising inci-
dence of dependency in the United States and the fact that there was a
decline in the number and rate of recipients for almost all welfare pro-
grams except Aid to Families with Dependent Children. He expressed
the belief that public officials found it more expedient to accept defici-
encies in the existing welfare structure rather than enact fundamental
changes in economic organization which are required for a real solution to
the problem. In his opinion, such fundamental changes would include:
1. An end to structural unemployment and the achievement of low
levels of cyclical unemployment.
2. Universal coverage for all social insurance programs, universal mini-
mum wage standards, a nationwide system of disability insurance, etc.
3. Enforcement of national minimum standards of social and educa-
tional services.
96-602 0-68-vol. 11-3
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474
4. Income supplements for workers with families and others.
In his analysis, Mr. Moynihan said that until very recently political
leaders have mostly avoided any serious involvement with the problem of
welfare, leaving it to the professionals. The facts that the bankrupt system
of southern agriculture has forced rural Negroes into the cities and that
AFDC, once a widow's program, is today in many respects a Negro prob-
lem and that the stability of family life among the poor, particularly the
urban Negro poor, has become undermined, have recently tended to make
welfare political. These national trends have afforded conservative leaders
an opportunity to exploit the negative issues and anti-Negro sentiment on
the one hand, while militant civil rights activists have also raised some of
the same issues and are attempting to transfer welfare recipients into
powerful interest groups and a party to negotiations. He pointed out that
most proposals now being made for improving the welfare system will en-
large it and that there is a conflict between helping people and keeping
costs down.
In his opinion, two approaches to the welfare problem deserve special
attention: first-the establishment of need as the sole criteria for assist-
ance provided in the context of national minimum levels; second-the pro-
vision of benefits as a matter of i~ight-thus ending harrassment and humil-
iation to welfare recipients.
"The question for public policy," he stated, "is how to set in motion
forces that will gradually diminish the size of the population which needs
public assistance."
"The heart of the issue is dependent children from broken families,"
he concluded from the latest national figures.
Mr. Moynihan believed that what is now required is a system of income
equalization and proposed the initiation of a family allowance. He pointed
out that the United States is the only industrial democracy in the world
without such a system, and is also the only industrial democracy with such
a large welfare population in our cities.
Under a family allowance system, systematic payments are made to all
families with dependent children for the primary purposes of promoting
children's welfar~. The advantages of such a system include:
1. Automatic payments requiring no means test nor a great bureau-
cracy, thereby maintaining low administrative costs.
2. Increased income to families whose income ranges from $5,000 to
$8,000, who have been left out of recent government programs, and to large
families with low incomes.
He proposed providing $8 a month for each child under 6 and $12 a
month for those between 6 and 17. For an average worker in private in-
dustry with two teenage children, such a family allowance would increase
the family increment in take-home pay from $384 to $672, and for a family
with four such children the take-home pay would be increased to $960.
Families with much larger incomes, who would also receive such a family
allowance, would pay much of it back in income taxes.
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475
He estimated the cost of such a program to be in the neighborhood of
$9-billion, a sum that could be raised by applying an increment of the
annual increase in Federal revenues of $3-billion over a period of three
years. He felt that such a system would relieve the strains on family life
that occur when mothers go to work to supplement the inadequate earnings
of fathers and discounted the proposition that a family allowance would
increase the birth rate of the poorer section of the population. He cited the
fact that during the past two decades when Canada had a family allow-
ance, the Canadian and American birth rates rose and fell together with
apparently no "family allowance" effect whatsover.
Lastly, Mr. Moynihan endorsed the establishment of national standards
for welfare payments under the Social Security Act and called for research
in two general areas:
1. Longitudinal studies of poverty populations to determine what factors
lead in and out of welfare dependency.
2. Determination of methods of providing genuine help to those in deep-
est poverty.
Leland Hazard called his paper Welfare, Social Work and Business in
Transition. * In his opinion, poverty was relative and would never be
totally eliminated. The differential could be lessened by bringing the poor
into the mainstream of the work force, but not by money payments to
them. He stated that family allowances caused inflation by handing out
money for neither goods nor services, and that in other countries they were
used as a means of increasing the population. Nor did he endorse the nega-
tive income tax or other such schemes which he felt would produce an in-
flationary impact forcing the economy level to run faster to maintain an
existing level of poverty.
To Mr. Hazard, America is not affluent in terms of all of her aspirations,
and he cited the estimate given by the National Planning Association
which stated that by 1977 the collective costs of America's goals would
outrun the economy's capacity to produce by an estimated $150-billion.
Stating that the principle of force is necessary to social order, it was his
opinion that America~s "doves" concede limitations on the military but not
on the ghetto front.
Mr. Hazard felt that social welfare needed the disciplines of industrial
management in addition to social work and politics. Accordingly, he pro-
posed the formation of a Council of Business for Social Welfare comprised
of many top companies and financed by its members on the basis of each
company's relative ability to pay. Such a Council should have a life of five
years with an annual budget of $2.5 million.
The Council would assemble information on the latest trends in social
work philosophy and techniques, including those in other countries, and
*Subsequently condensed and printed in Harvard Business Review, January-February
1968 under the title "Business Must Put Up."
PAGENO="0036"
476
disseminate it through business channels; appraise social work programs
and techniques within the context of management principles bearing upon
allocation of scarce resources and make reports to interested agencies; de-
sign research as indicated above to be "farmed" out with grants to well
qualified organizations; and issue policy statements based on gained knowl-
edge concerning programs deemed least or most promising for alleviating
the conditions of the poor.
In The Future Course of Public Welfare, Eveline M. Burns, Ph.D., mo-
mentarily turned to the past by outlining programs developed by the Social
Security Act passed in 1935 which brought the Federal Government into
the welfare picture and developed public welfare agencies throughout the
the nation whose functions then and now cover a wide gamut of services.
In her paper, Dr. Burns indicated that despite increasing affluence, re-
duced unemployment and more programs designed to provide jobs for the
needy, costs have risen and so have criticisms of public welcare programs.
Such criticisms include the following:
* Questions whether social welfare programs designed for the needy
really benefit them.
* The fact that current programs serve too few genuinely needy people
(only about one-fourth of the present poverty group).
* The fact that too much is spent on direct payments to the needy, too
little on constructive social services.
Dr. Burns felt that the obstacles to be overcome in formulating new
policies were formidable and the directions these take difficult to forecast.
Possible new policies included:
* A further expansion of the Social Security system which still does not
support all the people it could or should, including increased payments to
assure adequate income.
* The guaranteed annual income or the negative income tax, both of
which would be more costly than present welfare payments since either
would be available to people who presently seek to avoid the stigma of
welfare, and because nationally established minimum payments would be
higher than payments now made in many states.
* The demogrant or status payment, such as a children's allowance.
But despite such income maintenance systems, the public welfare sys-
tem would still have to perform a residual relief function for a variety of
emergencies.
Regardless of whether any of these were to be adopted, Dr. Burns be-
lieved that policy decisions still remained relating to the point at which
society accepts responsibility for supporting the needy. These included:
* A definition of the minimum acceptable standard of living below which
no one should be allowed to fall.
* The private resources which the individual is expected to exhaust be-
fore claiming aid from the community.
* The behavioral standards to which the public aid recipient is expected
to conform.
PAGENO="0037"
477
Dr. Burns made a strong case against the inequities and inadequacies of
presentS policies which, in addition to being complicated to administer, are
degrading to the recipient. She felt that any public welfare maintenance
system should include:
* Some standard allowance for everyone whose income is below a cer-
tain level.
* A social policy which would endeavor to identify certain types of com-
monly experienced special need for which stated payments could auto-
matically be made.
* Payments meeting the suggested poverty level which could provide a
differential in regional cost of living but would eliminate present illogical
discrepencies among the states.
In opting for reform, which Dr. Burns did throughout her paper, she
raised the question of what service functions public welfare should be re-
sponsible for. The answer to this question depended on:
* The extent to which such services could be reduced by assurance of an
adequate income.
* The effectiveness and appropriateness of needs to services.
* To the extent that they are needed and effective, should they be oper-
ated by public welfare, other public agencies or a single agency?
* Should public assistance payments and social service programs be ad-
ministered by one department? Or would it be sound to have a separate
department whose primary function would be consultation, referral and
direct provision of social casework services?
The fact that Government had taken an increasing responsibility for
financing public welfare programs aroused a conflict of opinion. These
ranged from those who argue that the Federal Government should expand,
set a national minimum standard and propose a new method of financing
it-to those who contend that the Federal Government is already too
influential and interfering.
In her opinion, the future role of the volunteer agency also merited
considerable study. She offered the possibility that in the future the pri-
vate agency might come to concentrate on the provision of services to
those to whom the public welfare agency had no responsibiliy. She also
raised the question as to what extent the administration of public welfare
programs should be in the hands of social workers for whom social welfare
is a profession. Some critics of the present system advocate citizen boards
directly involved in administration, particularly at local levels; others a
more impersonal bureaucratic expert administration by social workers and
trained aides.
For too long, policies have been made on the basis of beliefs about facts
rather than on tested knowledge. She pointed out that no forward-looking
businessman would be content to operate even a much smaller enterprise
while remaining in the dark as to the effectiveness of his policies. More
knowledge is needed on the causes of dependency, the nature and be-
haviour of the dependent population, of motivation and of the effectiveness
of various policies.
PAGENO="0038"
478
Regardless of tested knowledge, the future course of welfare programs
will be influenced by some of the following values:
* The extent to which people with jobs will be willing to sacrifice in-
come-either through higher taxes or lower pay increments-so that as-
sistance payments may be higher.
* The extent to which people with jobs will be willing to grant equal
rights to people on welfare.
* The prevailing views as to the responsibilities which the community
could demand from those who are supported by public funds.
* Society's tolerance of abuse and incentive.
* The strength of the feeling of national unity both geographically and
among ethnic groups.
* The extent to which social and economic developments create a need
for social services.
* The extent to which the public develops an intelligent and informed
interest in policy formation.
Brief summaries of some of the other material sent in advance of the
Conference follow:
REPORT OF THE ADVISORY COUNCIL ON PUBLIC WELFARE
-The Council, a twelve-man group, appointed under a Congressional
directive to review the administration of Federal public assistance and
child welfare programs, after hearing testimony from experts representing
the views of welfare, health, civic, education, labor and business organi-
zations, recommended sweeping reforms in public and child welfare, in-
cluding a "revolutionary reversal of roles" in the pattern of Federal and
State financing of such projects.
After setting forth the major problems existing under present welfare
programs, the Advisory Council recommended the following:
* That the Federal Government set a minimum standard for welfare
payments below which no state may fall and below which no family would
be required to live. The Federal Government would assume the full finan-
cial responsibility between the state's share and the total cost of the
program.
* A nationwide comprehensive program of public assistance based upon
a single criterion: need.
* Extension of coverage and liberalization of benefits under the social
insurance program.
* Strengthening and extension of social services.
* Legal representation for all who wish it, including payment of neces-
sary costs and an independent appeal system.
* A positive program for informing recipients and applicants of their
rights.
* Expansion by the Welfare Administration of recruitment, education
and training for welfare personnel, including pre-professional, professional
and advanced social work and education.
PAGENO="0039"
479
Expanded social welfare research commensurate in size and scope
with the national investment in its programs.
In urging the Federal Government to set standards for the quality and
administration of the programs, the report said, "Without strong Federal
leadership and support, it is the opinion of the Advisory Council that pre-
sent imbalances will continue and are likely to increase."
Summary of A PROPOSAL TO CURE THE SICKNESS OF BIGNESS IN THE
ADMINISTRATION OF PUBLIC WELFARE by John J. Keppler, Executive
Vice President, Federation of Protestant Welfare Agencies, New York City.
In order to cut public welfare costs in half and relief rolls by one-third,
Mr. Keppler proposed shifting one-third of the present population on
welfare (those receiving OAA, Aid to the Blind and Aid to the Disabled)
over to the Social Security system. The transfer of tax funds now fed
through a costly and cumbersome welfare bureaucracy to the Social Secur-
ity Trust Fund would not draw upon existing contributions to Old Age
and Survivors Insurance from employers and employees.
Mr. Keppler estimated a saving of administrative costs of around $1/4
billion which could help raise the amount of aid for those groups to
higher Social Security levels.
The approximately 5-million people who would be left on the case-
loads of local public welfare agencies, most of them receiving AFDC,
would be better served by social workers relieved of excessive paper work.
The costly and excessively high staff turnover now prevailing would be
considerably reduced if social workers had increased opportunities to help
the remaining caseload solve their problems and move towards self-support
and self-respect.
Because many of those who would be shifted to the Social Security sys-
tem would still need some social services as well as grants, Mr. Keppler
proposed that voluntary health and welfare agencies supply such services
through contractual arrangements with the Government.
SUMMARY OF PROPOSALS BEFORE SENATE SUB-COMMITTEE ON
EMPLOYMENT, MANPOWER AND POVERTY, MAY 8, 1967, made by Mitchell
I. Ginsberg, Commissioner, New York City Department of Welfare (presently
Human Resources Administrator).
According to Mr. Ginsberg, the present welfare system, is designed to
save money rather than people and ends up doing neither. If changes are
not made, welfare problems will grow and become harder to solve. He
differentiated between short-range and long-range changes, anticipating
that the latter will take years to accomplish, while the former are neces-
sary to make existing programs more effective.
Proposals for changes in the existing program included:
Substitution of a declaration approach to the means test.
* Employment incentive plan so that welfare recipients securing em-
ployment could retain a share of their earnings for a period of time.
PAGENO="0040"
480
* Development of neighborhood centers where social, health, housing,
etc., services would be readily accessible to all who need them.
Elimination of Federal categories of assistance, making it possible
to provide more adequate financial grants.
* Expanded training and employment opportunities coupled with day
care for children and homemaker services.
* Recognition of welfare as a right, with emphasis on protection of the
dignity and self-respect of the recipient.
* Organization of client advisory groups to develop communication be-
tween recipients and welfare administrators.
* Separation of income maintenance and services so that the former
would be provided solely on the basis of need and the latter available even
when financial assistance was not required.
* Defining range of staff skills required to deliver welfare's services.
Proposals for long-range changes included:
* Expansion and improvement of Social Security system to include the
aged, disabled and blind.
* A program of guaranteed employment for all, with the Government as
the employer of last resort.
* A new system of income maintenance, preferably some form of chil-
dren's and family allowance.
* A limited public assistance program for those who do not fit into the
other three programs.
* A program of public social services, available to all who need and
want them, regardless of whether or not they were in financial need.
Other papers made available to conferees in advance included GUAR-
ANTEED INCOME MAINTENANCE, by Helen 0. Nicol, from the
Division of Research, Welfare Administration, and THE PITFALLS OF
GUARANTEED INCOME, by Sar A. Levitan of the Upjohn Institute
for Employment Research.
Both authors discussed new proposals concerned with lifting the poor
out of poverty by providing them with income. Referring to present fail-
ures in public welfare and the minimal achievements of the "war on
poverty," the merits, costs, and pitfalls of alternative plans were out-
lined. These included the Negative Income Tax, Guaranteed Annual In-
come Plans, Family Allowances and others.
Additional materials sent to participants included the following:
CITIES IN CRISIS, THE CHALLENGE OF CHANGE, published
by the U. S. Department of Health, Education and Welfare, Welfare
Administration;
OUR TROUBLED CHILDREN-OUR COMMUNITY'S CHAL-
LENGE-proceedings of a symposium, sponsored by the Edwin Gould
Foundation for Children;
Reprints from newspaper and magazine articles dealing with various
aspects of public welfare, as well as other relevant data from official U.S.
Government agencies.
PAGENO="0041"
481
The findings and recommendations reflected in this report were based,
in large measure, upon the analysis of the data presented to the delegates
heretofore described. It is recognized by all concerned that brief exposure
to so complex a problem does not necessarily make for expertise. Further-
more, it is recognized that many organizations, public as well as private,
have made long and noteworthy contributions to this field. It is not the
aim of this Steering Committee to pretend to a knowledge it does not pos-
sess. The Committee has tried to bring its own business orientation to
bear upon the problem, as it was asked to do by the Governor. If this
report has helped increase understanding of some of the problems faced
by our society in attempting to meet the public assistance problem, then it
considers its mission reasonably accomplished.
PAGENO="0042"
PAGENO="0043"
Socio-Economic and Political Environment
I
------ ---n
Upward Mobility Return to the Cities
I _~_~__J ___________________
0
I ,~ Rebuilt
"Exporters" of the I Poverty City Affluent Urban m
Impoverished Migration to Cities Center Core Upward Mobility Surroundings I
-1
C
C0 I -<
I I
I >(
L~ I>
I Urban U)
Squalid * Urban * Suburban I
Rural * Ghettoized * Integrated * White
____ ________ IC')
-I
Return to Country Upward Mobility
PAGENO="0044"
484
exhibit II THE URBAN POVERTY SYSTEM
Operating Objectives and
Sub-Objectives
Yardsticks
Aid to
Dependent
Children
Negative
Income
Tax
1. Income adequate for
minimum living standards
Income Level
Income Stability
Credit Availability &.Cost
DebVAsset Structure
Budgeting Patterns
+
+
+
+
+
+
2. Individual fulfillment and
social adjustment
a. Employment
Employment Rate
Job Turnover Rate
Occupational Patterns
?
?
?
b. Education and Training
School Years Completed
Vocational/On-the-Job Training
Literacy
Skills Inventory
c. Cultural and Recreational
Leisure Time Activities
d. Social Skills and Attitudes
Motivation
Political Participation
Community Attitudes
-
-
+
?
3. Health
Life Expectancy
Infant Mortality Rates
Disease
Nutrition
Mental Health
4. Stability of Family Unit
Head of Household Patterns
Illegitimacy Rates
Divorce and Desertion Rates
-
-
-
+
?
?
5. Law and Order
Crime Rates
Juvenile Delinquency
Size of Police Force
Police-Community Relations
Prosecution Patterns
Rehabilitation Rates
+
.
6. Attractive Community
Environment
Housing
Schools
Hospitals
Transportation
Recreational and Cultural
Facilities
Social Services
+
+
Cost of Program
$
$
Measurement of Cost/Effectiveness
PAGENO="0045"
485
WORKSHEET FOR PROGRAM PLANNING AND MONITORING
Poverty Programs
Yardstick - Score-Keeping
Headstart
Job
Corps
On-the-Job
Training
At Start
of Program
After Period
1 2
+
+
+
+
+
+
±
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
$
$
$
$
+
?
+
,
+
7
PAGENO="0046"
486
governor's conference on public welfare
arden house, november 2-3, 1967
Mrs. Omar Adams, New York State Board
of Social Welfare
Hon. William E. Adams, Chairman, Joint
Legislative Commission on Public Welfare
Joseph H. Allen, President. McGraw-Hill
Publications
Mrs. Max Ascoli, President, Marion R. As.
coli Fund
William S. Bienecke, President, Sperry &
Hutchinson Co.
George F. Berlinger. Vice Chatrman, New
York State Board of Social Welfare
Robert A. Bernhard, Vice President. The
Bernhard Foundation,
David Bernstein, New York State Board of
Social Welfare
Joseph L. Block, Chairman, Executive Com-
mittee, Inland Steel Co.
Dr. Eveline Burns,' Professor of Social
Work, Columbia University School of So-
cial Work
Philip Canfield, Manager. Employee Bene-
fits, Xerox Corp.
Dr. Everett Case, President, Alfred P. Sloan
Foundation
Edward T. Chase. Editorial Vice President,
The New American Library
Allen Chellas, Director of Public Affairs,
N ewsweek
George W. Chesbro, First Deputy Commis-
sioner, New York State Department of So-
cial Services
John V. Cleary, President, Consolidated
Edison Company
Edward 0. Cole, Vice President, Employee
Relations, Fairchild Camera and Instru-
ment Corp.
John A. Coleman, Adler, Coleman & Co.
C. W. Cook, Chairman, General Foods
Corp.
Gardner Cowles, Chairman of the Board,
Cowles Communications. Inc.
Roland J. Delfausse, Economic Develop
ment Council of New York City, Inc.
Thomas Diviney. Public Affairs Director,
National Industrial Conference Board
Robert Douglass, Counsel to the Governor
James R. Dumpson. Dean, School of Social
Services, Fordham University
Marriner S. Eccles, Chairman of the Board,
Utah Construction & Mining Co.
Gordon Edwards, President, National
Dairy Products Corp.
Lyle C. Fitch, President, Institute of Pub-
lic Administration
Gilbert W. Fitzhugh, Chairman of the
Board, Metropolitan Life Insurance Com-
pan y
Clarence Francis, President, Economic De-
velopment Council of Yew York City, Inc.
David Freeman, Rockefeller Brothers Fund
Milton Friedman, Department of Eco-
nomics, University of Chicago
Dr. John Galbraith, New York State Board
of Social Welfare
John Garrison, Governor Rockefeller's Staff
Leon ard Golden son, President, Ante rican
Broadcasting Co.
Harold E. Gray. President, Pan American
World Airways
W. P. Gullander, President, National Asso-
ciation of Manufacturers
John P. Hale, New York State Board of So-
cial Welfare
Leland Hazard, Consultant, Pittsburgh
Plate Glass Co.
Harold H. Helm, Chairman, Execufive
Comntittee, Chemical Bank New York Trust
Co.
Dorothy I. Height, New York State Board
of Social Welfare
Harry B. Henshel, President, Bulova Watch
Co.
Dr. James M. Hester, President, New York
University
D. John Heyman, President, The Netv York
Foundation
Melvin C. Hoim, President, Carrier Corp.
Mrs. Alexander Holstein, New York State
Board of Social Welfare
Alexander Holstein, Syroco-Holstein Foun-
dation, Inc.
PAGENO="0047"
Roger Hull, President, Mutual Life In-
surance Company of New York
R. 0. Hunt, Chairman of the Board, Crown
Zellerbach Corp.
Theodore C. Jackson, New York State
Board of Social Welfare
J. K. Jamieson, President, Standard Oil
Company (N. J.)
Michael C. Janeway, Associate Editor, The
Atlantic Monthly
Hon. Jacob Javits, United States Senator,
State of New York
Paul Jennings, President, International
Union of Electrical, Radio and Machine
Workers
Edward J. Johannes, Jr., New York State
Board of Social Welfare
Hugh R. Jones, Chairman, New York State
Board of Social Welfare
Dr. Grayson Kirk, President, Columbia
University
Frederick Klingenstein, New York State
Board of Social Welfare
Philip M. Klutznick, Chairman, Urban In-
vestment and Development Co.
Peter Labovitz, Arthur D. Little, Inc.
Gustave L. Levy, Chairman, New York
Stock Exchange
Jose Lopez, New York State Board of So-
cial Welfare
Joseph Louchheim, Deputy Commissioner,
New York State Department of Social Serv-
ices
L. W. Lundell, President, C. I. T. Financial
Corporation
Mrs. Donald McConville, New York State
Board of Social Welfare
Alton Marshall, Governor Rockefeller's
Staff
Baldwin Maull, Chairman of the Board,
Marine Midland Corp.
Schuyler Meyer, Jr., President, Edwin
Gould Foundation for Children
Arjay Miller, Vice-Chairman, The Ford Mo-
tor Co.
487
S. M. Miller, Program Advisor, Division of
National Affairs-Social Development, The
Ford Foundation
George S. Moore, Chairman, First National
City Bank
Daniel P. Moynihan, Director, Joint Center
for Urban Studies, M.I.T. and Harvard
Milton C. Mumford, Chairman of the
Board, Lever Bros. Co.
George B. Munroe, President, Phelps
Dodge Corp.
Alfred C. Neal, President, Committee for
Economic Development
Albert L. Nickerson, Chairman of the
Board, Mobil Oil
John Nuveen, John Nuveen & Co.
Frederick Osborn, Chairman of the Execu-
tive Committee, The Population Council,
Inc.
Robert Patricelli, Assistant to Senator Javits
Theodore Pearson, Kelley, Drye, Newhall,
Maginnes & Warren
Leo Perlis, AFL-CIO
Joseph Persico, Governor Rockefeller's
Staff
A. H. Raskin, Assistant Editor of the Edi-
torial Page, The New York Times
Hon. Nelson A. Rockefeller, Governor of
the State of New York
Churchill Rodgers, President, New York
Chamber of Commerce
Raymond Rubinow, The J. M. Kaplan
Fund, Inc.
Kenneth Rush, President, Union Carbide
Corp.
Harvey Russell, Vice President, Community
Affairs, Pepsico, Inc.
William G. Sharwell, Vice President and
Comptroller, New York Telephone Co.
Samuel J. Silberman, Chairman, Consoli-
dated Cigar Corp.
Leonard S. Silk, Vice Chairman, Business
Week
John Simon, President, Taconic Founda-
tion
PAGENO="0048"
488
Mrs. Leland W. Singer, Francis A. Singer
Foundation
Leslie Slote, Press Secretary to the Gover-
nor
D. W. Smith, Chairman, General Precision
Equipment Corp.
J. Henry Smith, President, The Equitable
Life Assurance Society of the United
States
Robert Stein, Director of Editorial Devel-
opment, McCall Corporation
James J. Sullivan, Deputy Commissioner,
New York State Department of Social
Services
G. G. Tegnell, Executive Vice President,
New York Chamber of Commerce
Walter N. Thayer, President, Whitney
Communications Corp.
Haskell C. Titchell, Bulova Watch Co.
John L. Tower, President, International
Paper Foundation
Harry Van Arsdale, President, New York
City Central Labor Council
Eleanor Walsh, Deputy Commissioner,
New York State Department of Social Serv-
ices
Frank A. Weil, Treasurer, The Aaron Nor-
man Fund
William H. Wendel, President, The Car-
borundum Company
Eli G. White, President, Endicott Johnson
J. Richard Wilson, Comac Builders Supply
Corp.
Joseph C. Wilson, Chairman of the Board,
Xerox Corp.
Hon. Malcolm Wilson, Lt. Gov. of the State
of New York
Dr. Ellen Winston, Consultant, Welfare Ad-
ministration, Department of Health, Edu-
cation and Welfare
George K. Wyman, Commissioner, New
York State Department of Social Services
Hon. Joseph Zaretzki, Minority Leader,
State Senate
PAGENO="0049"
489
SOURCES OF PHILANTHROPIC FUNDS
All expenses incurred in connection with the Arden House Conference
were contributed by private philanthropic foundations. No public funds
were used. The costs of the publication program were met by a grant from
the Edwin Gould Foundation for Children. Other philanthropic contribu-
tors to the Conference included:
Marion R. Ascoli Fund
George F. Berlinger
The Bernhard Foundation
The Field Foundation
The Ford Foundation
Arkell Hall Foundation
Audrey S. and Thomas B.
Hess Foundation
Hugh R. Jones
The J. M. Kaplan Fund
The Esther A. & Joseph
Klingenstein Fund
Robert Lehman Foundation
New York Foundation
The Aaron E. Norman Fund
Rockefeller Brothers Fund
Benjamin E. Shove
Frances A. Singer Foundation
Syroco-Holstein Foundation
Taconic Foundation
John F. Wegman Foundation
Mrs. Lawrence L. Witherill
96-602 0-68-vol. II-4
PAGENO="0050"
490
BIBLIOGRAPHY FOR
AD HOC COMMITTEE REPORT
1. EXAMINATION OF THE WAR ON POVERTY, prepared for the
Subcommittee on Employment, Manpower and Poverty of the
Committee on Labor and Public Welfare, U.S. Senate, Volume 1.
2. NEGATIVE TAXES AND THE POVERTY PROBLEM-by Green,
Christopher, The Brookings Institution.
3. INCOME AND BENEFIT PROGRAMS, October, 1966
U. S. Dept. of HEW, Office of the Assistant Secretary for Program
Coordination.
4. ADVANCE RELEASE OF STATISTICS ON PUBLIC ASSIST-
ANCE AND APPENDIX ON WORK EXPERIENCE AND
TRAINING PROGRAMS UNDER TITLE V OF ECONOMIC
OPPORTUNITY ACT AS AMENDED, OCTOBER, 1967-Dept.
of HEW, Social and Rehabilitation Service.
5. PUBLIC WELFARE PERSONNEL, 1965
U.S. Dept. of HEW, Welfare Administration, Bureau of Family
Services, Division of Research (May, 1967).
6. WHO WAS POOR IN 1966, prepared by Mollie Orshansky, Division
of Program and Long Range Studies, Research and Statistics Note,
U.S. Dept. of HEW.
7. PROGRAMS IN AID OF THE POOR-By Levitan, Sar A., Public
Policy Information Bureau, Upjohn Institute.
PAGENO="0051"
491
8. EXPERIMENTAL STUDY OF THE NEGATIVE INCOME TAX
(IN NEW JERSEY)-The Institute for Research on Poverty, Uni-
versity of Wisconsin.
9. MANPOWER REPORT OF THE PRESIDENT-The U.S. De-
partment of Labor.
~O. REPORT OF THE ADVISORY COUNCIL ON PUBLIC WEL-
FARE.
11. WELFARE AND THE INCENTIVES ISSUE, June, 1967-by
Weymar, Helmut F.
12. 19,000,000 CHILDREN COUNTED OUT BY THE AFFLUENT
SOCIETY-by Orshanksy, Mollie.
13. TAX POLICY AND CHILDREN'S ALLOWANCES-by Brazer,
Harvey E.
14. PUTTING THE HARD-CORE UNEMPLOYED INTO JOBS-A
Report of the Business Civic Leadership Conference on Employ-
ment Problems.
15. RURAL POVERTY CONFERENCE PROCEEDINGS-National
Association for Community Development, February, 1967.
16. News Articles from:
The New York Times
Washington Post
New York Post
The Reporter
U.S. News and World Report
Wall Street Journal
PAGENO="0052"
APPENDIX 2
CHALLENGE AND RESPONSE
A REPORT TO GOVERNOR NELSON A. ROCKEFELLER BY THE NEW YORK STATE BOARD
OF SocIAi~ WELFARE-MAY 1968
Two years ago the State Board of Social Welfare determined to commemorate
its 100th anniversary by a search for better answers to today's social prob-
lems. The Governor's Conference on Public Welfare at Arden House, in which
100 of the nation's leaders in industry, labor, news media, philanthropic founda-
tions and government participated, was the first step in that search. The ef-
fective work done by the Steering Committee of that conference was a second
step. The regional conferences held by the Board throughout the State were
still another. The hundreds of citizens, agencies, welfare recipients and others
who addressed our Board made a further contribution.
The conclusions our Board has reached do not constitute a final response to
the challenge. But they are a better response than we had two years ago.
Those answers are stated here as principles subject to continuing study, re-
view and refinement. But they are principles which will chart the course of
this Board as it starts the 2nd century of its search for the better society for
all the people of this state.
HAS PERLIC WELFARE FAILED?
It has been repeatedly suggested in recent years that the public welfare sys-
tem in the United States is inadequate. Such criticisms are valid only if the
system is to be judged by whether it has eradicated all the root causes of wel-
fare and dependency. It has not done so. We still have poverty in America.
We still have poor education, poor housing, poor health, racial discrimination,
unemployment, underemployment, technological displacement, and all the other
causes of dependency.
But the welfare system was not intended to solve these problems. It was in-
tended to alleviate the gross effects of poverty-to prevent people from going
hungry, from being ill-clothed, from being without shelter. In New York State
the system has done this and more-it has provided the social services which
have helped many of the poor to achieve self-support and self-care and have
strengthened family life. In New York State the basic standard of public assist-
ance-which is, in very real terms, a guaranteed minimum income-is ~3,650 a
year for a family of four. This exceeds the commonly accepted national level
of poverty. And this state pays the highest grant in the nation for Aid to De-
pendent Children.
Moreover, we review our standards each year to keep them current. The cost
of living in New York City has increased 11% since 1963; our standards have
increased 12%.
Nor does New York State have the restrictive or punitive policies that still.
unfortunately, exist in many other parts of the nation. There is no durational
residence law here, no "man in the house" rule, no unwarranted invasion of
the right to privacy of welfare recipients.
Our state system, therefore, is not inadequate if it is judged by what it is
intended to do rather than by the hope that it will eliminate poverty and
dependency.
Having said this, the State Board of Social Welfare recognizes that a number
of improvements should be made promptly in the conduct of the present welfare
system. The first part of this report lists such changes.
The Board also recognizes the need for consideration of various proposals that
would go far toward changing the system itself. The second fart of this report
addresses itself to these proposals, most of which require federal rather than
state action.
(492)
PAGENO="0053"
493
However, the Board does not want the discussion of these needed changes to
undermine the confidence of the taxpayers and the sense of security of the wel-
fare recipients in our New York programs, which last year aided more than 1.3
million of our needy citizens at a total cost of $1.8 billion.
MONTHLY SECURITY GRANTS FOR THE AGED, BLIND, AND DISABLED
There have been many suggestions that the aged, blind and disabled be trans-
ferred from public welfare to the Social Security Administration. Such a transfer
would require action by the Congress.
To accomplish the objectives of this proposal in New York State and to test
procedures, the Board has requested the State Department of Social Services to
inaugurate, in selected social services districts, a system of monthly security
grants to the aged, blind and totally disabled based on their needs as determined
by a certified application without preliminary verification.
Mandated periodic verification of the eligibility of these recipients will be
eliminated, since by definition their condition is not likely to change for the rest
of their lives. Instead reverification will be performed on an "as needed" basis.
A separate service unit will be established by the Department, where a variety
of social services will be available to the aged, the blind and the totally disabled.
Thus the system will differentiate between the maintenance of income and the
delivery of services.
This new system will add dignity and simplicity to the care of this group, will
eliminate the caseload concept, and will create a service-oriented method of
resolving individual problems as they arise.
CERTIFIED APPLICATIONS IN GENERAL
The Board has been urged to authorize the replacement of the present process
of detailed verification by the use of certified applications. This is the recom-
mendation of the Arden House Conference Steering Committee, concurred in by
the participants at the Forum conducted by the Committee for Economic De-
velopment as well as by many who appeared at the Regional Conferences. It is
now in use in the States of California and Maine, and was mandated by our
State Legislature in the Medical Assistance program.
Applicants and recipients are the primary source of information as to their
own needs, income and other resources. A form asking for essential information,
completed by the applicant or recipient who certifies that it is accurate and com-
plete, would permit a simple and quick determination as to his eligibility. As at
present, there would be follow-up spot-checks and audit procedures.
*This system would reduce the time lag in action on the application, would
lend dignity to the applicants and recipients and would permit more effective
use of present personnel in the rendition of needed care and services and might
delay or reduce the need for enlarged staffs.
Accordingly, the Board directs the Department to prepare and conduct an
adequate demonstration project, including both metropolitan and upstate dis-
tricts, designed to provide more complete information on the basis of which an
evaluation can be made of a certified application system.
SEPARATION OF SERVICES AND ASSISTANCE
The Board believes that true social services should be separated from the
function of determining eligibility and granting financial assistance. This sep-
aration will result in more effective use of trained social workers in the work
for which they have been trained, and will undoubtedly reduce staff turnover.
The Board has asked the State Department of Social Services to expedite the
planning and installation of such a separation of services throughout the state.
In view of the severe shortage of professional social work personnel, it is es-
sential that scarce skills be put to use where the need is greatest and where
results can be expected to be most rewarding. At the same time, job functions
will be organized in such a way that staff with a greater range of education and
experience can perform effectively.
Just as it is imperative to make the best use of trained social workers, it is
also imperative to make full use of less experienced persons for work that does
not require advanced education and experience. The Board has already adopted
a Rule making provision for Community Services Aides in local social services
PAGENO="0054"
494
departments. in which educational requirements are all but eliminated and pre-
ference is given to persons of low- income or dependent on public assistance.
The Board is also examining intermediate social services positions with a view
to utilizing an intermediate range of experience and education. including grad-
uates of tw-o-year colleges.
DAY CARE
The Board believes that it should be the policy of the State of New York that
every pre-school and young school-age child who needs day care services should
have such services available to him.
These services include both group and family day care. Priority for day care
services should be given to children of low income and ADC families.
State matching funds are now- available to local social services districts for
the direct provision or purchase of day care but thus far there has been little
utilization of these funds to expand these services.
The Board's rules permit day care for infants beginning at eight weeks of
age, and the Board solicits requests for establishment of group day care for in-
fants in acceptable programs as w-ell as for day care services for older children.
One of the principal reasons for the delay in development of day care centers
has been lack of adequate physical facilities. The Board recommends to the
Governor and the State Legislature that public capital funding be made avail-
able-as is the case in other areas of special need, such as housing and nursing
homes-for construction and rehabilitation of needed day care facilities.
The Board is now revising and modernizing its Rules on day care, in order to
permit full utilization of all possible facilities.
No child `in the States of New York who needs day care should be deprived of
such services, which should be free to the needy and chargeable to those fami-
lies which can afford to pay.
WORK INCENTIVES
The Board urges the State Legislature to adopt legislation that w-ould estab-
lish an across-the-board incentive allowunce for welfare recipients w-ho obtain
employment, regardless of the source of their earnings.
The Board is convinced `that this action will motivate people to accept em-
ployment and that it will eventually reduce expenditures for publlc assistance.
It would remove the present "dis-incentive," whereby a person who receives
public `assistance has a dollar deducted from his grant for every dollar he earns.
This means that a welfare recipient has no practical motivation to seek a job,
since his financial condition will not be improved if he gets one.
The Board is convinced that incentives to work are an important and desir-
able stimulant to poor people to enter the labor force. The Board has consistently
urged the federal government to permit welfare recipients to retain a share of
their earned income as a work incentive. The Board approved an experiment in
New York City which allows members of AI)C and TADC families who find em-
ployment to keep the first $8.5 per month of earnings plus 30 percent of any addi-
tional sum. Therefore we applaud the recent action of Congress in adopting an
incentive program in the 1967 Social Security Act amendments.
Unfortunately, New York States has not followed suit. and incentive allow-
ances have been applied only to federal employment programs but not to private
employment.
FAMILY PLANNING
The Board considers family planning an essential service which should be
available regardless of a person's economic status. It recognizes that the avail-
ability of family planning services does not take the place of, or obviate the need
for, personal motivation. But it has required-in a Rule adopted on December 23,
1966-every local social services district to make known to welfare recipients
generally the availability of family planning facilities and services. The Rule
also allows, with adequate protection of moral scruples, caseworkers to inform any
recipient of Aid to Dependent Children and Home Relief who is married or is
the head of `a family of the availability of such services. This Rule, adopted
w-ell in advance of the recent federal requirements concerning family planning
information and services, is in full compliance with those requirements.
The Board is now considering a further extension of its rule to include not
only recipients of public assistance but also recipients of care or services who
are married or heads of families.
PAGENO="0055"
495
The Board's continued interest in family planning is further evidenced by its
persistent monitoring of the effects of its Rules, by its concern with Departmental
implementation of family planning policies, and by its efforts to interest related
state agencies, such as the Departments of Health and of Education, to do all
possible to create viable, coordinated family planning services and facilities.
Moreover, the Board intends to continue to make known to the local social
services districts its deep concern with their implementation of its family
planning Rule.
SOBS AND JOB OPPORTUNITIES
Since a job is the cornerstone upon which most families construct wholesome
participation in community life, the Board urges all departments of governments,
as well as private employers to be innovative in creating opportunities for the
employment of welfare recipients in meaningful jobs.
This is the best solution to the problem of dependency, for any employable or
potentially employable person. It should be the public policy of our state and our
nation to provide jOb opportunities for all people and to adjust our economic
planning, our laws and our attitudes to attain that end.
The development of new careers for the poor, and the utilization of non-
professionals as Community Service Aides in local social service departments,
point the direction in which we must continue to move.
The Board reaffirms its conviction that those who are forced to turn to the
community for assistance in meeting their basic needs for food, clothing and
shelter have within themselves the potential, common to all men, of productive
contributions to economic and social life.
We recognize that the complexity of our industrial society demands a higher
level of training to unleash the potential which exists beneath the surface. This
calls for enlarged training programs to tap inherent abilities. Hiring standards
and testing procedures must therefore be modified if those welfare recipients
who are the most deprived `are to be brought into the labor force. Learning
to do the job must go h'and in hand with earning. Affirmative action in qualifying
the unqualified is required now of both the public and the private sector.
One specific means of assisting poor people `to find and keep jobs is to assure
them of adequate transportation between home and work.
TECHNOLOGY
The Board urges expanded application of modern technology, including systems
analysis and electronic data processing, to the problems of social services and
the administratioaof their delivery to `the needy.
It recognizes that these technologies may initially be more adaptable to the
administrative than to the service function, but it feels that concerted explora-
tion of both is warranted.
Although adoption of full state administration of public welfare would make
application of modern technology much easier, the. delay in establishing such a
system should not inhibit the rapid use of such technologies.
The Board realizes that this approach will require funds for consultants, pro-
gramming and equipment, and therefore urges Department of Social Services to
include appropriate funds for this purpose in its budget for the next fiscal year,
or to explore alternative means of funding.
RESEARCH
The Board of Social Welfare affirms the need for research as a basis for in-
formed policy decisions.
It is essential to expand the existing information system concerning de-
pendent children and adults, and concerning welfare services and programs.
It is equally important `to extend research into the conditions that predispose
a person toward dependency in public assistance, and to undertake systematic
evaluation studies to assess the effectiveness of welfare programs.
To enable a significant expansion of research, commensurate with the scope
and importance of welfare programs, sufficient public and private funds must
be made available and conditions provided to attract qualified research scientists.
The Board requests the Department of Social Services to identify the require-
ments for a greatly expanded research program, to make recommendations con-
PAGENO="0056"
496
cerning necessary action, and to develop, expand and foster research in public
welfare.
THE VOICE OF THE POOR
The voices and opinions of welfare recipients, both individuals and organized
groups, have proved to be most effective and useful in Board deliberations.
The Board has held public hearings and conferences as well as informal con-
versations with such persons and groups, and these methods will be continued
by the Board as an aid in effecting improvements in the welfare system.
The Board is convinced of the wisdom of such participation of welfare recipi-
ents and will continue to look for new and imaginative ways to implement this
conviction.
NEIGHBORHOOD SERVICE CENTERS
The Board agrees with suggestions from a number of individuals and groups
that welfare services should be brought to the people w-here they live, by means
of neighborhood centers such as already exist in a few neighborhoods of a
few cities in the state. These centers could also be open evenings and on week-
ends, for the convenience of the people they are intended to serve.
Moreover, the Board urges that city and county governments consider the
establishment of neighborhood service centers that include, in addition to wel-
fare services, such other information and referral services as health, employ-
ment, law, housing and family counselling. This w-ould be an effective means
of bringing the services of government to the people w-ho need them most, and
a further demonstration of the flexibility of democratic society.
LEGAL SERVICES FOR NEEDY PERSONS
For several years the Board has urged the passage of legislation to assure
that legal representation is available to applicants and recipients of public as-
sistance in the establishment of their welfare rights. To this end the Board
urges the passage by the State Legislature of Senate Intro 5731 and Assembly
7058, now pending.
This legislation is a response to the growing recognition of the need for
legal services for the poor as a matter of justice and right.
Federal financial participation is available for this program, and the Board
strongly urges its enactment into law.
FLAT GRANTS
The State Board directed that the budgetary method be simplified last year
to establish basic amounts of public assistance allowance based on family
size and the age of the oldest child. This basic money amount includes food,
clothing, personal incidentals, household supplies, school expenses, laundry for
recipients of Aid to the Aged, Blind, and Disabled, fuel, utilities and sales taxes.
The only item which must be added for basic maintenance is the amount for
rent.
Since we allow for special needs in certain circumstances such as special
diets or moving expenses, w-hich are not common to all recipients, additional
money amounts must be added in such situations.
Nevertheless, we are convinced that a flat payment of assistance based upon
family size is the most efficient and effective method of aiding poor peopis
within the present welfare system. To this end w-e urge the Department to con-
tinue to achieve this goal.
USE OF VOLUNTEERS
The Board, which is itself composed of citizens who are not professionals
in the field of social work, is deeply committed to the use of volunteers wher-
ever possible in furnishing needed supporting services to welfare recipients.
Since 1905 the State Department of Social Services has had a Senior Welfare
Consultant on Volunteer Services, the first such post in a Department of Welfare
in any state. The primary functions of the Gonsultant are to organize volunteer
services in local agencies, plan volunteer programs, and train supervisors directly
responsible for the work of volunteers.
The Board hopes that there will be ever wider use of this consultative service
for a broader and more effective involvement of volunteers in helping the needy.
PAGENO="0057"
497
UNIFORM NATIONAL STANDARDS
The Board urges the Congress of the United States to establish realistic na-
tional standards for public assistance which would provide a floor below which
no person in the land would be expected to live.
One of the principal weaknesses of the present welfare system is that it does
not assure every needy American that he will be protected in his essential right
to food, clothing and shelter. The lack of federally mandated standards causes
a wide variation in public assistance benefits in the fifty states. Such variations
range from granting a small percentage of a minimum subsistence standard in
some of the poorest states to meeting 100% of basic needs on a more liberal
standard in states like New York.
Only Congress can ëorrect this indefensible injustice. It can mandate national
standards, and in doing so it would necessarily be required to provide a federal
reimbursement formula which would take into account the economic capacity of
the state to finance such a standard.
ELIMINATION OF "CATEGORIES"
The Board has long urged the elimination of the so-called federal "categories"
of public assistance'.
These "categories" have been embedded in the federal public assistance pro-
gram., dividing up needy people by age or by the condition which created their
need. There are dependent children, and families of dependent children, and
blind, and aged, and disabled and persons on home relief receiving general
assistance.
This jungle of categories complicates a:dministration and creates more prob-
lems for people who already have problems enough.
The Board has consistently advocated action by. `the federal government to
establish a single category of assistance based upon need. Such action would
make federal financial aid available to all needy persons, including home relief
recipients and poor children in foster care, who are not now eligible for federal
assistance.
In 1962 the Board combined the categories of Aid to the Aged, Aid to the Blind,
and Aid to the Totally and Permanently Disabled into a single category known
in the State of New York as Aid to the Aged,. Blind and Disabled (AABD).
Moreover, the standards of assistance in this state have been made uniform for
all b'asic items in all categories of assistance.
THE PUNITIVE ASPECTS OF THE 1967 SOCIAL SECURITY ACT AMENDMENTS
The Board opposed `the action of Congress last year in amending the Social
Security Act, and today urges the Congress to repeal or modify the restrictive
and punitive provisions of these amendments.
The Board repeats its urgent request that `the ADC "freeze" be repealed, that
children of unemployed mothers' as well as fathers be aided, that ADO payments
be permitted to supplement Unemployment Insurance Benefits when these are
not sufficient to meet basic needs, and that mothers of dependent children be
encouraged to work only when it will be in the best interests of `their children.
As thi's law now stands, it shows a hostility toward needy people that the
Board cannot believe to be a reflection of the American conscience.
The Board's views on this legislation have been transmitted to `the Congress
and to the Department of Health, Education, and Welfare in the past, and the
Board repeats them today, with equal earnestness.
INCOME MAINTENANCE
The Board has given much thought to the various proposals designed, in effect,
to replace the present system of public assistance with a new form of income
maintenance. These new proposals are intended to separate the provision of
financial support to needy persons from the provision of social services to such
persons, and to provide a more dignified system of delivery of the funds required
for food, clothing, shelter and other basic human needs.
In recent months most Of the discussion of such a major change has focused
on the proposal of a negative income tax and on the proposal of family or chil-
PAGENO="0058"
498
then's allowances. These are, however, other methods of approaching the same
goals, including some form of "income insurance" which would be based upon a
vast enlargement of the insurance aspects of the federal Social Security system.
Any such change in the basic method of providing essential income to Amen-
cans in need would obviously have to be made by the federal government. It
would be impractical for a single state-even as large a state as New York-to
undertake such a change on its own.
The Board believes that these proposals deserve earnest, serious and prompt
consideration by all citizens and by the Congress. However, it urges that any
such consideration should keep in mind the following reservations;
1. That it would be a disservice to the inhabitants of the State of New York
if a nationwide system of income maintenance were to be adopted that, while
benefiting needy persons in other parts of the country, worked to the disadvan-
tage of the affected persons living in New York State. This state has one of the
highest levels of public assistance in the country, in the various categories of
assistance, and in some categories the highest of any state. This is not a matter
of generosity on the part of the state's taxpayers, but only a clearer recognition
of the responsibility one citizen has to another in a civilized society. It would be
a tragedy if, in the effort to improve the condition of the poor throughout the
country, the condition of the poor in New York State were to be made worse.
2. That there must be safeguards against the use of a major change in the
form of income maintenance as an unintential device to reduce the effectiveness
of those social programs which are intended to assist people toward the dignity
and self-respect that comes from self-support.
No form of income maintenance can take the place of reinforcement of exist-
in.g programs and the creation of needed new programs for employment oppor-
tunity, decent housing, improved health care, educational opportunity and
elimination of discrimination.
3. That we must guard against the creation of a permanent underclass of
Americans whose chief characteristic will be their dependency. The objective
should be to use the device of income maintenance as a foundation on which to
build a system of social services designed to eliminate the existence of any group
of persons relying upon public assistance, under whatever label.
The Board has not reached the point, in its own deliberations, of agreeing on
any particular program of income maintenance that would replace the present
system. However, it is continuing its study of such proposals, and will express
its views to the public and to the Congress when and if it concludes that one or
another of the proposals, or a combination of them, would be in the best interests
of all, and particularly of the poor people in this State and nation.
CoNcLusIoN
We are keenly conscious of the intensive and thoughtful consideration given
by a large number of people, many of them new to social welfare, to the prob-
lems of dependency in our nation and their possible solutions.
Undoubtedly the most significant aspect of the Arden House Conference w-as
that it represented, as Governor Rockefeller characterized it, "a unique and
unprecedented concentration of American leadership on the problem of public
welfare." It had been the aspiration of the Board to enlist, perhaps for the first
time, the real interest and involvement of our top national industrial leader-
ship, and then to secure from the members of that group a commitment to con-
tinuing participation in the resolution of the problems of public welfare. These
objectives have been achieved beyond our wildest dreams.
In the regional Conferences there developed a healthy, continuing aw-areness
on the part of both well known and new spokesmen that these were the problems
of our whole society and that every sector of our community life shares respon-
sibility for their solutions. Reflecting a readiness to comprehend the facts, to
understand their significance, and to eschew a merely visceral reaction, the
public displayed a truly enlightened climate of opinion and concern. The New-
burgh syndrome has been replaced by a compassionate, informed but tough-
minded regard for people rather than an anxiety for dollars only. And the busi-
ness of public welfare is no longer the exclusive concern of the social services
establishment. This augurs well for all of us, recipient, worker and taxpayer.
PAGENO="0059"
APPENDIX 3
NO ONE OAN STOP IT-~EXGEPT US
THE 101sT ANNUAL REPORT OF THE NEW YORK STATE BOARD OF SOCIAL WELFARE
AND THE NEW YORK STATE DEPARTMENT OF SOc'L&L SERvIcEs, 1967
STATE OF NEW Yoiu~
NELSON A. ROCKEFELLER, Governor
STATE BOARD OF SocIAL WELFARE
HUGH R. JONES, Chairman
STATE DEPARTMENT OF SOCIAL SELvIcEs
GEORGE K. WYMAN, Commissioner
LETTER OF TRANSMITTAL
MAY 15, 1968.
To Governor Nelson A. Rockefeller and the Members of the Legislature of the
State of New York.
GENTLEMEN: In accordance with the provisions of the Social Services Law
of New York State, and at the direction of the Board, I herewith submit to you
the 101st Annual Report of the Board and the State Department of Social
Services.
Respectfully yours,
HUGH R. JONES, Chairma'i~.
A DEDICATION
This 101st annual report of the New York State Board of Social Welfare and
the New York State Department of Social Services is dedicated to the memory
of Antonio A. Sorieri, First Deputy Commissioner of the Department, who died
July 11, 1967.
Tony Sorieri devoted his life to America's destitute and gained national recog-
nition as an eloquent spokesman for these muted millions. His contributions to
their welfare will continue through the great structure of public social services
he did so much to build.
Well might the humble and the disadvantaged everywhere say of him, "So
worthy a friend."
(499)
PAGENO="0060"
500
EXPENDITURES IN PUBLIC WELFARE PROGRAMS SUBJECT TO BOTH FEDERAL AND STATE AID OR TO STATE AID
ONLY, NEW YORK STATE, 1967
[In thousandsj
Class of expenditure
Assistance and care
Medical assistance for the needy._
Old-8ge assistance
Aid tothe disabled
Assistance to the blind
Aid to dependent children
Home relief
Day care
Care of adults in public homes
Care of adults in public shelters_ - - -
Care of children in public shelters..
Fostercare of children
School lunch and milk
Juvenile delinquents in local facili-
ties
Burial costs and other assistance
programs -
Local administration
New York State New York City Upstate
Amount Percent Amount Percent Amount Percent
Totalexpenditures
SOURCE OF FUNDS
Federalaid
Stateaid
Localfunds
Medical assistance for aged in mental
hospitals
Mental hygiene family care
Juvenile delinquents in State training schools
State office administrative costs -
Expenditures in locally-administered public
welfare programs
OBJECT OF EXPENSE
`$1,867,844
100.0 $1,169,376 100.0 $513,522 100.0
698,089
645,703
524,052
37.4 421,423 36.0 183,978 35.8
34.6 381,406 32.6 172,038 33.5
28.0 366,547 31.4 157,506 30.7
161,892
1,659
16, 542
21,395
8.7
0.1
0. 9 10, 072 0. 9 6, 470 1. 3
1.1
Assistance and care
Subsistence payments
Medicalcosts
Local administration
PROGRAM ANALYSIS
1,461,506
78.2 1,011,857 86.5 449,649 87.5
854,062
607,444
45.7 642,766 55.0 211,296 41.1
32.5 369,091 31.5 238,353 46.4
204,850
11.0 147,447 12.6 57,403 11.2
Subject to both Federal and State aid
1, 666, 356 89. 2 1, 159, 304 99. 1 507, 052 98. 7
Local administration -
Subject to State aid only -
Assistance and care
1, 352, 446
72. 4
930, 120
79. 5 422, 326 82.2
1, 208, 732
64. 7
822, 883
70. 3 385, 84975.1
606, 668
72, 503
42, 079
3, 964
483.518
32. 5
3. 9
2. 2
0. 2
25.9
368, 311
50, 105
29, 887
2, 869
371,711
31. 5 238, 358 46. 4
4. 3 22, 398 4. 3
2. 5 12, 192 2. 4
0. 2 1, 095 0. 2
31.8 111,806 21.8
143, 714
7. 7
107, 237
9. 2 36,477 7.1
313,910
16.8
229,184
19.6 84,726 16.5
252, 774
13. 5
188, 974
16. 2 63, 800 12. 4
99, 937
7,061
11,010
2,132
7,406
90, 198
18,668
5. 4
.4
.6
.1
.4
4. 8
1.0
77, 015
7,061
2,280
2,132
7,406
64, 421
18,640
6. 6 22,922 4. 5
.6
.2 8,730 1.7
.2
.6
5. 5 25, 777 5. 0
1.6 28
13, 980
.7
8,444
.7 5,536 .11
2,382
.1
1,575
.1 807 .1
61,136
3.3
40,210
3.4 20,926 4.1
~Since costs for medical assistance for aged in mental hospitals, mental hygiene family care, and State administration
appear only in the New York State column, the sum of New York City and Upstate does not yield the State total shown.
PAGENO="0061"
501
MONTHLY AVERAGE NUMBER OF PERSONS IN SPECIFIED PROGRAMS
Program
New York
State
New York
City
Upstate
Total
1,292,260
784,831
507,429
Medical assistance for the needy
Also received money payments
Medical only
460,102
147, 863
312, 239
200,393
259,709
95,846
52,017
104,547
207,692
Old-age assistance
Aid to the disabled
Assistance to the blind
Aid to dependent children
Home relief
Children in foster care
69,657
36,960
3,126
721, 580
153,238
47,990
44,909
24,682
2,118
525, 871
109,959
25,275
24,748
12,278
1,008
195,709
43,279
22,715
1967 AND 1966
In 1967 the social services system in the State gave assistance and care to a
monthly average of 1,292,260 persons at a total cost in local, State, and federal
funds of $1,867,844,000, $606,668,000 of which was spent for medical care for
those persons, who included a monthly average of 259,709 individuals who
received medical care (Medicaid) only, not public assistance grants.
In 19643 a monthly aventge of 969,540 persons received assistance and care at a
cost of $1,200,531,000, $356,019,000 of which was spent for medical care for those
persons, who included a monthly average of 80,114 individuals who received
Medicaid only (for the eight months that program was in operation) and a
monthly average of 35,878 individuals who received Medh~al Assistance for the
Aged (for the four months that. program was in operation before Medicaid suc-
ceeded it). In addition, several thousand men, women, and children received
hospital care as medical indigents during the first quarter of 1966 before Medic-
aid legislation w~s er~aoted in New York &ate.
The monthly average number of persons given assistance and care in 1967 was
322,720 more than in 1966. Over half of the increase, 179,003, were welfare recip-
ients, almost all of whom were in the programs of aId to families with dependent
children and home relief. The other 143,717 were Medk~aid recipients who did
not receive public assistance grants.
The 1967 expenditure was $667,313,000 more than the 1966 expenditure. Almost
two-thirds of that increase, or $416,664,000, was for public assistance and care.
The remainder, $250,649,000, represented increased medical assistance expendi-
tures due to 12 months of Medicaid instead of 8 months, rising medical costs,
and other factors.
TABLE OF CONTENTS
Letter of Transmittal 499
Dedication 499
Expenditures in Public Welfare Programs 500
I. A Proposal: Employability Insurance 502
II. The State Board in Action 507
III. Medicaid 513
IV. About People 515
V. About Programs 516
Vi. No One Can Stop It-Except Us 518
Appendixes:
A. The State Board of Social Welfare 519
B. The Department of Social Services 519
C. Award Winners 519
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I. A PROPOSAL: EMPLOYABILITY INSURANCE
(By George K. Wyman, Commissioner, State Department of Social Services)
Nineteen sixty-seven was the year in which 87 leaders of our economy-from
industry, business, labor, news media, charitable foundations. and government-
studied the problems of public dependency in the United States under the spon-
sorship of the Governor's conference on Public Welfare-"a unique and unprece-
dented concentration of American leadership on the problem of public welfare,"
as Governor Nelson A. Rockefeller characterized the event.
A summary of the ideas and proposals developed by `these distinguished citizens
is included in this report.
This unusual achievement and similar developments which follow-ed it that year
and this year-such as the `National Advisory Commission on Civil Disorders, the
President's Commission on Income Maintenance, and the National Alliance of
Businessmen-demonstrate that a large, responsible segment of the private sector
is aware of the dimensions and implications of widespread want in the social
pileup of millions of families who have been segregated from the mainstream of
American life, and are involved in action to correct the causes of want: lack of
job skills, illiteracy, the changing work requirements of a fast-changing economy,
racial discrimination, and poor health.
The urgent need for such action is clearly evident. For still another year public
welfare rolls and costs continued to climb everyw-here in the United States,
despite anti-poverty programs and all other social action. In the last five years
the Nation's public welfare population increased from 7.5 million recipients to
over 9 million-95 percent of whom are children and those who take care of
them, and aged, blind, disabled or otherwise handicapped persons. And costs rose
from $5 billion to $9 billion.
A SOCIAL AUDIT OF AMERIcA: 1968
Indeed, welfare and poverty programs constitute one of our fastest-growing
industries.
And where do all these investigation-certified destitute come from, year after
year after year, in ever-increasing numbers? From these groups, among others:
(1) The 28 million men, women, and children-12 percent of the white
population and 40 percent of the non-w-hite-who live below- the so-called
poverty level of $3,335 annually for an urban family of four.
(2) The estimated 30 million adults and children who live in our slums.
(3) The 11 million illiterate persons.
(4) The 3.3 million unemployed.
(5) The 9 million adults who lack work skills.
(6) The 12 million persons disabled by chronic illness, a handicap, or
conditions that require hospital or institutional care.
(7) The 20 million mentally ill.
(8) The 5.5 million mentally retarded.
(9) The 6.5 million alcoholics who are unable to hold a job or run a home.
Obviously, unavoidable duplication exists in this brief social audit because a
great number of persons are multiple-handicapped: many are illiterate, lack
work skills, live in slums, are in poor health, and are otherwise too handicapped
to go it alone in a sophisticated, complex society.
But the net, unduplicated toll of decades of poor living standards. poor health,
and poor preparation for life is still staggering. Furthermore, a rising popula-
tion means more people damaged by that poverty of mind, body, and spirit; and
in the last eight years our population rose by 20 million.
Such stern facts of life, especially as they apply to our non-white population,
prompted the Presidents Commission on Civil Disorders to warn: "Our nation
is moving toward two societies, one black, one while-separate and unequal."
It would be more accurate to say that our nation has consisted of two societies,
separate and unequal, for decades. Today 1 in every 14-both w-hite and black-
live in an ever-deepening subculture. a "separate and unequal" underworld of
deprivation. This schizophrenic, double-standard way of life represents a fiscal
and social burden that no society, however great its Gross National Product, or
its apathy, can long tolerate.
About apathy. Everybody seems to agree that welfare recipients arid the
millions of other poverty-stricken need to be motivated. They do. Any human
being condemned to life in a hovel, without even the resource of hope, needs all
PAGENO="0063"
503
the motivation he can get. But the rest of us need motivation, too-and enough
of it to take whatever action is necessary to stop this incredible stunting,
deterioration, and destruction of the character, spirit, and potential for decent
living of so many millions of our men, women, and children.
Bitt worse than apathy. Nineteen sixty-seven was the year that the Federal
Government passed legislation to withhold federal funds for the support of any
and all needy children who might be unlucky enough to be among the percent-
age of children to be excluded by an arbitrary federal ceiling on such aid. The
children who would lose federal aid in this grim lottery would have to look to
the states and the localities for the necessities of life; and many of these
states and localities, even with federal aid, provide only a fraction of the
living needs of destitute children and adults. (In one state the average monthly
payment for a family is $35-for all of its needs: food, rent, clothing, etc.)
Such federal legislation seems to indicate the frustration and inability of
the Government to deal with the critical problem of massive destitution.
Another example of this policy of retreat is the Federal Government's cut-
back of its Medicaid program for individuals and families not on welfare who
cannot pay for needed medical care. That cutback is to be carried out by con-
gressional ceilings based upon public assistance levels, however inadequate
those levels might be, and ar2, in many states. As a result, millions of Americans
living below the poverty line will not be able to qualify for federally aided
Medicaid, which means they will be deprived of needed medical care. This in the
face of a shocking toll of sickness and disability which accounts for some 40
percent of all welfare costs in New York State and elsewhere throughout the
Nation. Deprived of federal funds, New York State was forced to cut back its
program, too. Some 2,200,000 persons potentially eligible for help in case of
illness and 1 million beneficiaries were cut out of the program.
Does this federal approach to our gravest internal social and economic prob-
lems reflect a domestic social isolationism that augurs not less, but more, wel-
fare and other poverty burdens? Is it meant to punish public welfare recipients
and other needy by depriving them of help because they are unable to cope with
dependency-making factors over which they have little or no control: sickness,
disability, dependent infancy and childhood, old age, illiteracy, unrealistic job
requirements, discrimination, and all the rest of it?
Hopefully not. What it does indicate, perhaps, is that government must rethink
a lot of its services-welfare, health, education-new and old. And the private
sector must do likewise, especially in its recruitment, job-training, health benefits,
and other areas. Out of that reconsideration should come recognition that the
public and the private `sectors will have to fit their policies and operations to
meet the demands of 19f38 and the years ahead.
If every physically and mentally able individual is to be given an opportunity
to earn a living, the leadership responsible for our economy, for its work
requirements, and for the availability of the educational, vocational, health,
and other services our citizens require to meet those work requirements, must
make those services available so that the opportunity to earn a living is a
fact and not a theory.
* ABOVE ALL ELSE, HOW TO EARN A LIVING"
To do this we need to regroup, refocus, and recast a number of welfare,
health, and educational activities; contract to private industry, labor, and other
private sectors some activities now conducted by government or not at all;
and enlist the active cooperation of thousands of citizen organizations in these
public-private `operations.
This proposed reorienting, rebasing, and extension of existing welfare, educa-
tion, and health activities might be called employability insurance. We have
many kinds of insurance now, of course-unemployment, old age, survivors,
health, disability. But all of them are, in one way or another, tied to unem-
ployability-as they should be. But what we need is employability insurance, a
program of coordinated action in key fields focused on employability, on making
and keeping people employable and employed.
Employability insurance would begin in the school, where every child would
be taught-above all else-how to earn a living. New, revitalized, and extended
work-oriented instruction and guidance would be given, through management-
labor teams, in actual work settings-stores, offices, shops, hospitals, farms,
restaurants, factories-under the immediate direction of managers, foremen,
and other supervisors and employees in commerce and industry.
PAGENO="0064"
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All young people would be required to complete sufficient academic education
and job training to equip them for available full-time or part-time work oppor-
tunities wheii they leave school for employment or they continue with higher
education but need employment.
Students of appropriate ages might be given school credits for working full-
time or part~time, for limited periods; at approved jobs in industry, business
or government. Such practical education and earn-a-living training would develop
self-reliance, expose them to the realities of the world of work, teach them some-
thing about earning and managing money, and help them to think about and
prepare for their future.
Thus every child would learn firsthand about our economy: what makes the
w-heels turn, why `and how one must earn a living, the many commercial, indus-
trial, technical, and professional opportunities that exist, and some important
facts of modern life, including this: many people will have to undertake two or
three careers in their working lives because our fast-changing economy makes
more `and more occupations obsolete.
In a matter of months of full-time vocational study and training, young people
could be taught enough to fill part-time or full-time job vacancies in industry
or commerce while they are getting an education, after they have completed it,
or if they drop out.
All young people would be required to complete sufficient academic and job
training to earn a living.
The work training and guidance, the content of vocational courses, and other
work-related activities could be turned over to an agency comprised of represent-
atives of various business, technical, and professional fields, labor, and govern-
ment, as a public-private enterprise.
Through this agency, employers might be encouraged to adopt new patterns of
employment and recruitment, especially in view of `the fact th'at, within a year,
half of the 200 million people in the United States will be under 2~ years of age
and their life expectancy will be much greater than that of any group of Ameri-
cans in :hi~tory. These facts have economic and social implications for all of us,
and unless commerce, industry, labor, and government plan for effective utiliza-
tion of this unprecedented manpower, those implications w-ill soon become eco-
nomic and social problems of unguessed dimensions.
A long word of caution. Over-emphasis on getting a "good job" (by getting a
"good education") and too much warning about "dead-end jobs" can produce
unfortunate results.
Obviously, a college education is no guarantee of a "good job," and not every
young person is "college material." Equally apparent, there will continue to be
millions of jobs, and self-employment opportunities that do not require years of
academic Study-and never will. Many of these pursuits may `be characterized
as "dead-end," `but millions of Americans start in this way, progress to other
work, and climb as near the top of the ladder as conditions permit, in the great
American tradition.
Many others, whose limitations and circumstances prevent such progress, at
least have the satisfaction of earning their own living, modest though it be, at
tasks, that must be done in every town, city, and county in the nation, if the
wheels of our economy are to be kept turning.
If shunning of "dead-end jobs" should increase and become widespread, we
might find ourselves with additional hundreds of thousands of job vacancies and
unrealized self-employment opportunities-as well as continued high-level, and
increasing, welfare rolls. This because more and more individuals might be
encouraged not to prepare themselves for so-called dead-end jobs, even though
such preparation might involve a minimum of effort.
Today some of the few employables on the welfare rolls are beghming to say
they will refuse to accept available jobs if those jobs are "dead-end." (If they
do refitse and consequently are dropped from the welfare rolls, all of us will
share the blame for their mistake in judgment-and for the `subsequent suffering
of their families.)
Certainly all of us should know and believe that working at whatever we can
do, at w-hatever stage of our development, is being useful to others as well as
ourselves and our dependents and is the truly `significant meaning of "earning a
living."
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505
HEALTH ASSURANCE
Employability insurance would also provide needed medical services-preven-
tive and treatment-for all school children and require periodic reporting on
their health status and health needs to prevent sickness and disability, to correct
poor health, and to make children, and their families, health-conscious.
Every school would have available to it the services of a physician and a nurse
to give periodic health examinations and necessary follow-up guidance to the
children and their parents. Where medical care is required, the family physician
would provide that care; if the family could not pay for the care, it would be
given at public expense.
Older children would be given appropriate health information and guidance
through practical health talks and demonstrations by physicians, psychiatrists,
and other health educators, and by visits to various health facilities. With
the disappearance of the general practitioner, the shortage of health facilities
and personnel in urban and rural areas alike, sickness and disability being the
greatest cause of welfare expenditures, and the runaway costs of medical care
everywhere, such health guidance has become an urgent need for millions of
medically indigent and other Americans.
Medical personnel in government, in private practice, in medical schools,
and in research organizations have a priority responsibility to undertake this
all-important health education-through a voluntary draft, if necessary.
These services, and the work-oriented training program, should involve enlist-
ing the understanding and support of the parents. PTA groups, women's clubs,
service clubs, and other community and civic groups at school district levels, and
having representatives of these groups, and of the general community, attend the
health and work sessions. Through such communication, parents could be alerted
to the significance of these programs, specifically in terms of their own children
and generally in relation to the community and what dependency and sickness
mean, socially and fiscally.
But we need much more than an expanded and deeper health program for our
50 million school children. Employability insurance embraces a major program-
universal health insurance-to cover every man, woman, and child, protection
that is provided by every industrial nation in the world today, except the United
States.
The main thrust of this program would be to cut down the burden of sickness
by having every person able to pay for necessary medical care, assume that basic,
priority responsibility for himself and his dependents, through health insurance
payments by him and his employer. In the case of welfare recipients and other
poverty-stricken citizens, government would pay the insurance premiums until
the circumstances of these individuals and families changed to enable them to
assume their share of this obligation.
Even a limited program of health insurance would produce direct results in
checking the burden of sickness in the Nation by getting some needed medical
care to some people, and by teaching millions of citizens their responsibility, to
themselves and their dependents, of giving priority consideration to expenditures
for health protection and restoration.
MONEY TO LIVE BY
The final major segment of employability insurance would involve the provi-
sion of income maintenance grants, through a recast welfare system or a new
program (as suggested by proposals of the participants in the Governor's Con-
ference on Public Welfare 1) to individuals and families who cannot earn their
own living because of illiteracy, lack of work skills or health disabilities.
The first two groups would receive the literacy and work training they require,
promptly and effectively, from a nationwide network of management-labor
teams under government contract.
Such programs have, everywhere in the country-
(1) Taught the illiterate in record time, beyond anything yet achieved
by conventional educational methods, and opened work opportunities for
thousands of jobless men and women;
1 See "Instead of Public Assistanc~ * * * ?" on page 17.
96-602 0-68-vol. II-5
PAGENO="0066"
506
(2) Trained totally unskilled people, more quickly and more success-
fully than has been done through standard vocational training programs,
and provided these people with the exact know--how needed to take over and
handle a job the very first day of employment;
(3) Motivated the aimless and the hopeless by helping them to become
somebody with a sense of purpose and achievement, a feeling of responsi-
bility, a new-, important status in the family-by teaching them how- to
earn a paycheck;
(4) Demonstrated how- even individuals w-ith police records could be put
to w-ork, with their employers experiencing less pilferage than employers of
w-orkers without criminal records; and
(5) Trained and placed Negroes and other minority group members in jobs
in various industries and businesses.
Individuals w-ith health-disabilities would, of course, receive whatever medical
care and other services might be required to restore their health and employ-
ability or otherw-ise benefit them. -
Other individuals and families-those without income because of age. chronic
illness, or other conditions that clearly preclude employment-would be given
income maintenance grants and w-hatever social or other services they might
require.
All.persons over ~5 years of age, all totally and permanently disabled persons,
and all blind individuals now- on the public welfare rolls would be transferred
to the social security rolls-some 3 million needy citizens who surely should be
in that program and not on public relief.
The tired. old cliche objections to such a transfer no longer obtain. Here's why:
(1) The Federal Government now pays almost tw-o-thirds of all welfare costs
for these 3 million individuals. Why not provide those funds through the social
insurance system instead of a second system and a second overhead-w-elfare-
especially in hundreds of thousands of eases in w-hicb too-low- insurance benefits
must be supplemented by welfare payments? And even a third system and a
third overhead where such cases involve hundreds of local w-elfare departments
asw-ell?
(2) Another fiction that helps to block needed simplification and improvement
in the insurance-welfare systems is the notion that the social insurance program
is founded upon an inflexible inviolable actuarial system and that contributors
must get only the exact benefits that their contributions make actuarially pos-
sible. To give them any more, regardless of their actual need, w-ould introduce
a welfare concept into the insurance system, and this must not be done, according
to this reasoning. Everybody knows. how-ever, that social insurance policies
and benefits have been changed several times to help meet more of the financial
needs of various groups of insurance beneflciaries-w-ithout regard to their
contributions or the duration of their coverage in the system. Indeed, social
security has become something of a welfare program for 23 million citizens. all
of w-hom are subject to a means test through the earned-income limitations and
earnings test.
(3) Furthermore, the myth that benefits can only be wage related and that
beneficiaries must have been prior contributors to the system was exploded jy the
Congress, itself, when it authorized general tax revenues to be used to pay
certain benefits and to match premium payments for Supplemental Medical
Insurance benefits. These changes w-ere made in 1965 and the Social Security
system has jeen improved thereby.
(4) Another alternative would be for states to pay the Social Security system
the amounts the aged, blind, the disabled now- receive in welfare payments. These
sums could be added to their individual Social Security benefit checks and be
sent as a single combined amount to the needy persons. The advantages of this
proposal are simplification, a single benefit payment, and elimination of dupli-
cation.
(5) Finally, a social insurance system that cannot provide benefits for over
9 million certified destitute men, women. and children in the world's richest
society needs some overhauling to bring it into line with United States 1968.
Surely the American people would support transfer of these unfortunate
citizens to the social insurance rolls as the soundest, most practical, and most
indicated start for an income maintenance, or guaranteed annual income, plan.
PAGENO="0067"
507
THE COST: IF WE DO OR DON'T
Every day that we delay doing what we should be doing to stop or slow down
the spread of poverty, the financial and social costs accelerate.
There is no way of escaping what some day we must finally do: provide the
training, educational, and health services millions of adults and children need
to fit them to earn their own way in the most competitive, most complex way of
life in all history.
The cost: We are now spending some $70 billions annually for welfare, educa-
tion, and health programs that cannot do what needs to be done in the United
States in 1968 and the years ahead-prepare millions of people to fill millions of
job vacancies. Recast welfare, education, and health services, a reasonable
health insurance program that will have us put aside the money we should to pay
for our medical care, and a massive job-training program by industry, business,
and labor, could raise the consumption levels of tens of millions of Americans
and increase purchasing power billions of dollars annually. (In 1960, if Negro
expenditures for consumption had equaled those of the white population, the
added direct purchases by Negroes would have been nearly $7.5 jidllion, according
to Mr. L. W. Moore, president of the American Oil Company. Mr. Moore added:
"Because of multiplier effects . . . the total impact on the economy would have
been much greater than that. And, because of population growth, the figure
would also be larger today.")
Hopefully, most of us still believe that every human being, even the most
bereft among us, should have the opportunity to try to live a meaningful existence.
After all, that's what life is all about.
II. THE STATE BOARD IN ACTION
Nineteen sixty-seven was the 100th anniversary of the New York State Board
of Social Welfare, the group of 15 citizens who set policies and standards for
the Sta.te's social welfare system, one of the most extensive and highly developed
in the nation.
That system-involving public, voluntary, and proprietary facilities-include's
institutions and services for children; homes for the aged; programs for the
blind and other handicapped; casework counseling for individuals and families:
hospitals, dispensaries, infirmaries, and nursing homes; anti-poverty programs;
and the federal-state-local public welfare system, which provided for a monthly
average of 1.3 million men, women, and children, at a cost of $1.8 billion in 1067.
A lot of needy people and a lot of public funds. This problem of steadily
increasing welfare popula!tion and costs has been an urgept concern of the Board,
as it has been of many other citizens. And the Board, like other citizens, recog-
nized that public dependency was becoming not only a major problem in the
nation but a crisis, and required the attention and action of the private sec-
tor, not only the public. If millions of Americans were to be given an opportunity
to earn their own living in today's economy and tomorrow's, those who set the
work requirements and those best able to bring these millions into the mainstream
of American living-the leaders and builders of our economy-must help to
resolve or alleviate the great domestic problem of widespread poverty.
It was decided to observe the centennial of the Board, not in some con-
ventional, ritualistic way, but through an action program that would seek
realistic answers to the shake-up dimensions to which poveviy and welfare had
spread inthe nation. It proposed to do this by presenting this tremendous
economic and so~ial problem to those who are primarily responsible for building
and guiding our economy.
Commissioner George K. Wyman suggested that this be done through a unique
meeting at which, leaders from business, industry, labor, the mass news media,
private charitable foundations, and government would assess the problem and
make recommendations for its solution.
Chairman Hugh R. Jones aild the other members of the Board approved the
idea. Through a committee headed by George F. Berlinger, Vice Chairman
of the Board, David Bernstein, Theodore C. Jackson, and Mrs. Donald E.
McConville, plans were made for the meeting, for the production of two films,
for publication of position papers, and for obtaining private philanthropic fund's
to pay the costs of the event.
PAGENO="0068"
508
Governor Nelson A. Rockefeller invited leaders of the economy to a Governor's
Conference on Public Welfare at Arden House, Harriman, New- York, Novem-
ber 2-3. Eighty-seven participated at the two-day sessions-after having studied
especially prepared papers on the basic elements of the problem by prominent
authorities-and offered many ideas and proposals. A summary of the recom-
mendations and suggestions made at this pioneering event-prepared by a
committee of participants headed by the Conference chairman, Joseph C. Wilson.
Chairman of the Board, Xerox Corporation-is included in this chapter.'
Another major development was that the Conference recommendations con-
stituted the agenda of an all-day session held by the Committee for Economic
Development in New- York City on May 8. This organization of 200 distinguished
businessmen and educators seeks, through research and discussion. to contribute
to the maintenance of the United States economy and living standards at a
high level.
The Board follow-ed through on its Arden House program by seeking grass roots
opinions on new- approaches to public welfare through seven public meetings
held in the State. A report on these meetings is also included in this chapter.
Other actions by the Board included adoption of new, major policies and ap-
proaches, such as the following:
1. Recasting the whole appeals machinery for recipients and applicants of
public assistance by changing that set-up from a conciliation process to a full-
fledged administrative review- to assure equitable treatment by more effective
development. presentation. and evaluation of the facts involved in each appeal,
and by permitting the appellant full access to those facts and the help of counsel,
or of any other representative designated by him, in the presentation of his case.
The appeals program includes, among other provisions, the right of applicants
and recipients to appeal to the State Department of Social Services from deci-
sions of local departments that the recipients or applicants believe are unfair.
Such situations include failure of a local department to act on an application
for assistance, failure to provide needed assistance. or unfair suspensions or dis-
continuance of assistance. In the case of appeals against decisions to suspend or
discontinue assistance, the Board shortened to 10 working days the time between
the request for a State hearing and the actual conduct of that bearing, to pro-
*tect the applicant family or individual from hardship.
In addition, the Board extended to 110.000 home relief recipients and to all
future applicants for such aid the right to make such formal appeal. Heretofore,
the appeals process was available only to applicants or recipients' of federally-
aided public assistance: aid to families with dependent children, and assistance
to the aged, blind, or disabled.
2. Requiring that all basic materials on the operation of public welfare pro-
grams in the State-federal and State laws. Board rules, and Department regu-
lotions bulletins, and other information on official policies-be made available at
all Department area offices throughout the State for the information of the public.
3. Endorsing the principle of State administration of social services, instead
of the present system of local administration under State supervision. T~ecause
State administration would further the interests of the welfare recipients and
the general public by assuring desirable uniform standards of assistance. opera-
tion, and management; by permitting the needed professional development of
welfare personnel; and by achieving some simplification by eliminating one
level of the present federal-state-local system.
4. Requesting the Legislature to make it clear that Medicaid recipients are
not exempt from assignment. income execution. and installment payment orders.
(Public assistance recipients are so exempt by federal and State legislation so
that their w-elfare grants are used for food. rent. and other necessities and are
not diverted to liquidation of old debts.)
In developing policies, the Board has conducted public hearings. conferred
with the State Administration, worked with members of the Legislature. held
meetings, with repre~entatives of various citizen, health, weifare and other or-
ganizations. met with w-elfare recipients and their representatives, and otherwise
functioned-collectively and individually-as citizen, participant, guide, and
policy-maker in the State's social w-elfare system.
1 A detailed report on the Arden House sessions appears in the February 1968 issue of
~$ocial gervice Outloo1~, the Board and Department magazine.
PAGENO="0069"
509
INSTEAD OF PUBLIC ASSISTANCE . . .?
A summary of major recommendations from a report of the steering com-
mittee appointed at the Governor's Conference on Public Welfare, held at Arden
House, Harriman, N.Y., November 2-3, 1967. See page 14.
The replacement of the present system of public assistance covering nine mil-
lion people with an income maintenance system-possibly a negative income tax,
which would bring some 30 million Americans classified as "poor" up to the so-
called poverty line of $3,300 a year-has been proposed by a steering committee
of 12 named by Governor Rockefeller from among a group of nearly 100 leaders
of the economy to seek solutions to the nation's welfare problems.
The steering committee-headed by Joseph C. Wilson, Chairman of the Xerox
Corporation, who also chaired the Arden House Conference-urged sweeping
reforms in the welfare system but said it found the present system so bad that
it doubted any "tinkering" would evolve a satisfactory program.
Indictment of the present system was unanimous, as was the major recom-
mendation for an income maintenance system and another recommendation that
government, as a long-range goal, should pursue policies and actions leading to
productive employment for all who can work.
The steering committee was named by Governor Rockefeller last November
following a two-day meeting at Arden House called to help plan new approaches
to public welfare in the United States. Almost 100 leaders from industry, labor,
philanthropy, communications, and government from 14 states and 12 cities
within the State participated in the Conference, which commemorated the 100th
anniversary of the New York State Board of Social Welfare.
The committee's report was made to all members of the Arden House group
at a Public Policy Forum of the Committee for Economic Development held in
New York City on May S. That meeting was attended by the Arden House con-
ferees and approximately 250 CED trustees from various parts of the country.
Among the highlights of the Committee's report were:
(1) The present system of public assistance does not work well. It ~overs only
9 million of the 30 million Americans living in poverty. It is demeaning, in-
efficient, inadequate, and has so many disincentives built into it that it encour-
ages continued dependency.
(2) It should be replaced with an income maintenance system, possibly a
negative income tax, which would bring all 30 million Americans up to at least
the official federal poverty line. Such a system should contain strong incentives
to work, try to contain regional cost of living differentials, and be administered
by the Internal Revenue Service to provide greater administrative efficiency and
effectiveness that now exists.
(3) A system of uniform national standards for public welfare should be
established to provide a federal floor below which no state would be permitted
to fall and no person would be expected to live.
(4) Much more effective and intensive family planning information should
be made available to all families on public assistance.
(5) A systems approach to poverty and public welfare is worth exploring
to see if it might yield some data or show some relationships which are not known.
(6) Solid research is virtually unknown in public welfare. Less than one-
tenth of 1 percent of welfare funds are spent for that purpose. Rarely has so
costly a program operated with so little knowledge. More research is urged in
all aspects of the public assistance `and other public welfare programs.
(7) Until a new system of income maintenance, after thorough study, is
adopted, the present welfare system needs drastic and immediate reform.
Among the major changes urged are:
(a) The aged, blind, and disabled, who constitute two4hirds of the public
assistance cases, should be transferred to Social Security.
(b) The "man in the house" rule, still in effect in 28 states and the Dis-
trict of Columbia, should be abolished because it destroys family stability.
encourages deceit and deception, and costs more money to enforce than it is
worth.
(c) Incentives to work should be liberalized, and all possible steps in-
cluding "transition" allowances, should be taken to encourage the move
from welfare to work.
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510
(d) A large expansion of day-care facilities is vital to enable welfare
mothers with preschool-age children to work, if they can. These programs
should be educational as well as custodial.
(a) An affidavit system to determine eligibility, with spot checks similar
to those used by the Internal Revenue Service, should replace the costly,
demeaning, and inefficient investigations now used almost universally. This
would free scarce staff to try to keep people off the assistance rolls, instead of
making certain they stay on.
(8) Staff turnover in public welfare departments averages close to 30 per-
cent a year, with some states in excess of 40 percent. This is evidence of crippling
inefficiency. Of the 110,000 people employed in the field, less than 2,000 have a
degree in social work or the equivalent. This professional group also has a job
turnover in excess of 20 percent a year. With this condition, there can be little
effective casework or continuity between client and staff.
(9) Improved health, education, and housing are vital if the cycle of de-
pendency is to be broken. Unless welfare recipients, and particularly the young-
sters, are given the strengths, capabilities, and resources to break that cycle,
future generations will bear the high social and economic costs of this discrimina-
tion. Failure to act continues a trend toward polarization of the country into
white and non-white communities-a type of apartheid by default.
(10) Jobs and training for jobs are vital parts of any effort to reduce de-
pendency on welfare. While the private sector can do much, and is now making
a considerable effort to provide jobs and training opportunities, government, as
a long-range goal, should pursue policies and actions leading to productive em-
ployrnenit for all who can work.
(11) The lack of legislative action on various proposals for needed reform
costs taxpayers huge sums, and prevents effective change.
(12) Unless our country. including our northern cities, solves the problems of
the slum areas, the nation stands in danger of being torn apart.
(13) The Committee does not expect that its recommendations can be carried
out without further analyses, studies, public aw-areness, experimentation, and
demonstration, but it urges that these not be used as excuses for inaction and
that steps be taken as quickly as possible to implement these suggestions.
In a foreword to the report, Mr. Wilson said:
"We are terminating our activities at this time humbled by the magnitude of
the task but wiser as a result of our participation. As a group, we are com-
mitted to the idea that the facts and figures as we have come to know them be
made available to all Americans.
"We know that both our personal and social responsibilities have only just
begun. Armed with appropriate knowledge, we are convinced that the American
public will join in the effort required to close the poverty gap of their 30 million
fellow Americans."
Members of the steering committee were:
Joseph C. Wilson (Committee Chairman), Chairman of the Board, Xerox
Corporation
Joseph C. Block, Chairman of the Executive Committee Inland Steel
Company
John A. Coleman, Senior Partner Adler, Coleman & Co. (N.Y. Stock
Exchange)
Gilbert W. Fitzhugh, Chairman of the Board Metropolitan Life Insurance
Co.
Philip M. Klutznlck. Managing Partner, KLC Venture, Limited
Gustave L. Levy, Chairman of the Board of Governors, New York Stoch
Exchange
Baldwin Maull. Chairman of the Board, Marine Midland Corporation
Arjay Miller, Vice-Chairman of the Board, Ford Motor Company
Alfred C. Neal, President, Committee for Economic Development
A. L. Nickerson, Chairman of the Board and Chief Executive Officer, Mobil
Oil Corporation
Harvey C. Russell, Vice President, Community Affairs, Pepsico, Inc.
Samuel J. Silberman, Chairman of the Board, Consolidated Cigar Corpora~
tion
Victor Weingarten, of New York, who was director of the Governor's Confer-
ence on Public Welfare, also beaded the staff w-hich worked with its steerh~g
committee.
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MAKING PUBLIC WELFARE POLICY
A SUMMARY OF OPINIONS FROM SEVEN GRASS ROOTS MEETINGS ON PUBLIC WELFARE
PROBLEMS
Scores of suggestions for improving the public welfare system were made at
seven regional conferences `sponsored by the New York State Board of Social
Welfare throughout New York State during February and March.
The conferences, held as part `of the Board's 100th Anniversary, were follow-ups
to the Arden House Conference at which representatives of industry, labor,
philanthropy and mass media discussed possible new approaches to the welfare
problem. Two hundred thirty-nine persons appeared at the meetings, which
were held in Long Island, New York City, Albany, Binghamton, Syracuse, Buf-
falo and Rochester.
Speakers included public officials, attorneys, physicians, representatives of
religious, civic, health and welfare organizations, chambers of commerce, tax-
payers associations, farm bureaus, business and labor, and welfare recipients.
Almost without exception, all speakers criticised various portions of the
present welfare program, but with the exception of three speakers from one
rural upstate community, no speaker advocated regressive or punitive measures.
All urged various reforms to liberalize the system, make it less demeaning
and more effective and constructive. In virtually every community, there was
sharp agreement on the following:
(1) A vast expansion of day care facilities for preschool-age children to
enable mothers now receiving public assistance to return to work.
A survey of welfare mothers in New York City, which revealed that 70 per-
cent wanted to work, was borne out by testimony throughout the State.
(2) Deplorable housing was cited in every community as a pressing problem.
In New York City alone, it was disclosed, the public welfare department pays
almost $200 million annually in rents for generally sub-standard housing. Experi-
mentation with welfare department-sponsored housing was urged in some
communities.
(3) Lack of transportation in many parts of the State makes it difficult for
welfare recipients `to obtain work. Testimony showed that jobs are available,
but there is almost no transportation to help a slum resident get to the job.
Lack of. transportation also made it difficult for welfare recipients to shop
at supermarkets and to get adequate medical care in many instances.
(4) Abolition of the system of mandatory verification and substitution of
an affidavit to determine welfare availability were recommended in every region.
Not only would these measures save money, but they would enable scarce staff
to spend its time helping people get off the welfare rolls instead of making
certain they stay on, testimony disclosed.
In New York City, where an affidavit system has been used for two pilot areas,
preliminary results show the system works as effectively as the mandatory
investigation.
(5) Better job training and employment programs geared to existing jobs
were cited as high priorities.
(6) More effective and intensive family planning information was widely
recommended. One novel suggestion was that married women of child-bearing
age whose incomes are below the poverty level receive $500 bonuses for each year
they do not have a child. Such payment, the speaker said, would cost less than
the cost of having a child on public welfare.
(7) Some critics of the system said the public assistance program bad "too
little cash and too much control." A caseworker told the Board that "the tradi-
tional, accepted way for a widow with children to rehabilitate herself is to
remarry, but if she has a man over for dinner, she risks both social and legal
embarrassment under the current welfare system."
One proposal was that in the event a welfare recipient with children remarries,
her new husband not be required to provide funds for the care of children by
a previous marriage. It was testified that this would help restore a large measure
of stability to many fatherless homes.
(8) Abolition of the present welfare system and substitution of an income
maintenance progr~1n was recommended by many speakers. Some favor a form
of universal childreLi's allowance; others a negative income tax; some said either
would be preferable to the current program.
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512
Detailed proposals for both forms of income maintenance were many. One
suggestion was that a children's allowance of $50 a month be paid universally
only for preschool-age children.
A second was that an annual stipend of $500 be paid for the first child until
he reaches 18 years of age and that payments for the support of succeeding
children should decline with each additional child, but a minimum of $200 per
child should be established.
There were almost as many specific proposals as there w-ere economists
testifying.
A Syracuse University economist testified the nation now has two kinds of
w-elfare, one of which is acceptable, the other the object of scorn. The middle
class, he said, gets public assistance in the form of unemployment insurance,
workmen's compensation, and tax deductions for mortgage loan costs and for
taxes on real property. These "hidden welfare measures" for the middle and
upper classes are dignified and politically untouchable, while w-elfare for the
poor is exposed and humiliating. "This dual welfare system is unjust and must
be corrected," he said.
(9) TTtilization of more welfare clients as case aides in welfare departments
was urged in some of the regions. New York City Commissioner of Social Services.
Jack R. Goldberg, testified that 1,200 such aides were now employed by his depart-
ment; that they were w-orking w-ell; and that most had been unemployed for five
or more years before being given these new jobs.
(10) Despite open invitations by State Board Chairman Hugh H. Jones for
"irate taxpayers" to come forward, none appeared. Three individuals from rural
upstate testified they felt the names of recipients in their counties should be made
public, and one suggested that a farmer who was receiving supplemental assist-
ance, as well as an allowance for fuel oil, should be made to cut his own firewood
so that the oil allowance could be discontinued.
That was the extent of the "punitive" approach heard by the Board.
(11) Representatives of several chambers of commerce and counsel for the
New York State Taxpayers Association all offered constructive suggestions for
the improvement of welfare programs and administration.
Many speakers urged a total overhaul of the w-elfare system, with the Federal
Government taking responsibility for providing the funds under some form of
income maintenance and the State and local governments assuming the major
responsibility for the social services that would be required under any federal
system.
(12) Elimination of the various categories of public assistance was seen as a
source of saving.
(13) Welfare recipients were frequently eloquent in their testimony which
dealt with the minutiae of life on slim budgets. Several urged that personal al-
lowances be paid to ease the transition from welfare to work. They pointed out
that welfare subsistence was, at best, meager, and generally has with it a back-
log of deprivation. Once a person is employed, the need for modest funds to
"catch up" with that backlog is normally be~-ond the salary earned. A "transition
allowance" w-hich w-ould continue w-elfare payments at some reduced scale for
three to six months would not only help ease the shift but encourage many more
people to try to obtain employment, they said.
Testimony was given that a sampling of persons living in poverty in various
parts of the country showed:
"The poverty population is (a) highly motivated to work their w-ay out of
poverty, (b) shares conventional middle class standards. (c) wants self-help
assistance to enable them to get out of poverty more than they want generalized
services aimed at making their existing situation more bearable, (d) are more
desirous of improving their neighborhoods than moving out of them. and, above
all, (e) are deeply concerned about their children's education."
Other witnesses testified that the State should assume more of the cost of
w-elfare and that no city be required to pay more than 25 percent of the total cost.
At present, some localities, like New York City are saddled w-ith a larger share
of welfare costs than local officials believe is fair. One public welfare ad-
ministrator said that salaries for w-elfare workers must be made more at-
tractive if the turnover is to be reduced. In her community, she said, the an-
nual staff turnover is close to 40 percent. She estimated it~cost aLmost $5,000 to
train a casew-orker and that this price w-as even0 more costly to the w-elfare
recipient because there w-as Snot sufficient continuity of services.
Many welfare recipients complained about the high staff turnover, point-
ing out that before they had an opportunity to establish a relationship with
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513
one worker, they had to build a relationship with a new one. Several complained
about the attitude of caseworkers assigned to them, alleging that many have
rigid middle class standards and treat them with scorn and disdain.
There was testimony that if more welfare recipients could be trained as case
aides, it would help establish a closer rapport with the clients served.
Speakers in several communities suggested that educational criteria for case-
workers be reviewed and that the college degree requirement be dropped for
many categories where a degree is not essential for the competent performance
of the job.
A sharp attack on the provisions of the new federal welfare law which freezes
the rolls at their present level was made by several witnesses, who also said
they were opposed to forcing welfare recipients to take jobs that are dead-end,
manual, poorly paid, and provide no opportunities for advancement.
The role of the government as an employer of last resort was supported by
speakers at virtually every conference. Other speakers testified that even though
the new federal welfare legislation granted a 13 percent increase in social security
benefits to the aged, welfare recipients under the old age and survivors insurance
program did not receive any actual cash benefits from that increase because
the additional amount was deducted from their welfare checks. Such action
condemns the aged welfare recipient to a substandard existence without any
hope of raising his level of living, it was testified.
It was obvious that the impact of the Arden House conference was felt in
many communities, and th'at the caliber of its industrial leadership had telling
effect among individuals and organizations who would normally be expected to
oppose reform.
The changed and more enlightened attitude toward the program was indi-
cated in an editorial in the Rochester, N.Y. Democrat and Chronicle, following
the Board meeting in that city. After citing some of the testimony, the editorial
said:
"These samples help to show that what we glibly brand as `welfare' worries
are really the aches and pains of society itself. A redrafted welfare act, simplify-
ing procedures with a positive accent, would help, but no legal rhetoric can ever
relieve a community of involving itself in the problems of the needy any ~nore
than an affluent citizen can wash his hands of the matter."
In New York City, where two days were devoted to hearing testimony, City
Council President Frank D. O'Connor proposed that a federal-state urban "home-
stead" program. be established to subsidize the purchase of homes and apart-
ments by the poor. Such subsidized home ownership, he said, would:
"Give the poor a secure family base many of them do not now have.
"Make more constructive use of welfare and rent supplement money that
now goes `down rat holes' as rent for substandard apartments.
"Encourage the poor to keep their homes in good repair."
Mr. O'Connor also said:
"The security of the middle class in their homes and environment has much
to do with their children's achievement in school and work. And that, after all,
is what we all want: to save the dropout and get him on the employed rolls."
He said welfare payments and guaranteed family incomes "are eventually
meaningless unless they lead to ownership of a patch of land or a piece of real
estate, however small or circumscribed."
The "save people, not money" theme which dominated the Arden House con-
ference, also dominated the Board's regional meetings.
III. MEDICAID
One of the oldest welfare programs in the world is the care of the sick. In the
United States, ever since colonial times, medical care has been available to
individuals who need it but cannot afford to pay for it through voluntary and pub-
lic institutions. Such care has been made available in New York State through
public welfare, probably because sickness is the greatest single cause of public
welfare expenditures. In New York State, and elsewhere, the sick, the disabled,
the blind, and the aged comprise one-fifth of the public assistance caseload but
account for two-fifths of such costs.
Consequently the Medicaid program authorized in New York State on April
30, 1906, gave great promise of providing preventive and treatment services for
families and individuals that would check and eventually reverse this tremendous
social and financial toll.
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The first year of Medicaid indicated this exciting possibility.1 Also, a study
indicated that this needed care was being given to non-w-elfare recipients in
households whose average gross weekly income was $61. Almost two-thirds
of these households had no private health insurance, and over nine-tenths did
not have sufficient income to pay any part of the cost of Medicaid services, in-
cluding the deductible amount for families and persons with modest incomes.
But the Federal Government cut back on its commitment for reimbursement.
That cutback meant, to take a medically indigent family of four as an example,
that the Federal Government-effective July 1, 1968-would not share in Medi-
caid expenditures, however necessary they might be for such a family, if its
gross income exceeded by 50 percent the welfare standard for the same size
family. It w-ent further. It reduced the percentage to 40 percent by January
1, 1969, and to 331k percent by January 1. 1970.
In many states that restrictive policy will eliminate federal help for needed med-
ical care for hundreds of thousands of the lowest-income, poverty-level families
and individuals in the nation. In New York State it means denial of federal funds
for the needed medical care of thousands of families and individuals who are truly
medically indigent. It also means shifting to the State and its localities an im-
possible share of the financial burden of the Medicaid program. And it means a
much more limited scope of medical care.
Governor Rockefeller appoil1ted a committee to make an immediate, emer-
gency study of the problem and to make recommendations as to the best way
of coping with the new federal legislation. The committee was composed of
Commissioner Wyman; State Health Commissioner Hollis S. Ingraham, and
Commissioner John J. Burns of the Office for Local Government. The manage-
ment consulting firm of Peat, Marwick & Company was retained to assist the
committee.
In its report to the Governor in January 1968, the committee said:
(1) Medicaid had proved to be a valuable mechanism for protecting the health
of a large number of citizens.
(2) `The program would nevertheless have to be curtailed to avoid intolerable
increases ill State and local expenditures.
(3) The first line of defense for the protection of the public's health should be
a program of universal health insurance. Medicaid, its scope greatly diminished
thereby, should be retained as the second line of defense to protect those who
are medically needed and those whose health insurance benefits have run out.
Governor Rockefeller concluded: "In view- of the already heavy burden on
our local governments and State Government, it is impossible to absorb this
added expense. . . . Consequently, we are simply going to have to revamp our
Medicaid program to reduce its cost." The Governor also said he planned to
present "a universal health insurance program that w-ouid dovetail w-ith Medic-
aid to provide New- York's citizens witth the Medical care they need under the
strongest, soundest financial terms."
The Govenor recommended revisions in the Medicaid program, but the Legis-
lature went beyond his proposals and reduced the dimensions of the program
drastically. How-ever, subsequent amendments w-ere made, and today the legis-
lative framework for New York State's Medicaid program is as follows:
A. Financial Eligibility Requirements
1. All recipients of cash assistance and children in foster care continue to be
eligible for all medical care and services.
2. The allow-able income and resources levels have been changed as follows,
for the medical assistance only applicants.
a. Income: Annual net income (number of family members in a household
and family members for whom they are legally responsible or have assumed
responsibillty)-One, $2,300; two, $3,300; three, $4,200; four, $5,300; five,
$6,000; six, $6,800; and seven, $7,600.
Such income exemptions shall be increased by six hundred dollars for each
member of a family household in excess of seven.
b. Resources: The first $1,000 of savings, including cash value of life
insurance, is exempt as a burial fund. This $1,000 exemption applies to each
member of a family. Additional savings equal to one-half of the annual net
income exemption are also allowed. Any savings in excess of this amount
will have to be used for medical expenses. The face value of life insurance is
no longer a factor in determining eligibility for Medicaid.
See Medicaid: Year in Review, published by the Department.
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515
B. Eligibility Requirements other than Financial
1. Single persons and childless couples 21 through 64 who are neither blind
nor disabled will generally be excluded from eligibility for any medical care and
services. However, medical assistance will be available to such persons under a
catastrophic illness provision. This provision authorizes medical assistance to
otherwise ineligible persons in the event of a catastrophic illness. Care under this
provision is limited to care and services in a medical institution. In such cases,
payment by the social services district, shall be limited to the cost of hospital
care and services in excess of the lesser of either:
a. Twenty-five percent of the recipient's annual net income or
b. The amount by which the recipient's net income exceeds the applicable
public assistance standard-~e.g. $1,600 for single persons and $2,300 for
couples.
Once having qualified under the catastrophic illness provision, the recipient
and his spouse, if any, shall be eligible for assistance in respect to the total cost
of hospital care and services for the period of 12 months.
The resource exceptions applicable to other eligible persons shall also apply
to this group.
If, in determining the recipient's eligibility under the catastrophic illness
provision., the amount of hts income above the public assistance levels is utilized,
the recipient will be eligible for all medical care and services.
2. Persons who meet the financial eligibility standard and who are either:
a. under 21 or 65 years of age an over, or
b. the spouse of a recipient of public assistance, or
c. for reasons other than income and resources, eligible for Aid to the
Blind, Aid to the Disabled or Aid to Dependent Children are eligible for all
medical care and services.
It is estimated that this revised Medicaid program would reduce potential
eligible beneficiaries by 2.2 million and actual beneficiaries by 1 million in the
next fiscal year.
A HEALTH SECURITY PROGRAM
A comprehensive plan to meet the health needs of the people of New York State
was presented by Governor Rockefeller in March 1968. Its major objectives are:
(1) To assure basic hospital benefits to 15.7 million New Yorkers, virtually
the entire population under 65 years of age. The cost to both employees and
employers would be limited and the State, in appropriate cases, would contribute
to meeting the expenses exceeding these limits.
(2) To establish an effective hospital cost control system.
The basic health benefits would include 120 days of semi-private in-hospital
care and ancillary hospital services; 100 days of home care; hospital outpatient
diagnostic services; and hospital outpatient care for accidental injury or emer-
gency illness.
Each employee's contribution to the health insurance system would amount
to two percent of his wages or one-half the actual cost of providing the cover-
age, whichever figure is the lower.
The hospital cost control system would be based on such measures as State
approval of rates to be paid by all government agencies and health insurers,
incentives for efficient management, and the establishment of a statewide, uni-
form cost accounting and cost-finding system.
The plan also provide for establishment of a Health Benefits Commission,
in the Department of Health, consisting of the Commissioner of Health, the
Superintendent of Insurance, the Commissioners of Social Services and Mental
Hygiene, and five public members appointed by the Governor, to administer the
program.
IV. ABOUT PEOPLE .
In 1967 the public social service system in the State gave needed care and
service to a monthly average of 1.3 million men women, and children. The
recipients were about equally divided between children and adults.
CHILDREN
Here is a brief statement about the children who were helped and how: 1
Public assistance.-588,000 received financial assistance because of the death,
desertion, disability, unemployment, or inadequate earnings of a parent.
1 Figures represent approximate monthly averages, except where otherwise indicated.
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516
Foster care.-48,000 were cared for in institutions or in foster family homes
because they were without parents or relatives able to take care of them in
homes of their own. (Over 2,000 were adopted in 1967.)
Training schools.-2,100 juvenile delinquents and boys and girls with special
problems were in the State's training schools and training centers, and 3,700
others, released from these, facilities, were under supervision of community-
based parole and casework units.
illedicaid.-170,000 children were given health care each month.
Blind services-More than 500 blind children were helped in 1967 through
Commission for the Blind and Visually Handicapped services given to their
parents and to agencies to assist the parents in understanding and plauning
for blind youngsters.
Other Help-Thousands of other children were aided through services to
unwed mothers; advice and guidance to parents on child-rearing problems; home-
maker and day-care services; and efforts to prevent child abuse.
ADUlTS
This is a listing of the adults who were helped and how: 2
The aged.-70,000 were given old-age assistance because of financial need.
3,500 other needy aged w-ere cared for in public homes and infirmaries.
Tue disabled.-37,000 got assistance because they were totally and permanently
disabled and unable to support themselves. An additional 65,000 disabled persons
were aided in 1967 through the Department's adjudication of their claims for
social security benefits-a service `the Department performs for the Federal
Government.
The biind.-3,100 needy blind persons received assistance to the blind. An
additional 11,000 blind adult-s. not on public assistance, received services during
the course of the year from the Commission for the Blind and Visually Handi-
capped, including home-teaching, vocational rehabilitation, and other needed
help.
The sick.-290,000 men and women got medical care under Medicaid. In addi-
tion, 27,000 persons 65 years of age and over received care in State mental
hospitals :through Medicaid, and another 1,500 released mental hygiene patients,
in boarding homes, received needed public assistance.
Other advits.-288,000 adults (in addition to the aged, disabled, and blind)
obtained public assistance or care because of financial need. Included were more
than 196,000 on the aid to dependent children rolls, the great majority of whom
were mothers taking care of children. 91,000 other needy adults were on home
relief because they were jobless, unemployable, or working full-time (some two
jobs), but their income was not sufficient to support their families. 1,100 other
adults, mostly men, were in municipal shelters for the homeless.
V. ABOTJT PROGRAMS
Space limitations and general reader interest preclude definitive reporting of
the many developments, changes, trends, and actions in a field of public service
involving three levels of government, scores of programs and services, a con-
stantly changing population of 1.3 million welfare and Medicaid recipients. the
yearly expenditure of $1.9 billion, and tens of millions of administrative actions
annually.
Some representative developments, however, are recorded in this section to
give the reader some idea of the kinds of activity, experimenting, progress, and
trends in 1967.
Work Incentives-An experimental project designed to reduce the number of
unemployed adults on w-elfare was started in New York City. It permits parents
on the aid to dependent children rolls to keep the first $85 they earn each month,
plus 30 percent over that $85-without having their welfare grants reduced pro-
portionately-until they become self-supporting.
Welfare Grants Increased-Rising living costs necessitated an increase in
welfare grants. The increase averaged $7.65 monthly for a family of four con-
sisting of a father, mother, a boy of 13 and girl of 8. (The total monthly grant
for food, clothing, personal incidentals, utilities and household and school sup-
plies is $182.00. Rent and heat are not included in this total because these items
vary too much from locality to locality to be included in the example.)
2 Figures represent approximate monthly averages, except where otherwise indicated.
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Food ~Stanips.-This program, which makes it possible for welfare and other
low-income families to obtain more food for their money, was extended to Cat-
taraugus, Clinton, Niagara, Wayne, and Wyoming Counties and the City of
Jamestown, Erie County has been in the program since 1966, and Sc'hoh'arie
County will be added in July 1968.
Welfare Appeals-A sharp rise occurred in the number of appeals welfare
recipients and applicants have made to the State Department of Social Services
from decisions of local departments. From a total of 650 in 1966 the number in-
creased to more than 4,200 in 1967, approximately 3,300 of which originated in
New York City, where organized welfare recipient groups have been campaigi~-
ing for better welfare grants and services.
~iniplifying Welfare-A demonstration project in New York City is testing the
feasibility of determining eligibility for public assistance on the basis of an affi-
davit or declaration form, somewhat similar to an income tax form in that it
liSts the income and other resources of the applicant, if any. Full-scale investiga~
tion would be made of one of every 20 accepted applications, instead of every
application, which is the current practice.
Improving Welfare Administration.-RePresentative efforts to increase effi-
ciency in welfare operations include:
A project being carried out with the State Division of the Budget to have local
services departments develop annual work plans which the State can use as a
guide in supervision and evaluation of operations.
Installation of data processing systems in Rockland and Sullivan Counties as
a pilot project to determine whether such equipment can be used productively
in 40 other local departments.
Development of a uniform billing system which will enable all providers of
medical services-hospitals, physicians, dentists, and others-to use the same
billing procedure. Heretofore many of the 64 local departments had their own
procedures, and providers of medical services had (to use several different meth-
ods and different forms, in billing for their services, depending upon where the
patients lived.
Indoctrination of new welfare employees has been expedited and improved
through the use of six films and videotapes. Entitled "Human Factors and
Social Services," these training materials are being used in social services
departments and on closed-circuit educational TV.
Rehabilitating Delinquent Children-A new approach to helping delinquent
children through out-of-institution care was started in 1967. Responsibility for
parole services was transferred from the State training schools w-here they had
constituted a supplementary function, to two major Community Services Bureaus,
which concentrate on parole as one of their major functions. One of the bureaus
serves New York City and nine nearby counties, while the other covers the
remaining counties.
Among the measures taken to provide a more comprehensive program of com-
munity-based services under the supervision of the bureaus are:
(1) Expansion of direct care resources, including group residences: (14 to 20
children), group homes (seven to ten children), and boarding homes (one `to six
children)
(2) Extension of casework units into large urban counties; and
(3) Decentralization of casework units in New York City into neighborhood
locations.
As part of the change-over, the Division of Children's Services w-ill operate
three New York City facilities formerly operated by the State Division for Youth:
two group homes and a START (Short Term Adolescent Resident Training)
center for girls.
More Help for the Blind-The Commission for the Blind and Visually Handi-
capped sponsored the college enrollment of 262 blind students, who received
assistance ranging from the use of tape recorders to payment of `tuition; made
special efforts to get employment for blind social workers and vocational rehabili-
tation counselors; expanded vocational opportunities for the blind through estab-
lishment of vending stands at rehabilitation centers of the Narcotics Addiction
Control Commission; and worked with the State Education Department in plan-
ning vision-screening programs for preschool children in the State.
Locating Deserting Parents-The Bureau `of Registry and Location of Desert-
ing Parents got information omf the whereabouts `of more than 9,000 deserting
parents, and in 3,600 additional cases it turned up other information that was
useful in effecting parental financial responsibility for the care of children.
PAGENO="0078"
518
Emergency Welfare S~ervice.-The Bureau of Emergency Welfare Service
trained more than 100 persons as welfare managers for local civil defense orga-
nizations; surveyed the Department's institutions to determine their capability
to protect the resident population and staff from radioactive fallout and made
recommendions for necessary changes.
Fun d-Raising.-The Department is studying a new trend in raising funds for
charitable organizations: the increasing use by charity groups, of commercial or
profit-making organizations, such as recreation centers, sports arenas, television
stations, and so forth. These commercial organizations receive a substantial
amount of the fnnds raised, as payment for the use of their facilities and staffs,
thus sharply increasing fund-raising costs and proportionately reducing the funds
that go to charity. The public is unaw-are of these charitable-commercial con-
tractual arrangements, and believes the commercial organizations are donating
their faclities and services to the charities involved.
A New Name.-Legislation has changed the name of the State Department of
Social Welfare to the `State Department of Social Services. Corresponding
changes were made in the names of the local departments. The name of the State
Board of Social Welfare remains unchanged because it is fixed by the State Con-
stitution and w-as not affected by the Legislature's action.
Film on Adoption.-To stimulate public interest in this subject, the Depart-
ment produced a film entitled "A Bridge to Adoption." It has been made available
without charge to organizations throughout the State, and is also being offered
to television broadcasters.
~TJ No ONE CAN STOP IT-EXCEPT Us
More than 9 million men, women, and children are on the Nation's welfare rolls
today. In the opinion `of experienced welfare administrators, the number of other
impoverished citizens who could qualify for w-elfare, if they applied for it, range
as high as another 9 million. This may or may not be true, in whole or in part.
But it is a well-know-n fact that many Americans, especially the aged, are re-
luctant to ask for help-public welfare especially-even though their personal
situations may be desperate.
But the welfare population and its costs are increasing. One reason is that
poverty groups have been organizing the poor and encouraging the legally
qualified among them to apply for welfare. And these organizations have been
fighting for better assistance standards. Another reason for rising rolls and costs
is that skyrocketing hospital and medical fee schedules are putting health care
out of reach of millions of people in the United States, especially the low-income
groups who are not covered by hospital and medical insurance or whose coverage
is all but a fiction in the grim reality of today's hospital costs and medical fees-
and is becoming more and more of a fiction, month by month, all across the
country.
Rising health costs have forced an increasing number of individuals and
families, many for the first time in their lives, to apply to a public welfare depart-
ment for help-help to meet hospital and medical bills that are beyond their
ability to pay. And many of these Medicaid applicants and recipients-most of
them in the lowest income groups-are learning that they are eligible for partial
or total welfare assistance as well, are applying for that assistance, and are
getting it. Thus, sickness and disability, the greatest single cause of welfare costs.
will contribute substantially to the acceleration of welfare caseloads and
expenditures.
Another factor is the low- public assistance grant-in many states as low
as a few pennies a day per person for food, rent, clothing, and other neces-
sities of life. It is from this government-sponsored economic and social under-
w-orld that annually come the hundreds of thousands of hunger-driven, sick.
undereducated, and underskilled immigrants who crowd our cities looking for
something better-and adding to America's hard core health-w-elfare-education
crisis.
Unless we check and reverse all this, our w-elfare-Medicaid population w-ill rise
from 9 million to 16 million in the next five years, and costs will jump from $9
billion to $18 billion (this has been the rate of increase from 1962 to 1967).
No one can stop it-except us, the people of the United States.
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519
APPENDIX A
THE STATE BOARD OF SOCIAL WELFARE
Hugh R. Jones,' Chairman Utica.
George F. Berlinger, Vice Chairman New York.
Mrs. Omar Adams . Niagara Falls.
David Bernstein - Binghamton.
Dr. John M. Galbraith - Old Westbury.
John P. Hale Bronx.
Dorothy I. Height New York.
Mrs. Alexander E. Holstein, Jr - Syracuse.
Dr. Arthur G. Hopkins 2 Brooklyn.
Theodore C. Jackson Jamaica.
Edward J. Johannes, Jr Buffalo.
Richard G. Kimmerer Albany.
Frederick A. Klingenstein Rye.
Jose Lopez Flushing.
Mrs. Donald E. McConville Rochester.
Dr. Leslie Hughes Tisdall Brooklyn.
1 Reappointed February 15, 1968.
2 Resigned November 21, 1967.
Resigned March 9, 1967.
Reappointed February 15, 1968.
Appointed February 15, 1968.
APPENDIX B
THE DEPARTMENT OF SOCIAL SERVICES
George K. Wyman Commissioner
George W. Chesbro First Deputy Commissioner
Clifford P. Tallcott Deputy Commissioner,
Division of Welfare Administration
Felix Infausto Counsel and Board Secretary
Joseph H. Louchheim Deputy Commnissioi:er,
Division for New York City Affairs
C. Carlyle Nuckols, Jr., M.D Deputy Commissioner,
Division of Medical Services
Robert Shulman Deputy Commissioner,
Division of Children's Services
James J. Sullivan Deputy Commissioner for Board Affairs
Eleanor Walsh Deputy Commissioner,
Division of Family Services
APPENDIX C
AWARD WINNERS
The New York State Board of Social Welfare was cited by the New York State
Welfare Conference "for its historic contribution to our social welfare structure."
Chairman Hugh R. Jones was given a Conference award "for his outstanding
citizen leadership to social welfare in the State and Nation."
Commissioner George K. Wyman received the Blanche Ittleson Award for spe-
cial services in the fields of social work and social welfare in recognition of his
"leadership in social action and championship of comicepts' of social welfare philos-
ophy and practice, which has produced better service in meeting new and chang-
ing conditions in the State of New York."
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APPENDIX 4
THE FAMILY ALLOWANCE
By MARTIN SCH~cITZER, Professor of Finance, Virginia Polytechnic Institute
In the United States many persons and groups of diverse political persuasions
advocate some form of a guaranteed income as a device to eliminate poverty.
Most proponents of an income guarantee visualize the use of an income transfer
through the existing tax system in the form of a negative income tax. A minority
favors the use of a family allowance in which transfer payments are made on
the basis of the number of children in a family. Precedenee exists for the use of
the family allowance because all major industrial countries use it; this fact,
however, does not mean that the United States should rush to adopt it.
In this prepared statement, the family allowance systems of five countries-
Canada, Denmark, France, Great Britain, and Sweden-will be compared. It is
appropriate that these countries should be used, for all are advanced and modern
industrial countries. Canada and Sweden are second and third among countries
in the world in terms of per capita income.
Family allowances are regular cash payments to families with children, and
are usually financed by a tax on employers or out of general government reve-
nues. The a~nount of the family allowance is either the same for all children,
or it increases progressively with the number of children in the family. In
some countries the family allowance varies with age. Generally, there is a cut-off
point for eligible children, which ranges between 14 and 18 years; however, this
cut-off point may be extended for children who are in schooL The allowance
is available to all families regardless of income; however, it may or may not,
depending on the country, be subject to the personal income tax.
THE CANADIAN FAMILY ALLOWANCE
The Canadian family allowance was introduced in 1944. There were several
reasons for its adoption which were as follows:
1. The Marsh Report, which was the Canadian counterpart to the Beveridge
Report of Great Britain, appeared in 1943. In this report, a proposal for a family
allowance was presented. The Beveridge Report had recommended the adoption
of a system of family allowances as part of a postwar social .security system
for Great Britain. The Marsh Report visualized the same purpose for family
allowances in Canada.
2. There was concern in Canada over the problem of maintaining full employ-
ment after the end of the Second World War. It was felt that the family allow-
ance would stimulate aggregate demand-the Keynesian influence on Canadian
economic thought was strong-since it would redistribute income to families
in the lower income brackets where the marginal propensity to consume is the
highest.
The current Canadian family allowance is paid to every child under 16. The
allowance is $6 a month for each child under 10 and $8 a month for each child
between the ages of 10 and 16. There is also a youth allowance which was re-
cently put into effect, and which is payable at the rate of $10 a month for youths
aged 16 or 17. The allowance is normally paid to the mother and is not subject
to a means test. It is paid from the Consolidated Revenue Fund of the Canadian
Government. It does not constitute taxable revenue, but there is a smaller tax
exemption for children eligible for the allowance.1
1 Exemptions for children receiving the family allowance amount to $300 per child;
exemptions for children not receiving the allowance amount to $550 per child.
(520)
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521
In 1966 the average monthly family allowance in Canada was $16.59. This
amounted to approximately 3 percent of the average gross monthly income for
the typical Canadian family. The allowance was paid to 2,785,636 families with
6,865,057 children. The total cost of the family allowance was $551,734,824. This
amounted to 12.7 percent of all social security expenditures in Canada-federal,
provincial, and municipal-and 19.1 percent of federal expenditures on social
security. When compared to Canadian national income, the family allowance
amounted to 1.4 percent.
The value of the family allowance varies inversely with the level of income.
Although payments are low for such a high income country (the average gross
family income is around $6,500 a year), they can amount to a significant propor-
tion of total income to low income families. For example, a family with three
children under 10 and with an income of $1,500 a year would receive $216 a
year-14 percent of earned income. If the three children are between the ages
of 10 and 16, the family allowance would amount to $288 a year. In terms of
closing a poverty gap, the Canadian family allowance would only make a partial
contribution. For example, if the Council of Economic Advisers poverty line
income of $3,000 a year for a family is applied to Canada, the above mentioned
family with the income of $1,500 a year would receive from $216 to $288 in fam-
ily allowances depending on the ages of the children. This would work out to
a maximum of $1,788 a year, a figure which is far short of the poverty line in-
come of $3,000.
The average monthly family allowance has .remained virtually unchanged
over the last five years as the following table indicates.
TABLE 1.-Average monthly family allowance payments in Canada
Average
moat hly
payments
1963 $16. 63
1964 16. 67
1965 16. 68
1966 16. 59
1967 16. 42
Source: Department of National Health and Welfare, "Social Security in Canada,"
Ottawa: 1967.
The family allowance, when expressed as a percentage of total transfer pay-
ments via social security expenditures for federal, provincial, and municipal
levels of government, is declining in relative importance. For example, the family
allowance in 1959 amounted to 16.3 percent of total transfer payments; however,
in 1967 the allowance amounted to 12.5 percent of total transfers. There appears
to be a tendency in Canada, as well as in many other countries, to raise the
allowance only periodically.
The income redistribution effects of the family allowance form an interesting
pattern in Canada.
1. There is income redistribution between provinces with lower income prov-
inces, such as Newfoundland gaining in terms of the benefits of the allowance
as opposed to the cost, and upper income provinces, such as Ontario, losing in
terms of benefits as opposed to costs. The family allowance, when expressed as a
percentage of average family income, varies from around 5 percent in the poorest
Canadian province (Newfoundland) to about 2 percent in the richest province
(Ontario).
2. There is horizontal income redistribution between individuals and families
within the same income group, meaning simply that individuals and families with
no children lose while families with children gain. A family with no children
receives no allowance but pays income taxes which finance the family allowance.
A family with children pays income taxes but may get back more than what it
paid in the form of the allowance.
96-602 0-68-vol. II-6
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522
3. There is also vertical income redistribution in that families that make above
$9,000 a year lose in terms of cost-benefits (the cost of the allowance is greater
than the benefit of the allow-ances), and families with incomes of less than $9,000
gain in terms of cost-benefits.
4. The progressivity of the Canadian income tax is reduced by the family
allowance for the reason that it is exempt from taxation.2
THE FAMrLY ALLOWANCE IN DENMARK
The family allowance in Denmark is different from allowances paid in the
four other countries because it is based to a certain extent on need. Families w-ith
incomes below a prescribed standard receive an additional allowance, called a
general allowance. The family allowance is paid to all Danish families and is not
subject to the Danish income tax.
The family allowance was introduced in 1949 and has been revised on a
number of occasions. The Danes regard it as a device which is partial compensa-
tion for the levying of a series of indirect taxes which culminated with the
adoption of the value added tax in 1967. In 1960 tax exemptions of 600 to 800
kroner per child were abolished for income tax purposes, and the family allow-
ance was used as a replacement.3
The current family allowance arrangement entails the payment of 780 kroner
per child per year for the first four children in a family. and payment of 830
kroner per child for the fifth and subsequent children. There is an additional
allowance of 3~0 kroner per child for families in which there is a single mother
or father. In terms of U.S. currency the family allowance amounts to approxi-
mately $110 a year per child.
Payment of the family allowance can be illustrated as follows:
Kroner
Families with 1 child 780
Families with 2 children 1,5(30
Families with 3 children 2,340
Families with 4 children 3, 120
Families with 5 children 13, 120
1 Plus 830 l~roner for the 5th~ 6th, 7th child, etc.
The average gross income in Denmark is around 30,000 kroner a year, and the
average net taxable income is 23,000 kroner. An average Danish family consists
of three persons. In terms of ratios, the family allowance would constitute
about 3 percent of average gross income and about 4 percent of average net
taxable income.
For families or single persons with low incomes, there is an addition to the
allowance, which is tied on the level of income. If net taxable income is less than
8,200 kroner ($1100) a year, a general allowance of 350 kroner a year is paid.
If net taxable income is between 8.200 and 8,800 kroner a year, the general
allowance is 200 kroner, and if net taxable income is between 8,800 kroner and
9,600 kroner. the general allowance is lOt) kroner a year. For single persons with
net taxable income of less than 8.5(X) kroner a year, compensation amounting to
200 kroner is paid.
A measure of the importance of the family allowance in Denmark is provided
by a comparison of allowances to income tax revenues against which they are
offset in the Danish national budget. In the fiscal year, 1950-51, personal income
tax revenues amounted to 727 million kroner and family allowances 89 million
kroner. The allowance amounted to 12.5 percent of the gross income tax revenue
against which it was offset. For the current fiscal year, 1967-68, the ratio had
increased to 17 percent.
2 For studies of the redistribution effects of the family allowance see Joseph W. Willard,
"Some Aspects of Family Allowances and Income Redistribution in Canada," Public Policy,
Srol. 17, 1954, and Antal Deutsch, "Income Redistribution Through Canadian Federal Family
Allowances and Old-Age Benefits," Canadian Tax Foundation, 1968.
2 The Danish currency unit is the krone. One krone is worth $0145.
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523
THE FRENCH FAMILY ALLOWANCE
Transfer payments, including family allowances, comprise a considerable per-
centage of personal income in France. The table below illustrates this fact.
TABLE Il-A COMPARISON OF TRANSFER PAYMENTS TO TOTAL FRENCH INCOME
Social welfare
Total income
Year
payments
(in thousand
francs)
including
transfers
(in thousand
francs)
Percent
1959
1960
1961
1962
1963
1964
1965
31,780
35,054
39,803
46,645
55,252
62,957
70, 160
210,391
233,922
251,972
286,018
318,192
348,538
372,540
15.1
15.0
15.8
16.3
17.4
18.1
18.8
Source: Etudes and Conjoncture, No. 1, January 1967.
The French family allowance system is one of the most comprehensive in the
world. Unlike the Canadian and Danish family allowances, it excludes the first
child in a family and varies in payment according to French regions. It is cx-
i~ressed as a percentage of a set minimum w-age, which is 328 francs in the
Paris area, and less in other areas. Also unlike the Canadian and Danish family
allowances, it is financed by a tax on employers which amounts to 11.5 percent of
income per employee up to 13,680 francs a year. A characteristic of the French
social security system in general is that it is almost entirely financed by taxes
on employers.
The French system of family allowances was started in 1858 at the initiative
of several French public employers-the railways and the public administrative
service. The Val-des-Bois Works, a private company, introduced a program of
family allowances in 1870, in which workers with families received an additional
60 centimes per child per day. In World War I the family allowance was used
by a number of French companies to attract scarce workers into employment.
It was also used to resist worker demands for higher wages.
In 1932, the family allowance was incorporated into the French revenue and
tax system. The rationale for its inclusion was to stimulate the birthrate in
order to compensate for the enormous war losses sustained by the French in
World War I. Whether or not the family allowance accomplished this objective
is a subject for debate.
The current family allowance is based on a rather complicated procedure:
Families with more than one child are eligible for an allowance that is com-
puted on the basis of a base minimum salary which is 328 francs ($65) a month
iii the Paris area.4 This minimum salary is considered to be the minimum that
an unskilled worker would receive in the Paris area. It roughly corresponds
to a minimum wage which is set by law and which is 2.2 francs an hour in Paris
and 2 percent lower in other zones.
The rate of the family allowance is 22 percent of the base salary of 328
francs for the second child, 33 percent for successive children through the sixth
child, and a flat 33 percent for all children over the sixth child. However, if the
children are between the ages of 10 and 15, an additional increase of 9 percent of
the base salary is provided, and for children who are 15 and older, an increase
This base salary is actually hn arbitrary, determination on the part of the Government
and is considOrably less than the minimum income for an unskilled worker which is around
~12O a month.
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524
of 16 percent is provided. However. if a family has two children over 15, the
oldest is excluded from the allowance.
The following table illustrates the fanny allowance and the method of com-
putation.
TABLE Ill-ILLUSTRATION OF THE FRENCH FAMILY ALLOWANCE
Percentage
Number of Children 1 of base
Amount of
allowance
salary 2
(in francs)
2 22 72.16
3 55 180.40
4 88 288.64
5 121 396.88
6 154 505.12
I The children are assumed to be under 10 for the sake of simplicity.
2 The base salary is 328 francs a month.
The average w-age for a production worker in the Paris area is around $190
a month. The family allowance for a worker with three children under 10 would
amount to 180.4 francs ($38) a month. This would represent a transfer pay-
ment which would amount to 20 percent of the average wage. If one child is
over 10, the allowance w-ould amount to 64 percent of the base salary, or 209.92
francs ($42) a month. For a family with five children under 10, the allowance
would amount to 396.88 francs ($80) a month, which is almost half of the
average salary for a production w-orker. It is entirely possible for the family
allowance to exceed the w-age for many low income w-orkers.
The family allowance is exempt from the personal income tax and is paid to
all families in France. As mentioned `above, it is financed by a tax on employers.
A characteriStic of the French tax system is the reliance on indirect taxation
to produce much of government revenue. Total tax revenues in 1966 amounted
to 39 percent of gross national product-the highest ratio for any major country,
with the possible exception of Italy.
In addition to the regular family allowance, there are other allowances which
are a part of the family allowance system (prestations familales). There is a
single salary allowance for families in which there is one wage earner and the
spouse is incapacitated, and allowances for widows with dependent children. In
addition, a prenatal allow-ance of 22 percent of the base wage of 328 francs per
month for 9 months and a maternity allowance of 200 percent of the base wage
are paid to families. Finally, there is a housing allowance, payable on a monthly
basis to families who devote a certain percentage of their income to rent or to
house payments.
The family allowance system is divided into four categories:
1. family allowances under the basic system, which are applicable to all
w-age and salary earners in France;
2. family allowances for the self-employed;
3. family allowances for fa.rm workers; and
4. family allowances for farm operators.
Administration of the family allowance is under separate funds (caisses) at
three levels-primary funds, organized on a local or occupational basis; regional
funds; and a national fund that acts as an equalization and reinsurance fund
for the primary and regional funds. The funds are managed by boards chosen by
employers and employees.
Ez~penditures on the family allow-ance amounted to 17.2 billion francs in 1966.
This amounted to 24.4 percent of total expenditures on social welfare measures
in France. On a relative basis, family allowances have declined in importance
when compared to other social welfare measures. In 1959 it comprised 30 percent
of total social welfare expenditures.
THE FAMILY ALLOWANCE IN SWEDEN
Sweden has one of the highest living standards in the world. In 1965 the
average family income was approximately 27,500 kroner ($5,300) and the
median family income amounted to 26,000 kronor ($5,200). The Swedish social
welfare program is one of the most comprehensive in the w-orld, and in 1964
amounted to 16.5 percent of net national product.
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The Swedish family allowance was introduced in 1948. Currently, it amounts
to 900 kronor ($175) per child a year. It is paid to every family, rich or poor,
out of general revenues, and irs not subject to the personal inbome tax. It is the
second largest expenditure item in the Swedish budget, ranking behind ex-
penditures for old age pensions. In 1907 allowances were paid for 1,770,000
children under 16.. at a cost of 1.6 birilion kronor ($300 million). This amounted
to 1.3 percent of the Swedish gross national product for 1967, 5 percent of the
national budget, and 14 percent of total social welfare expenditures on the
part of the government.
In addition to the regular family allowance, there are special allowances for
families in unusual circumstances. Special allowanbos ~re paid to single persons
with children, a:nd to orphaned children living with relatives.
The family allowance varies in importance according to the size and income
of the famirly. For example, a family with five children would receive 4,500
kronor ($900) a year. If the family has an average income of 26,500 kronor, the
allowance would amount to approximately 17 percent of earnings. In 1966,
11 percent of Swedish families with five children made less than 12,000 kronor
a year (less than one-half of the median family income for trhe year). The family
allowance, to this group, would constitute a sizeable part of total income. For
married couples without children, 20.3 percent made less than 12,000 kronor in
1966. The family allowance would provide no addition to their income. It is
apparent that transfer payments through the family allowance do make a sub-
stantial contribution to low income families with several children, and there is
a horizontal redistribution of incomes between families with no children and
families with several children, in the same income group.
This can be illustrated by taking two families, both of which have identical
incomes of l2~000 kronor a year. One family has no children, the other family
has five children. The family with no children would have a disposable income
after taxes of 9,980 kronor, and the family with five children would have a dis-
posable income of 14,480. Both families would pay the same amount in taxes,
but the family with children would have 4,500 kronror to add to the disposable
income of 9,980 kronor.
It is important to note thrat the Swedish income tax system does not permit
deductions for children, since these were replaced in 1948 by the famliy allow-
ance. It can be said in com:parin~ the U.S. and Swedish tax systems, that a
family allowance is built into the U.S. tax system through the use of personal
exemptions and deductions which amount to $700 per child. This means that
families in the U.S. receive a children's allowance which, when based on cur-
rent income tax rates ranging from 14 to 70 percent, varies from $98 to $490 per
child. This is a saving to the taxpayer rather than an outright gilant.
It is evident that an element of negative income taxation exists in the Swedish
tax syrstem through the use of the family allowance. At low levels of income,
the family allowance more than counterbalances the personal income tax. Art
hi,g~h levels of income it is the reverse. The fact is illustrated in the following table.
TABLE IV.-THE SWEDISH INCOME TAX AND THE FAMILY ALLOWANCE 1
Gross income
Family
allowance
Income tax
Gain or loss
$1,200
$2,000
$3,000
$4 000
$360
360
360
360
$40
204
525
860
+$320
-156
-165
-500
$6,000
$10,000
$20,000
360
360
360
1,660
3,560
9,560
-1,300
-3,200
-9,200
1 A family of 4 is used, and kronor were converted into dollars to facilitate comprehension. The Swedish personal income
tax used is an average of the national and municipal rates applicable to various income levels. The family is entitled to
deductions of 2,250 kronor for husband and wife, but there are no deductions for children. The family allowance is $180
for each child per year.
THE FAMILY ALLOWANCE IN GREAT BRITAIN
Family allowances were introduced in Great Britain in 1945 during Churchill's
short-lived second Ministry of May-June, 1945. They were included in the
Beveridge Plan, the precursor to the British welfare state for the following
reasons:
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526
1. There was a need for a national minimum income in employment no less
than in unemployment: pre-war surveys had show-n that considerable want
existed, even when a wage earner was at work.
2. There was an anomalous situation by which, without additional assistance
for children, wages might be no more, or even less, than unemployment benefits.
3. Lastly, there was the need with a falling birth-rate for the utmost care
for children, and the greatest possible encouragement for having them.
The family allowance fitted into the Beveridge policy of socializing demand
rather than production, in that it w-as to help attack directly the central weak-
ness of the unplanned market economy of the interwar period-failure to gen-
erate effective demand for products.
The current family allowance is paid to families with tw-o or more children
under certain age limits.5 The allowance is 15 shillings a w-eek for the second
child and 17 shillings a week for subsequent children. For example, a family
with three children would receive 32 shillings a w-eek, and a family w-ith five
children would receive 60 shillings a week. The family allowance is paid to all
families, but must be declared for income tax purposes. It is financed out of
general tax revenues.
The average earnings of adult male w-orkers in Great Britain in 1967 were 21
pounds, 7 shillings a week ($51.24). For a family with three children, the 32
shillings ($3.64) would represent around 7 percent of average weekly earnings.
If the family had five children, the 66 shillings ($7.92) w-ould amount to around
15 percent of gross income.
The British family allowance, when compared to the French family allow--
ance, is considerably less important as a source of income to families with
children. In 1961 the family allowance expressed as a percentage of average
gross monthly earnings amounted to 5.7 percent in Great Britain compared to
28.7 percent in France.
Under the British tax system, allowances are given for children. They vary
with the age of the child; thus for children under 11. an allow-ance of 115 pounds
is given; for children between 11 and 16, the allowance is 140 pounds; and for
children who are 16 years or over, the allowance is 165 pounds so long as they are
in full-time education.
The tax allowance for children is more valuable than the family allowance.
To a British famfly with an income of 1,000 pounds a rear, and with three
children under 11 years of age, the family allowance in 1967, as a percentage of
earned income before taxes amounted to 4.7 percent and the value of the tax
allowance for children in reducing the tax bill amounted to 12.3 percent before
taxes. To a family with an income of 2000 pounds before taxes, and with three
children under 11, the value of the family allowance on the same basis amounted
to 2.3 percent of earned income, and the value of the tax allowance amounted to
7.1 percent of earned income.
THE FAMILY ALLOWANCE--A StIMMARY
The five countries reviewed in this prepared statement use the family allow-
ance. Four of the five introduced it during the immediate post World War II
period for a variety of reasons-to stimulate aggregate demand, to increase the
birth rate, etc. Its importance as a source of revenue to families has declined as
a family incomes have risen.
The allowance varies in amount among countries and can be summarized as
follow-s:
1. In Canada, the amount is $72 per child a year for children under 10, and
$90 a ychr per child for children between 10 and 16. This amount can be com-
pared to average gross Canadian family income of $6,500 a year.
2. In Denmark, the amount is $110 a year per child. The amount can be com-
pared to average gross Danish family income of $4,300 a year.
3. In France the allowance is $180 a year for the second child if under 10, and
more if over 10, and $262 a year for successive children through the sixth (as-
suming that each is under 10) and more if the children are over 10. This can
be compared to average gross wages for production workers of $190 a month.
4. In Sweden the allowance amounts to $175 a year per child. This can be com-
pared to average gross family income of $5,300 a year.
To count for family allow-ances. a child must be under the minimum school-leaving age
of 15, or if over that age. under 19 and undergoing full-time education.
PAGENO="0087"
527
5. In Great Britain the allowance amounts to $93.60 a year for the second
child, and $105 a year for snccessive children.
In Great Britain, the family allowance is taxed; in the other four countries, it
is not. However, Great Britain has tax exemptions for children; Sweden and Den-
mark do not; France uses a family quotient system which permits the splitting of
incomes into parts, based on the number of persons in the family; and Canada
permits an exemption of $300 for children receiving the allowance compared to a
regular exemption of $550.
All ol' the countries pay the allowance to every family regardless of need, and
all, with the exception of France which uses a payroll tax, finance it out of general
revenue.
The redistribution effects of the family allowance can also be summarized.
1. There is horizontal redistribution within income groups, i.e., individuals and
families without children finance families with children in the same income group.
2. There is also vertical redistribution between income groups in that families
with high incomes pay more in taxes than they receive in allowances, while fami-
lies in the low income groups receive more in allowances than in taxes.
3. There isregional redistribution of income in that the family allowance repre-
sents a greater percentage of family income in low income areas and regions
than in high income areas. Also, low income regions receive more in benefits than
they pay out in taxes.
As `an anti-poverty device, the family allowance would have two limitations:
1. It is limited to families with children, whereas poverty occurs among a num-
ber of groups-the aged, families with or without children, and individuals. The
allowance by definition would not be payable to several of these groups.
2. If payment is made to all families, which is the normal custom, most of the
expenditures would go to families that are not in need-a rather superfluous ap-
proach to say the least. This could, however, be circumvented by using a cut-off
point of $3,000 a year per family. The allowance would have to be reduced as the
cut-off point is reached for reasons of equity. Otherwise, a family making $2,900 a
year would receive an allowance of several hundred dollars while a family making
$3,000 would receive nothing.
The cost ~f the family allowance in the United States would depend upon the
number of children to be included and the amount of the allowance. If children in
families with incomes of $3,000 and above are excluded, then in 1964 15,900,000
children would be eligible for allowances. Assuming that the first child is not
excluded from receiving an allowance, the cost of the allowance can be estimated
by using a payment schedule. If the allowance is $10 a month per child ($120) a
year), then the cost would be $1.9 billion a year. This payment of $10 a month
would roughly correspond to current monthly payments in Canada, Denmark, and
Great Britain.
However, assume a payment of $30 a month per child-a not unrealistic as-
sumption since only the children of the poor are considered eligible-the cost
would be $5.7 billion a year (15.9 million childrenX $360 a year).
If all children under 18 in the United States are considered eligible for allow-
ances, the cost of the family allowance would rise considerably. For example,
assume that `the Canadian family allowance is applied to `the United States. In
1967 the Canadian family allowance averaged $6.76 per child. There are ap-
proximately 69 million children in the U.S. under the age of 18. The cost of the
family allowance would be approximately $5.6 billion a year. If the Swedish
family allowance of $175 a year is used, the estimated cost would be $12.1 billion
a year in the United States.
However, it is important to remember that the Swedish tax system does not
permit exemptions for children, and the Canadian tax system reduces the
s~andard exemption of $550 to $300 for children receiving allowances. If the
same procedure were adopted in the United States, namely, the $600 exemption
per child, tax revenues would increase to counterbalance the cost of the allowance.
The French family allowance system if transposed to the United States would
be enormously expensive. A conservative estimate would be around $25 billion
a year.
CoNcLusIoNs
Family allowances are regular cash payments to families with children, and
are paid in a large number of countries as a social security benefit. Payments
usually cover only gainfully employed persons and recipients of social insur-
ance benefits. Some countries start family allowances with the first child; others
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528
start only with the second child. Family allowances are ususily financed by a
tax on employers, or out of general goveimmental revenue. The amount of the
family allowance is either the same for all children, or it increases progessively
with the number of children in the family. Generally there is a cut-off point for
eligible children, which ranges between 14 and 18 years; however, this cut-off
point may be extended for children who are in school, or who are sick or
handicapped. The family allowance is available to all families regardless of
income; however, it may or may not, depending on the country, be subject to
personal income taxation.
The merit of examining the family allowance as an anti-poverty measure
is that it is used by all major industrial nations, with the exception of the
United States, as an income guarantee to children with families. Unlike the
negative income tax and the social dividend, which are other commonly recom-
mended income guarantee devices, the family allowance is in current use and can
be examined.
However, the family allowance does not appear to be a particularly efficient
one w-hen considered as an anti-poverty device. It would be rather foolish to
use it for this purpose, unless it u-as limited to poor families, because it w-ould
be like spraying a forest to get at a few decayed trees. It could be made to apply
directly to the problem of poverty by limiting it only to poor families.
The negative income tax, although not used by the five countries examined
in this statement, appears to be the feasible solution to an income guarantee in
the United States. It would cover all poor, not just families with children, and
would be relatively easy to handle administratively.
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APPENDIX 5
INNOVATION IN PUBLIC ASSISTANCE: THE CASE OF ELIGIBILITY
DECLARATION *
By Sydney E. Bernard, Associate Professor of Social Work, The University of
Michigan, School of Social Work, Ann Arbor, Michigan
A. INTRODUCTION
The last eight years have witnessed a suStained and far-reaching criticism
of existing public assistance programs. Numerous reform proposals have been
advanced, some planned to replace, others to improve the current system. This
paper will discuss one major reform which has moved beyond the proposal
stage and is already underway in a few jurisdictions. The innovation, "Declara-
tion," drastically simplifies and improves the process through which eligibility
and grant size are determined. In contrast to current practice, the agency
accepts the client's statement (Declaration) about his own status, e.g., age, in-
come, resources, residence, etc. Declaration omits the time-consuming, expensive
and demeaning investigation of every relevant aspect of every client's state-
ments. Though originally conceived as a vital reform within public assistance,
Declaration provides a revealing glimpse into the problems and prospects
for eligibility `determina:tion in Negative Income Tax or Guaranteed Minimum
Income programs. Eligibility and benefits under these programs must also be
based on a determination of income and need. A demonstration that these
judgments can be made at an acceptable level of `accuracy and with a minimum
of administrative cost even at the lowest end of the income scale, will provide
strong support for the argumeni that "universal" income maintenance pro-
grams based solely on need can be cheaply and efficiently administered.
The following paper examines the experience to date (March 1968) of the
States that have introduced some variation of this innovation. It describes the
changes associated with this innovation, benefits `and problems encountered,
strategies adopted for its introduction `and projects a possible direction for the
evolution of public assistance. The conclusions are speculative, based upon
agency reports and interviews with some of `the participants.' The paper can
seen as preliminary to a systematic investigation which would include stand-
ardized measures `of the innovation's scope and impact on such relevant targets
as clients, caseworkers, and interest groups in the agency's environment. Such
an investigation would test the accuracy of the reported observatioiis about the
innovation's impact and the strategy developed for its implementation.
B. HISTORY AND CURRENT Usu
Declaration was first used in Public Assistance2 in 1962 in Alabama on a
project basis `and for eligibility redetermination only. It is now in operation or
being initiated in all or part of twelve States.2 By the end of 1964, Declaration
*pajper prepared for the National Conference on Social Welfare, San Francisco, California,
May 1968.
1 ~ am indebted to the staff of the State public assistance agencies whose programs
are discussed below for their assistance in forwarding project reports, copies of forms
and nianiials, personal correspondence in response to questions and in number of instances,
personal interviews. A complete list of these documents is available upon request. Part
of the research was carried out while serving as consultant to the Michigan State Depart-
ment of Social Services, Summer Faculty Demonstration Project, supported by the
Bureau of Family !Services, Department of Health, Education and Welfare.
2 A number of States had used declaration in their MAA programs, some went on to
use it in the other public assistance categories. `See George Hoshino, "Caa the Means
Test Be `Simplified'," Social Service Review, 10, 3, (July, 1965), pp. 192-196.
8Date indicates initiation on full scale or experimental basis: 1962, Alabama; 1964,
West Virginia; 1965, California, Colorado; 1966, Maine; 1967, Iowa, Louisiana, New
York City. Wisconsin; 1968, Pennsylvania, Connecticut; to start July 1, 1968, Michigan,
to start "after July 1st, and under active consideration in Maryland, Oregon, Texas and
Rhode Island. NB., for stylistic reasons, I use the term "State" to indicate jurisdiction,
though in some States the program is in use in only one or a few subdivisions, e.g., in
New York State only two of New York City's 34 centers are involved.
(529)
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530
was in use only in Alabama and West Virginia. By the end of 19(36, California,
Colorado and Maine had initiated experiments. In the first five years only five
States initiated the program, in the next 18 months another seven started or
announced their decision to do so. In addition, at least four other states are
actively examining the use of Declaration for their program.
C. EXTENT OF INNOVATION
The extent of innovation introduced varies greatly. Major variables along
which States differ are: (1) requiring an interview with each applicant; (2)
extent of organizational change introduced; (3) breadth of geographic coverage
achieved; (4) inclusion of eligibility determination and redetermination; and
(5) number of categories included. Other inter-state differences which were
sometimes reported include; response of clients and staff members; extent of
policy change introduced or developed; and degree of community involvement.
THE APPLICATION INTERVIEW
All States which use declaration have reduced their investigatory process; only
four States however, Maine, Colorado, West Virginia and Louisiana, allow
eligibility to be established without an interview. California re-established the
interview when it discovered a (3-7 percent ineligibility rate, and despite the.
conviction that this was largely due to complex eligibility criteria.
The interview is maintained in order to assist the applicant in completing the
complex form, to allow the staff member to note possible inconsistencies and
areas for additional investigation and to offer and assess the need for social
services. Home visits and routine investigation of assets and incomes are not
ordinarily required. New York City for example, requires that full investigations
of eligibility be carried out only on applicants with prior records of fraud or
"other unusual circumstances." Louisiana, which uses declaration for redeter-
nilnation only, has a staff member fill out the form from the case-record and
mail it to the recipient requesting that they indicate any changes.
ORGANIzATIONAL CHANGE
Organizational changes introduced are directed toward the separation of serv-
ice from assistance. Surprisingly, organizational changes are not closely asso-
ciated with establishing eligibility by mail. Maine is the only State to both estab-
lish eligibility by mail and to separate the service and assistance functions. Penn-
sylvania (in four experimental counties) retains the application interview but
provides maximum separation.. The total assistance function; eligibility deter-
mination, redetermination and interim changes in the grant are the responsibility
of the eligibility unit. All other States require the service unit to process grant
changes, and many involve `this unit in eligibility determination in specified cir-
cumstances. The trend, however, seems to be toward a `separation.
Structural changes tend to follow a three part organizational model; (1)
eligibility unit, (2) service unit and (3) validation unit.
The eligibility unit prepares or receives the application and determines eligibil-
ity and grant status. There was an initial attempt to have the eligibility unit
diagnose or assess service needs. The tendency now is to define eligibility deter-
mination as a separate task. Educational requirements for `this position are re-
duced and lower pay offered. Service needs may be discovered by requiring serv-
ice unit visits within 10-30 days of application, mailing a list of services to the
client (Maine), or adding a diagnostic and feferra'l interview at the gateway
to the process.
Service unit innovations found in one or more States include: subdivision into
short-term and long-term units; use of a pooled or agency caseload status:
group orientation meetings to inform clients about policy and program; use of
sub-professionals and volunteers; and a case-conference system which includes
the client as participant.
Validation waits may be staffed at the sub-caseworker level. They carry out
a full investigation of a carefully drawn 10 percent caseload sample. Variations
range from the use of the casew-orker to determine eligibility in a sample of his
own cases, to the reliance on Quality Control, rather than separate validation
units, with a smaller, one-two percent sample.
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GEOGRAPHIC BREADTH
Only three States introduced Declaration without a tooling up or testing pe-
riod in a county or district. Most States whose programs are 12-18 months old
(6) have extended the project to all i~arts of the States and all who have drawn
conclusions from the test period report their intention to do so. The introductory
period involves perfecting forms, changing policies (in some instances) and
training staff.
ELIGIBILITY PROCESS
Nine of the 12 States determine both initial and continuing eligibility by
Declaration. Only Alabama, Louisiana and West Virginia do not.
CATEGORIES INCLUDED
All 12 States use Declaration in their OAA category; ten of the 12 include all
the adult categories (OAA, AB, APTD); surprisingly, eight include or are ex-
perimenting With AFDO recipients; three, Wisconsin, New York City and Penn-
sylvania include general assistance recipients.4
Most of the innovations associated with Declaration are internal to the
agency. Two seem most likely to rouse strong overt public criticism, inclusion of
AFDC recipients and establishing initial eligibility without a mandatory inter-
view. It is striking, therefore, that eight states have included AFDO either in
their initial plan (New York City, Iowa, Wisconsin, Pennsylvania) or as an ex-
tension of the existing system (California, Alabama, Maine, Colorado). And
even more, that two of them, Maine and Colorado, do not require an application
interview.
It is evident that Declaration is glaining momentum as it spreads across the
country but also that prudent concern over public reaction seem:s to characterize
the extent and structure of the innovations associated with it. Before speculat-
ing about the factors that may influeilce the extent of his innovation, it is useful
to examine the amount of ineligibility that may be associated with this process.
D. VALIDATION, How HONEST ARE CLIENTS?
Not surprisingly, clients are reported to be as honest as the rest of us, sur-
prisingly honest in many carts. Some examples: forms filled in by clients alone
are observed to have fewer errors than those in which someone, caseworker,
friend or prominent local citizen, helps them; often clients, when self-reporting,
disclose assets not previously reported in interviews and in one state (West
Virginia) one-fifth of those found to be ineligible, self-reported this fact on re-
turning their form.
A full assessment of Declaration's effectiveness in determining eligibility bone-
fis would identify four kinds of cases in which discrepancies are found: (1) er-
rors of any kind, "defectivb applications," (2) errors effecting the amount of
benefits thought not eligibility per se, a much smaller number (3) ineligible
cases, a smaller number yet, and (4) eligible cases denied benefits, no States re-
ported on these cases, though New York City plkns to do so.
Seven States reported the results of validation experience. Rates of defective
applications ranged from as high as 30-35 percent to as low as 2-8 percent. The
high rate of errors were attributed less to client perfidy than to policy stupidity.
Policies were complex and detailed, demanding for example, exact reporting of
cash value of insurance, property taxes, birth dates and places; all items in which
innocent mistakes abound. Staff produced errors are also frequently reported.
Individual workers or whole units will be "overly strict" in finding errors or
omissions, e.g., in mail applications, items whose meaning is clear from context
will be reported as errors or omissions.
Reported ineligibility5 ranged from a low of zero to .04 percent to a high of
between 6 and 7 percent. All but one State reported less than 4 percent. New
York City's rate, including AFDC, is less than 2 percent. California, however,
4 States and categories are: OAA, West Virginia and Louisiana; Adult categories,
Connecticut and Michigan; Adult and AFDC, Alabama, Ca~ifornia, Colorado, Maine, Iowa;
all these and other programs, Wisconsin, New York City and Pennsylvania.
~ The reported percentage of ineligible cases includes an unknown proportion of deliberate
attempts to defraud along with ordinary errors of reporting and interpretation.
PAGENO="0092"
532
reinstated an application interview in part because of a 6-7 percent ineligibility
rate. The two major factors which seem to determine the error and ineligibility
rates are (1) policy complexity and (2) degree of close review by staff during
the eligibility process.
Current methods of full investigation though tedious and demeaning may not
be efficient or effective. Staff members are usually not trained in investigation,
assets may be easily hidden, e.g., bank accounts transferred to distant banks, and
both staff members and clients may resent the process strongly enough to reduce
its effectiveness. There may, in fact, be a net reduction in costs with Declaration
since the expense of establishing eligibility is reduced and part of the burden
shifted to the applicant as he is given the responsibility of completing his appli-
cation. The saving which may be substantial is then used to provide additional
services of various kinds.
There are no commonly accepted standards for a tolerable level of errors in
Public Assistance administration. The range reported may seem too high or quite
modest. We can, however, make a crude comparison with other government pro-
grams and with an earlier review of the AFDC program. As noted, validation re-
views tend to find ineligibility rate of less than 4 percent. An AFDC caseload
review6 carried out by H.E.W. in 1962/63 found similar or higher rates. They
estimated an overall ineligibility rate of 5.4 percent varying between eleven
States with less than 2 percent through two States with over 15 percent. Their
findings also indicate that complex policy criteria are associated with high
rates of errors. If income were the sole eligibility requirement, fifteen States
would have less than 2 percent ineligibility and the two highest States would
have 8.9 percent and 9.3 percent.
The Veterans Administration, using a highly simplified declaration form, de-
clares that a spot-check comparison with social security records shows a .3 per-
cent ineligibility rate.8 The federal income tax, is the nation's foremost self-dec-
laration (and assessment) procedure. Arithmetical errors, "defects," are re-
ported in over half the returns filed, and are predominantly (11/2 to 1) in the
taxpayers favor. The I.R.S. audited ("validated") 3.5 million returns in 1966
about 3 percent of returns and probably a selected high risk group. Almost two
million "resulted in deficiency recommendations." 0 This suggests that at least
2 percent of tax payers submit returns which are seriously in error. To make a
rough analogy the I.R.S. found over 50 percent of its returns were "defective"
and discovered a two percent ineligiblity rate.
Since these conclusions do not lead the American people to recommend home
visits or investigatory interviews with each taxpayer, they suggest that much
smaller defect rates and quite comparable ineligibility rates ought to be tolerable
in Public Assistance.
E. INNovATIONS, INCENTIVES, AND BARRIERS
Innovation can be seen as one possible response of organization policy-makers
to internal or external pressures. Such pressures are transmitted in part through
the operation of `interest groups who press their demands upon policy-makers.
Recent research suggest that the extent of innovation is related to a combination
of three factors; (1) the motivation of the executive as indicated, for example,
by his training and career goals, (2) resources available, indicated by agency
size, variety and training of staff and State size and wealth; `and (3) barriers or
resistances to innovation; e.g., lack of plan into which the innovation can fit; con-
cern over impact on other program aspects and controlling effects of external
environment.10
Neither space nor available data permit a complete discussion of the relation-
ship between these broad factors and the extent of change introduced by the
States. It is possible to discuss in general terms the attitudes and activities of
some of the interest groups who are or might be involved as resources pressing
for or `barriers resisting adoption of Declaration.
6 U.S. Department of Health. Elucation and Welfare. Elicibility of Families Receiving
Aid to Families with Dependent Children: A Report Requested by the Senote Appropria-
tions Conim~ttee, (Washington), July, 1963.
Ibid. Table 2. p. 13.
8 Par A. Levitan. Projrams in Aid of the Poor, (Kalamazoo), W. E. Upjohn Institute
for Employment Research. December, 1965. p. 16.
0 U.S. Internal Revenue Service, 1966 Annual Report, (Washington, U.S. Government
Print'nc Office. 19661 pp. 21-22.
10 Robert E. Mvtin~er. Innovation in Local Health gervzces, U.S. Denartment of Health,
Education and Welfare. Public Health Serrice Publication No. 1664-2, (Washington,
U.S. Government Printing Office, February, 1968.)
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Innovation can then be described as, in part, a process of adjusting to the
pressures of conflicting interest groups within a context of broad social change.
The broad contextual pressures are indicated by the stark facts of precipitous
rise in caseload size and costs, chronic manpower shortage and the glare of public
attention as pilblic assistance becomes a central political issue (and scapegoat).
The financial and manpower squeeze are easily indicated. Annual public assist-
ance costs are around $8 billion, total caseloads pass 8 million. Between January
1967 and January 1968, total costs rose about one-third, medical care costs in-
creases seventy percent, caseloads (excluding M.A.) increased ten percent." By
1970, it is estimated that there will be almost 100,000 social workers needed in
public assistance, of whom about 31,500 should have two years of graduate train-
ing. In 1964 there were about 46,000 staff members in these agencies of whom
only 2,200 had the desired graduate training.'2
The conditions these figures signify, squeeze public assistance agencies severely.
Pressures to provide services are matched by pressures to limit or reduce costs.
Innovations which have a potential for increasing caseload size are difficult to
initiate. The next section of this paper limits some of the major interest groups
in public assistance and discusses the possible direction their influence might
move agency policy. The basic conclusion of this section is that Declaration is
a remarkably inviting innovation. It advances the goals or satisfies the demands of
many interest groups, though substantial opposition will also be indicated. Major
support comes from groups who favor increased services and/or more objective
procedures, major opposition from groups concerned with increased cost or from
staff members who resist this change for a variety of reasons independent of
cost. The pattern of innovations described above indicates that the scope of
implementaion represents a compromise between these opposing views.
F. INTEREST Gxou~s
The interest groups whose positions will be discussed include; State or local
agency executives; caseworkers and other line `staff; clients; federal agency
staff; political officials, congress, governors and state legislators; and professional
organizations, particularly the American Public Welfare Association.
Agency executives including directors and central staff members, are, I would
suggest, the major source of initiative for this innovation. The executive's
dilemma as already outlined; how can Declaration help him? The manpower
shortage expresses itself in high turnover, low morale, and sheer staff shortage.
The `executive sees an opportunity to shift staff to services, raise morale and
reduce turnover. Higher priced BA. degree social workers can specialize in
services and lower priced eligibility technicians can be used for eligibility
determination. Hard-pressed staff may be able to "manage" larger caseloads or in
ideal circumstances, caseload levels may allow the agency to secure 75 percent
federal matching for "service costs," rather than the 50 percent administrative
costs .matching formula. Not least, the executive may achieve personal and pro-
fessional career goals through developing a more `service driented agency
structure.
Line staff, particularly caseworkers, exert considerable influence both support-
ing and resisting this change. Supporters argue that the eligibility determina-
tion role absorbs time, energy and motivation for their preferred role, service
provision.
A few staff critics may question clients trustworthiness. Most questions,
however, are directed at separation of services. Oriented to the traditional case-
worker-client model, they wonder whether everyQne who "need service" will
receive it, unless routine application and redetermination interviews are main-
tained.
Staff resistance is invariably reported to decrease or vanish in time or
through staff turnover. Nor, can one place the cause for this resistance solely
upon staff attitudes. Complicated agency policy and a climate of deterrence
encourage overly rigid and restrictive evaluation of mailed eligibility, applica-
tions. To dc-emphasize the traditional investigatory procedures, New York
City and others assign newly hired staff to the eligibility unit. If innovation is
a goal, even high staff turnover can be turned to advantage.
"U.S. Department of Health, Education and Welfare, Advance Reldase of Public As-
ststance January 1968, Social and Rehabilitation Service, January, 1968, Table 1 and
Table 2. (Mimeographed).
"U.S. Department of Health, Education and Welfare, Closing the Gap . . . in ~ocial
Work Manpower, Report of the Department Task Force on Social Work Education and
Manpower, Office of the Under Secretary, November, 1965, p. 40.
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No systematic report on client response is available at this writing though
New York City includes this in its research plans. Agencies report that clients
welcome the change since it gives them "confidence and dignity." Some initial
uncertainty and suspicion is reported. Clients need to be told about the change
and the reasons for it; some were concerned about "losing their caseworker"
and others resented the validation review.
No one need doubt that clients place secondary priority on services, or even
humane administrative processes until adequate financial assistance standards
are set and implemented. Recognizing this, Declaration may still meet some
important client demands.13
Declaration can speed up eligibility determination and provide more rapid
access to assistance. A group of applicants whose need is temporary may re-
ceive assistance and be encouraged to risk leaving the rolls for a job since
re-application when need arises is seen to be rapid and simple. New York City's
experience suggests this possibility.
Public assistance has often been criticized for reinforcing or creating feelings
of powerlessness and dependency among their recipients. Briar lists agency
characteristics which contribute to this and recommends structural and policy
changes which might reduce this effect. He criticizes complex eligibility ~tnd
budgeting procedures, distant and obscure decision-making processes, snooping
over daily activities and linking assistance to other services. To reduce power-
lessness he suggests radical simplification of eligibility and budgeting, high
visibility of agency decision-making including enabling applicant to understand
criteria applied to his own claim, and high visibility and accessibility of agency
procedures.14
Declaration produces or can lead to many of the desired reforms. For example,
eligibility criteria are more visible, particularly on applicant-completed forms.
Separation of eligibility from assistance reduces the implicit assumption that
aid and services are linked. Introducing Declaration into the agency often
produces critical examination of policies and procedures and may initiate or
reinforce simplification efforts. Though few clients are now actively demanding
Declaration, it can be a means for effectively meeting some of their demands.
THE FEDERAL BUREAUCRACY
At the federal level state letters asserting federal interpretations of policy,
contain strong references to Declaration. A recent example is found in a major
revision of a section of the federal Handbook which includes within its references
to policies which would apply should the state adopt a "declaration form in
determining eligibility." ~ The 1987 administrative reorganization which created
the Social and Rehabilitation Service explicitly separates the service and assist-
ance payments function.
PROFESSIONAL ORGANIZATIONS
A persistent force for change stems from the American Public Welfare Associ-
ation's Technical Assistance Project (TAP). Sponsoring conferences, providing
consultation and publishing new organizational designs, this group serves as a
source of innovative ideas and as a communication channel for State and local
agencies.3~
POLITICAL OFFICIALS AND THE PUBLIC
There are very few special interest groups who maintain a set of persistent
sustained demands upon public assistance policy.17 Compared to highway policy
13 Declaration was an: explicit demand of the Representatives of the Poor Peoples March
in a recent meeting with Secretary Cohen. U.S. Department of Health. Education and
Welfare. "Conference of the Secretary, Department of Health, Education and Welfare.
with Representatives of the Poor Peoples March," Washington, April, 1968, p. 15
(Mimeographed).
14 Scott Briar. "Welfare from Below: Recipients' Views of the Public Welfare System,"
California Law Review, 54 :370. (1900). pp. 383-385.
~ Steohen P. Simonds. "Application Determintation of Eligibilty and Furnishing Assist-
ance-Handbook IV-2000-2400" Haiutbook Transmittal 139. Social and Rehabilitation
Service. Department of Henlth. Education and Welfare (Washington). February 8. 1968.
16 American Public Welfare Association. Public Welfare-Cliallenqe to Valklit~j. (Chicaro,
Illinois). Technical Assistance Project. pp. 21. (Mimeographed.) For an authoritative dis-
cussion of Maine's experience, see Stephen P. Simonds. Declarations and Incentives: New
Aporoaclies to Public Assistance, Public Welfare, 26. 1 (January. 1968), pn~ 67-71.
17 As the medical care component grows, interest groups have emerged whose activities
belie that generalization. This is one reason that medical care costs in public assistance
have risen more steeply than any others. Sunnort for the basic generalization is found in
Gilbert V. Steiner, ~S'ocial Insecurity, The Politics of Welfare, (Chicago), Rand McNally
and Co., 1966.
PAGENO="0095"
535
with its numerous and well organized set of economic interest groups; service
stations, cement makers, oil companies, etc., public assistance operates in a politi-
cal vacuum. The suggestion that executives have the key policy-initiating func-
tion is largely based on this observation.
Political interest groups who support the change would argue for its contri-
bution to an objective and universal assistance program. Others, perhaps more
conservative, support increased "services" as a solution to poverty. Liberals and
Moderates of both parties might use this issue as a low-cost "bold new innovation
in public welfare."
In Congress, viewpoints are sharply polarized. Declaration is permissible in a
number of programs, e.g., Medical Assistance for the Aged, Medical Assistance
1965 Amendments) and the Title V (OEO) Work Experience and Training
Programs. The 1967 Social Security Act Amendments urge simplicity of
administration:
"The committee bill includes a requirement that States determine eligibility
and provide assistance under their cash assistance program in a manner consistent
with simplicity of administration and the best interest of recipients." 18
Congressional voices can also be heard demanding exactly opposite policies.
The Senate Appropriations Committee "strongly urge" (the Department of
Health, Education and Welfare to) "direct the States" (that) "thorough checks
including inspection of the premises, with the permission of the client, are re-
quired in all determinaticms of eligibility and continuing eligibility. ~ 19
The Congressonal discensus and the sharply conflicted public opinion reflected
there, operates as an important but ambiguous constraint on executive strategy.
Before moving to a discussion of this strategy, it is useful to summarize the argu-
ments usually advanced for Declaration:
1. Continuing and persistent staff shortages may be partially relieved;
2. The federal matching grant may increase from 50 percent "administra-
tion" to 75 percent "services";
3. Client dignity and functioning are enhanced;
4. Welfare Rights organizations' demands for rapid and objective decision-
making can be met;
5. Eligibility determination is less subject to the interpretation of individ-
ual staff members;
6. Policies are reviewed, made more objective and rational;
7. The quality and quantity of services can be improved:
8. Staff members with advanced training may be employed at the direct
service level;
9. A focus on service and agency streamlining may serve a political and
public relations function as a "bold new innovation in public welfare ;"
10. Experience with the use of declaration in M.A.A., M.A., and OEO Title
V projects, show that the procedure is workable;
11. The 1965 and 1967 amendments to the Social Security Act contain lan-
guage urging "simplicity of administration." 20
G. EXECUTIVE STRATEGY
Using rough and impressionistic measures of extent of change associated
with Declaration, I have ranked the States by the extent of change introduced.
Highest scores go to those States which restructured agency roles through sep-
aration of eligibility services; include AFDC in the system; instituted a perma-
nent state-wide system; use for both eligibility determination and redetermina-
tion; and do not require an interview for eligibility determination. Though each
may not have introduced these innovations. California, Maine, Pennsylvania, and
New York City made the most extensive changes; followed in descending order
by Connecticut, Colorado, Iowa, Wisconsin, Alabama, Michigan, West Virginia
and Louisiana.
Returning to the three broad factors that served to indicate the probable
extent of innovation; executive's motivation, resources, and barriers, this listing
of States allows us to speculate about the factors that might explain the differ-
10 U.s. Congress, Senate, Committee on Finance. HR. 12080 social security Amendments
of 1967, Decisions of the Committee Announced by the Chairman, 90th Congress, 1st
Session. 1967. p. 27.
1~ U.S. Congres~ Senate, Committee on Appropriations. Departments of Labor and Health,
Education, and Welfare, and Related Aaencies Appropriation Bill, 1968, Report No. 469,
90th Congress. 1st Session, August 1. 1967. p. 68.
~° Jul's H. Berman. "The Means Test: Welfare Provisions of the 1965 Social Security
Amendments," Social Service Review, XL, 2 (June 1966), p. 173; and H.R. 12080, SocIal
Security Amendments of 1967, bc. cit.
PAGENO="0096"
536
ences between States and the implementation strategies adopted by them. The
four top States all are recognized as having strong, highly skilled, professional,
executive leadership (though this tends to be true of the whole group, while
other States with similar leadership are not on this list). Three of these four
states are also among the nation's richest and largest. Maine's position is clearly
not due to State wealth, (ranking 35th iii per-capita income) but may be due
to strong leadership in the highly professional-ized State agency arid to the
absence of some crucial barriers to innovation. A likely hypothesis suggests that
publio prejudices directed at a large Negro population serves as a crucial barrier
to public assistance innovation. In Maine, this "barrier" is relatively slight
(non-whites are .6 percent of state populations). In the other States, substantial
resources, and strong leadership may have been sufficient to overcome this barrier.
Of the four lowest ranking States, three are among the lowest in average per-
capita income, Alabama (47th), Louisiana (44th), and West Virginia (40th);
and three of the four, Alabama, Louisiana and Michigan, have high proportions
of Negroes or a major urban area with a high proportion of Negroes within its
boundaries.2'
These frankly speculative attempts to explain the activity of the 12 innovating
States leave us with the equally interesting question of the explanation for the
delay or inactivity of the other 40 states. All 12 States are pioneers in this inno-
vative area and two of those with least change were also the first to introduce
the process into their agencies.
Executive strategy in introducing Declaration followed a prudential incre-
mental model. States which have complex eligibility criteria and are highly con-
cerned about criticism for allowing ineligibles on the rolls tended to retain
interviews and other reviews of applicant statements but also consider policy
simplification.
Declaration was not a response to massive public demand. The bulk of public
attention and informed innovative initiative is rightly focused on the far more
basic question of raising benefit amounts and extending them to the tens of
millions covered inadequately or not at all by existing income maintenance
programs.
Initiative has come from within the agencies themselves. The early pattern
-seemed to be state level staff discussions followed by a testing period in a few
counties leading more or less rapidly to state-wide adoption. The two major
audiences are the agency's line staff and the Federal Government. Little pub-
licity was associated with this process though, some executives pointed out, "no
attempt was made to hide it." The innovation was often proposed as a technical
improvement, increasing staff efficiency. References were also made to improved
client functioning and increased dignity though not in response to overt client
-demands. During the last eighteen months, the process has accelerated. Some
-States are omitting the pilot project stage, innovations are more substantial,
covering more categories and including broader organizational restructuring.
New York City added a vital ingredient, legitimating -the innovation through
favorable -national newspaper publicity. In `addition, New York City, was the fimt
to include systematic and comprehensive research on these projects and by calling
attention to the inclusion of AFDC encouraged extension to this category.
On a State level, Maine provides another model for the deliberate mobilization
of public support. Though public assistance is not a central political issue, Maine's
state department made explicit efforts to notify the public through news-release
and -a series of state-wide public forums at which declaration, separation and
other program elements were drawn to public attention.
CONCLUSION
Public assistance is in- the midst of one of its more and more frequently
recurring crises. The program's leaders are searching for an adequate response
to this crisis. Personnel shortages evident throughout social welfare mock efforts
to deliver a humane service program. "Welfare" is increasingly being used as a
code word for racial prejudice, and is a respectable means of beating the poor,
especially poor Blacks. Societal change which produces larger and larger numbers
of unemployed and underemployed either through lack of individual skills or
absence of available jobs raises to the center of social policy the question of the
2' ITS. Denartment of Health. Education and Welfare, ~tatd Data and state Rankings
in Healtl~. Education, a-nd Welfare, Part 2, 1965 edition, Health, Education and Welfare
Trends, (Washington, ITS. Government Printing Office, 1966). Tables S-9 and S-42.
PAGENO="0097"
537
adequacy of public assistance as a mass income maintenance program. Despite
the centrality of this issue, many of the proposals suggested for replacing public
assistance, negative income tax and children's allowances, for example, will not,
in the form presently proposed, abolish and in some cases not substantially
diminish the need for public assistance programs. Yet, few defenders of public
assistance would argue that it would serve as an adequate mass income mainte-
nance program in its present form.
Declaration offers a possible productive route out of this impasse. The necessity
for large scale service programs will continue. Mixing those programs with
financial assistance in a punitive social control framework aborts the promise
of services and makes income maintenance a socially divisive function. Therefore,
separation of services from assistance and introduction of Declaration is of value
whether public assistance is continued or some alternative is adopted. In all
of these proposals, Declaration stands as a central technique for removing the
most abusive aspects of the means test.
It is possible to see two versions of a future public welfare program. Separa-
tion of services from assistance and the introduction of more objective eligibility
determination and grant provision allow the continuation of a public assistance
income maintenance program of the type envisioned by the Advisory Council. In
that system there would be a federally supported universal floor of public assist-
ance under the auspices of the currently existing state agencies. Conversely, if
this role or some substantial portion of it is picked up by a negative income
tax or large grant, children's allowance program, it would still be possible to
maintain the current public assistance structure as a nationwide service provi-
sion mechanism.
So, experiments with self-declaration and separation of services offer us in
addition to their immediate benefits, a glimpse into a possible social service
world of the future.
96-602 0-68-vol. 11-7
PAGENO="0098"
APPENDIX 6
THE POVERTY LINE. WHAT IS IT?*
WHAT DOES THE "POVERTY LINE" MEAN?
Everybody agrees that many Americans are poor. But what do we mean we say
"poor"? How much money (income) can a family have and still be called "poor"?
Many people, including the Federal Government, have tried to answer this
question. At first it ~vas said that any family with less than $3,000 a year was poor.
But that was not a very good answer. Some families were bigger than others. Some
families lived in cities where everything costs a lot, while others lived in farm
communities where things cost less.
So it was decided to figure out how much money different kinds and sizes
of families need. But how much do people need? What is the amount of money
Americans need to live with "human health and decency"?
Everybody needs food. So they started out trying to figure out how much
food people need-the minimum amount of food people need to be healthy. The
U.S. Department of Agriculture figured out how much food different kinds of
people needed (men, women, boys, girls, people of different ages). Then they found
out how much this food would cost in most places in America. Almost everybody
agreed that this was a fair way to figure out people's needs for food.
But, how much money do people need for everything else (clothing, housing,
etc.)? Many people had very different ideas about this, and it was hard to get
everybody to agree.
The Federal Government came up with an idea. (1) They now "knew" the
minimum amount of money people needed for food; (2) If they knew what part of
their income people spent for food; (3) They could figure out how much more
money people seemed to need for everything else.
So they made a study, and found out that low income people spent about one-
third of their income for food, and two-thirds for everything else.
They decided that if they multiplied the amount of money people needed
for food by three they would know the minimum amount of money people need
to live on. And this figure is what they called the "Poverty Line."
Actually, they figured out two "poverty lines". Both were based on food
budgets, and the idea of multiplying the food budget by three to find out the total
needs of a family. One of these was called the Economy Povetry Line, be-
cause it was based on the Agriculture Department's Economy Food Budget.
The Economy Poverty Line is what people usually mean when they refer to the
Federal Poverty Line.
The other one was called the Low-Income Poverty Line, because it was
based on the Agriculture Department's Low-Income Food Budget, which allows
about one-third-more money.
On the following pages are information and graphs which show the Economy
Poverty Line and Low-Income Poverty Line, and compare them with typical
U.S. welfare grants (the "welfare line" for Washington, D.C., which was close
to the national average in 1966.)
KEY TO MONTHLY AND YEARLY FAMILY INCOME GRAPHS
Federal low-income poverty line
The money income needed by a non-farm, female-headed family to live at the
IlLS. Social Security Administration's low-income poverty index in 1964.
Federal economy poverty line
The money income needed by a non-farm, female-headed family to live at the
U.S. Social Security Administration's economy poverty index in 1964.
*prepared by Edwin A. Day, Associate Director for Research, Poverty/Rights Action
Center, Washington, D.C.
(538)
PAGENO="0099"
539
AFDC welfare line, Washington, D.C.
The basic welfare grant levels for Aid to Families with Dependent Children
for food, clothing, shelter, and personal and household items during 1906 in
Washington, D.C.
(Based on the first child being an infant, and each additional child 2 years
older than the previous child.) In 1966, Washington, D.C. AFDC welfare grants
were typical of the national average.
[1] Social Security Administration poverty indexes for families of 7, 8, 9 and
10 are not available. Calculations for these points based on additions of $400
per additional person for the Economy Poverty Line and $450 for the Low Income
Poverty Line (both figures smaller than differences between figures for families
of 5 and 0).
[2] All figures in monthly graph rounded to the nearest $5.
[3] All figures in yearly graph rounded to nearest $100.
THINGS YOU SHOULD KNOW ABOUT THE "ECONOMY POvERTY LINE"
When the Federal Government and most people talk about the "poverty line",
they usually mean the "Economy Poverty Line".
When the Federal Government and most people talk about "eliminating pov-
erty" they usually mean bringing poor people above the "Economy Poverty
Line".
In America today there are 34 million people below the "Economy Poverty
Line".
Almost all welfare recipients (over 8 million Americans) are far below the
"Economy Poverty Line". The average AFDC family receives about 40% less
than their government's own standard for minimum human health and decency.
Welfare provides only GOVERNMENT-SPONSORED POVERTY.
MOST IMPORTANT, YOU SHOULD KNOW, EVEN THE "ECONOMY POVERTY LINE" DOES NOT
REALLY PROVIDE ENOUGH MONEY FOR HEALTH AND DECENCY
(1) The Economy Poverty Line is based on the U.S. Agriculture Department's
ECONOMY FOOD BUDGET-a food budget which does NOT allow people
enough food for continued health.
The Agriculture Department itself says that this food budget provides enough
food for "ONLY TEMPORARY AND EMERGENCY USE".
The Economy Poverty Line does NOT allow for enough food (nutrition) day-
in-and-day-out, month-after-month, for people to stay healthy.
(2) The Economy Poverty Line does NOT even allow enough food money for
most poor people to buy all of the food in the Economy Food Budget.
In figuring out how much money it would cost for people to buy the food in
the Economy Food Budget, the government used conditions that do not apply to
most poor people.
In order for someone to stretch their food dollars to get all the food in the
Economy Food Budget with the money allowed, they must-
(a) Be able to shop around at several good stores.
(b) Be a very good shopper, and always get the lowest possible prices.
(c) Always buy the very cheapest foods, whether the family likes them
or not.
(d) Not buy canned or frozen fruits or vegetables if there are any fresh
fruits or vegetables in season.
(f) Buy no "prepared foods (including baked goods)-make everything
from "scratch".
(f) Be a very good cook-so the family will eat all of the above food.
(g) Allow no member of the family to eat any meals out, or buy any
food besides what is fixed for meal time.
Very few poor people can meet all of these requirements. So they will
not have enough money to even buy the inadequate amount of food in the Econ-
omy Food Budget.
"SHORT-CHANGING" THE POOR
The FACTS show that the Economy Food Budget allows an Economy Poverty
Line family neither enough food nor enough food money to sustain adequate
health.
Furthermore, the Economy Poverty Line bases all of its other allowances,
for clothing, shelter, etc., on the amount of money it allows for food. Thus an
Economy Poverty Line family is equally short-changed on all other items.
PAGENO="0100"
4)
0
U
0
CJi
Number Of P~~pIe. in *Fam4~y
PAGENO="0101"
E
C)
YEARLY FamUy ~ncemes
At The Federa' Poverty Lines
And On WeUare (AFOC)
PAGENO="0102"
542
As a matter of FACTS, the Economy Poverty Line is a FALSE POVERTY
LINE; it does not allow a family enough money for health and decency; it does
not allow enough money for a family to escape poverty.
A true poverty line must "draw the line" between those who have enough
income for human health and decency, and those who do not:
People NOT IN Poverty
poverty line
People IN Poverty
The Economy Poverty Line clearly fails to do this: While it is true that
people below the Economy Poverty Line are in poverty, it is not true that
people at or above the Economy Poverty Line have escaped poverty-are not
in poverty.
PEOPLE WITH INCOMES AT THE ECONOMY POVERTY LINE AND
MANY PEOPLE ABOVE THE ECONOMY POVERTY LINE ARE STILL IN
POVERTY.
A MORE HONEST POVERTY LINE
The Federal government, in a way, admits that the Economy Poverty Line is
not a good poverty line. For it has developed another line which it also calls
a poverty line. They call it the LOW-INCOME POVERTY LINE.
It is shown on the graphs on the previous pages by the dotted line which
is above the Economy Poverty Line.
The Low-Income Poverty Line comes much closer to showing how much
income people really need to live at a minimum level of human health and
decency. It is a much more honest poverty line.
It is based on the Agriculture Department's Low-Income Food Budget
which allows about one-third more food and food money. In turn, the Low-
Income Poverty Line allows about one-third more money for clothing, shelter,
etc. than the Economy Poverty Line.
Many people still feel that the Low-Income Poverty Line is too little when
compared with the high standards of living in the United States. But it is
probably enough money for a family to live at a MINIMUM level of health and
decency.
wn~ TWO POVERTY LINES?
It is strange that the government has TWO poverty lines, when one of them is
clearly not a good one. It is also strange that the inadequate one is called
"Economy" while the more honest one is called "Low-Income"--terms which
give unknowing people the FALSE idea that the "Economy" one is really enough,
and that the "Low-Income" one allows "surplus".
Many feel that the Federal government's use of the Economy Poverty Line
as its standard for "eliminating poverty" is false and misleading-and a public
relations trick at the expense of poor people.
THE POVERTY LINE AND WELFARE RIGHTS
People who understand about poverty lines have a responsibility to tell other
people-to tell them what they really mean, and what they do not mean.
When members of the National Welfare Rights Movement gathered in Wash-
ington in February, 1967 to draw up legislative proposals for the 90th Congress,
they refuse to use the false Economy Poverty Line as their standard for ade-
quate welfare grants. In their proposals they demanded that welfare grants
be raised to the Low-Income Poverty Line.
It is an important difference.
PAGENO="0103"
WELFARET.
GUARANTEED
POVERTY
III.IIIIUh1UhII1IUh, POVERTY LINE $uIJIuIIILIIINIiiuii
I AVER.
AFDC
Poverty/Rights Actio~er,1713RSt.,N.W.,Washington,D.c. ________
Average Annual Incomes
(543)
PAGENO="0104"
544
THE TYPICAL A~RICAN VIEW OF "WELFARE" IS A TANGLE
OF ERROR AND FANTASY.
THE PURPOSE OF THIS BOO~,ET IS TO PRESENT IN GRAPHIC
FORM THE FACTS ABOUT AMERICA'S PUBLIC ASSISTANCE SYSTEM.
TABLE 1: In all states public assistance levels
are far below our government's own definition of
poverty. Thus, public assistance guarantees the
poverty of over 8 million Americans-.~over one-
fourth of the poor in the United States.
TABLE 2: Total public assistance expenditures
are decreasing in proportion to the national in-
come.
TABLE 3: Public assistance payments lag behind
the rest of the economy. The gap between the
living standards of public assistance recipients
and the rest of the population is rapidly growing.
In the last 15 years personal income in the United
States has risen more than 100% (see table 2).
Public assistance levels, however, have risen less
than 25% for children and less than 30% for the
aged.
TABLE 4: Over 95% of all public assistance re-
cipients in federally-supported programs are not
capable of self-support because of old age, child
care responsibilities, permanent and total dis-
ability, or blindness.
TABLE 5: Public assistance expenditures in most
of the states bear little or no relationship tb
the state's financial resources or the nation's
fiscal ability.
TABLE 6: There is no national standard for public
assistance payments. Assistance levels vary dras-
tically from state to state without regard to the
needs of people. In Mississippi most dependent
children receive less than 30,~ per day for food,
shelter, clothing, and medical care.
PAGENO="0105"
545
TABLE~7: Throughout the nati.~n dependent chil.~
dren receive 45% to 75% lessassistance than other
recipients in federally~-supported programs.
TABLE 8: The overwhelming majority of America's
34 million poor are denied any assistance whatso-
ever. Many federal and state regulations (such
as lifetime disability or state residence for 5
______ of the last 9 years) deny assistance to literally
[~ millions of desperately needy Americans Millions
of needy children and adults are denied assistance
~ because an unemployed or under.-employed man has re~
L~~4~j mained with his family. Moreover, a majority of
those who are eligible for assistance under the
law do not receive any assistance at all as a re-
suit of arbitrary administrative actions to mini-
mize expenditures.
1~{bbT OP THESE CONDITIONS, a new movement has ~i~i1I1
understanding and support is needed~:
Dr George A Wiley, Director
Poverty/ Rights Action Center
Except as noted, all statistical material and
statements in this publication are drawn from
public records of the U.S. Dept. of Health,
Education, and Welfare, the June 29, 1966,
Report of the Advisory Council on Public Welfare
(appointed by the Secretary of Health, Education
and Welfare at the direction of Congress), and
the U.S. Bureau of the Census.
Edited by ~dwin A. Day, Associate Director for
Research
PAGENO="0106"
546
U Public assistance payments are so low and so
uneven that the Government is, by its own stan-
________ WELFARE IS POVERTY dards and definitions, a major source of the
poverty on which it has declared unconditional
war.
The national average provides little more than half ihe amount
admittedly required by a family for subsistence; in some low-income States,
it is less than a quarter of that amount. The low public assistance pay-
ments contribute to the perpetuation of poverty and deprivation that extends
into future generations.
HEW Advisory Council on Public Welfare
June 29, 1966.
$6,746
MEDiAN -
INCOME $6,289
URBAN Average Annual Incomes
U.S. 1860 MEDIAN
INCOME
U.S. 1960 For the United States and Aid to Families with
Dependent Children (AFDI) Welfare Families
POVERTY LINE
liii 1111311111113111111111111 lIJEllIllIll
$3,150
POVERTY
LINE
FAMILIES __________
U.S. 1901 $2,499
HIGHEST
STATE
AVER. $1,756
AFOC
N.Y. 1969 AVER.
AFOC
U.S. 1966
$155
AVER.
~
PAGENO="0107"
547
FISCAL EFFORT FOR PUBLIC ASSISTANCE
The total personal income in the United States from all sources
has risen steadily since 1950. The aggregate personal income
which was $228.5 billion in 1950 had more than doubled by 1965,
when it reached $530.7 billion.
GROSS NATIONAL PRODUCT AND PERSONAL INCOME
BILLIONS OF DOLLARS
1,000
Growth
* . . And
Decline
1950 `51 `52 `53 `54 `55 `56 `57 `58 `59 `60 `61 `62 `63 `64 `65
PERCENT OF PERSONAL INCOME SPENT ON PUBLIC ASSISTANCE
1.0
1950 `51 `52 `53 `54 `55 `56 `57 `58 `59 `60 `61 `62 `63 `64 `65
It must be noted, while actual dollar costs have risen,
public welfare expenditures have decreased asia percentage
of national personal income and gross national product.
PAGENO="0108"
548
Public Assistance Payments
Lag Behind the Economy
fl (LI
fit: Li :en:r:I
fl C cfl! It~)fl c:: ~flfl( fit
icc p:;~~:;it ~::. :1:1
1 (1(fl CCC fifli CI, IY'~'fl'
ASSISIANCE
r r' rC(("fl5~ -
li IC UAL
AND ADJUSTED
DOLLARS
BY PROGRAM
(1936 TO 1965)
PAGENO="0109"
549
(JUNE 1965)
OLD AGE 2,149000
Aged (MM) 268,000
Father unemptoyed (AFDC)
UNEMPLOYMENT OF PARENT
388500
An examination of present caseloads highlights the fact that most
public welfare recipients, with the exception of the children and the younger
adults, cannot realistically be expected ever to become self sustaining.
For most public assistanc~ recipients, complete self sufficiency is not
an immediate practicable goal.
MAJOR CAUSES OF NEED AND DEPENDENCY
`S
DEATH APPARENT
220,000
PUBLIC ASSISTANCE RECIPIENTS
Possibilities for Self-Support
HEW Advisory Council on Public Welfare~
PAGENO="0110"
550
STATE FISCAL ABILITY
AND FISCAL EFFORT
FOR PUBLIC WELFARE
That there are fifty-four varieties of public assistance systems would
not be so serious if the resulting programs were adequate to meet need and
equitable throughout all local jurisdictions. Almost without exception,
however, public assistance recipients live in poverty even while they receive
assistance.
The high degree of reliance on State-local capacity, effort, and, to
some extent, willingness to finance the public welfare program has been the
major factor holding back development of adequate Nationwide programs.
CURRENT FORMULAS for Federal financial participation provide an
inadequate base for achieving the twin goals of adequate and comprehensive
public welfare programs:
The formulas do not take sufficient account of State fiscal ability
and effort to finance adequate and comprehensive programs.;
The hope that there would be equitable and adequate public wel-
fare programs in all States as a result of Federal legislative action without
* mandatory provisions has not been realized. Some 30 years of experience
in leaving the implementation of public welfare programs largely to the fiscal
ability and willingness of the State demonstrates that inequities among the
States, between programs, and most important between groups of recipients,
will persist if the Federal Government does not assume a stronger leadership
role.
HEWAdvisory Council on Public Welfare
PAGENO="0111"
551
STATE FISCAL EFFORT
AVERAGE PER CAPITA INCOME FOR PUBLIC ASSISTANCE
E~peo150fs6o~P4zAb~ce Pa~e~otsf~o~o S13AaAS LocalFwoth,
SkdbjAAe~igePerCsp6iIncvme,1964 Pe~ 9130000 Prnooallncorno, 1964
(60330310 Cc~.coa3 Asiio5~ce)
I I I I
3.544 D C 2.39
~ 3,430 DEL. 113
-~ 3233 CONN. 283 ~
~ 3211 NOV 103
3,382 N. 7. 5.13 ___________________
~ 3.116 ALASKA 212 ~
3.103 CAL 8.17 ~
~ 3531 IL1774010 384
3045 NI. 2.80
~ 2,365 7400. 652 ~
2.167 #0 226, ,
2,755 MICA 310
2.046 0670 2.43
~ 2630 503135 470
~ 2,822 4563633 267
~ 2500 077. 314
~ 2601 7073713. 307 ~
4007 810 350
2005 COL 7.32 ~
~ 0511 170 123
2.501 3 I. 46'S
~ 2470 775 382
~ 2,141 3230 251
~ 2.377 IIH 301
~ 2.376 30358 365
~ 2.375 4132173. 541 ~
~ 2,309 5065. 2.73
2,305 (3716 405 ~
_________________________________________________ 2257 #10717 133
~ 2.250 ALA 1.78
~ 2209 57 062 ~
~ 2,233 6732 197
~ 2.155 TEA 244
__________________________________________ 2,106 UTAH 273 ~
~ 2.133 11 5 433 ___________________
~ 2.132 #13756 276 __________________
__________________________ 2.119 53. 303 _______
2,703 EMLA 1033 ~
2.531 16 REX 3.75 ________________
____________________________________________ 2,000 707330 3.35 ~
0.115 Al. VA. 340 _____________
1,933 750 274
____________________________________________ 1,903 36. C 230
_______________________________________ 1879 S 5. 2.77 __________
1,877 050 705 ~
~ 1,859 07164. 195
~ 1833 KY. 324
1,749 31k 433 ~
- _____.___~~ 1.655 ARIA. 425 ~._____l._
~ 1.655 S.C. 1.52
Fl ~o~-..---'~-~ 14.03 41123 3.11 ___________
III 4 I 3 6 `1 I 4 4 3 .
~6OO 3~0 2.190 2030 1.530 1055 ~ ~419 , , , 5015940 260 , 500 - , 350 130
PAGENO="0112"
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PAGENO="0113"
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PAGENO="0114"
554
_____________ ~ ,*~_,_,
ALA. _______________________________________
ALASKA ~
ARIZ. ~
ARK. ~
CALIF. ~ 1 AVERAGE PAYMENT PER RECIPIENT
COLO. ~
CONN. ~ .
DEL ~ ~ -` FOR
D.C. ~1 _______________________________________
FLA ~ - . ~~1
GA~ ~ ~l OLD AGE ASSISTANCE
GUAM ~ I
HAWAII ~ ~III AND
IDAHO ~ ________________________
ILL ~
IND. ~ _________________________________ AID TO FAMILIES
IOWA ~ ________________________________
KANS. ~ I WITH DEPENDENT CHILDREN,
KY. ~ ________________________
LA. ~
MAINE ~
MD. __________________________________________ BY STATE,
MASS. ~ I
MICH. ~ I OCTOBER 1965.
MINN. ~ I
MISS.
MO.
MONT. ~_ 1
NEBR. ~
NEV. _______________________________________________
N.H. ~
NJ. ~
N. MEX. ~
N.Y. ~
N.C. ~ ~1
N.D. ~ I ________
OHIO ~ E~J 0 AA
OKLA. ~ I
OREG. ~ ~ DC
PA. ~
P.R.
RI.
S.C. ~
S.D. ~ I
TENN. ~
TEXAS I
UTAH *
VT. ~ I
VI. ~ I
VA. I
WASH. ~ I
W. VA. ______________________
WIS. ~- -~
WYO. -~~~.-----. ~
U.S. ~~~~JJIIIIIIIIIIIUIIIIII1III
PAGENO="0115"
555
CHILD WELFARE ?
The vitality of any
society can be measured by the way it treats the
children on whom its own future health depends.
Adults who in childhood have failed to receive
the physical and emotional nourishment neces
sary for their own best development become, in
their turn, itiadequate parents, poor citizens, and
economic misfits, incapable of the adaptations
required by our technological society.
HEW Advisory Council on Public Welfare
Among the needy groups, children have suffered most from lesser Federal financial support.
CURRENT FORMULAS for Federal financial participation provide an
inadequate base for achieving the twin goals of adequate and comprehensive
public welfare programs:
The formulas provide more favored Federal financial support for
some than for other groups of needy people. Children are the
most disadvantaged.1
As a result, while public assistance programs are rarely adequate for any
needy group aided, the program likely to be most inadequate-often grossly
inadequate-is Aid to Families with Dependent Children.
Maximum amount subject to Federal sharing: for children and parents-$32
(AFDC) for aged, blind, and disabled-$75.
An examination of public assistance medical care programs shows
clearly that they have not provided adequately for financing health and
medical care for the neediest of all children-those who are dependent on
public assistance. In 1965 more that $1.3 billion were spent on all public
assistance medical care. Yet, the AFDC program, whose recipients corn-
prise 60 percent of the entire assistance caseload, received only 12 percent of
the medical benefits, and 10 States did not proyide any vendor medical care
programs at all for such children.
PAGENO="0116"
556
* . present provi~ns4 and practices are tragically allowed to
continue discrimination against those most rejected and most in
need of special attention as part of the least visible, ihost helpless,
and hopeless of the poor."
STATE LIMITATIONS
FEDERAL PROVISIONS EXCLUDE
RESIDENCE REQUIREMENTS MANY OF THE NEEDY
ADMINISTRATIVE METHODS
Today, lack of Federal provision for large groups of needy people, plus fur-
ther limiting requirements for groups that are included, prevent many of
the most destitute from receiving needed assistance.
Many needy people do not receive assistance under programs pro-
vided for them by Federal law because the State in which they reside does
not participate fully in available programs.
Among the poor not being helped by any federally-aided public
assistance program are:
most needy children living with, both parents or someone other
than a close relative;
many children in need because of the unemployment of a parent;
needy otherwise eligible persons who have not resided in a par-
ticular State for a specified period of years;
persons rapidly losing their vision but not yet blind enough to
qualify for assistance for the blind.
needy disabled adults who are not both permanently and totally
disabled;
needy mothers who are employable but for whom no jobs are
available;
most needy adults under 65 years of age who are unemployed or
unable to earn an adequate income;
PAGENO="0117"
557
The average monthly total of New York
City residents receiving assistance in 1959 was 325,771, but
according to the 1960 census, 716,000 persons (unrelated
or in families) appeared to be subsisting on incomes at or
below the prevailing welfare eligibility levels (e.g., $2,070
for a family of four). In that same year, 539,000 people
subsisted on incomes less than 80 per cent of the welfare
minimums, and 200,000 lived alone or in families on in-
comes reported to be less than half of eligibility levels. Thus
it appears that for every person on welfare in 1959, at least
one more was eligible.
Richard A. Cloward professor of so-
cial work at Columbia University.
Under the public assistance titles of the Social Security Act, Federal
aid is authorized to assist States, as far as practicable, to provide financial
assistance, medical care, and appropriate social services only to specified
categories of needy people: the needy aged, the blind, the permanently and
totally disabled, and certain needy families with dependent children. No
one else, however destitute, can qualify for financial assistance or other we!-
fare services.
* It is widely known, for example, that
nearly 8 million persons (half of them white) now subsist on
welfare, but it is not generally known that for every person
on the rolls at least one more probably meets existing cri-
teria of eligibility but is not obtaining assistance.
PROPORTION
OF POVERTY
GROUP
RECEIVING
PUBLIC
ASSISTANCE
IN POVERTY
34 Milion
PAGENO="0118"
558
"One of the greatest obstacles to the improvement
and expansion of public assistance and public welfare
is the lack of understanding and support among com-
munity leaders and informed citizens. Many citizens
who are otherwise interested in educational, chari-
table and civic matters simply turn their backs on
public assistanc~ . . ."
PAGENO="0119"
(559)
tional
~eIfa re
Thgh ts
Organization
Official Publication of THE NATIONAL WELFARE RIGHTS ORGANIZATION - Headquarters:
Poverty / Rights Action Center, 1762 Corcoran St., NW. Washington, D.C. - (202) 462-8804
PAGENO="0120"
560
What Is The National Welfare Rights Organization?
THE NWRO IS A NATIONWIDE ORGANIZATION OF WELFARE RECIPIENTS and other
poor people. It is made up of affiliated local welfare rights
organizations fr~m coast to coast. At present there are over 100
affiliated local groups in 26 states, and another 100 local groups in
various stages of formation and affiliation.
THE NIIRO IS A ME~1BERSHIP ORGANIZATIUN. There are presently over 5000
dues paying members (families), and the NWRO directly represents the
over 20,000 welfare recipients in these households. The majority of
its members are families receiving Aid to Families with Dependent
Children.
MOST NWRO GROUPS ARE LOCATED IN THE GHETTOS AND BARRIOS of major U.S.
cities, but there are also groups located in rural areas of the South,
Appalachia, and the Mid-West. NWRO includes substantial numbers of
low-income whites, Puerto Ricans, and Mexican Americans, as well as
Negroes in its membership.
How Did The NWRO Come Into Being?
OVER THE PAST SEVERAL YEARS welfare recipients in communities around
the country have been organizing to protect themselves against the
injustices of welfare, and to seek ways to help themselves and to
change the welfare system.
IN MAY, 1966, THE POVERTY/RIGHTS ACTION CENTER was formed in Washing-
ton, D.C. and began contacting local welfare rights groups, supporting
local organizing, and encouraging cooperative action among the groups.
SEVERAL NATIONAL lEETINGS AND WORKSHOPS were held and a National
Coordinating Committee of Welfare Rights Groups was formed. On June
30, 1967 a major nationwide demonstration for welfare rights was
held, with over 5,000 recipients in 40 cities uniting under the common
banner of the National Welfare Rights ilovemant.
AUGUST 25-28, 1967 THE FIRST NATIONAL 1JELFARE RIGHTS CONVENTION was
held in Washington, D.C. More than 300 delegates of local WROs
attended. A constitution establishing the National Welfare Rights
Organization was written and adopted, national officers elected, and
a platform of goals agreed upon.
PAGENO="0121"
561
What Are The Goals Of The NWRO?
NWRO's GOALS ARE: jobs or income now--decent jobs with adequate pay
for those who can work, and adequate income for
those who cannot work.
1. ADEQUATE INCOME: A system which guarantees enough money for all
Americans to live dignified lives above the level
of poverty.
2. DIGNITY: A system which guarantees recipients the same full freedoms,
rights and respect as all Americ~.n citizens.
3. JUSTICE: A fair and open system which guarantees recipients the
full protections of the Constitution.
4. DEMOCRACY: A system which guarantees recipients direct participa-
tion in the decisions under which they must live.
How Is The NWRO Organized?
THE NWRO'S TOP POLICY-MAKING BODY is its annual National Convention
made up of locally elected delegates from each affiliated group.
Between conventions the NWRO is guided by its National Coordinating
Committee which consists of the National Officers, elected at each
convention, and one representative from each state with affiliated
local WRO's, selected by the local groups.
THE POVERTY/RIGHTS ACTION CENTER SERVES as the NWRO National Head-
quarters. The Center is a private, independe,t non-profit organiza-
tion, directed by Dr. George A. Wiley, who formerly served as
Associate National Director of CORE.
THE NATIONAL HEADQUARTERS PUBLISHES the twice monthly NWRO National
Welfare Leaders Newsletter, and other informational materials and
pamphlets on welfare rights. The Headquarters assists local groups
with research, legal backup, and organizing help.
Who Can Become A Member?
INDIVIDUALS BECOME MEMBERS OF THE NWRO BY JOINING AN AFFILIATED LOCAL
welfare rights organization. To affiliate with the NWRO, local groups
must have at least 25 members, a majority of whom must be current
welfare recipients, and the rest immediate past recipients, or low-
income persons, with no more than 10% "other" persons. The group must
be an independent group, or if part of a larger organization, able to
function independently with regard to welfare rights issues.
flTHER PERSONS WISHING TO SUPPORT the welfare rights movement may
become members of a "Friends of the Welfare Rights Movement" group,
now being formed in local communities in cooperation with the NWRO
Headquarters.
PAGENO="0122"
562
How Is The NWRO Financed?
.IEMBERS OF LOCAL GROUPS PAY $1.00 as a joining fee with $1.00 per month
dues recommended. Most of this money stays with the local group, with
small portions going to the support of citywide, statewide, and
national headquarters.
HOWEVER, THE NATIONAL HEADQUARTERS AND LOCAL GROUPS DEPEND on contri-
butions from private individuals, churches, unions, social workar
groups and other friends as a major source of financial support. The
National Headquarters also obtains some funds from foundation grants,
and sales of the NWRO Newsletter, informational pamphlets, and greetir~g
cards.
YOUR SUPPORT AND CONTRIBUTIONS ARE NEEDED AND WELCOMED!!!
How Can I Obtain Additional Information?
Further information can be obtained by contacting:
POVERTY/RIGHTS ACTION CENTER, Headquarters
National 1Ielfare Rights Organization
1762 Corcoran St., N.W. Washington, D.C. 20009
Telephone: (202). 462-8804
ADDITIONAL NWRO PAMPHLETS AVAILABLE FROM NATIONAL HEADQUARTERS:
"How to Link Up with the National Welfare Rights Organizaton"
"A Brief History of the National Welfare Riahts Organization"
"How to Start a Local Welfare Right Organization"
"Welfare--Guaranteed Poverty"
Officers of the NWRO
CHAIRMAN: Mrs. Johnnie Treasurer: Mrs. Marian Kidd,
Tillmon, Los Angeles Newark, New Jersey
First Vice-Chairman: Rec. Sec.: Mrs. Edith Doering,
Mrs. Etta Horn, D.C. Columbus, Ohio
2nd Vice-Chairman: Mrs. Corres. Sec.: Mrs. Dorothy
Beulah Sanders, N.Y.C. DiMascio, Rochester, N.Y.
3rd Vice-Chairman : Mrs. Financi al Sec. : Mrs. Dovie
Carmen Olivo, N.Y.C. Coleman, Chicago, Illinois
Sargeant-at-Arms: Mrs. Alice
Nixon, Pittsburgh, Penn.
PAGENO="0123"
563
NWRO DEMANDS
RIGHTS for the
~rganization POOR PEOPLES
CAMPAIGN
I, REPEAL OF THE WELFARE SECTIONS OF TH~ 1967 SOCIAL SECURITY AMENDMENTS
(PUBLIC LAW 9O-2~t8 "ANTI-WELFARE LAW
This law is the most regressive and racist piece of social legislation in the his-
tory of the country. Directly or indirectly, it affects the majority of residents
of the ghettos and barrios of our country.
A. It freezes federal funds for millions of needy children who are desperately
poor but presently receiving no public assistance.
B. It forces mothers to leave their children and accept work or training or be cut
off welfare and have their children taken away from them.
C. It seriously restricts the program of aid to children of unemployed fathers.
0. It encourages welfare departments to further coerce and intimidate poor people.
II. A NATIONAL GUARANTEED MINIMUM INCOME OF $`+,OOO FOR EVERY AMERICAN FAMILY,
Four thousand dollars per year for a family of four (with $500 per person adjust-
ments for more or fewer family members) would be a minimum to raise families out
of poverty.
The Guaranteed Minimum Income should also:
A. Provide annual cost of livIng adjustments.
B. Be administered by a simple affidavit, similar to the income tax.
C. Include a work incentive allowing families to keep all earnings up to 25% of
their guaranteed minimum income and some portion of additional earnings.
III, FEDERAL FUNDS FOR IMMEDIATE CREATION OF AT LEAST THREE MILLION JOBS FOR MEN
There is a desperate need for jobs in the ghettos for men to permit them to assume
normal roles as breadwinners and heads of families.
These job programs s~üld:
A. Focus on building critically needed low income housing and community facilities
in the ghettos.
B. Contribute manpower to extend vital human services such as health care, educa-
tion and community organization.
C. Give first prnference to contracts with organizations controlled by poor people.
PAGENO="0124"
564
The National Welfare Rights Organization
THE NWRO IS A NATIONWIDE ORGANIZATION OF WELFARE RECIPIENTS AND other
poor people. It is made up of affiliated local welfare rights
or.ganizations from coast to coast. At present there are over 100
affiliated local groups in 26 states, and another 100 local groups in
various stages of formation and affiliation.
MOST NWRO GROUPS ARE LOCATED IN THE GHETTOS AND BARRIOS of major U.S.
cities, but there are also groups located in rural areas of the South,
Appalachia, and the Mid-West. NWRO includes substantial numbers of
low-income whites, Puerto Ricans, and Mexican Americans, as well as
Negroes in its membership.
NWRO's GOALS ARE: jobs or income now--decent jobs with adequate pay
for those who can work, and adequate income for
those who cannot work.
1. ADEQUATE INCOME: A system which guarantees enough money for all
Americans to live dignified lives above the level
of poverty.
2. DIGNITY: A system which guarantees recipients the same full
feeedoins, rights and respect as all American
citizens.
3. JUSTICE: A fair and open system which guarantees recipients the
full protections of the Constitution.
~. DEMOCRACY: A system which guarantees recipients direct participa-
tion in the decisions under which they must live.
CHAIRMAN: Mrs. Johnnie EXECUTIVE DIRECTOR:
Tillmon, Los Angeles Dr. George A. Wiley
First Vice-Chairman: 2nd Vice-Chairman: Mrs.
Mrs. Etta Horn. D.C. Beulah Sanders, N.Y.C.
3rd Vice-Chairman; lirs, Treasurer: Mrs. Marian Kidd,
Carmen Olivo, N.Y.C. Newark, New Jersey
hec. Sec.: Mrs. Edith Corres. Sec.: Mrs. Dorothy
Doering, Columbus, Ohio OiMascio, Rochester, N.Y.
Financial Sec.: Mrs. Dovie Sargeant-at-Arms: Mrs. Alice
Coleman, Chicago, Illinois Nixon, Pittsburgh, Penn.
FURTHER INFORMATION CAN BE NATIONAL WELFARE RIGHTS ORGANIZATION
HEAOQUARTERS: POVERTY / RIGHTS ACTIOH CEUTER
OBTAINED BY CONTACTING: 1762 COR~QgAN ST. NW., WASH!NGTON, D.C. 20009, (202) 462-U04
PAGENO="0125"
MARCH
1Q
1968
OFHCtAI PUBL~CATRn~ ~ir r NAflONAL WELFARE RiGHTS ORGANI ZATION
Headquarters Poverty/Rights Acflon Center1762 Corcoran St.N.W. WashDC(202)462 8804
(565)
PAGENO="0126"
566
REPORT OF THE
NATIONAL ADVISORY COMMISSION
ON CIVIL DISORDERS
Tiu~ WELFARE SYSTEM
The Commisison believes that our present system of public
assistance contributes materially to the tensions and social
disorganization that have led to civil disorders.
Our present system of public welfare is designed to save
money instead of people, and tragically ends up doing neither.
This system has two critical deficiencies:
First, it excludes large numbers of persons who are in great
need, and who, if provided a decent level of support, might
be able to become more productive and seif-safficient. No fed-
eral funds are available for millions of men and women who
are needy but neither aged, handicapped nor the parents of
minor children.
Second, for those included, the system provides assistance
well below the minimum necessary for a decent level of ex-
istence, and imposes restrictions that encourage continued de-
pendency on welfare and undermine self-respect.
A welter of statutory requirements and administrative prac-
tices and regulations operate to remind recipients that they
are considered untrustworthy, promiscuous and lazy. Resi-
dence requirements prevent assistance to people in need who
are newly arrived in the state. Regular searches of recipients'
homes violate privacy. Inadequate social services compound
the problems.
PAGENO="0127"
567
The Commission recommends that the federal government,
acting with state and local governments where necessary, re-
form the existing welfare system to:
o Establish uniform national standards of assistance at least as
high as the annual "poverty level" of income, now set by the
Social Security Administration at $3,335 per year for an urban
family of four.
o Require that all states receiving federal welfare contributions
participate in the Aid to Families with Dependent Children-
Unemployed Parents program (AFDC-UP) that permits assist-
ance to families with both father and mother in the home, thus
aiding the family while it is still intact.
o Bear a substantially greater portion of all welfare costs-at least
90 percent of total payments.
o Increase incentives for seeking employment and job training, but
remove restrictions recently enacted by the Congress that would
compel mothers of young children to work.
o Provide more adequate social services through neighborhood
centers and family-planning programs.
o Remove the freeze placed by the 1967 welfare amendments on
the percentage of children in a state that can be covered by
federal assistance.
o Eliminate residence requirements.
As a long-range goal, the Commission recommends that the
federal government seek to develop a national system of in-
come supplementation based strictly on need with two broad
and basic purposes:
o To provide, for those who can work or who do work, any neces-
sary supplements in such a way as to develop incentives for
fuller employment;
o To provide, for those who cannot work and for mothers who
decide to remain with their children, a minimum standard of
decent living, and to aid in the saving of children from the
prison of poverty that has held their parents.
PAGENO="0128"
568
THE NEW YORK TIMES
MARCH'l, 1968
Panel on Civil Disorders Calls for Drastic
Action to Avoid a Two -Society Nation
RIOT GE~E~IS SEEN I~ ~II1TE RACIS~1
* By JOHN HERBERS'
Spe~ai to The New York Timee
:. WASHINGTON, Feb. 29-The
Ptesident's. National: Ad~iisory
Comm ssion on Civil Disorders
gave this warning to Americans
tonight: "Our natioń:is moving
toward two societies, one black,
`one white-~eparate~ ~and un~
`equal." -,`
Unless drastic and `c6stly
*reniedies are begun at once, the
-. commission said, there will be
a "continuing polarization of
the American community and,
ultimately, the - destruction of
basic democratic values."
The commission said "white
racism" was chiefly to blame
Thr the explosive conditions
`that sparked riots i~i Ameriëan
cities during thEI~t few'sum-
mers. But it also warned that
a policy of separatism now ad-
vocated by many black mili-
tants "can `only relegate Ne-
groes to a permanently inferior
economic state.' =
As for the civil disorders that
ravaged American cities `last
summer, the commission said
they "were not caused by, nor
were they the consequences of,
any organized plan' or `con-
*spiracy.'"
Broad Proposals
The panal made sweeping
recommendaticms at~ Federal
and local levels in law enforce-
ment, welfare, `employment,
education and the news media.
It' made no attempt to put a
pricetag onthese recommenda-
tions, but they~ go far beyond
social programs that are now in
trouble `in Congress because of
a tight~ budget.' They would cost
hiany billions of dollars.
Drive, for Jobs . `Asked
The' following'v~ere ~tmong
the conimission's scores of:rec-
ommendations' for " bringing
about euality `and integration~
cA. revamping of:the'welfare
system, with the Federal `Gov-
ernment assuming a much high.
er percentage Of the cost-un
to; `90. `~er cent-and . with
`changes in. administration that
-wcnild help' to hold families' to-
`gether.: ` ,. *" `. ..` -
clmmediate action to create
2 million new, jobs; 1 million b~y
the state,. local-and Federal
governments and L.million by:
`private industry. `.
cFederal subsidy' of' on-the-
job training for'. hard-core un-
employed ~"by contract or `by.
tax credits."
cLong-range approach to a
"guaranteed minimum income"
for all Americans through a
"basic allowance" to individuals
and families.
t~Bringing 6 million new and
existing dwellings within reach
of low and moderate `income
families in the next five years,
starting with 600,000 next year.
"Reaction to last summer's
disorders had quickened the
movement and deepened the di-
vision," the commission said.
"Discrimination and segregation
have long, permeated much of~
American life; they now threaten'
the future of every American."
But the movement can be re-
versed, the commission said.
- "The vital needs of the na-
tion . must be met," the com-
mission said. "Hard choices
must be made, and, if neces-
sary, new taxes enacted."
The report has deep political
implications. The commission
is advocating that the' nation
go much further than the Pres-
ident has recommended in seek-
ing new social legislation. It
comes at a time, too, when the
nation is deeply involved in the
PAGENO="0129"
569
war in Vietnam and there have
been reports that the President
might send in additional troops.
~urther increasing the cost of
the war.
Ccn2ress has-brim reluctant
to- in~reäse domestic programs
~vhile the vOris. draining so
much of the nations resources
-~2-billiona month..
But .the thrust of the -corn-'
mission's report is that the na-
tion cannot afford to continue
on its present. domestic course,
even `if new sacrifices are
needed~ :
The 11 member commission
headed-by Gov. Otto -Kerner of
-Illinois, was appointed by Presi-
dent Johnson last July 27 to
find the causes of urbai~ riots
and recommend solutions.
Its. report amounts to -a:
stinging indictment of the white
society for its -isolation and
neglect of the Negro minority.
Its pages are filled with find-
ings to bear this o_
"Segregation andpoverty have
created in the racial ghetto a
destructive environment totally
unknown to most white Ameri-
cans," the commission said.
"What white Americans have
never fully understood-but
what the Negro can never for-
get-is that the white -society
is deeply implicated in the
ghetto. White instittuions cre-
ated it, white institutions main-
tain it, and white society con-
`dones it." -
The report was considered
remarkable in that it was chief-
.ly the work of white, middle-
class Americans, several of
them politicians with white
constituencies. Most of the.
commission members are known -
as moderates. -
Some, i~owever, said they
were shocked by the conditions
they had found in Negio slums
during their seven months of
work. Some believed at the out-
set that because of the extent
of the rioting there was bound
to he some conspiracy involved, -
some plan for rioting that had
been carried out.
But the most exhaustive in.
uestigations could find no evi-.
dence of this, the report indi-
cated, even though it was clearly
established that black militants
nad created a climate for riot-
in~ in their calls for violence.
- What the commission found
over and over- was evidence of
white prejudice or ignorance
that had led to Negroes being
crowded into the inner city un-
der a. "destructive environment."
"Large-scale and continuing
violence could result," the
grQup said, "followed by white
retaliation, and, ultimately, the
separation of the two commu-
nities in a garrison state." -
But the commission said
"white racism is essentially re~
sponsible for the explosive mix-
ture which has been accumulat-
ing in our cities since the end
of World War II."
Police Are Warned
The commission also warne~
that "there is a grave danger
that some communities may re-
sort to the indiscriminate and
excessive use of force." It
went on:
"The commission condemns
moves to equip police depart-
ments with mass destruction
weapons, such as automatic
rifles, machineguns and tanks.
Weapons which are designed
to destroy, not to control, have
no place in densely populated
urban communities."
The commission devoted one
section of its report to other
minorities who have worked
their way out of poverty and
segregation and are now ask-
ing why Negroes do not do the
same.
"Today, whites tend to exag-
~erate how well and quickly
they escaped from poverty," it
said. "The fact is that immi-
erants who came from rural
backgrounds, as many Negroes
do, are only now, after three
"enerations, finally beginning-
to move into the middle class.
"By contrast, Negroes benan
concentrating in the city less'
than two generations aeo, and
under -much less favorable con-
ditions. -Although some Neeroes
`~ave esraned poverty, few hnve
h~~i ahle to escape the urban
ghetto."
96- 602 0-68-vol. 11-9
PAGENO="0130"
PAGENO="0131"
~OW!
Ico
Questions and
about
the
NEW
Answers
Official Publication of THE NATIONAL WELFARE RIGHTS ORGANIZATION - Headquarters:
Poverty/Rights Action Center, 1762 Corcoran St., N.W. Washington, D.C. - (202)462-8804
nti
(571)
PAGENO="0132"
572
Questions and Answers
about the new
ANTI-WELFARE LAW
The Anti-Welfare Bill (H.R. 12080) was signed into law by President
Johnson on January 2, 1968. It is now Public Law 90-2~8.
Q WHAT DOES THE LAW SAY?
A FL 90~2148 is a complicated law with many parts. The most important
things in it are:
THE FREEZE= Congress wants to keep welfare rolls from growing.
CUT GRANTS This law tries to `freeze" the number of people on
DENY AID welfare by limiting the number of children the
federal government will pay its share~ of welfare
for.
WORK INCNETIVE Congress wants to make as many mothers as possible
PROGRAM=FORCE go to work. This law will force many mothers to
MOTHERS TO WORK accept jobs or training or be cut off welfare.
Congress wants to crack down on mothers with il-
FOSTER HOME legitimate children. This law encourages welfare
SERVICES=TAKE departments to place more children in foster
CHILDREN AWAY homes, take more mothers to court on neglect
charges, and also to track down and harass fathers.
EARNINGS To encourage people on welfare to work this law
EXEMPTION=KEEP allows recipients and their children to keep some
MONEY YOU EARN of the money they earn working full or part-time.
Q WHEN WILL THE LAW GO INTO EFFECT?
A Each state must change its welfare program to follow this law.
This will take some time. Most of these important parts of the law go
into effect this July--but states may start these programs sooner.
Some states are already beginning to do these things. now.
PAGENO="0133"
573
Cut Grants / Deny Aid
Q HOW WILL THE FREEZE WORE?
A On July 1, 1968 when the federal govern-
ment stops paying its share of welfare for
all children over the limit set in the law
two things will be likely to happen:
1. Welfare Oepartments will try to "get
tough" about letting any more people on wel-
fare (and they will, of course, also try to
cut people off wherever possible)
2. States will try to cut all welfare
grants to make up for this lost federal money.
WHAT ARE MY RIGHTS?
A If your situation stays the same, you
cannot be cut off. All states are required
by federal law and the U.S. Constitution to
treat people equally and anyone who qualifies
for welfare must be aided even if the federal
government doesn't pay its share.
If grants are cut they must be cut for all
children equally.
Q WHAT CAH OUR LOCAL WELFARE RIGHTS ORGANI-
ZATION DO ABOUT THE FREEZE?
A Start now to inform people of their right
to welfare when they are in need Pick a
regular day when your group "sets up a table"
at the welfare department to inform people
who are trying to get help from welfare of
their rights. This is how to stop welfare
departments from illegally denying aid by
using the freeze as an excuse.
Find out who decides how much money recipients
receive in your state. Is it the state wel-
fare director? a welfare board? the legisla-
ture? Then plan a campaign to RAISE grants--
this is the best way to fight against lower
grants!
Force Mothers To Work
Q HOW WILL THIS "WORK INCENTIVE PROGRAM"
BE USED TO FORCE MOTHERS TO WORE?
A The welfare department decides if you are
an appropriate mother to be forced to work.
All mothers who are to be required to work
are then sent to the local state employment
office. The state employment office decides
if: you should be sent out to a regular job
(any work that is available); or put into
some kind of job training program; or if you
need to have a special job created for you.
Whatever the state employment office decides
you must accept unless you have good canse.
If you refuse then the welfare department
will cut you off. Your children may still
receive aid but their money may only be paid
through someone else or to a foster parent..
Q WHAT ARE MY RIGHTS?
A Each step of the way you have rights!
You can appeal the welfare department's deci-
sion that you are an appropriate mother to be
forced to work. -
You can appeal the state employment plan for
your if you think it is wrong.
You can appeal if you are finally cut off by
welfare.
Q WHAT ABOUT DAY CARE FOR MY CHILDREN UNDER
THIS PROGRAM?
A Welfare must provide standard quality day
care for your children if they try to get you
into this work plan. You can refuse work or
training if welfare does not provide good day
care for your children.
Q IF I WANT WORK OR TRAINING BUT WELFARE
TRIES TO KEEP ME OUT OF THIS PROGRAM, WHAT
CAN I DO?
A This is very important--if you want work
or training you should demand that welfare
provide day care for yo~"~ldren and find
you decent work or training or create a job
for you. This will help other mothers who
feel they should be at home with their child-
ren. But you will need to be organized be-
cause welfare may try to force you to take
bad jobs or training and you will ~ to
fight to get what you want.
PAGENO="0134"
Q WHAT CAN OUR GROUP DO TO PROTECT OUR
:Th4BE~S AND OHER RECIPIENTS AGAINST FORCED
lORE?
A The first time to fight is when ~our...state
welfare writes up its rules about which~
mothers are "approprIate" to be forced~tb..-
work. Find out. how these regulations are -
decided in your state and try to get mother~s
with pre-schhoI~children or children with
special problemK~kept out of the program
from the beginning.
Secondly, yourghoupmust begin to inform
all welfare mothers of their rights: to
adequate day care, to decent work and train-
ing, and especially their right to appeal
* what the welfare department decides for them.
i~ig public meetings, door to door street cam-
paimps, to get the word out are very import-
* ant.
Third, you can plan pressure to make the wel-
fare department and employment agency. find
jobs first for any men who are on welfare and
then for women who want to work. Only after
all these people have decent jobs should there
be any forcing mothers out of the home..
Getting a group of unemployed men to demand
jobs right at the employment office where they
are trying to force mothers to work would be
a good action example!
Take ChUdren Away
Q IF THE WELFARE DEPARTRENT TRIES TO TAKE
MY CHILDREN AWAY, WHAT ARE MY RIGHTS?
A Your children cannot be taken and placed
in a foster home aga~nst your will without a
court hearing. Yotwhave a right to demand
legal help to fight. any attempt to take your
children away from you. If welfare threatens
to cut you off unless you agree to put your
children in a foster home this is an illlegal
threat and ycu should make a big issue of ft
wdth your Welfare Rights group backing you up.
You can appeal an~naybe even thke the welfare
department to cou over threats and tricks
like this!
WHAT CAN OUR LFARE RIGHTS GROUP DO
ABOUT THIS FOSTER ORE ISSUE?
~ Your group rri4t want to make a big public
issue of this t~. ng out how welfare pays
foster parents mo to take care of children
than they pay the mother and to show many of
the other problemsswith foster care. Most
social wor~ers,. p.ychiatrists and others who
have se~f1 ~he pro~lems of foster homes will
be onytr side. -
Money You~ Earn
Q HOW WILL THIS WORK?
A States maynow let welfare recipients
keep the first $3O.GO and 1/3 of the rest of
earnings from any work. States must do this
by July, 1969. Some will Gd it starting in
the next several months. All income of a
child in school full time or in school part-
time but not working full time may be also
kept.
Q WRO ACTION ON THIS?~
A Your group needs to find out when your
state will adopt this small but important
benefit.
2. The Welfare Department is diredted to
work more closely with the courts and police
on reporting neglect.
-. 3~ Also, welfare departments are tobe -~
allowed to make more use of protective and
vendor payments--paying your grant to you
indirectly through a guardian or paying
your rent and bills . instead of giving you
the money directly.
Got The Message?
If you haven't got the message in this law
yet here it is once more:
either welfare recipients and poor people
will .stick together, learn their rights,
fight against this anti-welfare program
or -
this law will help welfare departthents
seek out, attack, and destroy us one by one.
ORGANIZE! FIGHT BACK!
JOIN YOUR LOCAL WELFARE RIGHTS GROUP!
If there is no WRO in your neighborhood~start
one today. For information, write:
National Welfare Rights.Organization
1762 Corcoran St., H.W.
Washington, D.C.
574
Other Bad Features
Q WHAT ABOUT OTHER BAD FEATURES OF THE LAWI
A There are at least three other important
things in the law:
1. Aid to Children with Unemployed Fathes
in the home is made even more difficult to
obtain.
PAGENO="0135"
APPENDIX 7
TAX POLICY AND CHILDREN'S ALLOWANCES
By HARvEY E. BRAZER, The University of Michigan
To many of us the awareness that something less than $15 billion per year
would suffice to eliminate poverty in the United States in a source of both im-
patience and challenge. The impatience arises because the sum involved looks
so small-less than 2 per cent of Gross National Product, about 6 per cent of
total government spending, and about half of the annual cost of pursuing the
war in Viet Nam-relative to the gains to be realized. And the challenge is found
in the recognition that some means must be devised for effecting the required
transfers.
Given one's impatience, a reading of the recent literature on schemes to al-
leviate or eliminate poverty teads to a sense of frustration, for it seems that
no one plan is capable of achieving the objective at a coSt that is not substantially
greater than the so-called "poverty gap." 1 Rather, it appears that the poverty
problem must be approached from several directions by means of an integrated
set of schemes, each of which can be expected to do no more than a part of the
job. The difficulties involved arise, in part, from the fact that poverty stems
from a wide range of causes, including prolonged unemployment, incapacity,
when employed, to earn enough to bring income above the poverty line," absence
of a male head of family, and incapacity due to age of physical or mental infir-
mity.
But irrespective of why people are poor, their poverty tends to be transmitted
from generation to generation through their children. Thus for at least a very
substantial proportion of the poor our best hope for breaking the poverty cycle
appears to lie in a program specifically aimed at those who suffer the misfortune
of having been born to a family whose income is inadequate to provide the basic
necessities of life. Without these necessities-decent shelter, adequate nutrition
and clothing-provided in an atmosphere and in a manner that encourages
aspirations and reward's effort and initiative, supportive programs in education
and training are likely to be least helpful to those among the poor and near-poor
who are mtst in need of help.
The needs of many of the poor may be met by expanding and improving existing
programs under Social Security and categorical assistance. But the position of
poor families with children, especially when there is an emŘloyed adult bread-
winner present who is incapable of earning an adequate indbme, requires a new
program. In our economic system employers are not expected to adjust workers'
compensation to take into account the number of children dependent upon them.
Nor should they be obliged to do so, for the obvious reason that the larger his
family the `more difficult `would it be for the individual to find and keep a job. And
yet, when earnings of the family head are low the children, unless these earnings
are supplemented, are likely to be caught in the poverty trap.
It is not difficult, the~-efore, to make a formidable case for children's all~w-
ances and alternative programs designed to achieve the same objectives. Before
examining the tax and broader fiscal policy issues associated with such pro-
grams, however, we should note that any one scheme that is designed to serve
all or part of the needs of a segment of the poor population should meet several
criteria. (1) It should not carry the stigma associated' with a "dole" and its
accompanying means test. (2) It should not discourage efforts to earn income.
(3) It should be efficient, in the sense that the portion of the cost attributable
to benefits realized by the non-poor is zero or as near to zero as is compatible
1 For a fine summary of the literature see Christopher Green, Negative Taxes and the
Poverty Problem (Washington, D.C. The Brookings Institution, 1967).
(575)
PAGENO="0136"
576
with our first two criteria. (4) And it should `be susceptible of being adniin-
istered in a manner that neither involves continued or frequently repeated ques-
tioning of the right of recipients to benefits nor excessive costs.
These criteria, and the list is by no means meant to be exhaustive, impose
conditions or constraints that should provide some guidance in the effort to
narrow the choices among alternatives. In my examination of `the alternatives
I shall examine children's `allowances and very briefly look into a tax credit for
depen'dent children and the negative income tax.
CHILDRnx's ALLOWANCES
As we all know, the United States is the only major Western nation that does
not have a children's allowance program. In some countries, such as Belgium,
France, Germany, and Italy, the program is tied to social insurance and financed
through payroll taxes imposed on the employer, whereas in Canada, Sweden, and
the United Kingdom it is unrelated to social security and financed out of general
funds. At current exchange rates monthly benefits per child range from about
$6 to $10. Eligibility generally extends to all children, irrespective of family
income.
Adoption in the United States of a similar program would suggest a monthly
allowance per child under age 18 of about $15, a figure that reflects our higher
level of personal income. This would cost some $12.5 billion per year~ of which
almost 80 per cent would go to children in non-poor families. Its net cost, were
benefits to be subject to federal income tax, would be about $10.5 billion.
Financing this cost would entail such alternatives as additions of L8 percentage
points to employer and employee social security tax rates or a 3.3 percentage
point increase in all personal income tax rates.
It seems patently clear to me that a program with these dimensions has little
appeal, irrespective of whether it is financed out of income or social security
taxes. It would not go nearly far enough toward alleviating poverty among fam-
ilies with children, it is inefficient in the sense in which that term is used in
our criteria, and its cost is excessively high when viewed against its limited
accomplishments.
But rejection of a children's allowance plan more or less patterned `after that
of Canada and the major nations of Western Europe does not imply rejection
of any or all such plans. A children's allowance of $50 per month would remove
an appreciable proportion of presently poor families from the ranks of the poor
and, on this score, is appealing. But if it were to be paid to all families its' gross
cost would be, at about $42 billion, unacceptably high. And, as in the case of the
$15 allowance, some four-fifths of this cost would be attributable to allowances
paid to non-poor families. The problem, then, is to attach to it provisions that
will serve to concentrate benefits primarily on the poor and near-poor and `bring
the net cost down to a feasible level, certainly below $15 billion, while at the
same time not imposing excessively high effective marginal tax rates on earnings
of low-income families.
One means of reducing both the net cost of the plan and reducing the benefits
accruing to middle and higher-income families is the inclusion of family allow-
ances received in taxable income. Although other forms of public transfer pay-
ments, whether or not they are income-conditioned, are now generally tax exempt,
this appears to be the result of a lack of overt policy rather than a part of an
overall plan designed to achieve horizontal and vertical equity under the per-
sonal income tax. Exemption of children's allowances would be inconsistent
with horizontal equity, for it would favor this source of income relative to
others. Vertical equity, or equity among people receiving different amounts of
income is, at best, a murky concept, but whatever it may mean it is hardly
likely to be advanced by exemption of this form of income. Thus taxing chil-
dren's allowances would appear to be consistent with tax policy aimed at greater
equity under the personal income tax.
Subjecting a $50 per month children allowance to income taxation would
recoup approximately $7 billion of its gross cost of $42 billion, to bring the net
cost to $35 billion. Its further effect would be to increase the proportion of net
benefits accruing to poor families from 20 per cent to over 25 per cent.
Under present income tax law the taxpayer is permitted an exemption of
$600 for himself and a like amount for his spouse (plus an additional $600 if
either is over 65 and/or blind) a~d each of his dependents. These exemptions
PAGENO="0137"
577
serve several purposes. They add a major element of progression to the income
tax; avoid the administrative and compliance costs that would otherwise attach
to taxing those with very low incomes; recognize that the first $600 per capita
of family income represents little or no capacity to contribute to the support
of government; and they permit recognition of the fact that family size, `at all
levels of income, is an element in the determination of taxpaying capacity. What,
if anything, is suggested by the introduction of a children's allowance for the
role of the presently allowed income tax exemptions?
With respect to the exemption for the taxpayer and his' spouse, as well as for
dependents other than children who would qualify for the children's allowance,
it seems to me that no change is called for. But the children's allowance should
be viewed as a substitute for the exemption presently allowed for dependent
children. The effect of this substitution would be to introduce an important ele-
ment of the negative income tax at low levels of income, increase after-tax
income of families and heads of households with taxable incomes of less than
$44,000 an'd $36,000, respectively, and reduce It for those with higher taxable
incomes. The effect of the suggested change is illustrated, for married taxpayers
with two children at selected income levels, in Table 1.
TABLE 1.-EFFECTS OF CHILDREN'S ALLOWANCE SUBJECT TO TAX AND ELIMINATION OF EXEMPTIONS FOR
DEPENDENT CHILDREN, MARRIED TAXPAYER, 2 CHILDREN
Adjusted gross income
Presen
t law
With children'
s allowance
Increase in
after-tax
income
Tax 1
After-tax
Tax 1
After-tax
income
income
$1,000
$2,000
$3,000
$5,000
$7,000
$10,000
$20,000
$30,000
$50,000
$100,000
$200,000
$400,000
0
0
0
0
$290
603
1,11~
2,910
5,372
12,188
34,848
88,748
207,300
0
$1,000
2,000
3,000
4,710
6,397
8,886
17,090
24,628
37,812
65,152
111,252
192,700
0
$56
200
354
692
1,034
1,574
3,490
6,135
13,254
36,136
90,258
208,854
$1 200
2,144
3,000
3,846
5,508
7,166
9,626
17,710
25,065
37,946
65,064
110,942
192,346
$1,200
1,144
1,000
84~
79
768
749
620
43p
13
` -87
-31k
-35
1 For simplicity it is assumed that the standard deduction or minimum standard deduction is taken at incomes up to
$10,000 and that itemized deductions equal to 15 percent of adjusted gross income are taken at higher levels of income.
It is further assumed that all of the taxpayer's adjusted gross income is in the form of wages or salary.
As is indicated in the table, the increase in after-tax income effected by the
substitution of the children's `allowance of $50 per month per child for the
dependents' exemption's ~egins at $1,200 when income is zero, is $1,144 when
income `is $1,000, and $1,000 when income is $2,000, declining to $740 at an
income level of $10,000, and assumes negative values at the top of the income
range. But the fact remains that elimination of the income tax exemption for
children eligible to receive a children's allowance reduces the net cost of the
allowance only to about $28 billion and the proportion of net benefits accruing to
the poor is increased only from one-quarter to approximately one-third.
As we have outlined it thus far, therefore, our children's allowance plan meets
three of our criteria but fail's to m'eet the other one. Benefits would not carry any
stigma; it offers simplicity in administration; and the increase in marginal tax
ra'tes on earnings is small. However, the cost `of the plan is twice as high as
would seem feasible and approximately two-thirds of the jcnefits accrue to the
non-poor.
If we accept the criterion that is not met as an overriding constraint it is
clear that something more is needed if the very poor are to receive children's
allowances of as much `as $50 per month per child. It is also clear that this
"something more" must involve impinging upon full compliance with our other
criteria.
I believe it `desirable to retain the `distribution of the allowance to all families'.
Otherwise it would be necessary to define and identify the poor at least at yearly
intervals, thus `admitting a means test and all that it implies into the scheme.
PAGENO="0138"
578
Our task, then, is to devise a method for recouping the allowance from those
whom it is not intended to benefit. In effect this suggests a "vanishing allowance,"
one that declines in value to the recipient at a su~bstantially more rapid rate than
can be accomplished simply by substituting the allowance for the dependents'
exemption and subjecting it to ordinary income tax rates. If, however, we are
to retain some differentiation for size of family in tax liabilities, the allowance
should not be permitted to decline to zero.
One way in which this feature can ~e built into the children's allowance plan
is by requiring that the taxpayer add to his tax liability as ordinarily computed
(after including children's allowances received in income) an amount equal
to an increasing proportion of children's allowances received as income rises.
In developing the rate schedule to be used for this purpose two objectives conflict.
The more steeply progressive we make it the smaller will be the proportion of net
benefits accruing to the non-poor and the lower the total net cost. On the other
hand, the steeper the progression the higher are the implied marginal tax rafes
on earned income. Clearly any suggested schedule must reflect the author's
judgment and his own su,bjective terms of trade between minimizing disincentive
effects and maximizing the share of benefits going to the poor while keeping
costs within tolerable limits.
Before setting up an illustrative schedule and testing its impact upon families
at various income levels, a decision must be made as to the concept of income
to which rates are to relate. My own preference is to relate them to taxable
income, including children's allowance, since this concept presumably reflects
the family's welfare more precisely than adjusted gross income, because it offers
the advantage of jeing the concept to which taxpayers are accustomed to applying
tax rates, and because it would give full effect to the progression effected by the
minimum standard deduction and exemptions for taxpayer and spouse. Alterna-
tive concepts of income are ruled out because their use would involve the dis-
advantage of losing the convenient tie-in with the income tax and the gain in
administration and compliance ease that it offers.
I should propose, therefore, that under the individual income tax children's
allowances be included in income, that exemptions for children eligible for the
allowance be disaliowed, and that taxpayers ~e required to add to their tax
liabilities as otherwise computed an amount equal to a proportion of children's
allowances received.
For convenience and simplicity it might seem appropriate to adopt the taxable
income brackets to which the regular income tax rates apply for purposes of our
schedule of children's allowance recoupment rates. But these brackets are too
wide to permit avoidance of large increments in these rates. Thus I should prefer
$500 brackets up to $4,000, $1,000 brackets up to $8,000, and use of the regular
income tax brackets thereafter. A suggeted rate schedule is presented in Table 2.
TABLE S-SUGGESTED CHILDREN'S ALLOWANCE RECOUPMENT RATE SCHEDULE, MARRIED TAXPAYERS 1
Taxable income Children's
allowance
Over- But not over- recoupment
rate
Taxable income Children's
allowance
Over- But not over- recoupment
rate
0 $500 0
$500 1,000 0
$1,000 1,500 10
$1,500 2,000 15
$2,000 2, 500 20
$2,500 3,000 25
$3,000 3, 500 30
$3,500 4,000 35
$4,000 5,000 40
$5,000 6,000 45
$6,000 7,000 50
$7,000 8,000 55
$8,000 12, 000 60
$12,000 16,000 65
$16,000 2 20, 000 2 90
Over$20,0002_ 390
1 Separate schedules would be required for single taxpayers and taxpayers filing as "heads of households."
2 At these levels of taxable income the CARR declines as the individual marginal income tax rate increases, thus avoid-
ing combined marginal rates in excess of 90 percent.
3 Minus marginal tax rate.
PAGENO="0139"
579
Under this schedule the value of the children's allowance would range from
$600 per year for each eligible child to $60 at levels of taxable income in excess
of $12,000. At least one obvious difficulty presents itself, however. It enters in
the form of extremely high marginal "notch-rates" that apply when taxable
income moves from near the top of one taxable income bracket to the next higher
bracket. To illustrate, suppose that a taxpayer with two children for whom be
receives allowances has taxable income of $2,499. His children's allowance re-
coupment rate (CARR) would be 20 per cent and he would add $240 to his tax
liability. If his taxable income rose to $2,501 his CARR would rise to 25 per cent
and his net income would actually fall by $58 ($300-240-2) plus any ordinary
tax payable on his additional $2 of income. This implies a marginal tax rate
of more than 2,900 per cent! This problem might be solved in a number of ways.
One of these is to apply a rate equal to that applicable to the next lower income
bracket plus the increment in rate multiplied by the ratio of the taxpayer's
taxable income falling within his bracket to the width of that bracket. Thus in
the case at hand the CARR applicable to a taxpayer with taxable income of
$2,501 would be 20 percent plus ~oo of 5 per cent, or 20.01 per cent. His effective
marginal OARR would be only 6 per cent ($12 on $2) and his combined marginal
tax rate 23 per cent (17+6). Thus there is no notch problem.
Assuming again, for illustrative purposes, families with from one to seven
children eligible for the children's allowance and selected levels Of adjusted
gross income, Table 3 offers a ready comparison of the effects of the children's
allowance on the family's net income position.
TABLE 3.-NET CHANGE IN INCOME AFTER TAX DUE TO SUBSTITUTION OF CHILDREN'S ALLOWANCE FOR EXEMP-
TIONS, TAXING ALLOWANCES AND APPLYING THE CARR, SELECTED INCOMES AND NUMBER OF DEPENDENT
CHILDREN 1
Number of dependent
children
Adjusted gr
oss income
$0
$1, 000
$3, 000
$5, 000
$7, 000
$10, 000
$15, 000
$30, 000
1
2
3
4
5
6
7
$600
1,200
1,800
2,344
2,874
3,112
3,280
$600
1,144
1,674
2,008
2,305
2,562
2,700
$339
618
934
1,186
1,377
1,572
1,710
$209
355
483
590
684
832
910
$124
218
289
315
313
304
322
$27
39
42
36
21
-3
-45
$13
-45
-81
-124
-129
-226
-305
-$112
-211
-311
-410
-510
-610
-709
1 Computed as per assumptions stipulated in footnote to table 1.
The table clearly illustrates the fact that the net contribution of the children's
allowance to family income declines both with income and the number of eligible
children in the family. Thus, for example, with two children the benefits decline
from $1,200 when income is zero to just over $600 at an income level of $3,000,
to $355 when income reaches $5,000, and to only $39 at the $10,000 level. Sim-
ilarly, when income is, say $3,000, the net gain begins at $339 for the first child
and decreases to less than $200 for the sixth and seventh child.
That additional children bring declining net benefits may comfort those who
are concerned with avoiding pecuniary incentives for bringing large numbers
of children into the world. More important, in my view, is the fact that the plan
reflects the reasonable assumption that rearing children is an enterprise with
declining marginal costs.
I am not able to pretend to have a precise estimate of the net cost of the
children's allowance scheme as. it hasi been developed here. My rough estimate
would place the cost at about $12 billion, perhaps one third higher than one
would like to have it. But it seems to me that the plan offers a reasonable way
to achieve the desired objectives while meeting all of the criteria set forth
earlier, not perfectly, but at least in very large measure. Obviously modification
is possible and perhaps even desirable. One might wish, for example, to reduce
PAGENO="0140"
580
the allowance from $50 per month to, say, $40 per month, and to provide a
larger allowance for the first than for second and subsequent children. Both of
these modifications are capable of substantially reducing its cost.
In the general form presented here the children's allowance would not appear
to offer major administrative difficulties. Its basic features, to the extent that
they relate to the income tax, could be built into the income-tax withholding
system, including, where appropriate, even withholding on children's allowance
payments alone.
THE TAx Cmmi~
An alternative means of achieving the same results as are obtainable under
a children's allowance may be found in a vanishing tax credit, one that would
be allowed irrespective of tax liability as otherwise calculated, including cases
in which net tax liability would be negative. The credit would replace the exemp-
tion presently allowed for eligible dependents and could be made to decline with
income within a range of, say, $600 to $60 per dependent. In these respects it
would be very similar to the children's allowance plan outlined in the foregoing
paragraphs. It seems to me, however, that it would present some difficult admin-
istrative problems.
Among these problems is the task of finding a means of providing for distri-
bution of net benefits on a regular monthly basis without requiring people to
declare their expected incomes at the beginning of each year. Underestimates
would give rise to the need to collect appreciable amounts in tax from taxpayers
with low incomes, a task that would involve heavy administrative costs and,
undoubtedly, severe hardship in compliance in many cases. Perhaps these are
not insuperable difficulties, but on balance I am inclined to the view that the
merits of this approach relative to the children's allowance are unlikely to be
found to be sufficiently attractive to warrant the measures that might be devised
to overcome them.
THE NEGATIVE INCOME TAX
The appeal of the negative income tax lies in its potential capacity to deal with
the problem of alleviating poverty irrespective of the presence of dependent
children in the family. Those plans that have thus far been presented,2 how-
ever, fail to come to grips adequately with many of the problems involved. These
include devising a means of providing regular monthly payments to the poor,
and of avoiding excessively high effective marginal tax rates while at the same
time providing a meaningful level of benefits, keeping the net cost down to a
feasible level, and confining the benefits primarily to the poor and near-poor.
It appears to me, however, that it would be more than worthwhile to adopt a
limited negative income tax or "negative rates" taxation, particularly if it is
regarded as a supplement to a children's allowance plan. But as a substitute for
or alternative to that plan I find it less than attractive. In fact, of course, the
children's allowance as outlined above could readily be modified to make it a
"people's allowance." As so modified it becomes a general form of negative income
tax; without the modification it is essentially a negative income tax confined to
families with children.
FINANCING CHILDREN'S ALLOWANCES
There is little, in my view, to be said for financing the net cost of the kind
of children's allowance plan set forth here by any means other than the individ-
ual income tax. The alternative of financing through the social security payroll
taxes is unappealing in terms of equity, since the base is limited to the first
$6,600 of wages and salaries, thus excluding property income and part of the
wage and salary income of higher income taxpayers. It is, therefore, regres-
sive as well as horizontally inequitable. Nor can this means of financing be
justified in terms of any alleged or actual "insurance principle."
For the calendar year 1965 reported taxable income under the federal in-
dividual income tax amounted to $254.~3 billion.3 Adding to this sum the amount
of the children's allowances that would be received by taxpayers and the dis-
allowed exemptions for dependents would raise the total tax base to about $320
2 See Green~ op. cit., especially chapters IV-VIII, and the references cited therein.
3 tLS. Treasury Department, Internal Revenue Service, Statistws of Income, 1965, Indi-
vidual Income Tax Returns (Washington: U.S. Government Printing Office, 1967), p. 8.
PAGENO="0141"
581
billion. Growth at the rate of 6 percent per year would raise it further to ap-
proximately $400 billion by 1969. On this base financing the net cost of the
children's allowance plan would require an average increase in tax rates of 3
percentage points. If applied across the board it `would mean raising taxes to a
range of from 17 percent to 73 percent. Alternatively, 3 percentage points is
slightly less than one sixth of the average rate of 19 percent applicable to tax-
able income in 1965. Thus another way of attaining the desired revenue objective
would he by raising all rates by about 16 percent, to a range of 16.2 percent to
81.2 percent. Clearly the latter approach is to be preferred if more rather than
less progression is desired.
But if one is to view the prospects for authorization and financing of chil-
dren's allowances realistically he must take into account existing demands and
pressures on the budget of the federal government. And these are such at present
as to suggest that the best that can be hoped for is that cessation of hostilities
in South-East Asia will release funds and resources in sufficient amounts, not
only to make it possible to finance the plan, but to make it necessary to find
means of sustaining an adequate level of demand in the economy. A~t this point
in time children's allowances, hopefully, will stand high among such alterna-
tives as massive tax cuts and sharp increases in other kinds of public expendi-
ture. Olearly it will be far easier to obtain financing out of potentially large and
unwanted federal "full-employment" surpluses than through enactment of
increases in income tax rates. It is essential, however, that those who favor a
meaningful children's allowance plan develop in full the details and appeal of
that plan, so that they may be ready to offer it for public and Congressional ap-
proval as soon as the budgetary position of the federal government and the
mood of the Congress `become receptive to it.
PAGENO="0142"
APPENDIX 8
UNITED STATES COMMISSION ON CIVIL RIGHTS: STAFF REPORTS
Farm Programs
The Cooperative Extension Service and the Farmers Home Administration,
together with the Agricultural Stabilization and Conservation Service (ASOS)
and the Soil Conservation Service, are the major technical and financial as-
sistance agencies of the Department of Agriculture. This briefing paper deals
with the Cooperative Extension Service and the Farmers Home Administra-
tion. The Soil Conservation Service was not treated at the Montgomery hear-
ing and the ASCS is the subject of a separate report by the Alabama State
Advisory Committee to the Commission on Civil Rights, copies of which have
been distributed.
The Extension Service and the Farmers Home Administration have been im-
portant in increasing the incomes and economic well-being of farmers through-
out the nation. In Alabama and the Blackbelt they have been instrumental in
assisting and financing the transition from cotton to other agricultural enter-
prises. Their services, however, have not benefitted the black poor of the 16
county hearing area.
The Commission on Civil Rights in 1965 studied the Extension Service and
the Farmers Home Administration in its report, "Equal Opportunity in Farm
Programs." The testimony at the hearing in Montgomery showed that the con-
ditions described the 1965 report are substantially unchanged in 1968.
Cooperative Eatension Service
The Commission investigated the Alabama Cooperative Extension Service to
determine whether black farmers are receiving its benefits and whether the Serv-
ice is effective in improving the farming practices and home life of black
farmers and rural residents.
The Cooperative Extension Service, a joint Federal-State program of the
Department of Agriculture, supplies current information about improvements in
farming and homemaking practices to farmers and rural families, helping
them identify their problems and assisting in devising solutions. At the Com-
mission's hearing, testimony indicated that (1) the Alabama Cooperative Ex-
tension Service is not meeting the needs of black people-particularly those
who are poor with only a few acres to farm; (2) the services it provides are
racially segregated and unequal in violation of Title VI of the Oivil Rights
Act of 1964; and (3) the Extension Service discriminates in employment against
black people.
Failure of program, to reach low-income people
The work of the Cooperative Extension Service is carried out by the State
Extension Services of the land-grant colleges in each State through a system
of more than 11,000 farm and home agents in almost every county of the United
States. These agents, acting as joint representatives of the Department of Agri-
culture and the land-grant colleges, work with local people on how to apply
knowledge `and information developed at the colleges to improve their farm,
home, and community life. Linking the agents to the colleges are subject matter
specialists who keep the agents informed of new agricultural advances and
conduct demonstrations on how this knowledge should be applied.1
1 Extension work is financed from Federal, State, county and local sources. Primarily
the funds are used to employ the county agents and specialists who conduct the educa-
tional programs of the Extension S'er'c-ice. In fiscal year 1967, the breakdown of funds for
Alabama was as follows: Federal: S2,585,740 (41.4%) State: S2,579,270 (42.0%) : and
County: ~1,035,694 (16.6%). Hearings of the Subcommittee on Agriculture of the House
Committee on Appropriations "Department of Agriculture and Related Agencies Appro-
priations for 1968," 90th Cong., 1st Sess., PT II, p. 431.
(582)
PAGENO="0143"
583
In addition, the Extension Service organizes 4-H clubs and home economics
clubs. The 4-H clubs, usually organized in public schools, enroll young people
in projects which provide information and demonstrations on such subjects as
farming and career exploration. The home economics clubs provide women with
information and demonstrations on such subjects as food preparation, family
budgeting and money management, health and sanitation.
The Extension Service programs, however, are not reaching many poor people.
No `special plan to reach low income people has been devised in Alabama. Dr.
Fred R. Robertson, the State Extension Service Director, said that there are
some demonstration programs but that they are inadequate because they are
"vastly under-funded." The failure to reach low4income people particularly
affects black people, who in the 16 county hearing area constitute 66 percent of
the rural population and over 87 percent of the rural poor. Common responses
to Commission investigators by black farmers and women were that they had
never seen or had rarely seen Extension agents.
A reason for `the Extension Service's failure to reach low income black farmers
was suggested by Calvin Orsborn, black owner of a cotton gin in Selma and
business manager of the predominantly black Southwest Alabama Farmers Co-
operative Association (SWAFOA). Mr. Orshorn told the Commission that the
inability of many poor black farmers to follow recommended farming practices
stems from their lack of resources to finance the necessary costs.
[We] can determine how many pounds or tons of fertilizer a man needs
or what variety of `seeds he needs and all this. And how much insecticide
he needs on his crop. That is all well and good, to tell this man this. But
now, if this man cannot follow recommended practices, if he doesn't have
the finances and .. . . the means to get finances to follow recommended
practices, you are telling him [something that] does no good.
I think Extension realizes this, and if they are short staffed, then w'hy
bother with these little people who can't follow recommended practices
anyway? . . . you're spinning your wheels really, so Extension has to con-
centrate on people who can follow recommended practices so their program
will be successful.
Mrs. Clara Walker, a farmer in Dallas County and an administrative assistant
in SWAFCA, testified that many members "didn't even know what a soil test
was, they hadn't heard about it."
The Department of Agriculture programs has under the Farmers Home Admin-
istration which provide loan funds to farmers to follow recommended practices.
But, as the hearing testimony on the Farmers Home Administration indicated,
the loan programs of the Farmers Home Administration have little impact on
the poorest black farmers. SWAFCA has attempted to remedy this by lending
money to its members so that they can put into practice the recommendations of
SWAFCA's field representatives and horticulturists.
Discriminatory and unequal service to Negro farmers
Even when black farmers receive services, they generally are not equal to those
received by white farmers. The inequality stems from the fact that (1) nearly
all visits by white agents are to white farmers and nearly all visits by black
agents are to black farmers, (2) black agents have a much heavier case-load than
white agents, since there are many more white than black agents serving a popu-
lation which is predominantly Negro, and (3) white agents have received better
inservice training than Negro agents and have been able to specialize, while
Negro agents remain generalists.
(a) Raoiall~y segregated services-Historically the Extension Service in
Southern States was segregated. Black agents were trained at segregated agri-
cultural schools, occupied separate offices and worked only with black farmers,
families and youth. Title VI of the Civil Rights Act of 1964 prohibited racial
discrimnation in programs receiving Federal financial assistance, and the De-
partment of Agriculture in implementing regulations specifically prohibited "dis-
crimination in making available or in the manner of making available instructions,
demonstrations', information, and publications offered by or through the Coopera-
tive Extension Service." Nevertheless, the Commission in its 1965 report, "Equal
Opportunity in Farm Programs" made the following finding:
Responsibility for work with Negro rural residents, in counties where
Negro staff are employed, is assigned almost without exception to the Negro
staff and the caseloads of Negro workers are so high as not to permit
adequate service.
PAGENO="0144"
584
In 1968, the conditions disclosed at the hearing showed that there has been
little change in blackbelt Alabama since the Commission made its finding three
years earlier.2
Staff members in their investigation analyzed activities reports of agents in
12 Alabama Black Belt counties. These reports show services rendered to rural
persons by race in two months (April and October) of 1967. It was found that
91 percent of the office and field visits made by white extension personnel were
made to whites. At the same time, 97 percent of visits to black farmers, rural
families and 4-H youths were made by black agents. Dr. Robertson, the State
Extension Service Director, testified that the Extension Service is "supposed to
work by the demonstration method, and through volunteer leadership." Service
has "always been on a freedom of choice basis" and "this perhaps is due to
custoně and tradition and longevity that you would have a natural inclination by
many Negro farmers and homemakers to request services from people of their
own race." The Extension Service, however, was racially segregated as a dual
system until 1965 and there is no evidence to suggest that any procedures for a
meaningful choice have been instituted since that time. "Freedom of choice",
moreover, cannot explain why black agents are assigned to work with 4-H youth
only in black schools and white agents only in white schools. Dr. Robertson
testified that instead of desegregating the 4-H clubs he was waiting for the
schools-now, fourteen years after Brown. v. Board of Education., virtually
segregated, with roughly 1.7 percent out of the Negro children in the 16 county
area attending all-Xegro schools-to become integrated:
You have to make a choice as an administrator. What you can do to
serve the most good-now, I had the choice to pull out all the 4-H clubs
from the schools and go to a community basis and say, these are going to be
open to 4-H Club meetings and no discrimination-or, in other words, just
let the chips fall where they may.
And the other alternative was to remain in the schools, and as the schools
become integrated, the clubs would become integrated. I chose the latter.
Now the State of Mississippi did [the former], and I think they have
perhaps a fourth as many 4-H Club members. So it is a value judgment as
an administrator, which course to take.
(b) Disparity betweea case loads of white and iYegro agen.ts.-In the twelve
counties studied, there were 46 white extension agents and only 26 Negro exten-
sion agents to serve a rural population of potential recipients of more than 72,000
Negroes and 27,000 whites. In view of the degree of segregation in services, each
Negro agent had a potential workload almost five times that of each white agent.
In Greene County, for example, there was a single Negro male agent for more
than 2,400 Negro farm operators and young men of 4-H club age-potential re-
cipients of extension services-while there were tw-o white male agents for only
approximately 400 white farm operators and young men of 4-H club age. In Hale
County there u-as a single Negro female agent for nearly 3,100 Negro women and
girls of home economics club and 4-H club age but there were two white female
agents for only 1,100 white women and girls of home economics club and 4-H
club age. Thus if a black person was served at all, it was by a Negro agent who
was overworked; the white person was served by a white agent who had the
time to spend on his problems.
(c) Better inservice training and greater specialization..-Black and white
agents, most of whom have been graduated from segregated land-grant colleges,
may have been equally u-eli trained at the time of graduation. Over the years.
however, black agents have been left out of the information meetings, seminars
and training institutes attended by their white peers, and `their land-grant insti-
tutions have received less appropriations for agricultural research than white
2 Ia its 1965 Report "Equal Opportunity in Farm Programs" the Commission recom-
mended that the President direct the Secretary of Agriculthre to end discriminatory prac-
tices in the Department. In a report on "Progress of Cooperative Extension Service in
Meeting Adverse Findings of the Report `Equal Opportunity in Farm Programs' ", the
Department's statement on segregated service is as follows:
Subject matter assignments are made with increasing frequency on the basis of
agents working in their areas of specialty without regard to race. However, with
regard to 4-H and Home Economics activities, progress is particularly needed to
ensure that no assignments are made on the basis of the race of the agent or the
clientele. Since consolidation of white and Negro county offices, and the assignment
of staff members on a program or subject matter basis, efforts have been made to
increase the amount of time Negro agents spend in assisting white clientele, and the
amount of time white agents spend in assisting Negroes. (Letter of May 23, 1968, from
Secretary Freeman to Rev. Abernathy in response to requests made by the Poor
Peopl&s March, Atta~hment D.)
PAGENO="0145"
585
agricultural schools and therefore have been less able to serve them well. Fur-
thermore, counties generally hired only one black agent and two or more white
agents. The whites were able to' concentrate on specialties, such as 4-H work, live-
stock and agricultural enterprises. The black agent, on the other hand, served a
much larger population and had to be a generalist. As a result the black agents,
knowing less than the white agents, have provided less satisfactory service to the
farmers they serve.
The gap in training between white and Negro agents was confirmed by the
State Extension Service Director. Asked whether there would be problems if
Negro agents were told that in the future they should go out and serve white
people and white agents were told to serve Negroes, Dr. Roberts'on said it would
be difficult to select which agents should serve those of another race and that if
a Negro were sent out "you might run into trouble on some of the technical infor-
mation in relation to beef cattle or some of the other highly technical subjects."
(d) Underenroilment of black youth in 4-H Club Projects aimed at furthering
social and economic opportunity.-Arriong the aims of 4-H Projects are giving
young people knowledge of scientific agriculture and home ecOnomics, exploring
career opportunities and continuing needed education. These aims, however, are
more fully realized for white youth than for black youth. For example, in Ala-
bama white youth tended to be enrolled in such projects as tractor use, raising
of beef cattle, personal development, career exploration and home management
while black youth tended to be enrolled in such projects as field crops and poultry.
This difference in project emphasis is explained in part by the fact that, follow-
ing "custom," the Extension Services assigns black agents to service the Negro
schools. The black agents usually do not specialize in the subject areas involved
because historically Negroes have been limited to traditional agricultural activi-
ties and restricted in their opportunities.
3. Discrimination against Negroes in e~vtension service employment
The testimony also disclosed that black people are excluded from significant
positions in the Service. Although twelve of the counties in the hearing area were
predominantly Negro, the State Director, Mr. Robertson, who appoints persons
to the positions of County Extension Chairman and associate chairman, testified
that no black people held these positions because no local governing board-all
of which are controlled by white persons-had ever recommended a black per-
son.3 He gave the following explanation:
as you know, we work on a cooperative basis, about 42 percent of our
budget comes from Federal and about 58 [percent] from the State and
county. And over the years we have, and we still think this is a basically
sound idea, to stay with the power structure in order to keep `the lines of
communication and the rent coming in.4
Asked whether he would affirmatively suggest to a local governing board that it
recommended a Negro county chairman, Dr. Robertson replied:
I don't think this would be a good administrative move, frankly. I don't
do it because he is a Negro but I have a lot of compassion and feeling for his
effectiveness and his future.
* * * * * * *
I think you have to recognize the fact to be a county chairman there is a
great deal more than just being a representative of the county. You have to
maintain contact with the technical field, with the land grant universities
and with the business community. And the county people and so forth.
Negro extension workers in the Alabama State Extension office at Auburn are
given titles different from whites although they do the same work. For example,
in 4-H work the black agents are known as 4-H Club Specialists and their white
counterparts are known as 4--H Club Leaders. In home economics work, two
black workers are known as District Home Agents while their four white counter-
parts are known as Associate District Extension Chairmen. In work with
farmers, the two black agents are known as District Farm Agents while their
four white counterparts are known as District Extension Chairmen. Of the 112
employees, only eight-all transferred from Tuskegee Institute in order to com-
ply with the Civil Rights Act of 19G4-are black. Black extension workers, re-
gardless of experience, are subordinated to white extension workers.
Of the approximately 1,385 county chairmen in the 16 Southern States, none are Negro.
The county. contribution to Extension work in Alabama averages only about 16% of the
total Alabama Extension Service budget.
96-602 0-68-vol. II-1O
PAGENO="0146"
586
The Commission's hearing and investigation also disclosed that the Depart-
ment of Agriculture has not dealt satisfactorily with the matter of eliminating
segregated offices. In Montgomery, a Commission staff member observed that the
black agent and his secretary occupy an office in the Post Office building isolated
from the area where all of the white agents and their secretaries have their
offices. Another incident was described in testimony at the hearing.
When the Sumter County Extension Office was directed to desegregate in 1965,
the black employees were moved from another building into the same building
as the white employees, but their offices were located in another section of the
building. The Chairman of the Sumter County Extension Service, B. B. William-
son, Jr., testified that in 1967 he was ordered by the Department of Agriculture
to desegregate his office. This w-as accomplished by moving the black secretary
into what had been the storage room and moving the supplies into the office used
by the tw-o white secretaries. The w-hite supervisor of the home demonstration
agents shared her office with a white subordinate, while the subordinate black
demonstration agent was placed in an office by herself. The two white farm
agents also shared an office, while the black agent had an office to himself.
This practice of office segregation not only violates the prohibition of the
1964 Civil Rights Act against discrimination in federally assisted programs, but
it facilitates choices by the whites to seek service from whites and blacks from
blacks. Sumter County had one of the highest rates of segregated service in any
of the counties investigated by the Commission-95 percent of white agents'
time and visits were with whites and 98 percent of black agents' time and visits
were with blacks.
Farmers Home Administration
The Farmers Home Administration was established in 1938 to help small
tenant farmers get out of debt, acquire family size farms, and build decent
homes and communities. The financial and technical assistance provided by
FHA over the years has been an important factor in maintaining the family
farm as a significantpart of American agriculture.
The Commission discovered, however, that in the 16-county Black Belt region
of Alabama FHA programs have had only a negligible effect on black rural
poverty and that white farmers and rural residents, who represent only 38
percent of the rural population in the 16 counties, receive by far the greater
share of FHA resources. Testimony at the Commission's hearing also show-ed
that the loan practices of PHA tend to perpetuate rather than alleviate the
economic dependency of black farmers and rural residents by providing them
primarily with marginal subsistence loans rather than growth and development
loans.
~Phe Commission learned that for Negro farmers agriculture is little changed
from the 1930's. They continue to plant only a few- acres of cotton and some
feed corn. They plow and cultivate with mules and sow-, fertilize and spread
insecticides and weed poisons by hand. They mortgage their crops before the
planting season to their landlords and to the furnishing merchants for rent,
seed, fertilizer, poisons and rations or cash for subsistence, for which they are
charged six to eight percent interest on the principal and outstanding indebted-
ness. At the end of the harvest they have nothing and often owe more than
they have taken in. Approximately two-thirds of the black farmers in the 16
county area of rural Alabama investigated by the Commission farm less than
fifty acres. `Economic progress has been made in Southern agriculture, but today
black farmers are not significant in the farm economy of the Black Belt except
as a source of economic exploitation by white landow-ners, furnishing merchants
and others.
Unequa7 Participation in FHA Programs
Contrary to the original intent of Congress in establishing the Farmers Home
Administration, poor black farmers in Alabama have benefitted little from FHA
programs.
Much of the capital required to finance the shift from row crops, such as
cotton, to diversified farming has been provided by PHA at favorable interest
rates. In addition, FHA County Supervisors have been active in encouraging
many farmers to diversify and have provided the necessary technical `assistance
A "furnishing merchant" makes advances of goods to farmers in return for a mortgage
on the farmer's crop.
PAGENO="0147"
587
to make the transition a su~cessful one.6 But this assistance has mainly benefited
white farmers.
Today only 32 percent of white-operated farms in Alabama are still classed
as cotton farms; 78 percent of Negro-operated farms a:re so classified. Robert
C. Bamberg, State FHA Director, explaining the role of FHA in financing the
shift from cotton to diversified `agriculture, stated that "I expect that we financed
75 percent of the dairymen in Alabama . . ." Dairying was a $50 million farm
business in Alabama in 1967, but of the State's 1,400 commercial dairy farms
only 65 were operated by Negro dairymen. The Farmer's Home Administration
has helped many farmers with only small acreage to enter the poultry business,
which is Alabama's nnm'ber one *source of farm income for 1967. But `of the
State's 5,900 commercial poultry farms only 32 are operated by blacks. FHA has
been the single most important source of financing for livestock operations of
all `sizes, `but less than 4 percent of the black operated farms were considered
livestock farms while nearly one-fifth of the white operated farms were live-
stock operations.
PHA Loam Progranw
Generally individual farmers and rural residents obtain five types of loans
from the Farmers Home Administration-operating loans, farm ownership loans,
rural housing loaas, emergency or disaster loans and economic `opportunity loans.
The loans are made on favorable terms at low interest rates. FHA closely super-
vises the loans b~ placing funds in supervised accounts, devising a farm-home
plan with the `borrower, and furnishing him with technical assistance from FHA
experts in farm management, `home construction, livestock management an'd other
farming practices. Thi's active supervision of high risk ioun~s redu'ces the rate
of failures and affords the borrower the `benefit of FHA management experience.
The testimony of Charles Griffin, a `black farmer who farmed all his life on
the plantation of J. H. Ham in Dallas County and who was evicte'd two years
ago, suggests what FHA could mean to poor `black `farmers. He and 11 other
`black tenant farmers, `after great effort, `secured economic opportunity loans from
FHA which they used to purchase some acreage. He testified what `his first year
of farm `ownership meant to him;
when I was on the Ham place, I was just blind, didn't know nothing
but work, make it and give it to him, but now if I make anything I know
which way it went, I know what I `made and know what it bought and every-
thing. That's a lot better; just 25 or 30 years too late. I hope it `ain't though.
I `hope I have some more years to live atid get some enjoyment out of it.
Black farmers however, are not participating in proportion to their numbers in
FHA loan programs. White farmers and rural resident's received the majoity of
FHA loan funds in the 16 county area and a proportion of funds far greater than
the proportion of the population which they represent. Whites in 1966 and 1967
constituted 24 percent `of the borrowers `but received 57 percent of the `funds;
blacks, who constituted 76 percent of the borrowers, received 43 percent of the
funds.
In the 16 county area, `during 1966 and 1967, applications for loans `and l'oans to
black farmers were concentrated in the operating and economic opportunity loan
programs. Of a total of 1,875 PHA loans `made to Negroes in this `area, 1,565 were
operating or economic opportunity loan's. Operating loans consist of advances for
the purchase of feed, seed, and fertilizers. Although these fund's can be used to
purchase machinery or livestock, very few of the operating loans made to
Negroes were `a'pproved `for these purposes. Economic opportunity loan's are made
to increase the income-producing capacity of rural residents.8
6 The Commission's [965 Report "Equal Opportunity in Farm Programs" noted:
"A borrower is not left to decide for himself wha't kind of loan he will request
and receive. The FHA staff plays a vital role in helping him decide the uses to which
FHA funds will be put. . . . When a farmer comes in to apply for a loan, the FHA
county supervisor often takes the initiative, and recommends the acquisition of
additional land, enlarged allotments, off-farm employment, soil conservation assist-
ance, and the use of extension specialists or other educational resources to improve
the economic position of the farmer," at p. 72.
Thus, the~ situation is substantially unchanged since the Commission, in its 1965
report "Equal Opportunity in Farm Programs", surveyed 13 Southern Counties (two of
which were Wilcox and Greene Counties in Alabama and found that 33 percent of the
borrowers were white and received 66 percent of the funds.
8 Themaximum limit on economic opportunity loans is $3,500 per borrower. The average
economic opportunity loan to Negroes in the 16 county area was $1,506' (`the average
economic opportunity loan to whites was $1,712).
PAGENO="0148"
588
In dollar amounts, FHA loaned $3,034,960 to Negroes in all FHA programs in
1966 and 1961; of this amount $1,958,840 was in the operating and economic
opportunity loan programs. This means that 64 percent of the money loaned to
Negro farmers went for subsistence or marginal developments purposes rather
than for growth and capital improvements. Most of the money loaned to whites
was concentrated in rural housing and farm owncrship loans, and thus were for
growth and development.
NUMBER AND TOTAL AMOUNT OF FHA LOANS, 16 ALABAMA BLACK BELT COUNTIES, FISCAL YEARS 1966 AND 1961
White
Number Amount
Black
Number
Amount
Operating
Farmownership
Rural housing
Economic opportunity
Emergency
Total
306
71
184
26
9
$1,208,220
950,832
1,730,300
43,840
41,660
1,226
53
155
339
102
$1,493,700
359,380
664,590
465, 140
52,150
616
3,974,852
1,875
3,034,960
The size of a loan, in part, is related to the ability of the borrower to repay
the loan and those borrowers with larger operations, proportionately more of
whom are white, are more likely to be able to repay larger loans. As State FHA
Director Bamberg explained, "some people have more resources to borrow more
money than others . . . it goes back to this, in many cases our nigger [sic]
population has small acreage. . . . Well, there is a tremendous difference [be-
tween] what we would loan to a man who has 170 acres and one who had 2 or
n
The Commission heard testimony that to borrow money, a farmer needs secu-
rity, a history of crop production and some means of repaying the loan. Many of
the black farmers were unable to meet these conditions.
Calvin Orsborn, business manager of the Southwest Alabama Farmers Co-
operative Association, a predominantly black farmers cooperative, testified:
A large segment of our people don't either have one of these basic re-
quirements. . . . most of these fellows have worked 30 or 40 years in a
plantation type setup. All of the production that they made, everything
that they did for 30 or 40 years, the credit did not go to him, the credit
went to the plantation, which means when this fellow is put off of this place
or when he decides to move he has no history. He can show no basic method
of repaying this loan and he has no security nine times out of ten.
One result is that black farmers must seek credit from furnishing merchants
who have done business with them for many years instead of going to banks or
the Farmers Home Administration. L. R. Haigler, a white furnishing merchant
who does business in Lowndes County, was asked why black farmers came to
him rather than to banks for financing, despite the fact that his interest rates
were higher. He answered:
Well, just been doing business with us so long. I reckon that would, be
the answer. We have been in business down there-my father did this busi-
ness and my grandfather did it. So I just imagine that's the reason
The banks don't-wouldn't go out on a limb like I would, naturally, because
they don't know too much the history of these people like we do, see.
Rnral Housing Loans
The Commission heard testimony that the need for housing for blacks in
rural areas of Alabama is "grave." More than 90 percent of the rural housing
° Mr. Bamberg-the person responsible for administering Farmers Home Administra-
tion programs in Alabama-also operates a 4,000 acre farm in Perry County. He rents
on a share basis to about 25 black farm families, advances them seed, fertilizer, cash
for rations and charges six percent interest on balances through September 1 of each
year. As State Director of the Farmers Home Administration he is responsible for ad-
ministering loan programs that provide funds for purposes similar to those for which
he lends money to his tenants and for which the Government charges five percent interest.
Asked whether this practice was inconsistent with his responsibility for administering
programs designed to lift tenant farmers out of the debt cycle Mr. Bamberg stated that
he runs his office by the rules and his farm to make the most money for his family. He
also volunteered to the Commission: "The `human kingdom' is just like the `animal
kingdom'. The strong take it away from the weak, and the smart take it away from the
strong."
PAGENO="0149"
589
occupied by blacks is substandard. Farm tenant evictions continue to create many
homeless black people in the 16-county `area.
In 1966, FHA made rural housing loans to 64 whites and 63 blacks in the 16
counties; blacks received less than half the money loaned to whites. In 1067,
the Farmers Honie Administration made ~12 rural housing loans in the 16
counties. Whites received 120 of the loans which totaled $1,141,000. Blacks
received loans totaling $440,460.
Reverend Daniel Harrell, who directs a self-help housing project in Wilcox
County, testified that even if FHA loaned all its rural housing money to blacks
it would not help those who need help the most:
Now through Self-Help housing we can reach only a certain group of people.
Because they have to have the ability to repay the loan. And a lot of people
in Wilcox County are not making over $500 a year . . . these people are
left out.
Reverend William Branch of Greene County told the Commission how the black
community drew on its own meager resources to house evicted tenant families
after they were turned down by FHA:
many of them ~vent to the FHA there in the county to try to secure
some help in building these houses. But, due to the small acreage or the
small lots, and due to having no income whatsoever, they were not approved,
their loan was not approved.
* * * * * * *
And we have spent many, many nights calling people together who already
have land. We couldn't buy land from the whites, end calling these people
together who had land and we had to sit down and sometimes had to re-
fleet on the Scripture saying, "When the Master came," we said, "When I
was outdoors you took me in, when I was naked you gave me clothes." And
we used that statement, and we have converted a lot of people who owned
land to be willing to permit those people to either live on their land free
of charge, until they can do better, or sell them a portion of that land.
Discrimination by FHA Committees
All loans made by the Farmers Home Administration are first approved by a
local committee in each county composed of three persons representative of the
rural population eligible for PHA assistance. Negro witnesses stated their belief
that racially discriminatory attitudes on FHA County Committees may be a
factor in refusing loans to black applicants.
Reverend Daniel Harrell, who has assisted a number of evicted tenant fam-
ilies in purchasing land on which to build, testified that:
I think FHA is okay, but I am kind of questioning FHA's committee. I
do know of a case down in Coy, where Mr. Le Croy [the county supervisor]
and I sat down in his office. I took into him 14 applications, we discussed them
and be knowing most of the people because he has been in the county for
maybe 15 or 16 years, maybe more than that. He and I came to the con-
clusion that nine of these said persons would pass. However, out of the
whole group after the committee meeting, out of the total group of 14 per-
sons, only one passed. And so I kind of question the committee a little bit.
The Farmers Home Administration has directed that at least one black person be
placed on each local committee. Although this directive has `been followed, in
no county in which black rural residents predominate has more than one black
person been named to the local committee.
$upervised Credit
Testimony was heard that the supervised credit policy of FHA when applied
to self-help cooperatives conflicts with efforts to establish initiative and self-
reliance in the members. William Harrison, president of the largest black coopera-
tive in Alabama, the Southwest Alabama Farmers Cooperative Association
(SWAFCA), told the Commission that "the whole idea behind SWAFCA is to
create some kind of economic basis by which people will be able to' think for
themselves." Supervised credit by FHA, according to Mr. Harrison, "would
simply destroy the whole philosophy behind the co-co . . . that indiv'iduals will
learn and do for themselves. As I view the restrictions, it simply means that FHA
will have a co-op in Southwest Alabama, rather than a board of directors run-
ning the co-op . . ."
Mr. Calvin Orsborn, business manager of SWAFCA, stated:
Under ordinary circumstance, I wouldn't hesitate one minute to take this
loan. But SWAFCA, being as controversial as it is, being a whipping boy for
PAGENO="0150"
590
politicians, having all of the difficulties that it does have, there is a possibility
that this loan, would be carried to the letter
The proposed loan restrictions included such requirements as FHA participa-
tion in all meetings of the board of directors, weekly and monthly reports on
specific accounts, a ban on demonstration plot farming and loans by SWAFCA to
members, all sales on a 30-day cash basis to members, and a number of others
relating to reserve accounts and security. The State Director of FHA. is author-
ized to require additional security or to release security as well as to make other
important decisions within his discretion to determine `that such action will not
be to the financial detriment of tl1e FHA." 10
Mr. Bamberg. State FHA Director, who is responsible for administering the
FHA loan to SWAFCA, testified that supervised credit "is one of the successes
of the Farmers Home Administration." He added:
Of course you can see this, it takes loss supervision w-ith certain intelligent
people than others. You have got that, it doesn't take as much with some peo-
pie as it does with another one.
Mr. Bamberg did not think SWAFCA's chances for success were great. He said:
The chairman here [Dr. Hannah] know-s the ingredients that are necessary
for a successful co-op, and if they haven't time ingredients, I see no reason.
All I can say is that w-e, that are employed in FHA are dedicated to try and
make it a successful venture if and w-hen the funds are funded.
Mr. Bamberg's position on the requirement of supervised credit and the total
involvement of FHA in all management decisions of the board of directors is
shared by FHA officials in the Department of Agriculture. Thus FHA, which is
not reaching many poor black farmers w-ith its programs, also is imposing restric-
tions w-hich probably will inhibit aid to black farmers who seize the initiative and
join together to help themselves.
10 FHA Instruction 451.3, Sheet 1, Pt. III, U.S. Department of Agriculture, Farmers
Home Administration (5-25-05).
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Employment
* . * [Mien [are] forced to work for such menial wages, they are forced
to come up and be reared with such kind of education until they have to
be Uncle Toms all day long just to keep a raggedy job, to keep a roof over
their head and some food in their family's belly; . . . not being able to be
men all day, they come home at night and they scold their wives, or they beat
their children to prove to themselves . . . [that they are men] *~
I. THE ECONOMIC CONDITION OF NEGROES IN THE HEARING AREA
More than three-fifths of the population of the hearing area is Negro, one
of the highest percentages for any area of equivalent size in the United States.
Poverty pervades the area, particularly among Negroes; in 1959 median non-
white family income was $1,279, or only 30 percent of the white median income.
More than 90 percent of the Negro people have incomes below the poverty index.
Cotton farming through the planta:tion system, which for many years domi-
nated the area, has been giving way to more diversified agricultural activities
such as livestock and dairy farming, and the raising of crops such as vegetables,
soybeans and peanuts. As machine replace hand labor on the farms, Negroes-
especially tenant farmera-are being forced to give up farming in large numbers.
From 1940 to 1900 the number of Negro farm operators declined by 24,700 or
60 percent.
While manufacturing industries, including pulp and paper, machinery, fabri-
cated metals and chemicals, have moved into the area, Negroes have had rela-
tively little share in the new jobs they have created. Negroes throughout the
area are victims of severe unemployment and underemployment. According to
reports filed with the Equal Employment Opportunity Commission, for example,
Negroes accounted in 1967 for only 22 percent of the area's reported industrial
employment though they represent 62 percent of the population. In the same year,
Negroes made up just eight percent of skilled and white collar employment, but
63 percent of unskilled employment in the area.2
In the past two years, three large paper mills and a manufacturing company
have begun operations in the area. Of the 782 new jobs `they created, just 112, or
14 percent, are held by iNegroes. Similarly, for all companies in the area reporting
increases in male employment for 1966-67 in reports to the Equal Employment
Opportunity Commission, less than one-quarter of the new jobs went to Negroes.3
As a result, Negroes-many of whom told the Commission that given a mean-
ingful option they would prefer to remain where they were living-have had to
leave the area to seek work. Many go to urban areas in the North. From 1950 to
1960 net Negro migration from the 16 counties was 94,420, more than four times
1 Testimony of Hosea Williams, Director of Voter* Registration and Political Educa-
tion for the Southern Christian Leadership Conference, Hearing Before the U.S. Coni-
mission on Civil Rights, Montgomery, Alabama, April 27-May 2, 1968.
2 See additional information drawn from EEOC reports in Table 1 appearing at the
end of this report.
The gulf that separates whites and Negroes in the job economy of the area is further
illustrated by the fact that in 1960 the occupational group described as "sales workers",
was comprised of 2,733 white males and 223 Negro males; similarly, the category
"managers, officials and proprietors" was comprised of 4,974 white males and 351 Negro
males. On the other hand, the category "laborers (except farm and mine)" was com-
prised of 1,610 white males and 6,829 Negro males. U.S. Census `of Population: 1960, Vol.
II, Characteristics of thd Population, Part 2, Alabama. The dramatic differences between
white and Negro employment are further reflected in data on job placements made through
the State Employment Service. Nonagricultural job placement statistics for the offices
which serve the 16-county hearing area, aggregated for December, 1967, show that the
bulk of white placements, 45 percent, are in manufacturing, while only 14 percent of Negro
placements are in manufacturing. Similarly, 25.5 percent of white placements, but only
10 percent of Negro placements, are in trade. The largest concentration of nonwhites, 39
percent, is in private households and other service jobs; only 2.5 percent of whites were
placed in `this category. `
(591)
PAGENO="0152"
592
the net white outmigration.4 The outmigration of Negroes continues today; few
Negro high school students, the Commission learned, look forward to employ-
ment careers in the 16-county area.
The marginal economic existence of Negroes who remain was illustrated by a
number of witnesses who testified at the hearing.
For example, Mrs. Rebecca Ward and her 10 children are presently supported
*by a combination of welfare payments and earnings from her work as a domestic.
She told the Commission that for 12 years, until November, 1~G7, she had been
employed as a domestic by one employer, working seven days a week from 7 a.m.
to 1 p.m. for $1.00 a day, and that at the end of that time she was fired with one
day's notice. Another witness, Mr. Willie Smith, told the Commission that after
six years in the Army, from which he was honorably discharged as a Staff
Sergeant, he is now employed as a "handyman"; his monthly take-home pay is
approximately half his pay while in the Army.
There is much in the lives of Negroes in the hearing area which tends to per-
petuate .their :poverty from generation to generation, by curtailing their employ-
ment opportunities. Malnutrition undermines their ability to study and to work,5
inferior all-Negro schools give rise to low levels of academic achievement and
inadequate vocational preparation,6 and there is pervasive racial discrimination.
II. EMPLOYMENT DISCRIMINATION
Much of the unemployment and underemployment of Negroes in the hearing
area is attributable to racial discrimination.
Retail anti industrial. entployment
Shortly prior to the hearing, Commission staff members surveyed the employ-
ment practices of retail businesses in 21 cities and towns within the 16-county
hearing area. Almost tome of these businesses are covered by the requirementc
of Title VII the Civil Rights Act of 1964, which is applicable only to companie~
with 25 employees or more. Evidence of discrimination by these employers was
ample.
The survey showed that of a total of 2,504 jobs in retail businesses, only 497,
or about 20 percent, were held by Negroes (even though Negroes represent
62 percent of the area's population).
Thirty-one percent of Negro employment was part-time employment while
only 16 percent of white employment was part-time. The predominant position
of Negro males was porter or janitor. At a department store in Greenville,
Alabama, a Negro was hired part-time, a staff member was told, because "he's
working out a debt ;" all of the other eight employees were white.7
The discriminatory attitudes of employers interviewed revealed themselves
in some of the following statements:
"don't hire Negroes to clean up because I do my own Nigger work" (Demopolls)
"Negroes can't weigh things nor figure prices, we tried" (Butler)
"problem with Negroes is not their education but their dependability" (Union
Springs)
In private industrial employment in the 16-county area, Negroes have tradi-
tionally been restricted to the most menial positions. Only with the Civil Rights
Act of 1964 has this begun to change. For example, Vanity Fair Mills, a major
manufacturer of women's garments with a number of plants in the hearing area,
acknowledged that it did not hire Negro sewing machine operators until the
enactment of the Civil Rights Act. The company still employs Negroes in these
During the 1940-1950 decade net migration from the South reached an all-time high
of over two million, of which about two-thirds was Negro. The pull of jobs in war indus-
tries and the displacement from ngriculture resulting from mechanization coincided to
precipitate and sustain the heavy outmigration. Especially large numbers of nonwhite
sharecroppers and other tenants left the land.
See accompanying staff report, Health, Welfare and Food Programs.
See accompanying staff report. Education.
Though a number of proprietors expressed the view that employing Negroes would be
disastrons to business, the manager of a food store in Livingston, Alabama, told the Com-
mission that six of his thirteen employees. includllng a cashier, were Negroes. A Negro girl
was moved from another department to the cash register in response to picketing by the
Negro community; the manager indicated he had feared the white reaction before he made
this transfer. However, he said, there have been no problems and no business lost.
PAGENO="0153"
593
positions in a proportion far below the Negro population of the area; of 5,930
employees, only 655 are Negro.8
A major industry in the hearing area is the pulp and paper industry. An
official of the Office of Federal Contract Compliance (the Federal agency which
oversees the enforcement of Federal contract compliance requirements), Mr.
Leonard Bierm'ann, acknowledged that discrimination has been traditional in
this industry and that the effect of such discrimination on employment patterns
continues to' be widespread at present.
Alabama State `Superintendent `of Schools Ernest Stone told the `Commission
that employment discrimination is by no means restricted to companies indig-
enoustothe South;
Most of the Northern people who come to Alabama and establish an indus-
try are more concerned with employing white employees than they `are
Negroe employees.
Industrial employers have particularly poor records in employing Negroes in
clerical positions. For example, MacMilliain-B'oedel Products, a Oanadian-'based
company, which recently started operation `of a plywood plant and sawmill in
Wilcox County, has 25 to 30 clerical or stenographic employees, none of whom
are Negro. Vanity Fair Mills, the corporate headquarters of which is in Read-
ing, Pennsylvania, has 297 office and clerical employees, of whom one is Negro;
his job is to service vending machines on the company's premises. Though em-
ployers claimed that they could not obtain Negro office personnel employees, the
Commission learned that the `State Trade Schools of Alabama graduate many
Negro students from secretarial courses each year.
Discrimination by Companies Holding Government Contracts
In examining discrimination in employment, the Commission took a particularly
close look at the employment practices of a special category of private employers
in the hearing `area-those holding contracts with the Federal government.
Since 1943, Federal agencies have been required by Presidential Executive
Order `to include in their contracts a provision forbidding discrimination in em-
ployment by the contractor.9 Since 1951 the head of each contracting agency
has been "primarily responsible" for insuring that the nondiscrimination re-
quirements appearing in the contracts of the agency are enforced.1°
The Executive Order has great-but thus far largely unrealized-potential.
Significant leverage is afforded by the possible sanctions of loss or termination
of government contracts.
The hearing and preparatory staff investigation disclosed that the Executive
Order has received weak implementation in the hearing area, and that as `a result
noncompliance wa's widespread. The hearing revealed blatant discrimination by
eom~anies holding millions of dollars of government contracts-discrimination
which had not been attacked effectively by contract compliance officers.
For example, Bellamy, Alabama is a company town owned since May 1960, by
the American Can Company, a large General Services Administration (GSA)
contractor.11 The town is totally segregated. Only four of the 123 Negro houses
8 Though officials of Vanity Fair made much of the need to approach integration cau-
tiously, other testimony indicated that industrial integration. need. not present problems.
The Dixie `Shoe Company, a women's shoe manufacturer with a plant in Barbour County.
employs about 200 persons, most of whom operate sewing and' other machines. Since it
opened in August 1963, about 50 percent of the employees hired by the plant have been
Negroes. The plant manager, Harold Becker, told the Commission that there have been
no racial problems based on integration of the work force.
°Exec. Order No'. 9346, 3 C.F.R. § 1 (1943). Executive Order 8802 (1941) required such
a provision in defense contracts only.
10 Exec. Order No. 10308, 3 C.F.R. § 1 (1951) also, Exec. Orders Nos. 10479, 3 C.F.R. § 1
(1953) ; 1092'5~ 3 C.F.R. 307 (1961),; 11246, 3 C.F.R. § 205 (1965). In 1966 the Office of
Federal Contract Compliance, an agency' within the Department of Labor, assumed the
duty of supervising and coordinating contract compliance by the Federal agencies. How-
ever, the agencies continue to bear the primary responsibility for such enforcement. Exec.
Order No. 11246, 3 C.F.R. § 205 (1965).
~ At its Alabama facility alone, American Can has GSA contracts for more than $1.7
million, for fiscal 1968 through February 1, 1968. Since 1962, American Can Company has
been a member of Plans for Progress. Established in 1961i, Plans for Progress is a volun-
tary association of businesses, numbering 417 In January, 1968, which are purportedly
committed to eliminating all forms of employment discrimination within their respective
operations. The organization receives administrative support from the Department of
Labor, and has been a principal vehicle of OFCC's effort to promote voluntary compliance
with equal employment requirements by government contractors.
PAGENO="0154"
594
have running water and inside toilet facilities, while every white house has run-
ning water and inside toilets. There are several segregated churches, two segre-
gated swimming pools, and a company owned Negro school house. A worker
employed at American Can's Bellamy sawmill for the past 24 years, who charac-
terized himself as a spokesman for the town's Negroes, testified that the town
was "just about in the same shape" when he first came there in 1943 as it is now.
No GSA contract compliance official has ever made a compliance inspection at
Bellamy.
Other government contractors located in the hearing area also had racially
segregated facilities. The McGregor Printing Corporation-a contractor with the
Government Printing Office-is located in York, Alabama. Despite the fact that
its plant was built after passage of the Civil Rights Act of 1964, separate rest-
rooms for black and white employees were built side by side and continue to be
used on a segregated basis. Dan River Mills is a large government contractor
manufacturing uniforms for the armed forces. At Dan River Mills' Greenville
plant, there w-ere dual restroom facilities on the inside and outside of the build-
ing. White employees used the restroom facilities on the inside, Negro employees
used the facilities on the outside. Bernard Shambray, a former employee at the
plant who was hired in 1966, testified that the outside restroom-
"Was pointed out to me when * * I started to work there. This supervisor
that carried me around, he showed the restroom and he told me that was the
restroom I was supposed to use.
Mr. GLIcKsrnIic. Were there any other facilities that you were told you
couldn't use?
"Mr. SHAMBRAY. I was not told that I couldn't use any of the facilities. I was
just pointed out the one to use."
Mr. Shambray also testified that although there was one drinking fountain, he
"was told that the other Negro employees always got a coke bottle to drink out
of." 12 Although the Greenrille plant does not produce cloth under a government
contract, the Executive Order requires the government contractor to insure that
all its facilities are in compliance.
At the McGregor Printing Corporation, the 29 officials and managers, tech-
nicians, sales workers, office and clerical workers and craftsmen employed in
York, Alabama are all white. The black employees are all laborers or semi-skilled.
Testimony by company officials disclosed that local applicants are interviewed
by Mayor Grant of York, from whom McGregor receives an "advisory evaluation"
on the applicant's "potential, ability and character, and so on". The mayor is
the owner of a local clothing store that has been the target of demonstrations by
members of the Negro community because of his failure to hire any black persons
in his store. There also was testimony, by a Negro employee of McGregor, al-
though denied by the mayor and company officials, that Negro applicants for
employment are told by the mayor and company officials that they do not approve
of persons engaging in such demonstrations. The mayor did not deny that he
keeps in his office photographs of persons w-ho demonstrated outside of his store.
An employee of the company testified that he knew of no McGregor employee
who had participated in a civil rights demonstration.
Of approximately 200 employees at Dan River Mills' Greenville plant. only
three are Negro-a watchman, a warehouseman and a truck driver who doubles
as a janitor. Mr. Shambray testified that he was hired as a w-eaver-learner in
the fail of 1966, but was subsequently assigned w-ork as a sweeper and quit in
April, 1967 because he felt that by reason of his race he never would be promoted
to weaver.n
At the large pulp and paper mill of American Can, which draws its employees
from an `area whose population is about 57% Negro, only 108 of mere than 1550
employees are Negro, and only "several" of these are in skilled positions. Of 340
employees at American Can's Bellamy sawmill, a type of work which is tradi-
tional for Negroes in the South, about 270 are Negro. The highest position held
by a Negro employee at the mill at the time of the hearing was Assistant Super-
visor, to which position two Negroes had been appointed just two weeks prior to
the Commission's hearing.
Alabama Power Company, another large government contractor in the hearing
area, receives about $2.5 million annually under a contract with the General
12 The plant manager at the mill testified he was unaware that ~egroes were instructed
that they were not to drink from the water fountain, or were to use only certain rest-
room facilities.
13 The plant manager denied that Mr. Shambray had been subject to discrimination.
PAGENO="0155"
595
Services Administration. The company employs 5,394 employees, of whom 472
are Negro. About three-fourths of the Negro employees are in unskilled posi-
tions. In 1966, of more than 1,300 craftsmen three were Negro; now, two years
later, the number of Negro craftsmen has risen to four. From 1967 to 168 the
proportion of the company's male employees who. are Negro actually declined.
Another large GSA contractor in the hearing area whose officials testified that
they believe their company is in compliance with Federal equal employment
requirements, is Allied Paper Company, which has a paper mill located in Jack-
son, Alabama. The personnel manager testified that there are 47 Negroes out of a
total of `about 445 employee's, and that none of the Negroes are clerical or super-
visory personnel.
The performance of Alabama Power Company IS well known to the General
Services Administration. A letter memorandum of May 1967, transmitting to
Washington field compliance surveys of Alabama Power Company, observed that
the findings reflect patterns of restricted minority group employment and sug-
gested that it might be desirable to institute administrative action against the
company. Despite these reports, Mr. Ernest Strong, the company official respon-
sible for equal employment opportunity testified that after the review GSA did
not transmit a written report, specifying remedial measures. He said that during
the course of the compliance reviews the GSA investigator made "nominal sug-
gestions that were adhered to ;" and, Mr. Strong testified, the company has been
given a "clean bill of health."
Inadequa~cy of Enforcement
A number of fadtors account for the failure of government contractors to abide
by their obligations to provide equal employment opportunity.
It is fair to assume that a most important factor is that government con-
tractors have had no reason to take seriously the threat of sanctions for
noncompliance. Though contracting agencies, acting with the approval of the
Director of the Office of Federal Contract Compliance, are authorized by Execu-
tive Order 11246 to terminate or to suspend performance on contracts for non-
compliance, this power has never been used. The agencies, with the approval
of the Director of OFCC, also are empowered to initiate proceedings to debar
contractors from future government contracts; the first notices of intent to
debar ever issued under the Executive Order were sent by OFOC to five com-
panies on May 23, 1908.
Testimony also made clear that contractors in many instances are not clearly
and specifically told what they must do in order to achieve compliance.
Both the failure to impose sanctions, and the failure to tell contractors clearly
and specifically what they must do, may be largely attributable to the tendency
of government contracting agencies to see compliance as, at best, incidental
to the primary mission of the agency. As Mr. Leonard Biermann, Senior Com-
pliance Officer of OFOC, told the Commission, "95 percent of the contracting
agencies' staff and attention and desires are aimed at awarding contracts
[it is necessary] to overcome this built-in resistance that we find in every
contracting agency."
Another reuson for the apparent lack of forceful implementation of the
Executive Order in the cases discussed above is the failure to commit sufficient
personnel to contract compliance enforcement.
At present, most Federal agencies have a separate program and staff devoted
to enforcing equal employment opportunity requirements contained in the agency's
conta4aots. The Commission's recent Alabama hearing concentrated on the con-
tract compliance operations of two Federal agencies, the Department of Defense
and the General Services Administration.
The inquiry into the Department of I)efense contract compliance operation
focused on the Southeast Region, and on the Region's Birmingham. Alabama,
sub-office.'4 With a staff of eleven professionals, the Southeast Region is respon-
siNe for monitoring the compliance of more than 5800 known contractor
facilities.'5
The only adequate basis for determining whether a given facility is or is not
discriminating is to make a compliance inspection of the facility. In the two
`~ The Southeast Region is comprised of the States of Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina, and Tennessee, and Puerto Rico. The Bir-
mingham, Alabama sub-office has responsibility for Alabama, Mississippi, Western
Florida and Western Tennessee.
~ There are in addition many subcontractor facilities, estimated to number in the
thousands, for which Defense Department contract compliance officials in the Southeast
Region are responsible, but the identities of which are not reported to it.
PAGENO="0156"
596
and one quarter years since January, 1966, just 437 Department of Defense
contract facilities in the Southeast region-'less than eight percent of known
facilities-have been visited.
The head of the Department of Defense's Southeast Region contract com-
pliance operation has informed his supervisors that he needs siw to seven times
his present staff to perform his job adequately.
The General Services Administration contract compliance operation is much
smaller than that of the Department of Defense and less regionalized; accord-
ingly the hearing touched on the nationwide operation of GSA contract com-
pliance, centered in Washington, D.C.
To supervise equal employment opportunity with respect to GSA contracts
in the amount of $1,350,400,000,16 the General Services Administration provides
three professionals in Washington and ten compliance investigators in the field.
One investigator covers the entire seven-State Southeast region; 17 he devotes
a portion of his time to matters other than contract compliance as well.
Nationwide the GSA contract compliance operation has assumed responsibil-
ity for approximately 5,000 facilities.18 In the one and one half years since
September, 1966, somewhat over 500 facilities-about 10 percent-have been
subjected to a compliance review visit.
Department of Defense officials estimate that noncompliance is found in 85
percent of compliance visits in the Southeast Region. The contractor in such cases
is told what steps he must take to correct the noncompilance. The second vital
element in enforcement is the follow-up visit taken after an initial visit in which
deficiencies are disclosed, to insure that the contractor is remedying the de-
ficiencies. Yet in the vast majority of cases no such follow-up has been made. In
95 percent of all contract compliance inspections conducted by the Department
in the Southeast Region since January, 1966, the investigator recommended a
follow-up revisit, yet in only 10 percent of the cases has a revisit been made.
Kenneth Eppert, head of the Department's contract compliance in the South-
east Region, acknowledged the effects of this situation on the attitudes of con-
tractors.
"Mr. GLIOKSTEIN. Do you think that [the] companies that you weren't able to
revisit, but companies where you did find some deficiencies and wrote to them
about the deficiencies, do you think that they are terribly concerned about what
the consequences of not complying are?
"Mr. EPPERT. No. Well, let me phrase it this w-ay: I do not believe that you
should ever tell a company that you are going to re-visit them unless you visit
them and if you don't re-visit them they are human beings like we are. The
success of our program in my estimation is not necessarily the initial call, [in]
the initial call I am sure we could put dow-n many things which we expect to be
done, but certainly the re-visit, * * is the point to start, because there you
have an opportunity to actually see w-ha*t action had been taken on the recom-
mendations that you might have made."
Referring to the relation betw-een staff size and work load, Civil Rights Com-
pliance Officer Robert Harlan, a contract compliance official of the General
Services Adniinistration, characterized the system of compliance reviews as "a
sort of a hit and miss thing." He testified:
"Now, * * * you can recognize the horrendous task that it is to do these follow-
ups. I mean this program, as it is being run, is `basically project awareness. We
do have the responsibility of making these people aware that there is a clause in
their contract, and that this clause means just as much as any other clause.
But * * * we are operating under horrendous conditions so far as the actual
issuance of sanctions."
The inadequacy of staff, in addition to hampering the program of follow-up
reviews, also undermines another important phase of contract compliance enforce-
ment-4he "pre-award" inspection. Under the "pre-aw-ard" survey program, any
company receiving a publicly advertised Federal contract of $1 million or more.
which has not been the subject of a compliance review within the last six months,
16 For fiscal 1968, through February 1, 1968.
17 GSA's "Region 4." comprised of the States listed in note 14 above. In Alabama alone.
GSA has contracts in the amount of .815,614.193, for fiscal 1968. through February 1. 1968.
18 This estimate is based on a "Primary Interest Agency" listing of government con-
tractors, compiled in 1966, and on supplemental data, reported to GSA contract compliance
officials, on new GSA contractors since that time. Because this supplemental data is
incomplete, there are probably several thousand additional contractor facilities for which
GSA contract compliance is responsible, but which are unknown to it.
PAGENO="0157"
597
must be reviewed and cleared for equal employment compliance prior to the
award of the contract.19
Contract compliance officials strongly endorsed the potential effectiveness of
pre-award reviews. Mr. Eppert, head of Defense Department contract compliance
in the Southeast Region, acknowledged that "in almost all cases" contract com-
pliance officers are in a much better negotiating position before a contract is
signed than after it has been signed. Nevertheless, at least in part because of the
inadequacy of compliance staff, 40 to 50 percent of "pre-award" reviews made
by the Southeast Region are conducted some days or weeks alter the contract
has been let. A compliance report on a government contractor in the hearing area,
reviewed by the Commission, illustrates this problem. The report stated:
"Subject facility is located in * * * Alabama. The county * * * has a non-
white popu1ation of approximately 50 percent. The post award survey was con-
ducted on 9 February 1967; on 3 February 1967, the company was awarded a
contract for [more than $2 million dollars] covering the manufacturing of men's
cotton denim trousers. Based upon the nature and extent of the deficiencies noted
during this survey, subject facility was not in an awardable position for receiving
the aforementioned contract the previous week."
Failure to Deal Adequately witlv Consequences of Prior Discrimination
Even where a company which has previously engaged in racially discrimina-
tory hiring or employment practices ceases overt discrimination, the consequences
of its past discrimination may be perpetuated unless positive steps are taken to
insure this does not happen.
Discouraging Effects of Prior Disorinvination.-Negroes, for example, are well
aware of discriminatory employment practices. Mr. Shambray testified that the
Negro community in Greenville was aware of his experiences at Dan River Mills.
Sadie Allen, a senior at all-Negro Southside High School in Greenville, told the
Commission; "~ * * most of the Negroes know *they aren't going to be hired
for anything but sweeping the floor, so they just don't go out there."
Leonard Biermann, Senior Compliance Officer of the Office of Federal Contract
Compliance, testified that in his opinion discriminatory exclusion and restric-
tion is characteristic of Dan River Mills plants throughout the South. Negroes
understandably are unwilling to subject themselves to the humiliation of dis-
crimination. Unless a company such as Dan River Mills, therefore, not only ends
its discriminatory practices, `but also adopts strong measures to make it clear to
the Negro community that its discriminatory policies and practices have been
abandoned, few Negroes will apply for employment.
Similarly, Negroes who for many years have been excluded from certain posi-
tions may be slow to accept the idea that white management will now gladly
allow their transfer to newly opened positions.
The hearing disclosed that several government contractors in the hearing area
have not taken affirmative steps to overcome the discouraging effects of past
discrimination. For example, in Allied Paper, as in many large plants, tenure
and promotion are based principally on a number of "lines of progression."
Each line of progression is comprised of the positions in one department or other
functional unit of the plant. Although most of Allied's Negro employees are not
presently in lines of progression, but are in permanent "laborer" positions, the
company does not even inform Negro employees when positions in lines of pro-
gression become open and opportunities arise for them to transfer into such
positions.
Perpetuation of Eff cots of Discri~minatory Progression4ine Sy*ten*s
Typically, every employee in a line of progression starts at the bottom of that
line; by promotion, he advances up the ladder to progressively higher paying
and more responsible positions. Length of time within the line also determines
seniority, in most cases for the crucial purpose of job security, or order of lay-off.
When an ewployee transfers to another line, he must start at the bottom of the
ladder in that line.
Mr. Biermann testified that In Southern pulp and paper mills there has been
"a tradition of discrimination, in placement." The hearing clisclose~d that at the
Alabama pulp and paper mill of American Can Company, for example, Negro
employees have in the past either been excluded from lines of progression alto-
19 Office of Federal Contract Compliance letter directive, May 3, 1960.
PAGENO="0158"
598
gether, or else restricted to short, more menial "dead-end" lines of progression
designed for Negroes.
Where, as was done at the pulp and paper mill of American Can Company, for
exa~nple, dead-end lines are eliminated and Negroes are offered the opportunity
to transfer to other lines, they nonetheless tend to remain in their former lines
for a number of reasons. A principal reason is that employees are deterred by the
fact that transfer to another line means starting at the bottom of the ladder
again, losing seniority and suffering a reduction in wages in most cases. Such
loss of seniority, in the case of Allied Paper, was described at the hearing as
follows:
"Mr. GLICKSTEIN. In other words, if a man (who) was in the Wood Yard Dc-
partment and had been there for eight years, transferred to the Maintenance
Department, he would retain eight years of mill seniority but lose his eight years
Wood Yard seniority and he would start at the beginning of the Maintenanca
line of progression?
"Mr. HEARN. Yes, sir."
The resulting continuation of a predominance of Negroes in menial jobs was
observed at the hearing in the case of Allied Paper Company and American Can
Company. Mr. Biermann acknowledged that this is still common to the entire
Southern paper industry.
Public Employment
While discrimination in Federal employment is forbidden by Executive Order,2°
there is no comparable Federal requirement applicable to State and local employ-
ment; Title VII of the Civil Rights Act of 1964 specifically exempts State and
local employment from its nondiscrimination requirements.2' The Federal Gov-
ernment, however, does require that State employees engaged in administration
of certain Federal grant-in-aid programs be employed under personnel stand-
ards that prohibit racial discrimination; Alabama has refused to amend its
Merit System to comply with Federal law. Alabama's rules governing its system
of State employment do not prohibit racial discrimination.
Federal Employment -
The hearing provided evidence that the Federal policy of nondiscrimination in
employment is not being enforced in the hearing area.
The two major sources of Federal employment in the hearing area are the
Farmers Home Administration and the Post Office Department. These two
agencies employ 650 persons, of whomoniy 42 are Negro.
Farmers Home Administration offices in the hearing area employ 39 persons,
only 6 of whom are Negro. None of the 16 clerical workers employed by the agency
is Negro.
Of 611 Post Office Department employees in the hearing area, only 36 are
Negro. Eight of the 16 counties have no Negro postal workers.
State Employment
Through four principal agencies, the State of Alabama employs 560 persons
in the hearing area. Of these only 82 are Negroes, and 38 of these hold part-
time or janitorial positions.
The Agricultural Stabilization and Conservation Service (ASCS), which ad-
ministers Federal corp control and other farm programs in each county, employs
203 persons in the hearing area, only 27 of whom are Negro.22 Of the 220 persons
employed by the Alabama Department of Pensions and Securities, which ad-
ministers the State's welfare programs, six are Negro. All of the six do part-time
janitorial work.2'
`°Exec. Order No. 11246, i C.F.R. Part I (1965).
2'42 U.S.C. 2000e(b)(1).
`2ASCS county personnel are paid with Federal funds, but are not Federal employees.
23 The five State Employment Service offices located in the hearing area employ 35
persons. 9 of whom are Negro. Four of the Negroes are Employment Service local rep-
resentatives. who work in the Service's outreach and follow-up program and are paid
on an hourly rate when and as needed. The remaining five Negroes are custodial and
service workers. The fourth State agency examined is the Alabama Cooperative Service.
Of 40 Extension Farm Agents, 17 are Negro; of 25 female Extension Home Agents, 14
are Negro.
PAGENO="0159"
599
Local Employment
Of approximately 1,337 county employees in the hearing area, only 267 are
Negro. Only four of the 16 counties have Negroes on their law enforcement staffs.24
Only one county, Macon, has full-t&me.'Negro clerical workers. The largest con-
centration of Negro employees is found in county road departments.
None of the 16 counties has a county civil service system. Employees are hired
by county officials.
The sixteen cities surveyed in the hearing area employ a total of 933 persons,
350 of whom are Negro. Eight of the cities have full-time Negro policemen. None
of the cities has a civil service system. The largest concentration of Negro em-
ployees is found in the sanitation and street departments of the cities.
TABLE 1.-EMPLOYMENT DATA FOR 53 REPORTING UNITS FROM 16-COUNTY AREA OF ALABAMA
All employees White employees Nonwhite employees
Total Male Female Total Male Female Total Male Female
All categories of employees
Skilled and white collar em-
13, 668
7, 923
5, 745
10, 630
5, 875
4, 755
3, 038
2, 048
990
ployees
Semiskilled employees
Unskilled employees
7,336
4, 216
2,116
3,358
2, 872
1,693
3,978
1,344
423
6,755
3, 092
783
3,223
2, 103
549
3,532
989
234
581
1, 124
1,333
135
769
1,144
446
355
189
Source: Equal Employment Opportunity Commission, EEO-1 Reports (1967).
24 Autauga, Bullock, Dallas and Macon.
PAGENO="0160"
INTERIM STAFF REPORTS: ALABAMA HEARING, MONTGOMERY, ALA.,
APRIL 27-MAY 2, 1968
STATEMENT OF WILLIAM L. TAYLOR, STAFF DIRECTOR, U.S. COMMISSION ON Cn~IL
RIGHTS, JUNE 14, 1968
Six weeks ago the Commission held a public hearing in Montgomery, Alabama
on issues of economic security a~ecting black citizens living in 16 Black Belt
counties of that State. The hearing was the culmination of an investigation begun
last Fall. For five clays from April 27 to May 2, we heard testimony from many
black citizens, public officials, plantation owners and professionals.
Ordinarily, we would wait until we had completed a formal report before re-
leasing information developed from our investigations and hearings. But today
we are releasing these preliminary staff reports of the hearing because they are
particularly relevant to current Congressional debates on spending, to the issues
raised by the Poor People's Campaign, and, above all, to the crisis of race and
poverty confronting the Nation. We think that the information developed dur-
ing the course of our investigation and hearing should contribute to a better
understanding of the extent and the causes of the extreme deprivation that effects
so many citizens in this and similar areas. It also may suggest some guidelines
for the steps which the Federal government must take to solve these problems.
The Commission on Civil Rights for the past two years and more has been
concerned with the problems of race and poverty in our urban areas. During this
period we have studied the racial crisis in the Nation as it manifests itself in
the cities. Since last fall we have concentrated on the crisis as it relates to the
economy of rural, nonmentropoiltan areas of the South. We have come to believe
that problems of urban and rural areas are all of a piece-4hat both are mani-
festations of the same crisis of race and poverty that troubles the Nation.
The South has been exporting its problems North. Many of the unemployed,
frustrated, hopeless people of the cities are migrants from rural areas, who
hate left behind other unemployed, frustrated and hopeless people. In the ghetto,
as a woman in Gary told us, time stops. Time stops too in the rural counties of
Black Belt Alabama. For many people, despite the unprecedented affluence in
this country, there have been no improvements in housing, employment or edu-
cational opportunities for generations.
We have distributed to you a series of papers that examine in some detail
the principal problems of ~cononńc security that affect people living in the 16
county areas-problems of food, health and welfare, education, farm programs
and employment. The papers appraise the adequacy and effectiveness of govern-
ment programs in each of these fields.
When the material in each of the papers is taken together, it leads to one
inescapable conclusion-that government is not intervening effectively at any
point to provide people who have been victims of slavery and discrimination with
an opportunity to lead decent and productive lives.
Stated another way-the overriding failure of present policy is that for the
black citizen in rural Alabama, it is not providing any options at all. Government
policy is not making it possible for him to stay on the land or work in the towns
of the area, it is not equipping him with the education and skills which will
enable him to survive in the big city or to obtain a job once he gets there, and
it is not providing any place else for him to go.
ECONOMIC DEPENDENCY
To understand the reasons for the failure of government programs it is help-
ful to understand the system of economic dependency in which they operate. The
w-eight of the evidence at our hearing in Montgomery was that the legacy of
slavery still continues in the form of widespread racial discrimination, poverty
and economic dependence.
Poverty among the Negro population in the 16 counties is pervasive. Many
families must live on a noncash basis-they do not have any regular income.
(600)
PAGENO="0161"
601
They mortgage their crops or survive on credit obtained from store owners or
casual employers. The lack of cash income forces blacks to depend upon those
who will extend them credit and who are willing to carry them through hard
times. For example, black farmers are significant in the farm economy almost
entirely as a source of economic exploitation by white landowners furnishing
merchants and others.
A Dallas County plantation owner explained the system to us. He owns 10,000
acres, he rents portions of the land to about 40 black families. He advances them
seed, fertilizer, insecticides, cash and charged 8 percent interest. Part of the deal
requires the tenant to gin his cotton at the plantation owner's gin and to pur-
chase food at his store. This system denies the tenant cash and creates depend-
ence.
If the black tenant decides to leave the plantation and farm on his own he
finds that he can get no credit because his credit rating is based on his production
history and that has been attributed to the plantation on which he worked-
not to him. With no production history, the black farmer is forced to seek credit
from landowners and furnishing merchants instead of borrowing from commer-
cial banks or the Farmers Home Administration.
Farmers caught in this financial trap never break free of debt. We have ob-
tained records of individual debts as high as $16,000 in accrued interest and
principal. The income of such a farmer often is less than $1,500 a year.
The total economic dependence of black people is not confined to the agricul-
tural sector of the economy. Even when family income is from nonfarm employ-
ment, extensive underemployment and seasonal employment requires that fami-
lies seek credit from others in order to survive. The Commission heard testi-
mony about Bellamy, Alabama, a company town owned by the Americdn Can
Company and the site of one of their large sawmill operations. Frank Fenderson,
an employee, who lives at Bellamy, testified that his total take home pay fo~r two
weeks' work, after deductions for taxes, rent and debts owed to the company
store, was five dollars.
In this situation the test of effectiveness of government programs is whether
they enable people to escape from their condition of economic dependen~e. Too
often programs do not accomplish this objective.
The simple requirement of cash payments every month under the Federal
Food Stamp Program is an obstacle to participation by those who are in great-
est need-even when the cash payment is reduced to 50 cents per person.
The Government has programs under the Farmers Home Administration to
assist farmers who cannot obtain~ credit from normal sources. But the majority
of black people are too poor to be eligible for FHA loan programs. Their earnings
are meager and they have nothing to mortgage or commit to the moneylending
agency.
The result therefore is that when government programs fail to reach people
they remain dependent upon their old masters-the plantation owner, the fur-
nishing merchant, the boss-man.
Some government programs also substitute their own form of dependency for
the existing system.
Welfare rules under federally supported programs permit local officials to
exercise vast discretion in dispensing funds and to make decisions based on or-
bitrary judgments of moral character rather than on need.
Loan programs to self-help cooperatives are encumbered with burdensome
restrictions. For example, the Southwest Alabama Farmers Cooperative Asso-
ciation is trying to break the cycle of economic dependence for black farmers by
establishing a marketing cooperative for vegetables. But SWAFOA has run into
an unsympathetic Farmers Home Administration which insists on imposing
restrictions and conditions to a loan which, in the words of its president "would
simply destroy the whole philosophy behind the co-op. . . that individuals will
learn and do for themselves." The supervision of the SWAFCA loan would
be in the hands of the State PHA Director. Mr. Robert C. Bamberg, the owner
of a large plantation who made abundantly clear at the hearing his low opinion
of the abilities of Negro farmers.
GOVERNMENT PROGRAMS AND THE CYCLE OF POVERTY
In this setting of dependency, one can examine each critical point at which
government might interVene to provide people with a change for a decent and
productive life and find that it is failing.
96-602-68-vol. II-11
PAGENO="0162"
602
Food, 1tealt1~ and welfare.-Many children are born into homes of incredible
poverty. The Welfare system in Alabama allows $89 per month for a family of
four and does not provide mothers with pre-natal care. Before the child is of
school age he may be suffering from serious physical or mental ills which stein
directly from malnutrition. In one of the couiati~s investigated, 80 percent of the
Negro children suffered from anemia due to malnutrition and, as a result, had
a life expectancy 8 to 10 years less than white children. Federal programs that
provide food have been instituted or applied for in some counties only within the
last year because the decision has been left up to local authorities. The commodi-
ties distributed in counties with such a program do not provide adequate diets,
even though the Secretary of Agriculture has the authority to increase the
variety of foods. The food stamp program fails to reach many people because of
the cost of the stamps.
Ediication.-Even if children have not been terribly damaged by effects of
malnutrition, their economic opportunities will not be improved much by the
education they are receiving. By any measure considered important in the educa-
tional process, Negro children are suffering. It hardly needs to be said that schools
are almost totally segregated. In the segregated schools Negroes have inferior
facilities, fewer library books, poorer teachers, and the schools are not accredited.
Courses offered in white schools prepare students for further education or for
jobs for which there is a demand. Courses in Negro schools do not. So Negro
children finish high school 5 to 6 grades below national standards in achieve-
ment tests and without any marketable skills.
Enipioyment.-The lack of training received by Negroes is evidenced, in part,
by the jobs they hold. Negroes hold less than one-fourth of industrial jobs in the
Black Belt and the jobs they do hold are all laborer or semi-skilled occupations.
Racial discrimination continues to exclude even the qualified. Companies holding
millions of dollars of government contracts and required to take steps to provide
equal opportunity engage in blatant discrimination.
For example, the American Can Company is a government contractor. Its Com-
pany town, Bellamy is totally segregated. Only four black homes have running
water and inside toilet facifities; every white house has running water and inside
toilet facilities. American Can also owns the school, which is all black-the white
children and some black children are bused to the nearest town to attend a pre-
dominantly white school. The maintenance and operation of segregated facilities
is, of course, a violation of Federal law and the company's contract with the
Federal government.
Patterns of discrimination also were found in retail businesses and in public
employment.
Agricultwre.-Young people are not enabled to lead productive lives either in
urban or rural areas. Nor are government programs making it possible for older
farmers to make a satisfactory living on the farm. Many Negro farmers continue
to be marginally or totally dependent because they stifi are farming as they did in
the 1930's. The Cooperative Extension Service's farm agents instruct farmers in
modern farming practices. They have not done this for thousands of poor Negro
farmers. Negro farmers also have been excluded from benefits of programs of
the Farmers Home Administration already mentioned.
Political Participation.-The continuing economic subjugation of Negroes,
finally, is perpetuated by exclusion of Negroes from access to the avenues of politi-
cal change. Poverty and dependence, the Commission learned, greatly deter
Negroes from seeking to improve their lot by asserting themselves politically.
What I have just described are generally examples of insufficient resources, or
programs so structured that they do not reach the people they are intended for.
Beyond this, however, to the extent programs could be useful, we find that civil
rights requirements are not being enforced. These matters have been raised with
the agencies concerned. Mr. Howard Glickstein, our General Counsel, will discuse
briefly some of the letters we have written to agencies.
GuIDELINES FOR Aeriox
Over the years the Commission has made many recommendations which, if
implemented, would help to eliminate discrimination and improve opportunity
for citizens both in rural and urban areas. Among these have been recommen-
dations-
1. That the Federal Government establish a national minimum standard for
public assistance payments below which no State could fall and that it remove
PAGENO="0163"
603
restrictive rules in the administration of welfare programs which discourage
economic initiative and impedes family stability;
2. That the Secretary of Agriculture assure equal employment opportunities
in agriculture programs and extend full and equal participation in Department
programs;
3. That Title VII of the Civil Rights Act of 1964 be extended to cover public
employment;
4. That "freedom of choice" school desegregation plans be accepted only
where the school district shows that significant school desegregation actually
is being achieved;
5. That the Attorney General assign examiners under the Voting Rights Act
of 1965 to all political subdivisions where black registration is dispropor-
tionately low.
We continue to urge action on these recommendations. It has become increas-
ingly clear, however, that even if all of these recommendations were to be
enacted into law the cycle of poverty and dependency in Black Belt Alabama
and similar regions would not be broken. Bold new programs and approaches
are necessary. Before the system of economic bondage which exists in Alabama
can be ended it will be necessary to develop programs to assure every family a
standard of living adequate to provide at least a reasonable chance in life.
Many have suggested that this only can be accomplished by some form of income
guarantee. Whether it is a negative income tax, a guaranteed annual income
or whether the government guarantees a job to every person and assumes the
role of employer of last resort are questions about which we have not yet reached
any firm conclusions.
While we are continuing our investigations and plan to make further reports
with more specific recommendations, we do want to suggest now several prin-
ciples which we believe should govern any effort to deal with the problems of
race and poverty.
The first is that the Congress must recognize in law that every American
citizen is entitled to certain basic necessities as a matter of right. These should
include the right to an adequate and nutritious supply of food, to full health
care, to an education that prepares an individual to be a productive member of
society. It is clear that to make these rights meaningful, the Federal govern-
ment must be prepared to devote far more resources to programs of food, wel-
fare, health and education than it is now allocating. It is also clear that this
must mean an end to systems which allow local authorities to determine whether
the citizens will receive the benefits of these programs. The underlying theory
of local control of education and other programs is that it provides diversity and
choice. Where, instead, local control results in deprivation and provides a breed-
ing ground for ignorance, it can no longer be rationalized.
Second, we must find ways of assuring that these programs are implemented
through structures and institutions which are responsive to the people the pro-
grams are designed to serve. This means that it is not enough merely to shift
the focus of dependency from a plantation owner to a government agency. People
must be given some measure of influence or control over programs and decisions
which affect them. It also means that as difficult as this may be, we must find
ways to assure that the policies and practices of people who administer the
programs are in absolute accord with the purposes the programs are designed
to serve.
Third and finally, we must build into our social and economic development
programs the crucial element of choice. One of the things which was at least
mildly surprising to us during the hearing was the extent to which Negro citi-
zens in the rural South, young as well as middle aged and older, told us that
given a meaningful choice they would prefer to remain in the areas they now
live. They are suffering all kinds of indignities in these areas now, but they
also are aware that the big cities are nOt centers of opportunity either. If given
the chance for a decent job and a modicum of dignity, they said they would
prefer to stay where they are. If choice is to be made meaningful, efforts to in-
crease spending in urban areas must be coupled with investment in rural areas
and guarantees that Negro citizens will be able to share in the opportunities
created by these investments.
PAGENO="0164"
STAFF REPORT: EDUCATION
INTRODUCTION
Among the factors affecting the economic security of black persons in non-
metropolitan areas the Commission examined vocational and elementary and
secondary school education.
The testimony at the hearing and the preparatory staff investigation disclosed
that the educational system is failing to provide black students with the educa-
tion or skills needed to obtain a decent job, and is perpetuating black poverty and
economic dependency. Many young people are leaving the area and migrating to
the cities, but they are not equipped with any salable skills.
For many Negro children basic preconditions of learning are absent-food to
nourish the body, shoes and clothes to wear, freedom from the need to work
during school hours to help support a poor family. But the school system is fail-
ing to educate black children who do attend school and whose physical condition
permits them to learn.
ELEMENTARY AND SECONDARY EDUCATION
School achievernent.-One measure of the success of an educational system is
the extent to which students master the subject matter of instruction. In the
hearing area large disparities in achievement exist between black and white
students. These differences are revealed by school achievement data collected in
the Office of Education study, Equality of Educational Opportunity (known as
the Coleman Report). Data available is for black and white students in the rural
South compared to the average scores for white students in the urban North.
Marked disparities in achievement between white and black students at three
grade levels (grades 6, 9 and 12) on three types of standardized tests were found.
for example, by grade 12, black students in the rural South were 6.2 grade levels
behind white students in the urban North in math achievement while white stu-
dents in the rural South were only 1.4 grade levels behind. For verbal abifity by
grade 12, black students were 5.2 grade levels behind (white 1.5), while in read-
ing comprehension black students were 4.9 grade levels behind (white 1.0) .~
The precondition-s of learning
Testimony at the hearing disclosed that for many impoverished black citizens
of the State the basic preconditions of learning were lacking. Mrs. Rebecca
Ward of Akron, Alabama, for example, testified that she had 10 children and
one grandchild living with her. She earned $12 per week in addition to her
weLfare check of $26 per month. Because she was unable to afford shoes and
clothes for her children to wear, four of her children had not attended school
on a regular basis during the past year. Other witnesses at the hearing also
testified that inadequate clothes and shoes for their children had forced them to
keep their children out of school. Some had difficulty getting enough money to
provide lunch for their children at school.
Dr. Alan C. Mermann, an Assistant Clinical Professor of Pediatrics at the
Yale Medical School, examined more than 700 children in Lowndes County
during the summer of 1966. He found that more than 80 percent of the children
he examined suffered from anemia-a shortage of iron in the blood-which he
attributed mainly to bad nutrition, but also to poor medical care and worm
infestation. In his words, ". . . many of these people have about approximately
two-thirds of the amount of red blood that the Commissioners have. I think one
begins to see emerging from this the reason why children are asleep in the
classes." The fatigue, caused by the small oxygen-carrying capacity, he stated~
helped explain why large numbers of children participating in a summer program
were asleep on the floor at 10:00 in the morning.
Another serious handicap was brought out by Miss Sadie Allen, an honor
student at Southside High School in Greenville, Alabama, who explained her
~ See Appendix E.
(604)
PAGENO="0165"
605
school's high rate of absenteeism. "[I]n order to stay in school at all, they have
to get out and work, so they work and they try to go to school too." Others
"stay on the white man's land" so they "have to stay out and go to chop cotton,
or else they will have to find some place else to live." 0. B. Carter, the Superin-
tendënt of Eufaula City Schools, acknowledged that at the black school some
students still stay out for a mouth or six weeks during the planting and `har-
vesting seasons.
Clearly for some students `a great deal more than an adequate educational
system is required if they are ever to escape the cycle of poverty in which they
are trapped. This paper, `however, will deal only with whether the eduCational
system is meeting these needs.
Eatent of .student aiul staff segregation.-Fourteen years after the Brown
decision the schools in the 16 county hearing area are almost totally segregated.
Despite Federal school desegregation requirements promulgated by the Depart-
ment of Health, Education, and Welfare, and legal suits and court orders in each
of the school systems, only about 1.7 percent of the black students were attending
formerly all-white schools in the hearing area as of September 1967, according to
the Office of Education.'
The school systems in the 16 counties have adopted freedom of choice plans to
integrate their schools. The testimony of Mr. and Mrs. Bernard Shambray, a
young couple from Greenville, indicated freedom of choice has not resulted in
integrated schools partly because of the economic dependency of the poor `blacks.
Mrs. Shambray stated that their oldest son wanted to attend a white elementary
school, but her husband wouldn't allow him to do so. "Greenville," Mr. Sham-
bray said, "is' a small community, and we somewhat depend on the white people
for our living. .. [1V[]ost of us feel that we don't want to do anything that might
jeopardize us in any way." 2
Like the students, the teachers are largely segregated. Of the 2,076 black
teachers in the 15 county systems for which figures are available, only 55 were
assigned full or part-time to white schools. Conversely, only 59 white teachers
out of a total of 1,061 were assigned to black schools.
Tangible inequalities.-Almost all black students who `do attend `school `attend
all-black schools, with other children who also come from impoverished back-
grounds. Historically Southern schools have been segregated, supposedly separate
but equal. But Plessy v. Ferguson was no more followed in the South before
1954 than Brown v. Board of Education is today. Even today the rule of equality
announced in Plessy is not followed in the hearing area. In a school system which
itself is poor by standards prevailing elsewhere in the country, the black schools
are inferior to the white schools by virtually every yardstick, whether the incas-
ure is value of school buildings or the quality of the facilities, courses or
instruction.
In the 1966-67 school year Alabama school districts averaged only $390 per
pupil in `school expenditures, maki'ng the State 46th in the Nation. In 1966-67,
according to figures issued by the Alabama State Board of Education, Federal
funds totaled $49,406,139, accounting for more than 1/c of the total budget. State
funds accounted for approximately 78 per cent of the nonfederal revenues for
public elementary and secondary schools in Alabama in 1966-67. Thus local funds
make up a very small percentage of the total funds expended by most school sys-
tems in Alabama. Gene Stroud, Superintendent of Butler County Schools, for
example, testified that the Butler `County Schools could operate for only 13 d'ay's
on local tax resources. State and Federal support, however, did not begin to
meet the educational needs of the students in rural school districts. The National
Education Association in a recent report of its investigation of the school system
in Wilcox County, Alabama, noted that:
`on March 22. 1967, `a three judge panel issued a decree in the case of Lee v. Macon
County Board of Education, 267 F. Supp. 458 (1967~., aff'd 389 U.S. 215, ordering the
desegregation of 99 of the 118 school districts in the State of Alabama. The other 19 school
districts were already under, separate court orders and therefore were not includedL Under
the Guidelines Issued by the Department of Hea'it,h~ Education, and Welfare, a district can
qualify for Fed~erai financial assistance by n,greeing to comply with the court order. Thus
the Department of Justice, which participated in the Lee v. Macon suit, must now bear
major responsibility, together with the Federal courts, for the desegregation of Alabama
schools.
2 Mr. Shambray's concern was not without merit. Commission staff visited Butler County
in December 1967, in preparation of its study "Southern School Desegregation 1966-67."
A tenant farmer outsid~ Greenville reported that the previous September, after some of
his children had signed to attend a white school, his landlord' told him to move, saying,
"Ira just not up for colored child~ren going io white school."
PAGENO="0166"
606
The gap between income and need is particularly glaring in the rural Black
Belt counties . . . where the majority of the population is poor, and where
even the meager sources of tax revenue available are underutilized.
In some instances, available money is earmarked for programs that may no
longer be meaningful. For example, school officials from Eufaula testified that
the State and Federal governments were providing funds for teachers of voca-
tional agriculture and home economics. They expressed doubt that any job
opportunities were opened for persons taking agriculture courses while for per-
sons taking home economics courses available jobs were in eating places and in
private homes. Levi Pettway, a senior at Boykin High School in Boykin, testified
that he had studied vocational agriculture for three years even though he did*
not plan to become a farmer. Other students were having the same experience,
he said.
Coin parison of Financial Resources for Black and White Schools.-There are
sharp disparities between black and predominantly white schools in the hearing
area. In an extreme case in Lowndes County, the per pupil value of the black
schools was $120, while for the white schools it was $1,300. For the 16 county
hearing area, the county schools attended by white students had an average value
of almost four times that of the schools attended by black students. The average
for the white schools was $823.15; for the black schools it was 240.81.1
In seven of the school districts in the hearing area covered by Lee v. Macon,
there w-as a large difference between the per pupil insurance valuation of the
black schools and the traditionally white schools in 1907-68. For example, in the
Demopolis School System, the insurance valuation of the buildings for white
pupils was $011 per pupil and for blacks it was $486 per pupil.2 Six of the school
districts in the hearing area covered by Lee v. Macon. had a significantly lower
per pupil value for furniture and fixtures at the black schools. The Marengo
School System, the system with the greatest disparity, had a valuation of $24 for
the black schools and $95 for the white schools. None of the school systems had
formulated a plan to correct the disparity.3
Another indication of the comparative quality of schools for black and white
students is the respective number of black and white schools with inadequate
enrollments. In the 16 county school districts within the hearing area, there were
212 schools, attended by less students than the number prescribed by the State
Department of Education as the minimum number that any school should have,
during the 1965-60 school year; 169 of them (80 percent) were black schools.
Many such schools continue to exist. Among these schools are ~ in Sumter
County, nine in Marengo County, and eight in Clarke County.4
Dr. Ernest Stone, when asked to explain how it was possible for the Clarke
County School System to have a white school worth $110,000 and a black one
worth $750, stated that the State had nothing to do with the building of either
building, everything was planned by the local school system: "It's a little some-
thing that we call democracy and we think that it's worked pretty well," he
stated.5
Democracy does not work so well for black persons in Bellamy either, a
company town operated by the American Can Corporation. The public school
in Bellamy-owned by the company and leased to the school system-is attended
by the children of that company's black employees. It is a wooden structure
with seven rooms, each heated by a pot-bellied stove and lighted by a single bare
bulb in each room. The toilets are outdoors, more than a 100 feet from the
building. On rainy days the area between the school and the toilets becomes a
sea of mud, as it was on the day Mrs. Frankie M. Freeman, a member of the
Commission, visited the school. The only running water available is from
spigots outside of the building. All of the white residents of Bellamy send their
children by bus to the county school in Livingston, Alabama, 10 miles away.
Dr. Stone, questioned about the situation in Bellamy, admitted it was deplorable,
but noted that this was not the only place where such a situation exists. He stated
1 See Appendix B.
2 See Appendix C-i.
2 See Appendix C-2.
See Appendix D.
Dr. Stone also noted that historically white persons "have provided more money out
of their pockets to make for a quality school than the Negroes hare." As of February 1,
1968. only two counties in the hearing area had black school board members, Greene
(Reverend Peter Kirksey) and Macon (Dr. Charles Gomillion and Mrs. Elizabeth H.
Richardson). Political Participation, ITS. Commission on Civil Rights (1968).
PAGENO="0167"
607
that large numbers of poor black and white students are being denied a decent
education in the State of Alabama.
* Instr~tctionaZ Quality.-Instructional quality was higher at the traditionally
white schools than at the black schools. Miss Sadie Allen who was an honor
student at Southside High School in Greenville, testified that she was rejected
by St. Margaret's School of Nursing. Miss Allen-ninth in ,a class of 114-was not
accepted for admission because her achievement test scores in science, mathe-
-matics and verbal ability were far below acceptable minimum standards.
0. B. Carter, Arthur Jones and Theodore Gibbs, officials of the Eufala School
System testified that Eufaula High School, more than 96 percent white, had a
distributive education course, under which students received classroom instrue-
tion and on-the-job training with employers engaged in merchandising. They
etated that students had been placed in doctors' offices, hospitals, grocery stores
and banks. A similar course was not offered at McCoo High School, the all-black
~school, which instead provided a trade training program, offering carpentry and
cabinet work and involving no on-the-job training. Thus whites were trained to
work in doctors' offices and banks while blacks were trained for carpentry.
Gene `Stroud and Charles Newton, officials of the Butler County School System,
testified that the black high schools were inferior to the predominantly white
Jiigh schools because of the inferior preparation of the black teachers. As in the
Eufaula School System, they testified that the white high school, but not the
*hlack one, offered a distributive education course In sales and merchandising.
The black high school offered courses in auto mechanics, cosmetology, masonry,
and construction trades. They also stated that the library at the black high
school was inferior to that at the white high school. They agreed that the school
system bore part of the responsibility for the fact that the achievement of black
students was not equal to that of white students because over the years better
teachers and more funds had been going to the white schools.
The number of elective courses offered to high school students generally is
greater at all-white or formerly all-white schools than at black schools. In the
16 county school systems during the 1066-67 school year, white high schools
offered 117 elective courses that were not offered at black schools, but only 88
elective courses were offered at black schools which were not offered at white
high schools.1 Not only did the white schools offer a larger number of
courses than black schools, but the quality of course offerings were more sub-
.stantial. In a compliance review of the schools in Autauga County in January
1967, DUEW investigators found that "[ci ourses such as geography, journalism,
speech, speed reading, advanced foreign languages, business math and English
are offered at one of the predominantly white schools but are not offered, at
either of the two Negro schools."
There were generally fewer library books per student in black schools than in
white schools in the 16 school districts. `In the white schools, there was an average
of 13.8 books per child, while there were only 5.9 books per child in black school's.
The State of Alabama assesses the quality of a school's instructional program
through the process of accreditation. Accreditation is particularly important
for students who want to go on to college. In the 16 `county school systems, every
`white high `school was accredited by the State of Alabama in 1966-67, `but only
66 percent of the black high schools were accredited.2 In `Clarke County, only
34 percent of the black high schools were accredited; in Sumter County the
`figure was 60 percent.
In addition to the State, the Southern Association of Colleges and Secondary
`Schools-a regional accreditation body-accredits high schools in Alabama. The
accreditation standards of the Southern Association are much higher than
those of the State of Alabama. Thus many. high `schools accredited by the State
of Alabama are no't accredited by the Southern Association. For example, the
two black high schools in Butler County are accredited `by the State of Alabama,
but no't by the Southern Association. Butler County has `three white high schools,
however, all of which are accredited by the State and tw'o of which are accredited
`by the Southern Association. In Greene County there are two black high schools
and one white high school, all accredited by the State but `only the white high
school accredited by the Southern Association.
1 `See Brief of the United States in Lee v. Macon County.
~ Ibid.
PAGENO="0168"
608
VOCATIONAL EDUCATION
During the 1086-67 school year, 477 schools in Alabama offered vocational
education; 448 or 94 percent were regular secondary schools and 27 were tech-
nical or vo~ational schools. The former provided vocational training for in-school
youths; the latter for out-of-school youths and adults. All are under court order
to desegregate.
The importance of vocational education in breaking the poverty cycle was
demonstrated by the success of the State trade schools in Alabama. J. F. In-
gram, the Alabama Director of the Division of Vocational Education, stated that
the employment experience of the trade school graduates has been very good.
Most of the graduates have been able to get jobs in the trade for which they were
trained. The schools remain segregated, however, and the few black schools are
inferior to the white ones.
The trade schools were established along racial lines with separate districts
for the black and white schools. In several cases, a black and a white trade
school are located in the same city. These districts remained unchanged by the
Macofl decree.
For example, Tuscaloosa and Montgomery each have two trade schools. In
each city one of the schools is virtually all black with few if any white students
and the other nearly all white with a few black students. With the exception
of one white instructor at the black school in Montgomery, there is no faculty
integration at the four schools.
In both cases, the schools serve overlapping areas. Both of the black schools
serve a much wider geographic area than the white schools. In some cases, a black
school located in one county serves another county which has a predominantly
white school. For example, black students are bused 50 miles from Selma (Dallas
County) to the predominantly black Trenholm School in Montgomery (Mont-
gomery County), even though the predominantly white King School is located
in Selma. Thus, white and black students are given an opportunity to choose
schools virtually or largely segregated by race.
The directors of both trade schools in Tuscaloosa told Commission staff that
they recruited only at those high schools at w-hich the predominant race of the
student body was the same as that of the students at the trade school. A similar
situation pertained at the Montgomery Schools. Seven of the courses offered
in the black trade school in Tuscaloosa are identical to those offered in the white
school. The two schools in Montgomery offer 10 identical courses. This situation
indicates clearly that the schools are intended to serve racially different popu-
lations. Students desiring to take cosmetology, in fact, are encouraged to attend
the school serving their race, because of differences in hair texture and styling.
Not only does such a practice reinforce the idea that the school where particular
courses are offered is for either black or white students, it also limits the employ-
ment opportunities of the school's graduates. Black cosmetologists for, example,
by not being trained to work with the hair of white persons, are thus limited
to employment in all-black establishments. Some courses, on the other hand, are
offered at one school, but not the other. Those offered exclusively at the white
schools tend to be in the relatively higher skilled categories and lead to higher
paying jobs, while those at the black schools tend to be courses preparing stu-
dents for the lesser skilled, lower paying jobs traditionally filled by black persons.
Commission staff visited five cities having only one trade schooL The instruc-
tors at the five schools were all white. The number of black students at these
schools varied from one (enrollment 150) at the Hobson School in Thomasville,
to 31 or 22 percent (enrollment 140) at the Sparks School in Eufaula, to approxi-
mately 60 (enrollment 400) at the Opelika School in Opelika. Although some of
their directors had visited black high schools, none of the schools engaged in an
aggressive recruitment program among potential black students.
PAGENO="0169"
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PAGENO="0170"
610
APPENDIX B
VALUE PER PUPIL OF SCHOOL BUILDINGS AND CONTENTS, 1966-67
County White Black
County White Black
Autauga $454 $355 Macon $2,731 $354
Bullock 1, 042 397 Marengo 750 228
Butler 509 396 Monroe 807 287
Barbour 1,174 200 Perry 1,134 214
Choctaw 1, 143 402 Sumter 679 241
Clarke 569 188 Wilcox 733 221
Dallas 645 377
Greene 847 249 Total 13, 180 3, 853
Hale 1, 176 300 Average 823. 75 240. 81
Lowndes 1, 306 120
Source: Brief for the United States in Lee v. Macon, table III, app. C, pp. C-13, C-23.
APPENDIX c-i
INSURANCE VALUATION OF BUILDING PER PUPIL
Predominantly Predominantly
County school system white black
schools schools
Butler $475. 55 $347. 77
Clarke 399. 00 265. 00
Dallas 511.32 319.68
Demopolis 911. 00 486. 00
Marengo 624.00 295.00
Selma 632.31 525.14
Thomasville 480.29 411.30
Source: Letter from Stephen Pollak, Assistant Attorney General in charge of the Civil Rights Division, Department of
Justice, to Dr. Ernest Stone, State superintendent of education, State Office Building, Montgomery, Ala., Mar. 13, 1968.
(Hereinafter called "Pollak letter.")
APPENDIX ~-2
INSURANCE VALUATION OF FURNITURE AND FIXTURES PER PUPIL
County school system
Predominantly
White
Schools
Predominantly
Black
Schools
Autauga
Dallas
Demopolis
Fvlarengo
Selma
$28.05
31. 97
147. 00
95.00
61.55
76. 05
$22.53
23. 14
75. 00
24.00
46.57
59.96
Thomasville
Source: Pollak letter.
PAGENO="0171"
611
APPENDIX D
BLACK SCHOOLS HAVING SUBMINIMAL ENROLLMENTS
County school School Grades
system covered
Recommended Enrollment
enrollment
Autauga New Salem 1 to 6 17b 20
Marengo Shiloh do 175 50
Jones Chapel do 175 70
Putnam do 175 63
St. John do 175 30
Myrtlewood 1 to 8 300 97
Jefferson ito 6 175 85
Palmetto 1 to 8 300 189
Faunsdale 1 to 9 350 152
Coxheath do 350 329
Marion Lincoln School K to 12 525 321
Ada Hanna 1 to 9 350 50
Monroe GreerJuniorHigh do 350 319
Vredenburgh Junior High do 350 201
Uriah Junior High do 250 180
MonroeJuniorHigh do 350 274
Clarke Alberta Elementary School 1 to 6 175 55
Alma Junior High ito 9 350 175
Clarke County Training School 1 to 12 525 426
James Chapel Elementary 1 to 6 175 36
Lilly Valley Elementary 1 to 8 _ 300 44
Little Grove Elementary 1 to 6 175 52
Mackey Branch Junior High ito 8 300 214
Morvin Junior High 1 to 9 350 96
Sumter Kinterbish II ito 6 175 58
McGowen do 175 64
Judkins 1 to 8 300 77
Arrington ito 6 175 99
Epes do 175 78
Gainesville 1 to 8 300 108
Whitfield do 300 113
Bellamy do 300 180
Sumtervilie do 300 167
Belmont ito 12 525 251
Kioterbish High do 525 410
Dallas Shiloh High School do 525 458
Hason Ha~rell High do 525 457
Taylor Union High do 525 418
E. M. Brown High School do 525 392
Hunter Mission Elementary School ito 6 175 155
Source: Pollak letter.
APPENDIX E
COMPARISON OF SCHOOL ACHIEVEMENT OF WHITE AND BLACK STUDENTS IN THE RURAL SOUTH
Grade levels behind 1
6 9 12
Verbal ability:
Whitestudents
0.7
1.0
1.5
Blackstudents
2.5
3.9
5.2
Reading comprehension:
Whitestudents
.5
.8
1.0
Black students
2. 7
3. 7
4. 9
Math achievement:
Whitestudeots
1.4
Blackstudents
2.6
3.7
6.2
1 "Grade levels behind" refers to the number of months behind the average white in the metropolitan Northeast, the
natural standard of comparison used in the title IV survey.
Source: Coleman, et al., Equality of Educational Opportunity, tables 3.121.1-3.121.3, 274-275 (1966).
PAGENO="0172"
STAFF REPORT: HEALTH, WELFARE, AND FOOD PROGRAMS
At its May hearing in Montgomery, the Commission heard testimony from
many Negroes whose lives were unchanged by health, welfare, and food pro-
grams designed to improve the condition of the poor.
I. FOOD PROGRAMS
Although 14 of the counties in the 16-county hearing area have some type of
government sponsored food program,1 seven of the 14 have been designated
"Hunger Counties" by the Citizens' Board of Inquiry into Hunger and Malnutri-
tion in the United States.2 To be cited as a Hunger County by the Board, 3 of
the 4 following conditions had to exist: a postheonatal mortality rate twice as
high as the national average; at least 40% of the people in the county in poverty;
fewer than 25% of the poor participating in food stamp or commodity programs
and less than 2~% of the poor receiving welfare assistance.
In counties with a surplus commodity distribution program, Commission in-
vestigators found that many families were depending on the commodities as the
primary source of food and thus were living on nutritionally-inadequate diets.
Mrs. Pattie Mae Haynes who has six children, aged 1-13, and whose only income
is a welfare payment of $117 a month, stated that she received grits, peas, meal,
flour, canned beef, and lard under the commodity program and that these foods
were usually the only thing the family had to eat. Some of the food items were
provided in insufficient quantities to last the entire month.
In counties with a food stamp program, many families went hungry or bought
food on credit from neighborhood stores because they did not have the money to
buy the stamps-a particular problem in a noncash economy where many fami-
lies earn less than $800 a year. Many were able to buy the stamps infrequently
and then only at the sacrifice of other household necessities. Often the amount
of food obtainable with the stamps did not last the entire month. Mrs. Helen
Randale, who has six children and no husband, said she told the stamp dis-
tributors that she did not have any money to buy stamps and was told that "if I
didn't have [any] income, I couldn't get any [stamps]." In order to feed her
family, she had to rely on credit and donations from neighbors. Aiiother witness
who was unable to buy stamps regularly, Mrs. Mary Wade, testified that in order
to buy the stamps she had to do without other necessities: "I have to put off a
lot of bills or either borrow money from some of my friends and have to pay
them back later on and pay interest on it."
Other witnesses testified that the amount of food they were able to purchase
with the stamps was insufficient; at the end of the month, their meals consisted
of milk and bread and turnip greens.
The Svrpius Uomnioăity Program
Section 32 of the Agricultural Adjustment Act of 1933,~ as amended, authorizes
the Secretary of Agriculture to spend 30 percent of the custom duties collected
during the previous calendar year, plus up to $300 million of the unused balances
from previous years to "encourage the domestic consumption of [agriculture]
commodities or products by diverting them . . . from the normal channels of
trade and commerce or by increasing their utilization through benefits, indemni-
ties, donations or by other means, among persons in low income groups as deter-
mined by the Secretary of Agriculture." Section 416 of the Agricultural Act of
1949~ authorizes the donation of commodities acquired through price support
operations to needy persons. The Secretary of Agriculture established the Surplus
Commodity Program as a means of implementing these legislative directives.
1 Macon, Marengo, Monroe, Butler, Wilcox, Autauga. and Lowndes have a surplus food
program and Bullock, Dallas, Greene, Hale, Perry, Sumter, and Choctaw have a food
stamp program. A food stamp program for Clarke County has been approved but was
not in operation at the time of the hearing. Barbour County has requested a food stamp
program.
2 Autauga. Bullock, Clarke, Dallas, Hale, Lowndes, Macon.
27 U.S.C. 612(c).
7 U.S.C. 1431.
(612)
PAGENO="0173"
613
The type of commodity distributed under the program is determined by current
surplus products and generally consists of such items as dry beans, corn meal,
flour, grits, shortening, rolled oats, peanut butter, split peas, rice and rolled
wheat.5 Surplus commodities do not include fresh meat, fresh vegetables or fresh
milk.6 The commodities are viewed by the Dej~artment of Agriculture as supple-
ments to the recipient's food supply; however, as noted, many families rely on
the commodities entirely.
Staff investigation revealed that although public assistance recipients are
automatically eligible for the surplus food, not all such recipietits are participat-
ing in the programs. During the period October 19136-September 1967, 26.2%
of the public assistance recipients in Macon County amid 24.5% O~ suëh reëipients
in Marengo County did not receive surplus food. In January 1963, 20% of the
public assistance recipients in Butler County, and 23% of the public assistance
recipients in Wilcox County received no surplus food.
Although no payment is necessary to obtain food under a surplus commodity
program, distribution procedures deter many eligibles from participation. Testi-
money at the hearing indicated that most counties had only one food distribu-
tion point and transportation was necessary to get to the food. In addition, the
volume of the food distributed-22 lbs. per houshold member-~aggravated the
transportation problem. The Commission also heard testimony by commodity
recipients that many of the commodities "would be full of weevils and bugs and
things. You couldn't eat [them]," testified Mrs. Elizabeth Hutton.
The Food Stamp Program
The Food Stamp Act of 1964'~ authorized the creation of a food stamp program
in order .to utilize the nation's abundance of foOd "to the maximum extent prac-
ticable to safeguard the health and well-being of the Nation's population and raise
levels of nutrition among low-income households." Under the Act, the Secretary of
Agriculture is charged with formulating and administering a food stamp program
that will provide needy households "an opportunity more nearly to obtain
a nutritionally adequate diet" through the issuance to them of food stamps
which have a greater monetary value than their normal expenditures for food.
The stamps are then used to purchase food from retail food stores.
rThe Act provides that "In areas where a food stamp program is in effect, there
shall be no distribution of federally owned foods to households . . . except dur-
ing emergency situations caused by a national or other disaster as determined by
the Secretary.8
When a county shifts from a surplus food to a food stamp program, there is al-
most always a drastic drop in participation. Staff interviews with eligibles who
were not participating in the stamp program revealed that the cost of stamps
was the main reason for nonparticipation. When Dallas County shifted from sur-
plus food to food stamps in the 1966-67 fiscal year, participation declined by more
than 50 percent, from 11,493 to 5,237 individuals. In Greene County, where a
similar change occurred in the same year, participation was almost halved, drop-
ping from 6,666 to 3,685. Mr. `Ruben King, the Commissioner of the State Depart-
ment of Pensions and Security, testified that in most of U~ie counties that have
switched from commodities to food stamps, approximately one-third of the re-
cipients drop out.
An even smaller proportion of public assistance recipients are participating in
the food stamp program than participate in the surplus food program. During
the period October 1966-September 1967, 87.3 percent of the public assistance
recipients in Bullock County, 86.3 percent in Dallas County, 81.6 percent in Greene
County and 75.5 percent in Hale County, did not participate in the food stamp
program.
In January 1968, 64.7 percent of the public assistance recipients in Perry
County were not participating in the food stamp program. Mrs. Augusta Wilkin-
son, the Director of the Dallas County Department of Pensions and Security
~ The types of food distributed under the program vary from month to month with
the exception of flour, corn meal, corn grits, and bulgar, which have always been avail-
able for distribution monthly.
A Department of Agriculture survey Indicates that from 26-30 percent of the diets
of `Southern rural people have less than two-thirds of the recommended dietary allowances.
For persons in poverty in' the same area, the percentages are 42-43 percent. Such diets,
over sustained periods of time, are considered hazardous to health. U.S. Department of
Agriculture, Dietary Levels of Households in the United S~tatds, Spring 1965, AR'S Report
No. 62-17. January 1968.
7 U.S.C. 2012 et seq.
87 U.S.C. 2013(b).
PAGENO="0174"
614
gave the following explanation for the small niunber of public assistance
recipients who were purchasing food stamps:
when a person receives assistance, particularly mothers, and it aver-
ages around $16 per child, it's awfully hard to buy a lot of food and then
have set aside money for rent, for clothing, and incidentals that they have
to have.
Mrs. Wilkinson stated that transportation problems were also responsible for
the decline in participation:
I think that the transportation problem is very acute in our county. As
you well know, the Negroes who live out in the county, they are charged $5
to come in to get the food stamps.
Mrs. Helen Randale, who lives in Greene County, testified that she had to pay
$3 for food stamps and $2 for transportation to obtain the stamps.
Program Inadequacies
In both food programs, the needs of the poor are subordinated to other interests.
Since the surplus commodity program was conceived of as an efficacious means
-of disposing of farm surplus and thereby protecting farm prices, the Department
of Agriculture, generally, has not considered the nutritional needs of those who
depend almost entirely on surplus foods for their basic diet.
The Food Stamp Act attempts to provide the poor with more adequate diets
~ŕnd, at the same time, protect farmers and commercial food suppliers. The legis-
lative method used to accomplish these dual objectives was to require the stamp
recipient to continue to spend the amount he normally spent for food and then to
give him a bonus payment that would enable him to increase his consumption of
food. The insistence that stamps be used to supplement rather than supply regular
food needs does not take into account the realities of the budgets of poor people,
who must often choose between having adequate food, clothing, or shelter because
there is not money enough for all three.
The Department of Agriculture, in its regulations implementing the food pro-
grams and other administrative action, has further weakened the effectiveness
of the programs as vehicles for providing the poor with adequate diets.
The Food Stamp Act specifies that stamp prices are to be set for each family
at an amount determined to be equivalent to their normal expenditures for
food.9 The Department, however, has not based stamp prices on individual
determinations of "normal expenditures", but rather on average expenditures for
families of the same size and income. Thus a substantial number of families
must pay more for the stamps than they normally pay for food.
Some examples of the cost of food stamps are:
A family of four with a monthly income of $80 must pay $36 (45% of its
income) towards food stamps and receives $68 worth of stamps. If their monthly
income increases to $90, they must pay $4 of the $10 increase towards food
stamps (for a total of $40) and receive $70 worth of stamps-a value increase
of only $2.
A family of eight with a monthly income of $30 must pay $10 (33~ % of its
income) and receives $84 worth of stamps. Should their income increase to $40,
$6 of the $10 increase must be contributed to stamp costs. Although the amount
of the family's contribution has increased by $6, the value of the stamps
received remains the same-$84.
Stamp prices have been established with little consideration given to the
actual food-buying practices of the poor, particularly in rural areas where the
poor traditionally mortgage their crops and subsist on credit purchases through-
out the year. Thus, income earned is not a reliable indication of cash actually
available each month for purchasing food. The amount the poor have to spend
on food, moreover, in any one month is dependent on such variables as what
bills have to be paid, what emergencies have arisen, and whether work was
available in the month in question. In addition, the standarized pay scale does
not take into consideration variations in ages of family members which affect
the type and quantity of food needed, or seasonal changes in income.
The schedules of stamp prices set up by the Department, moreover, do not
reflect the differences between the amounts spent for food in urban and rural
areas and thus penalize the rural poor by assuming their food expenditures are
the same as those of their urban counterparts. The stamp issuance plan makes
7 U.S.C. § 2016(b).
PAGENO="0175"
615
no provision for providing free stamps to families who have no income or avail-
able cash, although such families have no "normal expenditures for food" and
legislative history of the Act clearly indicates that such persons should receive
the stamps free.
Desipte the designation of 255 counties a's "Hunger Counties" by `the Citizens'
Board `of Inquiry into Hunger and Malnutrition in the United States and the
well-publicized documentation of the extreme deprivation which exists in many
area's of the country and which amounts to a chronic condition of emergency,
the Secretary of Agriculture has not made use of the power given him the Food
Stamp Act to authorize the concurrent operation of the food stamp program and
the surplus commodity program in these areas, although the congressional debate
surrounding this provision `of the bill makes clear that such power was to be
exercised in area's of economic need where persons could not afford to buy food
stamps.1°
As noted earlier, the `Commission found that many needy families depend on
surplus commodities as their major source of food. The commodities currently
distributed do not provide nutritionally-adequate diets. Secretary Freeman ha's
indicated that he has the power to spend Section 32 funds to increase the variety
of commodities distributed to the needy. Yet, he has returned to the United States
Treasury in the last ten years over $902 million in unused Section 32 funds and
plans to return $228,616,000 this year. The Secretary gave the following explana-
,tion for his return of Section 32 funds in a May 27, 1968 letter to the Chairman of
the House Education and Labor Committee: "The only way in which the Section
32 funds could have been used would have been to add to the variety of com-
modities being distributed in counties which had program's. While this would have
been desirable, it was not judged to be crucial to the food program."
Secretary Freeman has contended that the only use he `can make of Section 32
funds is `to purchase surplus commodities and provide for their distribution. He
claim's that `Section 32 funds cannot be used to add nutritious nonsurplus com-
modities to the prgoram. The language of the Section and its legislative `history
do not support such a restrictive interpretation. In any event, even under the
Secretary's reading of the act, Section 32 funds could be used to improve dis-
tribution procedures for the `commodities in order to increase participation in
the program.11
II. WELFARE
Just as government food programs have failed to provide the poor with suffi-
cient food, public assistance programs have failed to provide `the poor with a
decent standard of living.
Mrs. Pattie Mae Haynes and her six children live in a three-room house that
has no electricity or indoor plumbing. Since the roof in two of the rooms leaks,
the family cooks and sleeps in one room. Mrs. Ha~nes is 43 years old and in ill
health. The Haynes' family does not h'ave an outhouse and must use the woods
behind the house. Water for household chores `and for drinking comes from a pol-
luted spring 100 yards from the house down a steep hill. There are only one
or two chairs in the house and the children must eat thei'r meals on the floor.
Mrs. Haynes often has to keep her children home from school because they do
not have shoes. Mrs. Haynes and her family receive $117 a month in welfare
payments.
`Mrs. Rebecca W'ard has 11 children and grandchildren living wi'th her and
works as a maid five hours a day, six days a week for $12. Because she has a
$12 weekly income, Mrs. Ward gets $26 a month in welfare payments. Mrs. Ward
`testified that her children do not attend school regularly:
I have got four staying out all this year because they didn't have shoes
and clothes to wear, and I wasn"t able to [buy them any] because I wasn't mak-
ing but $12 a week, and I bad to try to clothe them and feed them."
`Of the 23,891 persons receiving public assistance ill the 16-county hearing area,
77.5% are Negro. 91.5% of the persons receiving Aid to Dependent Children
(ADO) in the hearing area are Negro. ADO is available to children who are de-
prived of the care and support of one or both parents by reason of death, illness, or
10 The institution of commodity programs in these additional counties would not necessi-
tate the discontinuance of commodity programs in other counties since for the past 10 years
the `Secretary has not used all the Section 32 funds available to him.
~ For example, mobile distribution units that travel to various parts of a county
would help to overcome the transportation problems that presently discourage participa-
tion. In addition, increased use could be made of local private organizations as distribu-
tors of the commodities.
PAGENO="0176"
616
continued absence from the house. Alabama does not have a public assistance pro-
gram which provides aid to children who are deprived of parental support because
of the unemployment of a parent. Thus, many needy families which meet the in-
come requirements for public assistance go unaided if the unemployed father re-
mains with the family~
Families who manage to qualify for ADO find that their economic position is
not substantially improved. An ABC family of four receives oniy $89 a month
from the State Department of Pensions and Security despite that Department's
determination that such a family needs $177 a month for basic items such as food,
clothing, and household expenses. Only $40.30 of the ADO payment is available
for use for nonshelter items such as food and clothing. Even if a family were able
to spend the entire $40.30 for food monthly, this amount is only 28% of what
the U.S. Department of Labor has estimated is needed by a family of four to
maintain an adequate diet. In March 1967, the Federal Index of Poverty showed
that $2,320 a year was needed to afford a family of four even the minimal diet
that could be expected to provide adequate nutrition and still leave enough to
pay for other living essentials. In March 1967, the cash payment to an ADO
family of four in Alabama totaled $876 per year, 37.8 percent of the Federal
poverty index. Even if allowance is made for the average value of surplus food
and the food stamp bonus received by ADO families participating in those pro-
grams, the total payment is still less than half of the Federal index.
Ruben King, the Commissioner of the Alabama State Department of Pensions
and Security, conceded to the Commission that the present cash payment, which
represents 50% of the need, is inadequate but that the Department had been
unable to get the state legislature to appropriate more money for the program. He
stated that the average ADO payment in March of 1968 was approximately $15
per person and commented:
"$15 is not enough; there are many children in this State, both black and
white, who go to bed hungry at night. . . . [S]ince 1964 the whole Federal
program of welfare has been one of a rehabilitative approach, yet, if you cannot
give children adequate food, if they do not get adequate education, they are not
going to be able to compete in society today, and your vicious cycle of welfare will
continue. If these people are not able to compete, then society will leave them
along the roadside."
The requirements for the receipt of public assistance, which include factors
other than need, are so restrictive a's to exclude many needy people. Thus, there
are a large number of needy people who are unable to receive public assistance
who nevertheless are a'ble to participate in food programs in which need is the
only requirement.
From October 1, 1966, to September 30, 1967, non-public assistance recipients
constituted between 72.5 and 82.5 percent of those receiving surplus food in
Macon, Marengo and Monroe Counties, while in January 1968, 76.5 percent of the
participants in Butler County and 86.5 percent of the participants in Wilcox
County were non-public assistance recipients.
An even smaller proportion of the participants in food stamp programs are
public assistance recipients. From October 1, 1966, to September 30, 1967, in
Bullock, Dallas, Greene and Hale Counties, the non-public assistance participants
represented between 88 and 97 percent of all participants. In Perry Couiity in
January 1968, non-public assistance participants represented 72 percent of the
total participants.
III. HEALTH
The life of deprivation which the poor lead has `a direct and damaging effect
on their `health. The debilitating effects of an inadequate diet were `described
to the Corn-mission `by Dr. Alan C. Mermann, a Connecticut pediatrician and a
member of the Medical Committee on Human Rights, who directed a health
survey among Negroes in Lowndes County during the summer of 1966. He
examined 709 children and 110 of their parents. Dr. Mermann testified that 80
percent of the children suffered from anemia which was mainly due to bad
nutrition. He estimated that these children had "approximately two-thirds of
~ Mr. King was opposed to the 1967 amendment to the Social `Security Act which limits
the Federal contribution to state ADC payments to that proportion of the child population
of the state which was receiving ADO assistance during the first quarter of 1968. He
stated that he thought one of the reasons for the amendment was to put pressure on the
states to develop work incentive programs for ADO recipieats. He thought that such
programs would be successful because "I think that most of the people on welfare resent
the fact that they are on welfare and given an opportunity will come off of the welfare."
PAGENO="0177"
617
the amount uf red blood that the Commissioners have." As a result of this con-
clition, their life expectancy is 8 to 10 years less than the life expectancy of
whites in Lowndes County. Dr. Mermann described the effect anemia has on
learning and performance levels:
"I have never seen children sleeping in school before-this was a summer pro-
gram-~and these children would be asleep on the floor at 10:00 o'clock in the
morning. It explains, I think, some of the fatigue that `a woman, the mother
of six or eight children . . . has when she is operating on a very very low margin
of oxygen-carrying capacity In her blood. It explains the difficulty that `a man
might have in providing for his family. His inability to work on. I think this has
a profound economic impact on the community involved."
Dr. Merm'ann testified that medical studios suggest that a lack of protein in
early childhood has an `arresting effect on brain development which is irreversible.
He also emphasized the psychological effect going hungry has on a child:
". . . if children are not being fed properly from their earliest days, if the
parent cannot feed his child, `or her child, as parents feel a child should be fed,
this produces a certain `apathy and . . . a real distrust of the `adult world when
those earliest crying infant needs are not being met properly.
"This, I think, has profound influence on the way one sees the world from
then on."
The diet of most of the Negroes in Lowndes County consists of salt pork, corn
meal and beans. The Negro infant death rate is extremely high: 23 of 265 babies
die during the first year of birth. 8% of the children and 15% of the adults had
kidney disease and 6% of the children and 18% of the adults had high blood
pr~ssure. 90% of the children examined stated that they had never seen `a doctor.
Low.ndes County has two doctors: one practicing in the extreme southeastern
corner of the county and one in the extreme northwestern corner. There are no
hospitals in the county.
The conditions which Dr. Mermann found to exist in Lownde's County are
typical of the situation of the poor throughout the 16-county hearing area: the
illness and disease which are the products of their deficient diets generally go
untreated because of their lack of money and the absence of free medical serv-
ices. Alabama does not provide health care services to ADC families. The only
medical expense allotted in the budget for an ADC family of four is $1.60 per
month for medicine chest supplies. However, since only 50 percent of the family's
budget is covered in present ADC payments, it is likely that even this minimal
amount is diverted to other purposes.
While each county in Alabama has a public health department, the services
provided by these departmonts are woefully inadequate.~ Most of the counties
do not have full-time public health doctors, with the consequence that very
little medical treatment is provided at the health clinic. Immunization shots
and birth control devices are available at all clinics. Prenatal and postnatal
care of a routine nature are provided, but mothers must make their own arrange-
ments for delivery. Well-baby clinics are conducted by half of the counties but
these provide only diagnostic services-not treatment. Full utilization of the
services provided by the clinics is hampered by the fact that there is usually only
one clinic in a county and some services are provided only on specified days.
Thus, in addition to obtaining transportation to the clinic, a person must know
on which day the services he needs are provided.
Many Negroes are discouraged from going to the clinics because of the treat-
ment they receive there. The Commission heard testimony that, in many of the
clinics, Negroes and whites had separate waiting rooms and that whites were
waited on first. Mrs. Helen Randale, a welfare recipient, testified that she was
sent to Tuscaloosa by the health department in her county for an eye examina-
tion. She had to pay $10 for transportation for the 50 mile trip, and when she
got there she was told that she could not he examined that day, even though
she understood she' had an appointment. She was told to return the next month.
Mrs. Randale told the Commission: "[the lady] treated me so cold, I didn't
never go back."
Alabama's infant mortality rate is higher than the national average, and,
within Alabama, the rate is higher for Negroes than for whites. Dr. Ira L.
Myers, the State Health Officer, testified that one of the primary causes of infant
morta'ity, prematurity, is generally the result of inadequate prenatal care
13 In 19G7, Alabama spent $1.70 per capita for general health services-well below the
national average. Only six county health departments expended over $2.00 per capita.
96-602-68-vol. II-12
PAGENO="0178"
618
and inadequate diet. Inadequate assistance at delivery also is a factor. Alabama
does not have a statewide program that provides hospitalization for expectant
mothers who cannot afford such costs. As a consequence, many indigent mothers
have their babies at home, with only a midwife's assistance. Dr. Myers testi-
fied that there are about 700 midwives in Alabama at the present time. The
Department of Public Health issues preniits for the practice of midwifery and
conducts periodic courses for midwives. In 1906, one out of every 10 deliveries
was by a midwife.
Eight of the counties in the hearing area have school health programs
financed under Title I of the Elementary and Secondary Education Act. Under
this program school children are examined for medical and dental defects by
nurses hired with Title I funds. Federal money is provided for treatment of any
defects found in needy children, but it is up to the child's parents to find a
doctor who will treat the child.
For general medical treatment indigent families must rely on the good will of
local doctors who must provide their services free if necessary treatment is
to be rendered. Local service organizations must be petitioned for funds for
necessary drugs and other corrective items. Home health care services are
generally unavailable-the ill must either be able to travel to the county health
clinic or go without even the limited public health services theoretically avail-
able to them.
Alabama does not have a Medicaid program which would provide medical
services and drugs to public assistance recipients and other needy persons.
June 19, 1968.
PAGENO="0179"
APPENDIX 9
THE CHALLENGE OF URBANIZATION'
By PHILIP M. HATJSER, University of Chicago
Man or a close cousin has resided on this planet for some 2 to 21/2 million
years. Over this period four developments, interrelated and reaching climactic
proportions during this century, have profoundly affected man's attitudes, values
and behaviorisms. These developments are: one, the population explosion; two,
the population implosion; three, population diversification; and four, the ac-
celeration in the tempo of technological and social change.
The "population explosion" refers to the remarkable increase in the rate of
world population growth, especially during the three centuries of the modern
era. In the long view world population growth rates have increased from per-
haps two per cent per millennium during the Paleolithic Period (the Old Stone
Age spanning some 600,000 years) to two per cent per annum at the present
time-a thousand-fold increase.
Since mid-l7th century world population has increased over six-fold, from
about one-half billion to 3.3 billion at the present time (1968). In quick summary,
it took most of the 2 to 21/2 million years man has occupied the earth to generate
a world population of 1 billion persons-a number not achieved until about 1825.
It required only 105 years more to reach a population of 2 billion, by 1930; and
only 30 years more to reach a total population of 3 billion, by 1960.
The "population implosion" refers to the increasing concentration of the
world's peoples on a small proportion of the earth's surface-the phenomenon of
urbanization and metropolitanizatiOn. Again, in the long view, this is a rela-
tively recent development. Permanent human settlement was not achieved until
the Neolithic Period (the New Stone Age), some 10,000 years ago. Such per-
manent settlement had to await the great inventions, technological and social
organizational, of the Neolithic Revolution-domesticated plants and animals,
and the proliferation of the crafts. Clumpings of population large enough to be
called towns or cities did not emerge until after about 3500 B.C.; and mankind
did not achieve the technological and social organizational development to permit
cities of 100,000 or more until as recently as Greco-Roman civilization. With the
collapse of the Roman Empire the relatively large urban agglomerations in the
Roman sphere of influence diminished in size to small towns providing services
to rural hinterlands together with which they constituted almost autonomous
subsistence economies.
With the emergence of Europe from the Dark Ages and the series of develop~
ments known as the Agricultural Revolution, the Commercial Revolution, the
Industrial Revolution, the Scientific Revolution and the Technological Revolu-
tion, man achieved levels both of technological and social organizational develop-
ment that permitted ever larger agglomerations of people and economic activities.
In consequence, the proliferation of cities ~f 1,000,000 or more inhabitants became
possible during the 19th century, and the emergence of metropolitan areas and
megalopolis, the coalescence of metropolitan areas, during the second half of
the 20th century.
In 1800 only 2.4 per cent of the world's people resided in places of 20,000 or
more; and only 1.7 per cent in places of 100,000 or more. By 1960, 27.1 per cent
were located in places of 20,000 or more, and 19.9 per cent in places of 100,000
or more.
"Population diversification" alludes to the increasing heterogeneity of popu-
lations not only sharing the same geographic area but, also, the same life space-
economic, social and political activity. And the "same geographic area" and
"the same life space," with accelerating technological and social organizational
1Prepared for the Urban Journalism Center, Northwestern University, as a synthesis
and updating of a number of earlier papers.
(619)
PAGENO="0180"
620
developments, have expanded during the 20th century virtually to embrace the
entire world.
Population herterogeneity refers to populations diverse by culture, by lan-
guage,, by religion, by values, by behavior, by ethnicity and by race. These are
obviously not mutually exclusive categories, but they constitute foci for prob-
lems of communication, conflicts of interest, and frictions of interaction.
Finally, the accelerated tempo of technological social change are well enough
understood to require little elaboration. Suffice it to say that technological
change has, in general, preceded and necessitated social change; and that the
gap in rates of technological and social change, evident in myriad examples of
"cultural lag" constitutes a framework in the light of which most of contempo-
rary problems, domestic and international, may be better comprehended.
The four developments exposited are, needless to say, highly interrelated.
The population explosion has fed the population implosion. Both have fed
population diversification. And the accelerated tempo of technological and social
change have operated as both antecedents and consequences of the other three
developments. Each in its own way and all four in concert have generated
severe problems: chronic and acute; physical, economic, social and political;
and domestic and international. Man as the only culture building animal on the
globe not only adapts to environment, he creates environment to which to adapt;
and an increasingly important element in his environment is man himself-more
specifically, his increasing numbers, density and heterogeneity. Man has, in
large measure, created the world in which he lives-physical, economic, social
`and polictical-and he is still learning how to live in it. This is the perspective
in the light of which urbanization, which encapsulates all four developments,
may be regarded as one of the contemporary world's greatest challenges.
URBANIZAITON IN THE UNITED STATES
The United States constitutes the world's most dramatic examples of all four
of the developments outlined above. These have precipitated major crises during
the last third of the 20th century and constitute the framework for comprehend-
ing and dealing with America's urban difficulties. Virtually all of the urban prob-
lems which are increasingly and urgently requiring national attention, whether
they be physical, personal, social, ethnic and racial, economic or governmental
problems, may be viewed as frictions in the transition which is still under way
transforming the United States from an agrarian to an urban and metropolitan
order.
The Population Ewplosion.-In 1790, when the first Decennial Census of the
United States was taken, the United States had a total population of less than
4 million persons. By 1960 the population of the nation numbered more than 150
million; during 1907 it reached 200 million.
The rapid population growth of the United States was the product both of
natural increase, the excess births over deaths, and of immigration. Between 1820,
when the government first began to count newcomers, and 1966, almost 44 million
immigrants were admitted into the country, predominantly from Europe. The
pea& in immigration was reached during the decade 1901 tO 1910, when some 8.8
million immigrants were admitted. During World War I immigration slackened,
and then, with the passage, beginning in the 1920's, of the various laws controlling
the admission of newcomers, immigration became a minor factor in population
growth. It is now restricted to about 300,000 immigrants per year. Despite the
relatively large volume of immigration, in no decade did immigration exceed
natural increase in contributing to total population growth.
Natural increase, including of course that of the immigrants, has been the
main source of population growth of the nation. By reason of the changes in fer-
tility and mortality the rate of natural increase in the U.S. declined from about
25 (excess of births over deaths per 1000 persons per year) in 1800 to a level of
about 7 at the bottom of the depression. With the post-war baby boom, natural
increase rose to a level of about 15, but it declined again to a level of about 9 in
1960, and again to a level of 7 in 1967. Thus, the excess of births over deaths
alone, without considering immigration, has changed over time so as to drop
from a contribution of a 2.5 per cent annual growth rate in 1800, to a .7 per cent
growth rate in 1935, to a 1.5 per cent growth rate during the post-war baby boom,
to a .7 per cent growth rate in 1907. Although changes in the birth and death
rates considered (the "crude" rates) reflect in considerable part changes in the
nation's age structure, nuptiality and child spacing `and do not accurately depict
what has happened to the level of child bearing per couple during the entire
PAGENO="0181"
621
reproductive span, a more complex subject not considered here, they do show
how the net effect of fertility and mortality changes have operated to contribute
to the decline in the rate of total population growth of the United States.
The U.S. Bureau of the Census has from time to time made projections of U.S.
population on varying assumptions about the future course of fertility and
mortality. Such projections made in 1967 indicate that, despite the declining
crude birth rate, the United States will continue to experience large absolute
population increase in the decades which lie ahead. These projections show that
by 1990, only 23 years hence, the population of the U.S. may reach a level of
from 256 to 300 million. One of these projections, based on the assumption that
fertility would remain at the level obtaining in 1964 and 1965, would produce
a population of 207 million by 1970, 243 million by 1980, and 287 million by 1990.
The same projection gives a population of 336 million by the year 2000 and
430 million by 2015. These data constitute a brief overview of the population
explosion in the United States, retrospective and in prospect. Let us next turn
to a consideration of the population implosion in this nation.
The Population Implosion.-In 1790, 95 per cent of the population of the United
States lived in rural areas, that is, on farms or in places having fewer than 2500
persons. The 5 per cent of the population who lived in cities were concentrated
in 24 such places, only two of which (New York and Philadelphia) had popu-
lations of 25,000 or more. By 1850, population in urban places was still as low
as 15 per cent. By 1900, however, almost two-fifths of the population lived in
cities. But it was not until as recently as 1920 that the U.S. became an urban
nation in the sense that more than half of the population lived in cities. That
many critical problems affect cities and urban populations should not be too
surprising in light of the fact that it will not be until the next Census of
Population is taken, in 1970, that the United States will have completed her
first half century as an urban nation.
The increase in urban and metropolitan population is the result of net
migration as well as natural increase. Cities and metropolitan areas have over
the years received large numbers of migrants from rural and non-metropolitan
areas of the United States as well as through immigration from abroad. For
example, between 1950 and 1960, 35 per cent of the total metropolitan growth
was the result of net migration (including immigration) and 65 per cent the
result of natural increase.
Migration, in the United States, as elsewhere, represents mainly a movement
of population from places of lesser economic opportunity to places of greater
opportunity. Moreover, in the United States, as elsewhere, migrants have often
been ill prepared in their areas of origin for life in these areas of destination.
In consequence, the problems of adjustment of in-migrants to urban and metro-
politan areas are often difficult as they seek to accommodate to their new setting.
Furthermore, the problems of adjustment are compounded when complicated
by differences of language, culture, religion, ethnicity, or race.
The speed of the population concentration in urban and metropolitan areas
becomes clear in an examination of developments since the turn of the century.
In the first sixty years of this century the increase in urban population absorbed
92 per cent of the total populatiOn growth in the nation. In the decade 1950 to
1960 the increase in urban population absorbed more than 100 per cent of total
nationa.l growth; that is, total rural population, including nonfarin as well as
farm, actually diminished for the first time.
The increase in the population of metropolitan areas is equally dramatic.
The increase in the population of the Standard Metropolitan Statistical Areas
(SMSA's), as they are officially designated by the Federal government (cities
of 50,000 or more together with the counties in which they are located), absorbed
85 per cent of total national growth between 1900 and 1960; and the 24 largest
SMSA's, those with 1,000,000 or more, absorbed 48 per cent, almost half of the
total growth of the nation in the first sixty years of this century.
In consequence, by 1060, 70 percent of the American people, 125 million, re-
sided in over 6000 uriban places; and 63 percent, or 113 million persons, lived in
212 SMSA's. In 1965, 67 percent or some 129 million persons lived in the 228
metropolitan areas as defined on May 1, 1967.
The trend towards increased urban and metropolitan concentration of popula-
tion is likely to continue. The reasons for this are to be found in the advan-
tages of clumpings of population and economic activities. As Adam Smith noted,
the greater the agglomeration the greater is the division of labor possible; and
this generates increased specialization, easier application of technology and the
PAGENO="0182"
622
use of non-human energy, economies of scale, external economies, and minimiza-
tion of the frictions of space and communication. In brief, the trend towards
urbanization and metropolitanization is likely to continue because such clump-
ings of people and economic activities constitute the most efficient producer and
consumer units yet devised.
While the population of the United States has become increasingly con-
centrated in urban and metropolitan areas, population decentralization has oc-
curred within metropolitan areas. That is, within metropolitan areas the pro-
portion of residents living in the suburban ring, the area outside the central
city but within the SMSA, has increased. During the first sixty years of this
century the increase in the population of central cities has absorbed 25 percent
of total national growth and between 1950 and 1960, 31 percent. In contrast the
increase in suburban population absorbed 45 percent of the total national growth
between 1900 and 1960, and 66 percent, a full two-thirds, of total national
growth in the decade 1950 to 1960.
As a result, by 1960 almost half of the total population in SMSA's lived in
the suburban ring; the central cities contained but a slight majority of metro-
politan population. By 1965, however, it is estimated by the Census Bureau that
suburban population exceeded that of the central cities. In 1965, suburban ring
population is estimated at 65 mi]Iion, or 51.9 percent of the metropolitan popula-
tion. while central city population is placed at 60 million, or 48.1 percent.
The reason for the decentralization of population within metropolitan areas
is not difficult to trace. It is not so much the result of "flight from the city"
as the joint effect of the following two factors. First, with advancing technology
the maximum possible size of a metropolitan area has continuously increased.
Twentieth-century technology, characterized by electric power, the combustion
engine complex-the auto. truck and highway-and the telephone, has made pos-
sible much larger clumpings of people and economic activities than any prior
technologies. Second, the central city in the U.S. is a creature of the state legis-
lature which incorporates it, grants its charter, delimits its powers, and de-
fines its boundaries. Although cities have some powers of annexation, the rate
of population growth has far exceeded the rate of annexations. The reason. then,
why suburban rings are growing fasterthan central cities is simply that with the
increased size of metropolitan areas and the historical fact that most central
cities have been filled up since 1920, the only place that additional growth could
occur was in suburbia.
Short of catastrophic events such as nuclear war, it may be predicted that
urban and metropolitan concentration will continue. Within the framework
of total population growth outlined above and the assmnption of the continua-
tion of urban and metropolitan trends, it is possible that by 1990 the United
States with a total population of 281 million would have 2.33 million urban
residents, 81 per cent of the total, and 199 million metropolitan residents, about
70 percent of the total. Suburban rings could contain some 119 million persons,
or about 60 per cent of the metropolitan population; while central cities could
hold some 80 million persons or 40 per cent of the total. Perhaps 116 million per-
sons, or 58 per cent of the total national population, will be resident in the large
SMSA's having a million or more persons.
Population Diverrification.-The United States has been one of history's most
dramatic examples of population diversification as well as of the population
explosion and the population implosion. Although the original European settlers
were predominantly from the United Kingdom, the infusion of African Negro
population began during the seventeenth century and was followed by waves of
diverse European stocks during the nineteenth and early twentieth centuries.
The Census of Population first counted "foreign born" whites in 1850. At that
time they constituted 9.7 per cent of the total population. Although successive
waves of immigration were heavy, the foreign-born whites never exceeded 14.5
per cent of the total, a level reached in 1890 and again in 1910. They have been
a dwindling proportion of the total ever since 1910. By reason of restrictions on
immigration the foreign-born will become a decreasing proportion of the popu-
lation of the nation in the decades which lie ahead.
As has been indicated, between 1820 and 1966. some 44 million immigrants.
mainl~' from Europe. entered the United States. The predominant proportion of
immigrants settled in the nation's cities. The immigrants came in great waves.
During the nineteenth century large streams of Irish, Germans, and Scandiria-
vians were admitted following crop failures, hard economic times, or political
difficulties in their countries of origin. During the early part of the twentieth
PAGENO="0183"
623
century the sources of immigration shifted from Western and Northern, to
Eastern and Southern, Europe. Large numbers of Russians and Poles, including
Jewish populations, Italians, Bohemians, Greeks, and other peoples responded
to the opportunities open to them in the United States.
The processes by which these successive waves of newcomers made their entry
into `the metropolitan United States, found residential locations, acquired jobs,
and achieved status in the social order were ,strikingly uniform.
Because the cheapest dwelling units in American cities were located in their
inner zones, the newly arrived immigrants found their ports of entry and areas of
first settlement there, in the older and blighted areas' of the city. They initially
worked at the least desirable, menial, and lowest paid occupations. They' each in
turn had the lowest social status and were greeted with suspicion, distrust, prej-
udice, and discriminatory practices `on the part of those who had come by earlier
boats. For example, each of the immigrant newcomer groups was greeted with
derisive designations. During the nineteenth century the newcomers were known
as "Micks" (the Irish), "Krautheads" (the Germans), or "dumb Swedes" (the
Scandinavians). During the twentieth century they were known,as "Polaks" (the
Poles) Sheenies (the Jews) Wops (the Italians) Bohunks (the Be-
hemians), and so on.
With the passage of time, each wave of the white ethnic immigrants climbed
the social and economic ladder as measured by place of residence, job and
remuneration, and social acceptability. Each of the white ethnic groups had the
option of continuing to live in neighborhoods of their own or in dispersed and
integrated fashion.
Needless to say, the assimilation of these immigrant groups, popularly known
as "Americanization," was not achieved without a number of frictions. Although
the United States is often referred to as a "melting pot," it is clear that assimi-
lation of the immigrants has not proceeded either smoothly or uniformly-in
fact the process is still very much under way, and accounts for some of the acute
problems of intergroup relations which the nation still experiences.
The more recent newcomers to the urban and metropolitan areas are "in-
migrants" rather than "immigrants." `That is, they come from the rural and less
developed parts of the United States itself, rather than from abroad. The visible
`Negro and the less visible rural white, including the Appalachian white or "hill-
`billy," have replaced white immigrants as the main source of the new urban and
metropolitan settlers. These groups are supplemented by smaller streams of Mexi-
cans, Puerto Ricans, and Orientals as well as the greatly reduced nnmbers of
white immigrants' from Europe.
Because of their special problems, it is useful to examine the population trends
o'f Negro Americans. In 1790, as recorded in the first census of the United States,
there were less than 800,000 Negroes in the nation, but they made up about 20
per cent of the total population. By that date they had `already been resident in
the colonies for 175 years', mainly as the property or indentured servants of their
white masters.
Negro Americans remained about one-fifth of the total population until 1810.
From then to 1930 they were an ever declining proportion of the total, as slave
traffic ceased and white immigration continued. By 1930 the proportion of Negroes
had diminished to less than one-tenth of the total. Since 1940, however, the Negro
growth rate has been greater than that of the white population, and their propor-
tion had risen to 11 per cent by 1907.
In 1790, 91 per cent of all Negroes lived in the South. The first large'migratory
flow of Negroes out of the South began during World War I, prompted by the
need for wartime labor and the freeing of the Negro from the soil, with the diver-
sification of agriculture and the onset of the delayed industrial revolution in
the South. This migration of Negroes from the South was greatly increased dur-
ing and after World War II. As a result the proportion of, total Negroes located
in the North and West almost quadrupled between 1910 and 1900, increasing
from 11 to 40 per cent.
The migratory movement of Negroes from the South to the North and West
effected not only a regional redistribution but also, and significantly, an urban-
rural distribution. In 1910, before the out-migration of the Negro from `the South
`began, 73 per cent lived in rural areas-on farms or in places having fewer
than 2500 persons. By 1960, within fifty years, less than a lifetime, the Negro had
been transformed from 73 per cent rural to 73 per cent urban, and had become
more urbanized than the white population.
PAGENO="0184"
624
The great urban concentration of Negro Americans is even more dramatically
revealed by their location in metropolitan areas. In 1910, only 29 per cent of
Negroes lived in the Standard Metropolitan Statistical Areas. By 1960, this
concentration had increased to 65 per cent. By 1960, 51 per cent of all Negroes
lived in the central cities of the SMSA's. Moreover, the 24 SMSA's with one mil-
lion or more inhabitants contained 38 per cent, and their central cities 31 per cent,
of all Negro Americans.
By reason of the above developments, by 1850, native whites made up 74.6 per
cent of the population of the nation, foreign-born whites 9.7 per cent, and "non-
whites," mainly Negroes, 15.7 per cent. By 1900, the proportions had changed
little, 75.5 per cent being native white, 13.4 per cent foreign-born, and 12.1 per
cent nonwhite. But in 1900, little more than half the American people were na-
tive whites of native parentage. That is, about one-fifth of the population was
4'second generation," or native whites born of foreign and mixed parentage.
By 1960, native whites constituted 83 per cent, foreign whites 5.2 per cent, and
Negroes 10.6 per cent of the total. Native whites of native parentage made up
70 per cent of the total, the remaining 13 per cent of native whites being second
generation. Thus, in 1960 "foreign white stock," foreign born plus second gen-
eration, still made up over 18 per cent of the total population.
Although the foreign white stock will become a dwindling part of the popu-
lation in the decades which lie ahead, the proportion of nonwhites, mainly
Negroes, is likely to increase. In 1960, there were 20.7 million nonwhites in the
U.S., or 11.4 per cent of the total. By 1990 it is estimated by the U.S. Bureau
of the Census that nonwhites will double, increasing to 41.5 millionS By 1990,
nonwhites may, therefore, make up some 14.5 per cent of the American people.
The difficult problems of white-Negro relationships have been worsened by
the population changes described. The large increase in the population of Negro
Americans in urban and metropolitan areas over a relative short period of time,
and the contrast in background and life-styles between Negroes and whites by
reason generate tensions that may well constitute the most serious domestic
problem in the United States for some time to come.
Problenis Generated.-The combined effects of the population explosion, the
population implosion, and population diversification have created or aggravated
a host of physical problems such as problems relating to housing supply, hous-
ing quality, circulation of people and goods, solid and human waste removal,
air and water pollution, outdoor recreation, urban design and the management
of natural resources.
Similarly cultural and human problems have been precipitated, manifest in
the changes from the extended to the nuclear family, from primary to secondary
group living, from interpersonal relations based on sentiment and emotion to
relations based on utility, from informal to formal social control, from crescive
to enacted institutions, from behavior based on tradition to behavior based on
planning and rational decision making. These changes have been accompanied
by many frictions manifest in social and personal pathology-delinquency, crime,
alcoholism, drug addiction, and the like. They have also been accompanied by
new problems of security-occasioned by such phenomena as unemployment,
poverty, old age, ill health or physical impairment, and family disorganization.
The changes have also greatly aggravated problems of intergroup relations and
made more visible and more acute the consequences of prejudice and discrimina-
tory practices.
Finally, rapid population growth and urbanization have also generated many
political and governmental changes including great increases in governmental
functions and persomiel, and various forms of intervention into social and eco-
nomic affairs. They have outmoded inherited forms of local governmental
structure, a phenomenon perhaps more acutely evident in the multiplicity of
governmental units with powers to tax and to spend within individual metro-
politan areas~ They have, through cultural lag, produced malapportioned state
legislatures and a malapportioned House of Representatives in the Congress
of the United States. For example, as recently as 1960 there were 39 states in
which the urban population constituted a majority of the population but not a
single state in which the urban population controlled the state legislature. They
have in many places paved the way for administrative corruption including alli-
ances between organized crime and politicians, and questionable practices on
the part of legislators who have, in the main, exempted themselves from codes
of ethics and conflict of interest safeguards.
PAGENO="0185"
625
Without question "the urban problem" confronting the United States today
is the problem indicated by "the Negro Revolt." It has been indicated above
that within half a century the Negro American has become more urbanized than
the white American and heavily concentrated in metropolitan areas, and espe-
cially in the central cities of metropolitan areas. Hence the Negro is being called
upon to make an even more rapid transition from rural to urban living than
has been required of the white population; and he has much less adequately
than the white been prepared for the changes he must undergo. For example,
as recently as 1960, 22 per cent of all adult Negroes, those 25 and over, were
"functionally illiterate"; that is, had not completed fifth grade; and 78 per cent
had not completed high school.
One consequence of the pathetic share of the American way of life which the
Negro has had available to him is evident in the high incidence of .poverty in the
Negro community. In 1963, 42 per cent of all nonwhite families in the United
States were poor, by official designation, as contrasted with 12 per cent of white
families. The 2.0 million poor nonwhite families made up 28 per cent of all poor
families in the nation, more than two and a half times the proportion (11 per
cent) which `nonwhite families constituted of the total.
Other categories of the population are confronted with a `similar situation.
Appalachian whites ("hillbillies"), American Indians, Puerto Ricans, Mexicans
and `recent immigrants, in general, have also experienced and created many `acute
problems, for much the same reasons presented above-~rapid population increase
or concentration, `together with inadequate preparation for urban living. Most of
these newcomers, like the Negro, are characterized by insufficient education and
poverty. They along with other elements `of "the poor," who in total number some
7.2 million families with 34.6 million persons including unrelated individuals,
con'stit'ute `a `special category requiring special consideration.
Although other minority groups are also badly disadvantaged, it i's the Negro
co~nmunity which, in its deep frustration and alienation generated by the combi-
nation of poverty and three and one-half centuries subjection to racist doctrine
and bigotry, is giving increasing manifestations of approaching open `rebellion.
In consequence, `the United States today is at a crossroads. It `i's necessary to
choose between (a) greatly increased investment in human resources that would
enable Negro Americans, and the members `of other disadvantaged groups, to
assume the obligations `and respon'sibilities `as well as the rights of American
citizenship, and (b) greatly i'ncreased investment in security measures, police,
national guard, the army, `and concentration camps that would rebuild America
into a repressive caste society in the image of `the Union `of South Africa.
If the American people are to remain true to the American heritage `of democ-
racy and equality of opportunity it is necessary to choo'se the first of these alter-
natives. To do `this `a prerequisite is the establishment of nationa'l goals.
NATIONAL GOALS
It i's within the fra~ework of the `above perspectives that national goals in
contemporary USA must be set forth. By reason of the changed character of
our society the time has come for the formulation of a comprehensive policy in
respect `of the development of our physical and human `resources and `a coordi-
n'ated and integrated series of programs to achieve these goal's. In stating thi's
position `it must be `recogn'ized that, in effect, it i's being assumed that the United
States is no longer an agrarian `society characterized by a laissez-faire economic
outlook and the conception that "that government is best which governs least."
On th'e contrary, it ~5 being `assumed that the U'n'ited States as an urbanized and
metropolitanized society has come to understand that the personal, social, ceo-
nomic and political freedoms enjoyed by its popula'ce can `and must be enhanced
by positive government interventionism as necessary for the welfare of the
American people. In brief, it is assumed here that the United States is a welfare
state and that `such a designation is `neither pejorative nor dangerous. It is `rather
a badge of maturity-explicit `recognition `of the changed character of American
society `and `the new requi'rements by reason of the change.
By reason of the above consideration's the time has come to declare that:
It is the general social goal of the United states to provide each inhabitant of
this nation with the opportunity, freedom and security to enable him to achieve
optimal development of the human potential; and to contribute, as far as feasible,
to attainment of this goal for all humanity.
PAGENO="0186"
626
Although this is a relatively short sentence it embraces-much more than the
nation has yet achieved or set out to achieve.
Some clarification of this general goal is in order. To maintain a democratic
society, such as the United States professes to be, it is essential that each in-
dividual be provided with the opportunity to achieve maximum development.
Without such opportunity open to each person a society would, in relatively
short order, become stratified into various sub-grouping which, over time, would
achieve differential positions of power, prestige, or status. Every person in the
nation, regardless of background-social, economic, political, racial, ethnic,
religious, or familiar-should, as an American, have the opportunity for the de-
velopment of his capacities so as to be able to assume the obligations and respon-
sibilities as well as the rights of American citizenship and to advance in the social,
economic and political order to levels limited only by his personal capabilities.
A major tenet in the political creed of this nation has been the freedom of the
individual. There is, of course, no such thing as absolute freedom possible in an
organized society. As someone has wisely put it, "the freedom of a person to
swing his fist stops at the tip of another person's nose." All human freedom is
necessarily set in a social context and freedom, to practice, is often the product
of the social constraints imposed. Freedom in an urban and metropolitan society
consists in the widening of the range of, and maximization of the opportunities
for, individual choice within the framework of a multiplicity of constraints.
Opportunity and freedom have long been recognized elements of the Ameri-
can democratic way of life and had their origin as goals in the pre-urban so-
ciety. Both opportunity and freedom. in actuality as distinguished from prin-
ciple, have in the urban society been impaired by the absence of security. Urban-
ism as a way of life has through increased interdependence-social, economic
and political-increased the vulnerability of the individual to risks which often
negate both his opportunity and his freedom. For example, the vulnerability of
the urbanite to unemployment and interruption of his income flow may deprive
him in a fundamental sense both of opportunity and freedom. Similarly, the
insecurity associated with chronic poverty deprive the person both of opportunity
and freedom. It is absurd to contend that opportunity and freedom are available
to those steeped in poverty-disproportionately the nonwhite and other minority
groups, the aged, the residents of depressed areas, the acute or chronically
ill, the physical impaired or the parents of large numbers of children.
It is to be emphasized that the insecurities being discussed are those that arise,
not by reason of the individual refusing to exercise his capabilities in the pursuit
of life goals, but, rather, by reason of the play of forces in the urban environ-
ment beyond his control. The security that the American order should provide is
security against the risks of the highly interdependent and vulnerable society
-as manifest in extreme form, for example, through the great depression of
the thirties.
Opportunity, freedom and security must be available to every American for
human dignity is not possible without all of them. And concern with the status
of the individual and human dignity is presumably a fundamental aspect of the
American way of life. What is proposed is admittedly a far-reaching social goal
with tremendous implications for increasing the role of government-federal
state and local-in social and economic affairs. It is, in effect, a statement of the
objective of the "Great Society" but, obviously, implies much more than any-
thing that has yet been undertaken.
To achieve this general goal a series of sub-goals should be adopted as na-
tional policy and implemented at "all deliberate speed." These sub-goals may
be set forth as follows.
It should be the aim of American society to:
1. Provide each child with a setting for effective socialization and formal
education, adequate to enable him to assume the obligations, responsibilities,
and rights of American citizenship and to enhance his life chances for oppor-
tunity, freedom and security;
2. Provide each inhabitant of this nation opportunity for maximum length
of life in good health so as to permit achievement of the human potential;
3. Plan and exert the necessary control over the environment, including both
the physical environment and the social milieu, and including management of air,
water, housing, adverse population densities, recreational facilities and urban
design, in general, and natural resources;
4. Provide every person with opnortunity for employment commensurate
with his education and skill, and to assure him of an adequate flow of in-
come if such employment cannot be provided, preferably for services performed;
PAGENO="0187"
627
5. Provide every couple with the motivation and incentive as well as the
knowledge and means to determine family size-the number of children to be
born:
6. Assure equality to all in the administration of justice, including provision
for the Federal Government to intervene as necessary, `and as provided for in
the Constitution and in law, to intervene in the adminintration of state and
local justice when it becomes discriminatory in any way;
7. Rationalize Federal, State and local governmental structures and proce-
dure, including a more rational allocation of sources of revenue among the
different levels of government `and the maintenance `of basic democratic prin-
ciples including representative government and majority rule;
8. Promote economic growth and the development of science, tecimology, the
arts and mass culture and, thus, to provide a milieu in which opportunity,
freedom and security may be more meaningful in the attainment of the human
potential;
9. Contribute to the development of a peaceful world order-a world of optimal
economic, social and political inter-relations'hips and to strive towards this aim
by maximum participation in international organizations including the United
`Nations and the `Specialized Agencies.
It is apparent that great stress has been placed on the rationale `and need for
increased government intervention to accelerate the attainment of the gen-
eral social goal and the specific sub-goals. This stress is commensurate with the
contemporary setting and requirements. However, it is equally important to
stress that government interventionism is not intended to replace but, rather
to complement and supplement the role of the private sector. American society
with all its deficiencies has made tremendous advances. Government interven-
tionism of the types proposed can and should be achieved without breaking
down the incentive and motivation which spur initiative and creativity.
This will admittedly take some doing, the attitudes of many Americans being
what they are. But the task is not an impossible one as the experience of other
countries indicates. It will not be unlike the task undertaken by Franklin D.
Roosevelt in his "New Deal" who faced bitter and unrelenting opposition from
many who subsequently came to praise the programs and the floors and the
ceilings which he introduced into the conduct of business in the TJnited States.
Many elements of the community, for example, who were resistant to the en-
croachment of the community, for example, who were resistant to the encroach-
ment of government came to understand that the New Deal saved them from
themselves and from an out-moded system; and they came to prosper as well or
better than ever with government interventionism. The same can happen in other
realms. It is, therefore, proposed as a general fundamental and governing prin-
ciple that:
Government should do all that it can to maximize the areas of freedom of op-
eration in the private sector `consistent with the general goal of providing each
inhabitant of this nation with opportunity, freedom and security to enable him
to achieve optimal development of the human potentiaL
The adoption and implementation of the social goals proposed above would, un-
doubtedly, constitute the best investment the United States could possibly make in
her most precious possession-her human resources.
CONCLUDING OBsEavATIoNS
Urbanization and metropolitanization have produced a new way of life,
"urbanism `as a way of life," to use the language of the late Professor Louis Wirth,
which is still in process of development. In the transition from an agrarian to an
urban society, many problems have been generated, most of which still remain,
to be resolved. But, along with difficult problems, it must be emphasized that
the urban way of life has opened new vistas of opportunity to mankind, higher
levels of living, new horizons of the arts and sciences, and ever greater promise
of more complete control both of nature and of man's destiny. Thus, urbanization
has not only given rise to extrordinarily difficult acute and chronic problems
that constitute, perhaps, contemporary man's greatest challenge but, also, in eman-
cipating him from much of his past, urbanization has enabled man to face up
to and deal with the problems which confront him.
PAGENO="0188"
ANTI-POVERTY AND THE CITIES
By Dr. PHILIP M. HAUSER, Professor of Sociology, University of Chicago
Dirnensiona of Pove'rty.-In March 1965 the Bureau of the Census in its Cur-
rent Population Survey obtained special information for the Social `Security
Administration and the Office of Economic Opportunity. The data permitted an
analysis of the characteristics of the poor and non-poor in the United States on
the basis of 1964 income.
In March 1965, of the total population of almost 190 million, 64 per cent resided
in Standard Metropolitan Statistical Areas (SMSA's), 31 per cent in central
cities, and 33 per cent in suburbia-outside central cities but within the SMSA's.
Of the remaining 36 per cent of the people who lived in non-metropoiftan areas,
29 per cent lived in non-farm communities and 7 per cent lived on farms.
There was considerable difference in the distribution of white and non-white
population which constituted about 12 per cent of the total. Non-whites were
more heavily concentrated in SMSA's, 68 per cent comjiared with 63 per cent;
and non-whiteS were especially more concentrated in central cities, 52 per cent
contrasted with 28 per cent. Only 16 per cent `of the non-whites resided in sub-
urbia contrasted with 35 per cent of the whites. Non-whites were somewhat
more often residents of farms, 8 per cent compared with 7 per cent of the whites;
and less often residents of non-farm communities outside SMSA's, 24 per cent
compared with 30 per cent.
Of the total population in the nation some 34.3 million persons or Some 18
per cent were "poor" according to the index `of the Social Security Administrt-
tion based on a sliding scale which sets S3200 as the threshold for poverty for a
family of four. Of the white population 23.6 million or 14 percent were poor,
whereas among non-white 10.6 million or over 47 per cent lived in poverty.
Almost half of all the poor. 48 per cent lived in metropolitan areas, 29 per cent
in central cities and about 18 per cent in suburbia. Of the white poor 46 per cent
lived in SMSA's; of the non-white poor 53 per cent. But whereas less than
one-fourth of the white poor lived in central cities, 24 per cent, over four-tenths
of the non-white poor, 42 per cent, were central city residents.
That poverty is primarily concentrated in urban places, as are most of the
American people, is further indicated by the fact that only 13 per cent of the poor,
both white and non-white, lived on farms. Of the total poor 40 percent were lo-
cated in non-farm areas outside Si\ISA's, 42 per cent of the white po'or and 35
per cent of the non-white poor.
The distribution of households in the United States closely paralleled that of
the total population. Of the 60 million households in 1965. 47.7 million contained
families and 12.3 per cent comprised unrelated individuals. Non-white house-
holds, having larger average size than whites constituted h smaller proportion
of total households, 10.6 per cent, than of the total population. Non-whites made
up a somewhat smaller proportion of all households `containing families. 9.9 per
cent, and a larger proportion of `all households containing unrelated individuals
13.6 per cent.
Of the total number of families, 6.8 million, or 14.3 per cent. were poor. There
were 4.9 million poor white families, making up 11.4 per cent of all white families.
There were a smaller number of poor non-white families, 1.9 million, but they con-
stituted over 40 per cent of all non-white families. Of the total number of house-
holds comprising unrelated individuals 43 per cent were poor, 41 per cent of the
white, and 59 per cent of the non-white.
Over a fourth of the poor families in the nation (27.6 per cent) and nearly
two-fifths of the households of unrelated individuals (38.5 per cent) were resi-
dent in central cities. An additional two-fifths of all poor families (41.2 per cent)
and over a third of the unrelated individuals (36.0 per cent) resided in non-
farm areas outside SMSA's.
Of the non-white poor families over two-fifths (42.8 per cent) as compared
with about one-fifth of poor white families (21.9 per cent) were concentrated in
(628)
PAGENO="0189"
629
central cities. Well over half of all unrelated non-whites (55.0 per cent) com-
pared with less than two-fifths of the whites (38.5 per cent) were inhabitants
of central cities. Non-farm areas outside metrOpQlitan areas contained 36 per cent
of the poor non-white and 43 per cent of the poor white families. They also con-
tained 27 per cent of the poor non-white and 38 per cent of the poor white house-
holds made up of unrelated individuals.
Although poverty is concentrated in the non-farm areas of the United States,
reflecting population distribution, it disproportionately afflicts the farm popu-
lation. In 1965 only 6.6 per cent of all families resided on farms but 12.9 per cent
of the poor families, 13.6 per cent of the whites and 11.0 per cent of the non-
whites, lived on farms. As might be expected, 3.0 per cent of all unrelated indi-
viduals and only 3.5 per cent of those poor lived on farms. Poverty in non-farm
areas, however, has different political implications than poverty in farm areas
widely dispersed over the countryscape. In urban and other non-farm areas the
frustration, alienation and bitterness bred by poverty generates social unrest
more readily translatable into hostility and violence as recent untional experience
testifies.
Within the racial and geographic framework outlined above poverty had dis-
proportionate incidence in other identifiable sub-categories of the population.
For example, among unrelated individuals in metropolitan areas, 55 per cent
aged 65 and over were poor, 35.9 per cent of the older women and 42.5 per cent
of the older men. Among these senior citizens over three-fourths (76.5 per cent)
of the non-whites, compared with a little over half (52.7 per cent) of the whites
were poor. Among female heads of families about one-third (32.3 per cent) were
poor, compared with 7.4 per cent of families with male heads. Among non-white
families with female heads almost three-fifths (57.3 per cent) were poor, com-
pared with one-fourth (24.6 per cent) of comparable whites. Among families
with female heads with children under 6 over three-fourths (78.5 per cent) of
the non-whites, compared with about one-half (51.7 per cent) of the whites
were poor.
Within metropolitan areas the concentration of non-white poverty in central
cities is readily demonstrable. Of the poor non-white metropolitan families four-
fifths were found in central cities (80.7 per cent). Of the poor metropolitan non-
white families with female heads 85.9 per cent were residents of central cities
and, also, 76.4 per cent of the families with male heads. Of the metropolitan
non-white families with female heads and children under 6, 89.1 per cent were
concentrated in the central cities, and, also, 77.9 per cent of similar families with
male heads.
Other data permit even further pinpointing of the incidence of poverty. Within
metropolitan areas specific geographic areas disproportionately contain the
poor. This is revealed in the information collected by the Bureau of the Census
in March 1966 for the Office of Economic Opportunity. The survey was aimed at
families residing in "Poverty Areas" within the 101 SMSA's having 250,000 or
more persons in 1960. These SMSA's in 1960 contained 56 per cent of the Negro
and 54 per cent of the white population. The central cities in these metropolitan
areas contained 45 per cent of all Negroes and 25 per cent of all whites in the
nation; and they contained 81 per cent of the Negroes and 46 per cent of the
whites resident within these SMSA's.
A "Poverty Area" was determined by the use of a "poverty index" calculated
by utilizing five equally weighted "poverty-linked characteristics" for census
tracts (small statistical areas within SMSA's).'
The pdpulation resident in these Poverty Areas was disproportionately non-
white. Of the 27 million families in these SMSA's 3.2 million or 12 per cent
were non-white. Of the total number of families, 4.5 million or 17 per cent resided
in the Poverty Areas. Of the white families about one-tenth (11 per cent) lived
in the Poverty Areas. In contrast, almost three-fifths (58 per cent) of the non-
white families were concentrated in the Poverty Areas.
Not all residents of the Poverty Areas were poor and many of the poor lived
outside the Poverty Areas. All told there were 2.8 million poor families in the
1 These characteristics were: (1) per cent of families with incomes under $3000 in 1959;
(2) per cent of children under 18 not living with both parents; (3) per cent of persons
25 and over with less than 8 years of schooling; (4) per cent of unskilled males (laborers
and service workers) in the employed civilian labor force; (5) per cent of housing units
dilapidated or lacking some or all plumbing facilities. The Poverty Areas were, in general,
the census tracts falling in the lowest quartile which fell into the contiguous groupings
adjusted for urban renewal activities since 1960. In all, some 193 Poverty Areas were
delineated in the 101 SMSA's; 22 per cent of all the tracts in these `SMSA's.
PAGENO="0190"
630
101 SMSA's, 10 per cent of all families. Of these poor families, 1.9 million were
white, S per cent of all white families; and .9 million were non-white, 28 per
cent of all non-white families. Of the poor families, 1.1 million, or 39 per cent,
lived in the Poverty Areas. Of the white poor families, 454 thousand or about
one-fourth (24 percent) lived in these areas. In contrast, 642 thousand or almost
three-fourths (72 percent) of the non-white poor lived in the Poverty Areas. Some
1.4 million white families and 254 thousand non-white fell below the poverty level
dut did not live in the Poverty Areas.
It is clear, then, that although in these SMSA's, as in the nation, more white
than non-white families were poor (1.9 million compared with .9 million), a much
larger proportion of the non-whites than of the whites fell below the poverty level
(28 compared with 8 per cent). It is clear, also, that poverty in these SMSA's
tended to be concentrated in the delineated Poverty Areas, 39 per cent; and much
more so for non-whites, 72 per cent, than for whites, 24 per cent.
Anti-poverty programs in the United States, then, have readily identifiable
targets. Poverty has the highest incidence among non-whites, households with
unrelated individuals especially those with persons 65 and over, and families
with female heads especially those with children under 6. Moreover, the popula-
tion groupings with the highest incidence of poverty tend to be concentrated in
SMSA's; within central cities and within Poverty Areas, which are mainly
located in the central cities.
Although, as has been indicated, there are more poor whites in the United
States than poor Negroes, the discussion which follows will be focused on the
problem of the Negro Americans. For it is the Negro American who is at the core
of "the urban crisis" and whose growing impatience with present anti-poverty
efforts is forcing the Nation to face up to the problem.
The "Why" of Negro Poverty.-It is not difficult to understand why poverty has
its highest incidence among Negro Americans concentrated in metropolitan areas
and within segregated Poverty Areas. Although by 1910, the Negro had been a
resident of what is now the United States for some three centuries, he had not
yet entered the mainstream of American life. In 1910 about nine-tenths of the
Afro-Americans were still resident in the South and almost three-fourths of
them lived in rural areas, on farms or in places having few-er than 2,500 persons.
In effect up to 1910 the Blacks lived as an isolated sub-cultural group, highly ii-
literate, steeped in poverty, and denied participation in white American society.
Afro-Americans have had access to the mainstream of American life, urban
and metropolitan America, only since World War I. In half the century between
1910 and 1960, Negro Americans have experienced amazingly rapid urbaniza-
tion and metropolitanization, and had managed in large measure to leave the
South. By 1960 the concentration of Negroes in the South had diminished to
60 per cent and they had become transformed into a people 73 per cent urban,
more urban than the white population. Moreover, by 1960, 65 per cent of
Negro Americans lived in SMSA's and 51 per cent in the central cities of SMSA'a.
In the North 93 per cent of all Negroes lived in SMSA's and 79 per cent in their
central cities. In the West comparable percentages were 93 and 67 per cent, and
in the South 46 per cent and 34 per cent.
The rapid urbanization and metropolitanization of Negro Americans has not
been accompanied by equally rapid preparation for the transition from an
agrarian way of life, largely in the rural slum South, to urbanism and
metropolitanism as a way of life. As recently as 1960, 78 per cent of all Negro
adults, those 25 years of age and older, had not completed high school, and 23
per cent were functionally illiterate, had not completed 5 years of schooling.
The Negro, entering the mainstream of American life only during World War I
and mainly during and after World War II, was not equipped with the basic
education and skills to enable him to make a living in the technologically ad-
vanced and complex economy which had relatively few opportunities for unedu-
cated and unskilled labor. This stands in marked contrast with the opportuni-
ties available to the uneducated and unskilled streams of European immigrants
who entered this country prior to World War I. At that time with only un-
skilled labor to offer, the immigrant could make a living, for this nation was
still building railroads, roads, industrial plants and urban infrastructure.
The Negro American, although a resident of this nation for 31/2 centuries is,
in fact, a newer newcomer to the mainstream of American life than our pre-
World War I immigrants; and he has entered a much more advanced and
complex economy. Moreover, the Negro Americaii, unlike white immigrants, has
PAGENO="0191"
631
been confronted with bigotry and racist doctrines which have not only, denied
him equality of opportunity but, also, adversely affected his self-image and his
incentive and motivation. Finally, i~t must be noted that the Negro community,
by reason of its segregation and adverse accompanying conditions, experiences
higher incidences of family disorganization, families with female heads, larger
numbers of children, children living without both parents, males economically
and socially emasculated and, in general, higher incidences of' personal and
social pathology, all of which are associated with and contribute to the high in~
cidence of poverty.
Implications for Anti-Poverty Programs.-In general, two broad categories of
persons can be distinguished among the poor. One category comprises those
persons who for a variety of reasons have fallen by the wayside in their efforts
to make their way in our competitive order. The reasons include chronic or acute
physical or mental disabilities; families broken by death, divorce, separation or
desertion; and similar personal, familial or community misfortunes. The second
category includes millions of persons who cannot be described as having fallen by
the wayside. They are made up disproportionately of minority groups, not only
Afro-Americans but, also, Mexican Americans, Puerto Ricans, American Indians,
and Appalachian whites, "hillbillies." These people cannot be described as having
fallen by the wayside. They have never `had the opportunity to get under way.
They have been denied equality of access to the American economy and to
American society.
Prior efforts to `deal with poverty in this nation, as in other countries, have
included the establishment of the `social security and welfare `syste~s. These
programs `have made it possible for the vast majority of our citizens to earn
"rights" to income maintenance in old age, or under conditions of disability, and
to receive aid under specified conditions of need. The tragic fact is, however, that
a disproportionate number `of present welfare clients are not persons who have
fallen by the wayside `but are, rather, persons who have never `had the oppor-
tunity to get under way. A number of the present anti-poverty programs such as
Head Start and the other educational `and job training programs recognize this
fact.
Poverty in the United States cannot, *therefore, be eliminated through revi-
zion of the `social security and welfare systems. What i's needed to eliminate
poverty is what might `be termed an "equal opportunity program." Such a pro-
gram can be visualized as consisting of two parts: `short~run and long~run.
The short~run anti-poverty program must consist of two elements for Negro-
American's and for all of our minority groups subject to prejudice. The first is
provision for income fiow-~preferably for work performed under conditions of
`human dignity `on jobs suitable `to their present educational `and `skill levels. The
second is provision for symbols of acceptance-to overcome prevalent doctrines
of racism and bigotry.
To provide income flow two programs are `needed. One is a program t'o provide
employment to `absorb the "hard-core" unemployed. This requires considerable
increase in the allocation `of public funds `aimed at `this objective. Priority should
be given t'o the increase `of employment `in the private sector, `as is now `b'ei'ng
done in the program headed by Henry Ford II. But, there can be no doubt, that
after the private `sector has absorbed all of the hard-core unemployed it can,
there will `remain `substantial numbers of Afro-Americans and members of other
minority groups, still unemployed. For `such persons `the government, through, in
effect, an extension of the Employment Act of 194G, should become "the employer
of last `resort" as `advocated by the Urban Coalition. Even in such programs the
government could operate through private industry but, unless adequate re-
sources `are allocated for public services with explicit provision for labor inten-
sive programs, the hard-core unemployed are not `likely to be `employed. The list
of additional public `services needed by the American people i's long en'ough to be
quite adequate for the purpose. It includes, among many things, more adequate
roads, expressways, `and airports; `schools; recreational facilities; hospitals and
other medical facilities; improved postal service; and air and water `anti-pollu-
ti'on programs.
`The `absorption `of the hard-core unemployed would not, of course, `resolve the
income flow problem `of the families without workers, especially those with female
heads and young children. For such families adequate income flow should be pro-
vided through a `system of family allowances, or, perhaps, the negative income
tax.
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632
Income flow is, in general, the major cure for poverty, especially white poverty.
But for Black poverty income flow is not enough. Subjected to 31/2 centuries of
white racism Blacks require, in addition to income flow, symbols of acceptance.
Most important among such symbols have become national policies of open
housing and integrated schools.
These short-run measures would go a long way toward the elimination of pov-
erty and, also, toward the alleviation of present interracial tensions. But they
would not constitute adequate long-run anti-poverty programs. For the long run
there must be a great increase in investment in education so that every child,
white as well as black, has the opportunity for effective schooling. Every child
must be given the opportunity to acquire the basic skills, the saleable skills and
the citizenship skills to enable him to assume the responsibilities and obligations,
as well as the rights, of American citizenship. Without such an increased invest-
ment in human resources the present poverty situation may be indefinitely re-
cycled from generation to generation. Without adequate investment in education
other anti-poverty programs would be the equivalent of attempting to mop up
the floor before the faucets are turned off.
The elimination of poverty in the United States, then, consists in large measure
of providing equality of opportunity to millions of Americans who, hitherto', have
been denied equal access to the American economy and society. A number of the
present anti-poverty programs recognize this fact, but the resources allocated
thus far to fight poverty, both in moneys and symbols of acceptance, fall far
short of the mark. In no urban community in the United States have the re-
sources allocated to combat poverty reached a level of critical mass so as to have
major impact. Dribbles of anti-poverty resources which fail to achieve critical
mass may be much more expensive in the long run than short run expenditures
large enough to have significant effect. The United States has not yet been will-
ing or able to face up to the magnitude of the effort required to eliminate pov-
erty and, thus, to deal with the "urban problem" or, more accurately, the Afro~
American Revolt.
A blueprint for the elimination of Black poverty is now available in the re-
cently released Report of the National Advisory Commission on Civil Disorders.
It has been estimated that the implementation of the recommendations in this
report would require annual expenditures of over $30 bifflon.
Concluding Observation.-i. There is competent economic judgment that holds
that we can afford to eliminate poverty, even if we continue to be caught in the
Vietnam hostilities. One point that can be made is that our annual increase in
GNP, in constant dollars, is by itself quite adequate to do the job. In any case,
it is absurd to argue that we cannot afford to resolve the urban crisis, because
we shall be increasing our expenditures whether we think we can afford it or
not. It is certain that public expenditures to deal with the problem of poverty
and its consequences will greatly increase. The only uncertainty that remains is
that about which of three channels the increased expenditures will take. One is
the channel of increased investment in human resources-adequate income flow,
housing and education. The second is the channel of increased expenditures for
security-police, national guard, army, and concentration camps. The third is the
channel of increased expenditures for rebuilding what may become an increas-
ingly larger riot-devastated urban and metropolitan America.
The American people are at an historic crossroads. But we no longer have the
choice of continuing the present relatively low levels of taxation and public ex-
penditure in respect of poverty and especially Afro-American poverty. We have
only the choice of choosing from among three alternatives-investing in human
resources, creating an. "apartheid" society, or rebuilding riot-destroyed cities.
PAGENO="0193"
APPENDIX 10
ELIMINATING THE PURCHASING POWER GAP THROUGH TWO-FACTOR
THEORY AND THE SECOND INCOME PLAN
By Louis 0. KuLso and PATRICIA HETTER, San Francisco, California
At the personal level, virtually every economic problem can be stated in terms
of lack of purchasing power, superficially solvable by income additions of
smaller or greater size. Thus, to those who view the economy of the United
States as "affluent," poverty is merely the result of failure `to "maintain" ade-
quate income for the poor.
A variety of plans to repair this apparent "cause" of poverty have been pro-
posed and tried over the years: poor relief laws, welfare payments by local and
state governments, with and without Federal assistance, direct distribution of
food and other commodities, food stamps, rent subsidies, education subsidies,
governmentally subsidized jobs of various kinds, minimum wage laws, laws limit-
ing the work week, laws regulating overtime payments, laws permitting labor
to avoid the competitive determination of the value of labor, laws fixing mini-
mum wages and maximum hours for work on government contracts, laws sub-
sidizing agricultural production, shipping, ship-building, mining and various
kinds of manufacturing; aid to the blind, aid to the aged, aid to the medically
indigent, aid to families with dependent children, etc. etc.
With all the ingenious methods for redistributing income to those who would
otherwise have less of it, or none at all, the prosperity of the American economy
for nine-tenths of its inhabitants is limited, or illusory. The United States is
more prosperous than other economies with which it is not comparable. It clear-
ly cannot meet the test of functional prosperity, for it is constantly characterized
on one hands by the physical capability of expanding its production of hu-
manly useful goods and services many times over, and on the other by the very
real poverty of the overwhelming majority of the population who live in vary-
ing states of physical deprivation. Our principal industries-the ones that pro-
duce the great bulk of consumer goods and services and the capital goods re-
quired therefor, can easily increase their output 20% to 30% per year for a sus-
tained period of time, until we achieve general (as distinguished from our pres.
ent pinnacle) affluenee, i.e., until those at the bottom `and in the middle enjoy
the standard of living of those at the top income level of the economy. But the
economy, the Gross National Product, actually expands less than 3% per year.
Qualitatively, even this "growth" is illusory, being often achieved through exces-
sive production of military overkill goods that do not, to say the least, eradicate
personal poverty.
Because an accelerated rate of increase in the output of consumer-useful
goods and services is crucial to the elimination of poverty, further comment
on the possibility of such an increased rate of output in the principal industries
in the United States economy, in response to adequate consumer demand, is here
relevant. In 1964, R. Buckminster Fuller said: "We are using our machines
at only about four percent of efficiency, counting waste, misuse, off time and
clown time. All we would have to do to bring the entire world up to a wealtńy
standard of existence is to get that efficiency up to about 12 percent-which is
well below the 15 percent efficiency possible even with the reciprocating engine."'
Mr. Fuller was thinking in the physical terms natural to the engineer and
physical scieptist without concerning himself with income distribution, procluc-
tion motivation, or organization of the economy. Nevertheless, goods and serv-
ices are physical things; their production and distribution are physical processes
and they ultimately minister to physical human need. So it is of great and basic
significance that it is physically possible to multiply many timea over the pro-
du~tion of physical goods and services to meet human need.
1 "The Large-Sized Thoughts of Buckminster Fuller," by George Clark, "Think," Septem-
ber-October 1964, p. 9.
(633)
96-602-68-vol. II-13
PAGENO="0194"
634
Functionally, "affluence" is simply an abundant supply of useful goods and
services which minister to the creature comfort of individual human beings.
But "affluence" as measured by national income statistics is something else
again. These statistics are constructed on the basis of costs of all goods and
services produced within the economy in a given time period. They lump together
indifferently the goods and services which come into existence in response to
market demand by individuals for consumption, and goods and services which
come into existence through our governmental full employment policy, which
often add little or nothing to human comfort and may even be specifically
designed for human discomfort.
Our national income statistics even include the costs represented by the
dozens of varieties of subsidies for not producing useful goods and services. For
example, subsidies paid for non-production of agricultural commodities; pay-
ments for work not performed ("featherbedding," "make-work," "spread-work")
and so on. These same statistics also measure welfare-push inflation which re-
suits from the systematic packing of the wage-base with welfare verbally dis-
guised as the "rising productivity of labor," but constituting in fact a special
form of welfare built into the wage base by collective bargaining and taxed
to the consuming public through the price mechanism. For example, a $4,000
house built in the early 1940's can only be compared today with one in the
$40,000 range, and in many respects, including the durability of materials, the
size of rooms, the handcrafting of amenities, the house built today is inferior
to its 1940 counterpart. Recently a consumer article warned prospective home-
buyers to look under the wall-to-wall carpets to make sure that their new
home included a floor. It went on to explain that since a plywood understructure
now meets FHA mortgage standards, some builders were omitting the hard
or even softwood floor that was a standard feature in even houses of a few
years ago.
Thus, the statement that the principal industries of our economy could increase
their output of useful consumer goods and services, and the capital goods re-
quired therefor, at rates of 20% to 30% a year over a sustained period, making
easily possible, we believe, an annual rate of effective increase in humanly-useful
net national production of goods and services of at least 15%, is an estimate
which should be construed as relating to a functional increase in available af-
fluence that would take the form of increasing the production of humanly usefnl
goods and services absolutely, as well as in lieu of humanly useless goods and
services. It would include also the qualitative increase in affluence arising from
declining prices which would inevitably result once two-factor theory became
recognized in national economic policy and Second Income Plan techniques were
broadly and widely employed in producing and distributing wealth.
We cite as further evidence the following:
(1) Existing production facilities are generally operated at only 80-85%
of capacity when operating;
(2) If consumer demand warranted and trained manpower were not sys-
tematically wasted on non-economic production and non-production, produc-
tion facilities could be run for two or three shifts instead of one or two, with
substantial cost savings in most cases; and
(3) Our physical scientists, engineers and technicians tell us that the
production of useful goods and services is relatively easy, a truth evidenced
not only by a persistent tendency towards the production of surpluses
throughout the economy, but also by the frantic efforts of competitors to
pre-empt scarce consumer dollars for their own products, a phenomenon re-
flected in the high cost of selling, as measured in outlays for salesmen, sales
promotion, advertising, expensive packaging, etc.
Our conclusion that an annual rate of increase in personal affluence in the U.S.
economy of 15% or more on a sustained basis cannot be directly supported by
reference to the national income statistics for the simple reason that these sta-
tistics are designed for a two-factor economy operated on one-factor concepts.
National income statistics are not designed to reflect increases in the quality
of life (or decreases, for that matter), but merely to report increases in
the quantity of costs, some of which are relevant to the poverty-affluence
problem and some of which are not. The question of what and how much
the economy can produce, provided the income distribution problem can be
solved in a manner consistent with our traditional input-outtake morality and
the double-entry bookkeeping logic of our economy, is a question for business
management, labor union policy, and experts in technology. Our interviews with
PAGENO="0195"
635
top executives in a wide spectrum of companies and industries leave us with no
doubt about the answer.
Why is it that basic industry and agriculture which could grow by leaps
and bounds, year after year barely creep ahead? Here is the old familiar hang-
up: the people with the unsatisfied needs and wants do not have sufficient
purchasing power to buy the goods and services that would satisfy those needs
and wants. And the people with excess purchasing power-~the top five per-
cent or so-have no unsatisfied needs and wants.
Into this "war on poverty" it is now proposed that we introduce some new
super-weapons: the "guaranteed annual income," paid through a "negative
income tax" (i.e., a positive income dole), and a relatively new import from
other even more poverty stricken parts of the world, the family allowance,
or a dole geared to, and thus encouraging increases in, the number of children in
the family. A third new super-weapon that many leading citizens and politicians,
and, if we are to believe a recent public opinion poll, even a majority of the
citizenry may favor, is simply a more massive dose of an expedient that has
been tried and uniformly found wanting many times in the past: government-
ally subsidized and "created" jobs. "Government as the employer of last re-
sort" is the new name given to this old and discredited device that in practice
often means that "War is the employer of last resort."
We shall not, in this writing, undertake to argue the negative case against
doles and synthesized jobs. That has been argued often and well elsewhere by
others and by ourselves. We are convinced that those who would seek solutions
to our major political and economic problem-the problem of matching unsatis-
fied needs and wants with legitimately acquired purchasing power-through
programs of doles and "created jobs" do so out of a combination of social con-
cern and desperation borne of belief that no better alternative exist.
But a better alternative does exist, and this is the subject of our paper. In
advancing this alternative, we do not wish to be understood as frowning upon
the use, where necessary, of redistributive expedients during the interval (not
more than a brief span of years-we believe) in order to expedite the transi-
tion to a sound and self~sustaining economy and to ameliorate personal hard-
ships. On the other hand, as we will emphasize later, the vigorous employment
of the Second Income Plan will quickly initiate a period of two or three decades
of legitimate and intense full employment, so that the need for such expedients
will be tempered.
We make the following assumptions upon which there is, we believe, sufficient
general agreement to warrant omission of the proof of their validity, although
we believe each of them eminently supportable.
(1) The economy of the United States is physically capable of providing gen-
eral affluence (defined hereinafter) for the citizens and residents of this coun-
try. We have (or through commercial channels have access to) adequate re-
sources, productive knowhow, and trained or trainable manpower to produce
the quantities and varieties of humanly useful goods and services to provide
an affluent standard of living for all. Every signifidant firm and every industry
is physically capable within a few years of expanding its production to meet
any currently imaginable level of output that might be required to pro-
vide every family and individual in the economy with a genuinely affluent level
of goods and services, provided only that the consumers have the purchasing
power to purchase those goods and services. The present economy is clearly not
producing at a level even distantly approaching general affluence, but its pro-
ductive capacity could be expanded by an increment-whicli we wifi call the
Second Economy-capable of that high-level production. Nothing would please
all those whose contributions are necessary to such ligh-level output-the labor
force, management, the owners of resources, the scientists, technicians and
engineers-than to have the opportunity, through the possession of adequate
purchasing power on the part of those with unsatisfied needs and wants, to
expand their economic output to a level equivalent to general affluence.
(2) A market economy automatically generates an amount of purchasing
power equivalent to the market value of the goods and services it produces in
any given time span. "For every dollar spent in production, someone gets a
buck." This is irrefutably true as long as our business and fiscal systems are
constructed in accordance with the logic of double-entry bookkeeping. It may
be illustrated thus:
PAGENO="0196"
636
DOUBLE-ENTRY BOOKKEEPINGS THE BASIC LAW OF TWO-FACTOR ECONOMIC THEORY
Net National Payments (Net EQUALS Aggregate Income automa-
National Product) for a = tically arising out of the
given time period, corn- process of production and
puted by aggregating costs available to the individuals
of production of all goods who participate in produc-
and services produced with tion except to the extent
a market economy, and de- their arbitrary institution-
ducting depreciation and al arrangements, private
amortization of capital in- and governmental, intercept
struments. or divert such income.
(3) But there is a vast difference between a market economy's generating
sufficient purchasing power in the aggregate to enable the recipients to purchase
all goods and services thus produced for the market, and its generating sufficient
purchasing power in the hands of those with unsatisfied consumer needs and
desires who will use the purchasing power to satisfy those consumer needs and
desires. Outtake from the economy in the form of purchasing power, in a private
property economy which we morally want and try to pretend that we have,
must be based upon productive input, with the value of the productive input
being measured by market forces under workably free competition. Only a mar-
ket economy in which the consumer needs and desires of all are matched with
adequate productive capacity cam be a generally affluent economy.
(4) The historically conspicuous shortcoming of all market economies, crit-
icized and lamented in one form or another by political scientists, theologians,
economists, politicians, labor leaders, revolutionaries, educators, and the popu-
lace generally for a century and a half, is that they are never institutionally
designed to consume and enjoy what they desire to produce and can produce.
In an economy as technologically advanced and rich in resources as the United
States, an economy unquestionably having the capacity and potential capacity
to produce general affluence, only a small minority-at most the top ten percent-
have the capacity to consume and enjoy an affluent level of goods and services.
Clearly, therefore, the problem of poverty, at least for the United States and
for most of the resource-rich economies of the world who can buy technological
know-how if they do not possess it, lies neither in their physical inability to
produce general affluence nor in their lack of zeal to do so, but in the institutional
arrangements which fail to match, family by family, consumer by consumer, the
need and desire to consume with the economic power to produce at the desired
economic level. Specifically, if it requires an income of $15,000 a year for a family
of four to live even a slightly affluent life, some members of that family must
have the power and capacity-evaluated by competitive market forces-to
produce $15,000 worth of goods and services or to make a productive contribu-
tion to the economy of that value.
It is the thesis of this paper that our inability to find the answer to this dilemma
up to this point in history is primarily and indeed almost entirely due to a
deficiency in our theory of how wealth is produced; that all of the significant
schools of economic thought down to date suffer from the same theoretical de-
ficiency, and that by substituting sound theory for false, a not impossible step, we
can readily make the relatively minor changes in our business and governmental
institutional arrangements to enable us each to produce and enjoy an affluent
level of income and the economically comfortable lives that this would make
possible. The world so far has had its economies structured on the idea, explicit
in the case of the Socialist and Communist countries and implicit in all other
economies, that only one factor-labor-is the producer of wealth or economic
value. While our business institutions and our governmental institutions that have
to do with economic structure are built or designed in accordance with one-factor
concepts, the real productive world does in fact employ two productive agents.
We live in a two-factor world, but we operate our economies on one-factor think-
ing.
Let us define affluence as the standard of living enjoyed by the top 10% of income
recipients. To produce that level of affluence for all families would require that
our existing productive facilities be expanded many times over. To the extent that
resources, manpower, and know how are available (whether from within or from
~~vithout) to build a Second Economy within a reasonable time-say ten to twenty
PAGENO="0197"
637
years-general affluence, i.e., affluence for all households in the united States,
is a proper economic goal.
A definitive positioning of two-factor economic theory in the world of
economic thought would be beyond the limits of this paper. The orientation that
follows is necessarily brief.
The Classical (i.e., nonsocialist) economists asserted and still assert, that if
the government will keep its hands off interest rates and wage policies, the "un-
seen hand" of the free market will automatically put the economy in equilibrium
at full employment and prosperity. The Classicists are one-factor thinkers.
The Socialist (i.e., the Marxist) economists contend that the Classicists are
wrong: that full employment and its resultant prosperity are achievable only if
private property in capital is eliminated and state ownership "for the benefit
of the whole society" is substituted. The Marxists are explicit and vehement one-
factor theorists.
The Keynesians disagree with both schools of thought; they insist that full
employment can best be achieved by increasing, to whatever extent may be
necessary, aggregate consumer demand through deficit financing, measures de-
signed to raise wages above their free market level, and virtually any kind of
government-sponsored redistributive measures for adding purchasing power to
the workers and the unemployed.
Two-Factor Theory, or the theory of a private property economy, or the theory
of general affluence (each of these is a proper name for it), denies both the valid-
ity and the adequacy of the goal to which all three of these principal schools
are committed: the goal of prosperity solely through full employment. It holds
that full employment as such is a false-indeed a perilous-goal for an advanced
industrial economy, and that even if "full toil for all forever" could be achieved
outside a totalitarian state, it would prove itself inadequate as a means for
achieving general affluence.
Full employment ideology draws its ethical support from the so-called Puritan
ethic. Its tacit assumption is that one ought to contribute to production as a
prerequisite for receiving a distributive share. The premise is sound. However,
full employment thinking then makes an untenable leap. It erroneously assumes
that the only way for human beings to contribute to production is through their
labor. It overlooks the nonhuman factor of production, capital. It fails to recog-
nize that capital produces wealth in precisely the same sense as labor: that
capital is producing a major portion of our total goods and services now and
that capital, as technology continues to progress, will produce an ever-greater
proportion in the future.
Two-factor theory repudiates the economic objective of maximum output of
goods and services with maximum employment. Its goal is optimum output of
goods and services with minimum toil, but with universal participation in vro-
duetion. One may participate either through one's personal toil, one's personal
ownership of an equity in productive capital, or through both, as the state of
technology and the desired general living standard may require.
~nrninary of Two-Factor Theory-At this juncture, a definition may be in
order. The political institution of universal suffrage has never in history had an
economic counterpart. Consequently, the ideals of political democracy have never
been grounded upon a firm economic base. Defective economic institutions ac
tively subvert and undermine the ideals of political democracy and constitutional
government. Our own time has provided us with several horrifying demonstra-
tions of what can happen to freedom in an economic environment hostile to it.
Our Western political heritage has no chance of survival in a nation, or in a
world, where capital is the chief source of the affluence everyone seeks, but where
the majority owns no productive property.
The basic elements of the two-factor theory may be summarized under the
general engineering concepts of input and outtake. On the input side of the
equation is production.
Wealth is produced by two agents or factors. One is the human. It includes
labor in all of its forms-intellectual hnd managerial as well as manual. The
other is nonhuman. It includes productive capital in all ~f its forms-land,
structures and machines. Each factor produces wealth in exactly the `same
physical, economic, political and moral sense. That assertion is the reverse of
the prevailing view that the function of capital is somehow mysteriously to raise
of labor to the same.
Distribution of the wealth produced by an economy corresponds to outtake.
Logically, there are only two patterns of `distribution possible:
PAGENO="0198"
638
One is input oriented.-It allodates the outtake or personal income from each
productive process on the basis of productive input. This is the principle of pri-
vate property. It is the distributive principle of a private property or universal
capitalist economy structured upon two-factor theory. It is dictated by the logic
of double-entry bookkeeping.
The other is ~wninput oriented.-It is `based not upon productive input, but
upon the need of the recipient, as determined by central authority. This is the
principle of economic Communism.
It may be of incidental interest, since many people toy with the idea of
soëiallsm, to note that the distributive principle of socialism is also an input-
oriented principle. The difference between socialism and two-factor theory or uni-
versal capitalism in this respect lies only in the interpretation of the facts.
Universal capitalism holds that there are two factors of production: the human
and the nonhuman. Socialism maintains, as a matter of dogma, that there is only
one: the human, i.e., labor. The absurdity of the socialist position, while perhaps
not so easily discernible in the primitive industrial economy, becomes increas-
ingly obvious as technology shifts progressively more of the burden of production
onto capital instruments.
A FUNCTIONAL DEFINITION OF PRIVATE PROPERTY
Private property, as applied to the factors of production, means that the
owner of each factor is entitled to all the wealth or net income that the thing
owned produces. If the concept is to have objective validity, of course, the value
of productive input by either factor must be determined in reasonably free and
competitive markets.
Thus, under private property, the worker is entitled to the value of wealth his
labor produces, and the owner of capital is entitled to the value of wealth his
capital produces (value in each case being determined under conditions of work-
ably competitive markets). Private property, we may therefore conclude, func-
tions in economic affairs precisely like circuitry in electronics: directly to connect
productive input and distribute outtake.
In a free market economy structured upon the logic and morality of double-
entry bookkeeping, for any given time span, the market value of the goods and
services produced is equal to the purchasing power created out of the process of
production. This means that aggregate purchasing power is always adequate
in quantity to remove all goods and services from the market. But this fa~t does
not mean that the purchasing power, potentially sufficient in the aggregate,
will be used for this purpose.
Those with consumer needs and desires in excess of their purchasing power
can clearly not satisfy them.
Those with purchasing power in excess of their consumer needs have no choice
but to invest the excess in capital goods and thus further increase their ewcess
purchasing power.
There are but two ways to correct this imbalance, which in popular parlance
we know as poverty, on the one hand, and concentration of wealth, on the other:
Alternative I
Redistribution of purchasing power from those who produce more, or have
more than enough, to those who have less than enough. This is done in accord-
ance with "need" as determined by central authority. Redistribution is the
principal means employed in the United States economy, and the principal cause
of its social strife. It is, by definition, destructive of private property. It is the
corrective method of economic communism. Distribution on the basis of need is
the principle employed in all anti-poverty programs based on doles or govern-
mentally "created" jobs.
Alternative II
Institutional changes which facilitate the building of the productive power
of those households and individuals which are insufficiently productive, in order
to enable them to produce enough income to satisfy their reasonable needs and
desires. This method has yet to be employed as national policy in any economy.
It is a method designed to protect existing private property, highly concentrated
though it may be, and to build a Second Economy owned in reasonable-sized
holdings by the great majority of households, who own no productive capital in
the existing economy. This is the corrective method of the Second Income Plan.
PAGENO="0199"
THE VIOLATION OF PRIVATE PROPERTY
IN THE NON-HUMAN (CAPITAL) FACTOR OF PRODUCTION REQUIRED IN A TWO-FACTOR REAL WORLD
TO MAKE A ONE-FACTOR DISTRIBUTIVE CONCEPT FUNCTION - HOWEVER POORLY
5, ~0
~ 0-'
50 4 0 5)
sO U
U
-~ 000
0 U 4 0
a
o 5) 4-tO)
0 OH
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o N-iS)
*~ ~----H
°
* 1-1 55 -4
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~ :~ ~
So `sic)
4-40
0 4-5 sI
INPUT
Estimated actual iap4r~
mix for the U.S. econoeF
sith CAPiTAL (nonhuman factor)
and LABOR (human factor)
contrioutlons evaluated on.
assumption of competitive markets
OUTTAKE
Distri'oution of income
shhvin& estimated
redistri'oution of income
produced hy CAPITAL
(nonhuman factor) to
non-osmers of capital
(~orkero and the uneapioyeA)
0~)
4-)
944-)
sO 044
o iso
-4 0
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17'
Copyright 1967 - Louis 0. Kelso and Patricia Better.
PAGENO="0200"
640
Thus, the object of the program for industry and business which we urge can
best be illustrated in the following manner:
Let the small circle below represent the capital structure of the present economy
of the United States, and let the larger circle surrounding it represent a second
economy, to be built through expansion several times over of the present one.
A
N
I-
/
/ CA~TTAL STRUCTURE
;
/__ __
~ <:.
I ~, ECONOET~ I
1~
`ruE ~ ~ /
~ ~
Representing the capital structure of the present econcay, cmmcd by
the wealthiest 5E, theownership of which must be protected and prcse~vecI.
Representing an. expanded economy to bd so financed that it will becowa
owned, in reasonable-sized and diversified eqwity holdings, by tyc g~y of
families and individualswho oy~ no part of the present economy a orofuc-~
cive capital..
Poverty ~n the private property economy can be corrected only by measures
designed to enable the `poor" households to become more productive. i.e.. to pro-
duce more goods and services, or to contribute more towards production. To put
it another way, the private property route to general affluence (as distinguished
from the pinnacle affluence that characterizes Western industrial economies to-
clay) is to enable the citizens to produce goods and services for each other, and
to enable them to trade with each other, rather than to follow the prevailing
expedients under w-hich they give to each other under government duress or
take from each other w-ith government assistance.
The iYature of Technology. Essential to an understanding of the private prop-
erty economy is an appreciation of the nature of technology. Technology is a
process by which man harnesses nature throng/i his capital instruments and
makes her work for him. It is a process by which the productiveness of the
PAGENO="0201"
641
nonhuman factor of production is increased at an accelerating rate, and increas-
ing quantities of it are used.
Technological change is also a process which leaves the general productiveness
of the human factor untouched. Obsolescence of skills equal or exceeds the
development of new skills. Furthermore, increases in unemployment lower the
competitive value of the labor of those still employed.
The effect of these tendencies is to increase the productivity of capital. Labor
remains at best a constant factor; more often, it is a decreasingly productive
factor. As far as his productive capacity is concerned, man himself at best re-
mains about where history first found him.
For the past 100 years or more, output per manhour has been increasing about
21/2% per year. If we understand that this yearly increase is the result of
better and more numerous capital instruments, it is clear that today the great
bulk of wealth is produced-as our eyes tell us it is-~by capital: the figure is
90% or more.
`Consequently, in a private property economy, the principal means for enabling
households of low or no economic productiveness to become more productive is to
enable them to buy, pay for, and employ capital ownership in their lives.
A flna~ieing footnote
In enterprises with average or better-than-average management, new capital
formation does not take place unless the newly formed capital will (with ex-
tremely rare exceptions) throw off not only its cost of formation, but dozens,
hundreds, and sometimes even thousands of times its formation cost. Normal-
ly, in the well-managed businesses of the United States, the pre-corporate income
tax return on net worth is in the vicinity of 22%, thus enabling newly formed
capital-in spite of myriads of institutional arrangements that diveri, within
the corporation, the wealth produced by the owners of capital to the non-owners
of capital-to pay for itself within five years or less.
Consumer goods, such as personal automobiles and family residences, pro-
duce no marketable wealth. Therefore, they do not in themselves enable the
owner to pay for their costs' of acquisition.
Yet the financing of consumer goods has become so sophisticated (not to men-
tion asinine) as to enable the consumer to spend his income up to forty years
into the future in order to purchase today articles which throw off no market-
able wealth. As a result, he often pays for two or more houses `to buy one; he pays
for one and one-quarter automobiles to buy one, etc.
But the world of finance offers no significantly effective techniques to enable
a household that owns no capital, or owns insufficient capital, to buy newly formed
capital and to pay for it out of the wealth it produces, and thereafter to em-
ploy such capital as a factor of production and a means of producing income.
That which is inherently nonfinanceabie is financed.
That which is inherently financeable is not financed. And the illogic of poverty
amidst eagerness and ability to produce plenty goes on.
THE SECOND INCOME PLAN AND 1T5 ECONOMIC GOAL: THE BUILDING OF
A SECOND ECONOMY
The practical world requires in addition to second theory a practical and ef-
fective means of translating theory into action. The Second Income Plan is
an action program for bringing about general affluence in the U.S. economy.
All economy capable of producing affluence on the required scale would have
to be perhaps ten times more productive than the one we have now. It is the goal
of the Second Income Plan to create that "Second Economy"-
An economy in which the newly formed capital will be owned primarily by
those 95% of families who own no capital of income significance in the present
economy.
An economy to be built by means that increase the integrity of present private
property ownership in the existing economy.
An economy which will have logic and symmetry because it will systematically
build the economic power of all households to consume wealth through two
sources of income `at the same time it builds additional industrial power to pro-
duce wealth. Only when all families have viable capital holdings and also an
opportunity to engage in production through employment (to the extent that the
state of technology and the rate of growth require employment) can "aggregate
demand" be capable of supporting general affluence.
PAGENO="0202"
642
The suggested tools of the Second Income Plan fall roughly into four
categories:
Those relating to the pattern of testamentary and inter vivos gifts as they are
affected by Federal and state tax policy;
Those relating to the conduct of the corporation;
Those relating to financing capital ownership for corporate employees;
Those relating to financing capital ownership for persons not employed by the
private corporate sector.
GENERAL CHANGES PROPOSED IN FEDERAL AND 5TATE TAX POLICY
Tax policy changes affecting estate and gift tax laws should aim in general
to encourage gifts which broaden private ownership of capital; they should dis-
courage locking up ownership of the most productive factor of production, capital,
in tax-exempt general purpose foundations. Capital is socialized as effectively in
tax-exempt foundations as if the government had confiscated it. In either case,
its ownership is not connected by private property rights to individuals in reason-
able-sized holdings.
PROPOSED REFORMS RELATIVE TO THE CONDUCT OF THE CORPORATION
(1) The gradual step-by-step elimination of the corporate income tax. \Iethods
for financing capital ownership for individuals out of the income produced by
capital are among the most important tools for implementing the Second Income
Plan. Those vital tools are blunted by taxes which divert more than half the
income produced by capital to the government. The state and Federal corporate
income taxes, with the proposed new surtax, are a direct 60% destruction of the
capital owner's private property in capital. The rich man, because the wealth-
concentrating mechanisms of the existing economy work more effectively for him
than the redistributive efforts of government and labor unions work against him,
can temporarily withstand this invasion; the man without capital cannot.
(2) Gradually forcing each mature corporation to pay out all of its net
earnings, after depreciation and operating reserves only, to its shareholders. These
steps should be keyed to appropriate reductions in the personal income tax rates
to make them nonconfiscatory. This measure is one of the principal means of
restoring private property to capital ownership. It is designed to put the burden
of taxation on the ultimate taxpayer-the individual-where it belongs. It is
no more justifiable to withhold the wages of capital than it is to withhold the
wages of labor. If capital indeed produces most of the wealth, and we wish to give
symmetry to our economic system by enabling the masses to receive second
incomes through dividends, the private property of both the existing stockholders
and the new stockholders must be effective.
(3) Providing the corporation with new sources of financing growth to take
the place of the internally generated funds presently used. In the case of non-
employees, the source would be the financed capitalist plan; for employees,
it would be Second Income Trusts. Both are financing sources that are unlimited
by anything except the market for the goods and services to be produced by
the expanded economy. That market will expand as the "second incomes" of
the population expand.
More importantly, however, from the standpoint of the corporation, the Second
Income Plan would complete (i.e., correct) presently invalid corporate strategy.
Corporations employ meticulously logical methods to build their industrial power
to produce goods and services. But they neglect to comensurately raise the
economic power of consumers with unsatisfied needs and wants to buy the in-
creased output. This function they leave to chance, to government redistribution,
and to that most illogical and defective of all doctrines-the doctrine of exclu-
sive dependence on full employment, the keystone of all one-factor economic
theory.
Each year our corporations and other business enterprises put into place in
excess of sixty billions of dollars worth of new capital formation. But to the
purchasing power of consumers with unfilled needs, they add only limited
purchasing power incidental to the minimum employment required by auto-
mated production methods and the minor fraction of corporate net income that
reaches the small number of consumers who enjoy capital income. Even when
increased by organized labor's bargaining leverage and by wage-elevating legis-
lation of various kinds, the purchasing power which employment adds to the
economy is but a fraction of the aggregate purchasing power arising from both
PAGENO="0203"
643
factors of production; it is inadequate to support consumption of the increased
output, much less the output that could and must be produced in order to attain
general affluence.
TOOLS FOR FINANCING CAPITAL OWNERSHIP FOR CORPORATE EMPLOYEES: THE
SECOND INCOME PLAN TRUST
The basic vehicle for financing capital ownership for corporate employees,
although it resembles the conventional employee profit-sharing trust, is incom-
parably more high-powered and versatile. Called the Second Income Plan Trust
(or "SIP Trust"), it is structured like the stock bonus trust presently authorized
by the Internal Revenue Code, and although IRS regulations could be im-
proved, such a trust can be "qualified" today. Loan financing runs directly to
the Trust, and is invested in the sponsoring corporation's stock at market price.
Repayment of the loan can be guaranteed by the sponsoring corporation, which
commits itself by the terms of the Trust to a series of annual payments into the
Trust, sufficient to amortize principal and interest of the loan to the Trust.
The end result is a Trust that not only serves as a tool for speedily building
capital ownership into employees, but as a key financing source for the corpora-
tion. It is a device inserted into the usual loan financing arrangements of a
corporation to reverse the traditional concentration of ownership arising from
debt financing of corporate growth. It enables the corporation to finance its expan-
sion on pre-tax dollars, rather than the usual after-tax dollars. Where depreci-
able property is involved, ultimately more than 100% of the cost of new capital
formation is recovered out of state and Federal corporate income taxes. From
the government's side, as growing capital ownership provides second incomes
to workers, social security is replaced by private or personal security. Thus the
welfare burden of government is progressively reduced. As personal incomes
rise, the income tax revenues can rise to offset, to the extent necessary with a
reduced government welfare burden, revenue losses incurred in the transition.
As the corporate income tax disappears, the Second Income Trust becomes a
method both for financing accelerated new capital formation out of the wealth
produced by capital, and for financing the acquisition of capital ownership for
employees. It enables the noncapital-owner to finance his acquisition of capital
as the capital owner, with rare exceptions, has always done: out of the wealth
produced by capital.
TOOLS FOR FINANCING CAPITAL OWNERSHIP FOR PERSONS NOT EMPLOYED BY THE
PRIVATE CORPORATE SECTOR: THE FINANCED CAPIDALIST PLAN
Capital ownership for noncorporate employees can be financed through a
variation of virtually the same procedure. Suggested techniques for accomplish-
ing this are based upon the analysis set forth in The New Capitalists (Ran-
dom House, New York, 1961). There, Louis 0. Kelso and Mortimer J. Adler
analyzed the relationship, under conventional financing techniques, of present
capital ownership to the prcicess of financing newly formed capital. They con-
cluded that the relationship, not previously isolated and identified, is one of
insurance.
In the traditional business financing pattern, existing capital is put at risk to
insure against two contingencies: (1) that the newly formed capital may not
pay for itself within a reasonable time, and (2) that even if it does throw off
sufficient income to cover its formation costs, the income may not be used to pay
those costs.
If the function of existing tupital in the financing process, is an insuring func-
tion, they concluded, then there is a better way to achieve the same objective;
a way that is free from limits imposed by the availability of savings for financ-
ing new capital formation. This idea is, we submit, of momentous significance
to the U.S. economy. For it breaks the neceSsary `connection in conventional
finance between ownership of existing capital and the right to acquire ownership
of all newly formed capital.
Conventional finance is a method for bringing about the exact opposite of
universal capitalism. It is a mthod for relentlessly concentrating ownership. It is
a method for excluding from the ownership of capital those who sic not already
substantial capital owners.
The Second Income Plan, on the other hand, is a method designed to enable
men born without capital to buy it, to pay for it out of the wealth produced by
PAGENO="0204"
DIA~fl~AM I
SECOND INCOME PLAN FINANCING
t~rowtoPrototh Corporate Growth by Making Your Employeec Capital Ownei~1
* 1.In.effect,.~
corporate guaranty
of repayment of
the Truat'o.debt.]
PAGENO="0205"
645
that capital, and thereafter to own it and employ it in their lives to provide them
with second incomes.
Our suggested method for financing capital ownership for those who are not
corporate employees involves creating a commercial counterpart of the F.ELA.
insurance agency. We could call it the Capital Diffusion Insurance Corporation
(O.D.I.C.). It could be a self-liquidating government insurance agency, like the
F.H.A. Or it could be one or more private insurance syndicates.
The function of the proposed corporation (or corporations) would be to insure
lenders that make financed capitalist loans (for the dual purpose of creating new
capitalists and financing new capital formation) against failure of the financed
portfolios to pay off their costs of acquisition within, a prescribed financing
period.
It should be noted that the CDIC-financed capitalist program is intended ulti-
mately to take the place of internal financing, but it is not intended to displace
other conventional finance. It is strictly complementary and supplementary. In-
deed, it would be expected that much of the lendable funds of the economy would
be used in the financed capitalist and SIP Trust financing programs.
As the economic growth rate accelerates to a level where the loan funds of
the economy (including the loan funds of savings and loan associations which
might be made available for the purpose) are inadequate to meet requirements
of ODIC, SIP Trust, and conventional financing activities, then SIP Trust loan
paper and CDIC loan paper held by commercial banks, savings and loan banks
and perhaps by certain other lending institutions, should be made discountable
through the Federal Reserve Bank.
The reader's first reaction to this proposal may be that it would be inflationary.
On mature consideration, he will be sure that it will not be inflationary.
A monetary system which in effect inonetices new capital formation under
controlled conditions where top eccecutive and financial scrutiny is a prerequisite
to the new capital formation coming into eccistence, would be the first logical and
totally fieccible monetary s~ystem in history. It would monetize that factor of
production which is primarily responsible for producing the goods and services
that money is used to buy.
Such a system would solve the major monetary problems of the U.S. economy
both internally and internationally. Its intermediate and long-term effect would
be deflationary; for the value of net goods and services produced by newly formed
capital, after payment of financing costs, vastly exceeds the cost of new capital
formation. This deflation, however, would occur without hardship because in a
universal capitalist economy, the increasing purchasing power of money would
merely be a reflection of increasing ease of production. It would be accompanied
by increasing, rather than declining, opportunitien to participate in production,
as is the case under present one-factor economic systems.
THE POLITICAL UTILITY OF AN ECONOMIC PROGRAM BASED UPON THE SECOND INCOME
PLAN
The tools of the Second Income Plan are peculiarly useful at the Federal level
because their implementation depends primarily upon control of the monetary
and credit system, which is a matter of Federal concern.
The Second Income Plan itself can unleash the latent human power of every
man in an advanced industrial society by offering the opportunity to acquire
capital.
It is tailor-made for national economic planning; for anti-monopoly control;
for growth acceleration through the simultaneous building of the economic power
of the population to consume and its industrial ability to produce, and for the
promotion of industrial peace.
At the same time, the Second Income Plan is calculated to maintain in indi-
vidual citizens the growing economic power resulting from accelerated indus-
trialization, and to diffuse it broadly throughout the nation. Eventually and
ideally, this diffusion would be universal. Thus, it lends itself to control of the
economy by the government-but without the accretion of power by the govern-
ment that can threaten individual liberties. The growing political power of the
government is balanced by the growing private economic power of its citizen&
The Second Income Plan can induce the soundest boom movement in history;
one that can continue to grow until general affluence is achieved, and that can be
maintained at the level of general affluence without dependence thereafter on
purposeless expansion.
PAGENO="0206"
DIAGRAM II
How' the Second income Plan finances The purchase
of stock by individual famflies.
Copyright 1968; Louis 0. Kelso
a~d Patricia Hotter
PAGENO="0207"
DIAGRAM III
How stocks pay for fh~rnsellve~ under the Second
1.~com P'km.
Copyright 1968: Louis 0. Kelso ai~d Pat~icia Hetter
CORPORATION ISSUING
NEW STOCK BOUGHT
UNDER THE
~ "SECOND INCOME PLAN"
Through tax incentives or contract
agreements, corporation pays out
high percentage of earnings os dividends.
2. Under CDIC Program, these dividends
-are tax-deductible to corporation (like interest),
3. Thus with high payout and no corporate
income tax, these dividends can run as
high as 30% on invested capital;
con repay loan in 7 yeors orlese.
INDIVIDUAL
WAGE- EARNER
WHO WILL GET A
SECOND iNCOME FROM
DIVIDENDS
CAPITAL DIFFUSION,
INSURANCE CORPORATION
.(CD!C)
.~I
TO S~CURE
COMMERCIAL
BANK
PAGENO="0208"
648
The Second Income Plan is calculated to drastically reduce, and perhaps to
eliminate, economic cycles.
The Second Income Plan will inevitably demonstrate the advantages of a
strong Federal government. The monetary and policy control of the central
government will be counterbalanced by the opportunity provided for all citizens
to own diversified holdings of equities from enterprises in every state.
By bringing about a rising affluence level for all citizens-real general
affluence-the Second Income Plan can enable the tJ.S. to reform itself into an
economic model that will compel imitation by all nations, for the applicability
of two-factor theory is as broad as the applicability of industrial production
techniques.
PROTECTION OF THE ECONOMY FROM IMPORT COMPETITION
With growth accelerated through the Second Income Plan, and rising incomes
resulting from broad capital ownership, rather than from artificial elevation of
wages, the U.S. economy could increasingly begin to realize one of the key
advantages of growing automation in an economy structured on two-factor
theory: declining prices, and the rising value of the consumer dollar without
diminution of, indeed, with increasing, opportunity for all citizens to earn
incomes, either through their privately owned capital, their employment, or both.
This would amount to impenetrable import protection against the goods of all
one-factor economic systems.
THE SECOND INCOME PLAN IS WELL SUITED TO THE NEED OF THE U.S. ECONOMY FOR
AN INSPIRING ECONOMIC IDEOLOGY
One that will stand up under scientific and engineering analysis.
One that is consistent with the traditions of private property which form the
ethical background of the U.S. culture.
One that utilizes the most powerful of all motivational forces: the proprietary
instinct of all, not just of the few.
One that can accelerate economic development to 10%-possibly to 15%-
per year, or more, and maintain that rate until general affluence is achieved.
One from which sound policy determinations and effective implementation can
be directed, primarily by the Federal Government, but without the slightest
tendency to concentrate power in the Federal Government, since economic power
and political power are kept meticulously separate.
One that can simultaneously facilitate making national policy effective and
indispensable to the success of each enterprise and family, but which employs
the maximum in human autonomy, business autonomy, and state government
autonomy.
One that will "turn on" a boom psychology throughout the U.S. that will open
up the doors of opportunity to youth, who are today only promised employment
that must be artificially contrived and governmentally subsidized-a boom
which will be followed by no "bust" because it does not lead to the irreconcilable
concentrations of wealth, on the one hand, and mass poverty on the other, the
twin calamities in economies designed and operated upon one-factor concepts.
PULL EMPLOYMENT THROUGH THE SECOND INCOME PLAN
Through the Second Economy (several times the size of the present economy)
which the Second Income Plan is designed to build, full employment-indeed
overfull employment-will be inevitable for at least three decades. The United
States will be confronted with employment shortage problems similar to those
Germany and Japan faced in the rebuilding of their economies after World
War II.
However, the economic growth will not be the cyclical kind that is interrupted
by productive power outrunning the available purchasing power of consumers;
under the Second Income Plan, the economic power of the masses to consume
rises with the industrial power of the economy to produce.
A PRACTICAL COMMENTARY ON THE CDIC INSURANCE PROGRAM
In general, new capital formation not only pays its way, but is the source of
affluence~ If borne by the community, as is the case under the CDIO program,
the risk of entrepreneurial error is negligible. The risk is particularly negligible
compared to the cost of the failure to remove the financial shackles that deprive
PAGENO="0209"
649
90% of the consumers from enjoying the affluence entrepreneurs can and would
love to produce.
UNIFYING POWER OF THE SECOND INCOME PLAN
The capital estate of every family can consist of significant holdings of
equities, resulting in periodic payments of dividends, from industries in every
state in the United States and from foreign operations of the corporations in which
investments are made. The problems of urban crowding that arise from exclusive
dependence upon personal employment, real and pretended, legitimate and
subsidized, in one-factor economic system, can be ameliorated as increasing num-
bers of people produce their incomes through their privately owned capital, and
can choose their place of residence on criteria other than upon opportunity to toil.
General affluence cannot be achieved either through Keynesian expedients or
through socialism. It is the goal of neither. Their goal is merely full employment
and the redistribution of the affluence of the few at the top income level. The goal
of general affluence can only be achieved through the application of two-factor
theory and the Second Income Plan because in the modern world, capital is the
chief source of affluence.
THE GRAVE DANGER OF FULL EMPLOYMENT ECONOMIES THAT THE SECOND INCOME
PLAN IS CALCULATED TO ELIMINATE
The full employment economy is war-prone. While it cannot be said that respon-
sible governmental leadership would deliberately provoke wars for the admitted
purpose of supporting full employment, the result, although more subtle, is
much the same.
The people of the United States are morally committed to the private property
principle of distribution. They believe that wealth should go to those who produce
it and in shares proportioned to their productive contribution. But the United
States is a technologically advanced country, and during extended eras of peace,
one-factor techniques for maintaining full employment must take the form of
redistribution, often disguised as make-work. Eventually it becomes exceedingly
difficult to get sufficient Congressional appropriation to maintain politically ac-
ceptable levels of full employment.
It is easy, on the other hand, by playing on primitive emotions, to get the mili-
tary appropriations that are in fact the best one-factor expedient for creating
contrived toiL These appropriations maintain full employment, or tend to do so,
and yet they result in no useful goods or services that compete for the scarce
consumer dollars of the civilian economy. They promote the concenration of
wealth in corporations, which pleases management, and give it pools of funds
to preserve its entrenched monopolies at home and to acquire productive enterprise
abroad. It also sets up the classical inflationary spiral caused by artifically
generated consumer dollars chasing a fixed supply of consumer goods. Two-factor
theory and the Second Income Plan will free the U.S. economy from these peril-
ous tendencies that historically characterize one-factor industrial economies.
Svmmary
The utility of two-factor theory and of the Second Income Plan is, we submit,
clear.
It provides a blueprint for a monetary system built upon the expanding produc-
tive power of an economy whose goal is the creation of an institutional frame-
work within which every family can produce an affluent level of income.
The monetization of the increases in physical productive facilities is designed
to free the economy from dependence on any limitations arising out of the ex-
clusive use of financial savings to finance new capital formation, for the Sec-
ond Income Plan makes possible the financing of business expansion through
future savings of individuals accumulated without reducing current consumer
expenditures.
Such monetization of expansion is subject to a double level of controls to
assure its smooth and non-inflationary performance. The first is the autonomous
control by corporate management which has expertise in matching new capital
formation to growing market demand. The second level is through the mone-
tary controls of the Federal Reserve System implicit in the discount process,
and the controls of the loan-insuring agency which we have called the Capital
Diffusion Insurance Corporation.
96-602-68-vol. II-14
PAGENO="0210"
650
Two-factor theory provides the theoretical basis and the Second Income
Plan provides the practical program for simultaneously and proportionately
increasing both the productvie power of industry and the economic power
of families to consume by enabling them to participate in production through
ownership of both factors of production..
The foregoing theoretical exposition should be sufficient to enable the reader
to understand and share our conviction that any form of "income mainte-
nance," whether in the form of guaranteed income, negative income tax,
welfare checks, publicly subsidized work, or other direct or indirect money
payment not arising from economic production under competitive market con-
ditions, can never achieve the proper goal of an advanced industrial society:
the generally affluent economy where every family and individual legitimately
enjoys as the result of its or his productive input into the economy the level of
consumption readily supportable by our technology and resources and ap-
propriate to its or his reasonable desires to consume.
Regardless of the disguise employed, direct money payments of the sort
comprehended under the general euphemism "income maintenance" are redistrib-
utive. That is to say, they divide the output of the existing economy with those
who in fact produce no wealth; they equalize poverty, rather than build the new
productive power that general affluence, rather than affluence for top 10%,
requires.
If individual consumers are to be provided with direct money doles out of
funds provided by taxation on middle and high incomes (an open invitaton to
continuing struggle and confrontation between the poor and non-poor or by
increases in government debt (an invitation to eventual financial disaster), some
income now invested will be diverted to consumer goods and service. How-
ever, the apparent increases in the gross national product wifi be mainly
inflationary, i.e., imaginary. An indllspensible condition for building a genuinely
affluent economy is new productive power. Redistribution is incapable of bring-
ing into existence any significant amount of new capital formation.
Redistribution also strikes at the very roots of economic motivation. It de-
storys the private property institutions which have motivated Americans to
make their economy-inadequate though it is in terms of its potential and our
expectations-the most industrially powerful in the world. Giving to each the
wealth he himself produces, either through his labor or his caiptal, is the
best means of insuring that men will do the things necessary to produce desired
goods and services and to constantly expand productive power. Redistribution
solves the consumption problem of an industrial economy at the expense of pro-
duction. Russia, for example, has not underconsumption problem. But after
fifty years of defeating the private property instinct and its motivational drives,
Russia still cannot produce sufficient food, fibre, and hard consumer goods to
provide anything resembling affluence even for its top bureaucrats.
Welfare is on the way to becoming the leading growth industry in the United
States today. The official number of relief recipients, which the Wall Street
Journal reported at 8.6 million in October 1966, unquestionably represents only
a fraction of those whose pathetic circumstances entitle them under existing
laws to some degree of public assistance. Crushing taxation at local, state,
and Federal levels demonstrate the increasing burden being placed on the
economically productive-and the rising wave of so-called political "conserva-
tism" demonstrates the producer's resentment of the ever-growing demands
being made upon them by their dependent countrymen-whose dependency, let
it be understood, is most assuredly due to institutional failure, not to personal
fault.
Recently the State Coiamissioner of Social Welfare of New York, George K.
Wyman, reported that nearly one out of every seventeen New Yorkers is re-
ceiving welfare assistance from either the Federal, state, or local governments.
Mr. Wyman warned that welfare rolls and costs would continue to rise until
some way was found to meet what he called "this steadily growing. problem of
dependency-the greatest domestic problem in the United States." "The only
solution," the New York Times quoted Mr. Wyman as stating in the 1966 Annual
Report of the State Department of Social Welfare, "is to integrate into our
economy as many of our welfare recipients and poverty line people as possible."
But in an advanced industrial economy, where capital instruments are the
chief source of wealth, there is only one logical and economically adequate way
to accomplish the economic integration of labor-de~pendent individuals: to
enable them legitimately to become owners of the non-human factor of produc-
PAGENO="0211"
651
tion. That is the economic integratIon which the Second Income Plan is designed
to accomplish.
Aside from out-and-out redistribution, which is structurally incapable of build-
ing a generally affluent economy, there are only two kinds of income maintenance
possible. One derives from participating in the production of consumer-useful
goods and services, things that minister to the creature needs of living men,
women, and children, things that make them comfortable, secure and content.
The other derives from the subsidized production of non-economic goods and
services, i.e., goods and services not produced in response to normal market de-
mand. More often than not, these are goods and services that do not satisfy any
creature need or desire. Frequently, they are economically or physically perilous.
Production of such non-economic goods-military overkill goods among them-
consume precious natural resources on a gargantuan scale. In the real sense,
they impoverish the country, its inhabitants and the world. Income maintained
from such production cannot buy affluence, for the goods generated simultane-
ously with such income are not the substance of human affluence.
The virtue of the Second Income Plan and two-factor economic theory upon
which it is constructed lies in its unique ability to achieve general income main-
tenance through integrating all families and single individuals into the economi-
cally productive activity of the nation while expanding the productive economy
to the degree required to produce general affluence. Personal income in such an
economy flows automatically and justly to those who produce the wealth.
BIBLIOGRAPHY OF ADDITIONAL READINGS
BOOKS
The Capitalist Manifesto, by Louis 0. Kelso and Mortimer J. Adler (Random
House, New York, 1958). Also available in French, Spanish, Greek, and
Japanese.
The New Capitalists, by Louis 0. Kelso and Mortimer J. Adler (Random House,
New York, 1961). Also available in Japanese.
Two-Factor Theory: The Economics of Reality* by Louis 0. Kelso and Patricia
Hetter (Random House, New York, 1968).
FILM
The Second Income Plan, the action program for implementing two-factor eco-
nomic theory (universal capitalism), is described in a 60-minute stripfllm
with recorded narration, designed for showing on the Dukane micromatic strip-
film projector (available for rental in all Western Hemisphere cities). The
stripfllm set is available for $25 from The Institute for the Study of Economic
Systems, One Maritime Plaza, San Francisco, California 94111.
ARTICLES
"Karl Marx: The Almost Capitalist" by Louis 0. Kelso, American Bar Asso-
ciation Journal, March 1957, Vol. 43, No. 3.
"Corporate Benevolence or Welfare Redistribution?" by Louis 0. Kelso, The
Business Lawyer, January 1960, Vol. VV, No. 2.
"Labor's Great Mistake: The Struggle for the Toil State" by Louis 0. Kelso,
American Bar Association Journal, February 1960.
"Welfare State-American Style" by Louis 0. Kelso, Challenge, The Magazine
of Economic Affairs, New York University, October 1963.
"Poverty and Profits" by Hostetler, Kelso, Long, Oa;tes, The Editors, Harvard
Business Review, September-October 1964.
"Cooperatives and the Economic Power to Consume" by Louis 0. Kelso, The
Cooperative Accountant, Winter 1964, Vol. XVII, No. 4. (Published by The
National Society of Accountants for Cooperatives.)
"Uprooting World Poverty: A Job for Business" 1y Louis 0. Kelso and Pa-
tricia Hetter, Business Horizons, Fall 1964. (Reprinted in Mercurio, Anno VIII
#8, August 1965, Rome, Italy; Far Eastern Economic Review, Vol. L #1, Octo-
ber 1965, Hong Kong; and winner of the First Place 1964 McKinsey Award for
significant business writing.)
*Title changed after first printing from "How to Turn Eighty Million Workers into
Capitalists on Borrowed Money."
PAGENO="0212"
652
"Beyond Full Employment" by Louis 0. Kelso, Title News, Journal of the
American Land Title Association, November 1964.
"Poverty's Other Exit" by Louis 0. Kelso, North Dakota Law Review, Janu-
ary 1964, Vol. ~., #2.
"Are Machines Supposed to Make Work?" by Louis 0. Kelso and Patricia
Hetter, Challenge, April 1965.
"Why Not Featherbedding ?" a satire by Louis 0. Kelso, Challenge, September-
October 1966. (Reprinted in American Controversy: Readings and Rhetoric by
Dempsey and McFarland (Scott, Foresman and Company, 1968).)
"General Affluence for Canadians via The Second Income Plan" by Louis 0.
Kelso, Executive Magazine, Don Mills, Ontario, January 1961.
"Equality of Economic Opportunity through Capital Ownership" by Louis 0.
Kelso and Patricia Hetter, Social Policies for America in the Seventies, Robert
Theobald, Editor (Doubleday & Co., New York. 1968). (Excerpts from this
essay are reprinted in the April 1968 issue of Current Magazine.)
ADDITIONAL REAmNG
BOOKS
Report from Iron Mountain on the Possibility and Desirability of Peace, with
Introductory Material by Leonard C. Lewin (The Dial Press, Inc., New York,
1061).
Political Realignment-A Challenge to Thoughtful Canadians by Hon. E. C.
Manning (McClelland and Stewart Limited, Toronto/Montreal, 1961).
La Reforme Pancapitallste by Marcel Loichot (Robert Laffont, Paris, 1966).
Economic Nationalism and Capitalism for All in a Directed Economy by Dr.
Salvador Araneta (Araneta University Press, Rizal, Philippines, 1965).
Understanding Media: The Extensions of Man, by Marshall McLuhan (Mc-
Graw-Hill Book Company, N.Y., 1964. Also available in paperback by Signet
Books, N.Y.).
Of Time, Work, and Leisure by Sebastian de Grazia (The Twentieth Century
Fund, New York, 1962).
Leisure-The Basis of Culture by Josef Pieper (Pantheon Books, New York.
1962).
The Weapons Culture by Ralph E. Lapp (Norton
ARTICLES
"When Work Won't Earn" by Jack H. Doupe, Editor; "Three Men Pushing Us
All to Become Wealthy" by Anthony J. Patterson; and "Affluence for All Cana-
dians" by Wlimett Boyd and Jon W. Kieran, all from the May 1961 issue of
Canada Month (Montreal).
"The American Economy: Power and Paradox" by Dr. Norman A. Bailey, The
Yale Review, Summer 1966.
"Personal Thoughts" by Winnett Boyd, a Series of Seven Papers on the Cana-
dian Prospect.
PAGENO="0213"
APPENDIX 11
OWNERSHIP AND INCOME*
INTRODUCTION
The world and its resources were created by God for the use and welfare of
all His people. God intends that these natural resources help man live a good
life, develop his personality and contribute to the betterment of society (familial
and larger).
The right of individuals to own property has been affirmed repeatedly by the
modern Popes. This does not exclude, at particular times and places, other forms
of control and use of natural resources. Other forms include cooperative, tribal
and governmental ownership.
In evaluating the acceptability of these forms of ownership, the following
norms should be eonsidered: the dignity and rights of individuals must be
preserved; the welfare of families and society must be promoted; and the con-
servation and proper use of resources must be assured.
The National Catholic Rural Life Conference is convinced that more wide-
spread ownership of income producing property is urgently needed in technologi-
cally advanced nations such as the United States. Since land is a most funda-
mental form of productive property, this issue is of special concern to farm
families.
CAPITAL, LABOR AND INCOME IN THE UNITED STATES
All real wealth, that is, goods and services, is produced either by labor (the
human factor in production) or by capital (land, structures and machines, the
non-human factor of production). Consequently, all income is derived ultimately
from either capital or labor
Technological advances in agriculture, industry and business are bringing
about a steady increase in the relative contribution of capital to the production
of goods and services and a corresponding reduction in the relative contribution
of labor to the same.
Costly machines, including computers, are replacing workers or greatly reduc-
ing the role of workers.
An obvious implication of this trend is the need for more widespread owner-
ship of capital. A growing number of people should derive a substantial part
of their income from ownership. Then, the reduction of labor requirements in
our agriculture, industry and business would result in mJore leisure for our
people, but would not cause either a decrease in their income or prompt them
to demand pay for work they are not doing. Indeed, as technology improves and
as ownership of new capital becomes more widespread, the income of our families
would increase. This, in turn, would assure a growing buying power among
the rank and file citizenry ~rhich is essential for the vitality and growth of our
economy.
DISORDERS IN THE AMERICAN ECONOMY
The American people have not realistically adjusted to the changing produc-
tivity of capital and labor. Although a growing number of Americans have a
form of capital and a source of future income from social security, pensions
and retirement plans, yet, the majority do not own enough captial to contribute
significantly to their income. Indeed, many think only of labor Rs a ~ource of
income. They look to full employment as a panacea for the Nation's economic
problems. They even create situations which cause further concentration of capi-
tal ownertsliip in their efforts to develop new jobs and increase worker's pay.
*A policy statement adopted by the Executive Committee of the National Catholic Rural
Life Conference, Des Moines, Ia., June 19, 1968.
(653)
PAGENO="0214"
654
In many instances workers have claimed increased productivity (and demanded
higher pay) when actually their contribution has decreased while the contribu-
tion of the machines they operate accounts for the increased productivity. This
trend finds its ultimate term in featherbedding, the continuation of jobs which
contribute nothing to the operation in question.
We are in agreement with the desire of workers to increase their income.
Unless this occurs, they will not fully participate in the benefits of technological
progress and their lack of buying power will cause a stagnation in the growth
of markets for the products of our economy. However, we insist that most of this
increased income should be derived from ownership of capital. Any other policy
leads to a disorderly taking from the owners of capital the income which right-
fully belongs to them.
Our Government increased this disorder by creating many economically un-
productive jobs. Of course, most of the funds for such jobs are derived from
property and corporation profit taxes which further discourages ownership of
capital by the majority of our people.
OwNm~sHIP To ALLEVIATE POVERTY
It is ironic that millions of United States citizens suffer poverty in a nation
of unparalleled affluence. This is due party to the fact that a tiny minority of
our citizens own and derive income from our productive property. This condi-
tion cuts off the poor from one of the two sources of income. In effect, we are
asking the poor to climb the economic ladder with one leg.
There is a growing concern among leaders of the anti-poverty efforts in the
United States to devise ways to help low income people gain a stake in the
produrtive pi~operty of the nation. Some of the means proposed are listed
in a later section of this statement.
HUMAN RIGHTS AND PROPERTY
The Fathers of Vatican Council II remind us that personal liberty is inseparable
from property: "Private property or some ownership of external goods confers
on everyone a sphere wholly necessary for the autonomy of the person and the
family, and it should be regarded as an extension of human freedom. Lastly,
since it adds incentives for carrying on one's function and charge, it constitutes
one of the conditions for civil liberties." (Constitution on the Church in the
Modern World, par. 26.) Ownership of property better enables an individual to
protect his human rights. The people who do not own property-and they are
a majority-lack this power. This is one source of their frustration and anger.
The answer, however, is not to destroy the institution of private property, but to
extend it. If property can confer dignity, material comfort and security upon the
few, it can do the same for the many.
PAPAL TEACHINGS ON PROPERTY RIGHTS
The modern Popes have repeatedly stated that the right to own property is
founded in human nature, and that it is conducive to the welfare of the individual,
the family and society. At the same time, the Popes have stressed the limitations
of property rights and their social implications.
Back in 1891, Pope Leo XIII stated the Catholic position on property rights in
his encyclical, On the Condition of Labor: "For every man has by nature the
right to possess property of his own". (par. 5) "That right of property, therefore,
which has been proved to belong to individual persons must also belong to
a man in his capacity of head of a family; nay, such a person must possess this
right so much the more clearly in proportion as his position multiplies his duties."
(par. 9) "Men always work harder and more readily when they work on that
which is their own . . . It is evident how such a spirit of willing labor would
add to the produce of the earth and the wealth of the community." (par. 35)
Thus, Pope Leo stated the import of private property for the individual, the
family and society. He stressed the interdependence of capital and labor: "Capital
cannot do without labor, not labor without capital." (par. 15)
Pope Leo also warned against abuses of ownership. (Op. cit. par. 19) He and
succeeding Popes condemned huge concentrations of property because, in effect,
PAGENO="0215"
655
they make ownership impossible of attainment by many others. The primary
purpose of material goods, they declare, is to serve the essential needs of all man-
kind. Private property is justifiable only insofar as it contributes to this primary
purpose.
Pope Pius XI in his encyclical, On Restoring the Christian Social Order, reaf-
firmed the natural right of private property and stressed its social character. He
declared that "the distribution of created goods must be brought into conformity
with the demands of the common good, that is, of social justice. For every sincere
observer i's conscious that the vast differences between the few who hold
excessive wealth and the many who live in destitution constitute a grave
evil in modern society." (par. 58) He advocated both widespread ownership of
productive property (par. 63) and declared it "advisable that the wage contract
should, when possible, be modified somewhat by a contract of partnership, as is
already being tried in various ways to the not small gain both of the wage earners
and of the employers. In this way workers and officials are made sharers in the
ownership or the management, or in some way participate in the profits." (par. 65)
Pope Pius XII further stressed the primary purpose of material goods and
insisted that the right of every man to use them for his own sustenance is prior
to all other rights in economic life, including the right of private ownership.
(Radio address, June 1, 1941)
Pope John XXIII in his encyclical, Christianity and Social Progress, noted
that "the number of persons is increasing who, 1~ecause of recent advances in
insurance programs arid various systems of social security, are able to look to the
future with tranquility. This sort of tranquility once was rooted in the ownership
of property, albeit modest. It sometime happens in our day that men are more
inclined to seek some professional skill than possession of goods. Moreover, such
men have greater esteem for income from labor or rights arising from labor,
than for that deriving from capital investment or rights associated therewith.
This clearly accords with the inherent characteristics of labor, inasmuch as
this proceeds directly from the human person, and hence is to be thought more
of than wealth in external goods. These latter, by their very nature, must be
regarded as instruments. This trend indicates an advance in civilization."
(par. 105-7)
Pope John insists that this statement must not be interpreted as a rejection
of the principle of private ownership of property. He declares: "The right of
private property, including that pertaining to goods devoted to productive enter-
prises, is permanently valid. Indeed, it is rooted in the very nature of things
whereby we learn that individual men are prior to civil society, and hence, that
civil society is to be directed toward man as its end. Indeed, the right of private
individuals to act freely in economic affairs is recognized in vain, unless they
are at the same time given an opportunity of freely selecting and using things
necessary for the exercise of this right." (par. 109). This tie between ownership
and civil rights is prompting many civil rights leaders in the United States to
press for increased ownership of property by minorities.
With regard to Pope's statement about men who "are more inclined to seek
professional skills than possession of goods," we note that rapid inroads of auto-
mation into many skilled professions are now drastically reducing the number
of persons who can safely take this stand. For the vast majority of people,
ownership of goods is an urgently needed source of income and security.
Pope Paul VI in his encyclical, On the Development of Peoples, places great
emphasis on the obligation of rich individuals to share with those less fortunate.
He declares: "Private property does not constitute for anyone an absolute and
unconditioned right. No one is justified in keeping for his exclusive use what
he does not need. when others lack necessities. . . . If certain ~andecT estates im-
pede the general prosperity because they are extensive, unused or poorly used,
or because they bring hardship to peoples or are detrimental to the interests of
the country, the common good sometimes demands their expropriation." (par.
23-24). This principle provides a vindication for certain types of land reform.
We note the repeated affirmations by these Popes of the natural right of all
men to private property and their growing insistence upon the need for making
ownership and its benefits serve the needs of all of God's people. Therefore, we
urge both private organizations and Governments to initiate programs which
will make the ownership of productive property more widespread.
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656
WHo SHALL OWN THE LAND?
Pope Leo contends, that, among all types of productive property, the land is
most basic and most appropriately the object of private ownership. (Op. cit.
par. 7-8.)
In the United States there has been a tradition of ownership and operation
of farms by families. This tradition was made possible largely by the avail-
ability of free or cheap land to any family who would till it.
Today, much of our land is falling into the hands of non-farmers. Low farm
income, inflated land values and interest rates and high taxes are among the
causes of this trend.
STEPS TOWARD WIDESPREAD OWNERSHIP
1. Governments and private organizations should help young farm couples
purchase land and equipment, particularly that of retiring farmers. Care should
be taken, however, to assure units of sufficient productivity to enable a family
to support itself. Improved farm income is necessary in order that more families
can buy and retain ownership of land. Helping farmers improve their bargain-
ing power is one of the most effective steps toward improved farm income.
2. Governments and private organizations should assist bona fide credit unions
and cooperatives which give members shares in their stock and return profits to
members through patronage dividends. Such cooperative organizations enable
members to improve their economic resources, expand their ownership and gain
valuable experience in economic affairs.
3. Federal Government guarantee programs should be launched to facilitate
the flow of cerdit to low-income people to enable them to purchase newly issued
equity securities (preferably in the companies with which they work) where
the proceeds are thereupon invested in new, highly productive physical capital.
Such new capital investments nearly always pay for themselves within a few
years. They are inherently financeable. Hence, it is possible for a family to borrow
money to purchase stock and to pay for it out of the wealth it produces, and there-
after enjoy a new source of income which it produces. The Governments' role
would be to guarantee the loan as the U.S. Government now does in FHA
home loans.
4. Encourage stock sharing agreements between management and labor, partic-
ularly deferred compensation plans.
5. Modify property and corporation profit taxes with a view to encouraging
ownership by persons with limited financial resources.
We make these recommendations in very general terms, presuming that those
who are seriously concerned will fill in details after study and debate. Doubtless,
other proposals will result from such a study.
OWNERSHIP IN DEVELOPING COUNTRIES
The recommendations given above apply primarily to more developed countries
such as the United States. However, similar issues are confronting the people
of developing countries. They are being asked to sacrifice consumer goods in order
that their nations' productive capacities can be increased. Unless the capital thus
accumulated is shared by rank and file citizens, their future will be as bleak as
their present.
In some developing countries there is a tradition of tribal ownership of property.
This tradition can be harmonized with the norms for acceptable systems of
ownership listed above. However, safeguards must be provided to prevent small
obligarchies from depriving individuals and families of adequate income and a
genuine voice in their economic affairs. Failure to do so may open the door to
socialism or communism in these countries.
OWNERSHIP IN Co~r~IuNIsT COUNTRIES
It is noteworthy that, at the time when capitalist countries are re-examining
their patterns of private ownership, many communist countries are modifying
their patterns of public ownership. For example, in Eastern Europe today, the
most efficient farms are the private plots of individual farmers and the demo-
cratically controlled cooperatives, not the large communes or the state farms. As
ownership patterns in capitalist and communist countries become more similar,
one of the causes of international strife is lessened.
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657
CONCLUSIONS
As we assess the role of various forms of ownership in the United States, in
the developing countries and in commuilist countries, we must focus our atten-
tion on the divinely ordained purposes of material goods and move toward that
form of ownership which will best guarantee those purposes in the specific cir-
cumstances which prevail in various countries at this time. Thus, we shall hasten
the day in which new techilology will make an abundance of goods and services
available to all God's people.
We are convinced that the exciting technological advances now occurring par-
ticularly in the more developed countries warrant an extension, not a destruction,
of the ownership of productive property. We suggest that the perennial emphasis
o~ the Church on the right of individuals to own such property deserves reaffirma-
tion at this time and that we should consider bold new steps to enable the vast
majority of God's people to become owners of property which n-ill constitute for
them a source of a second income. We maintain that this will help reduce poverty
and to restore human rights and dignity to millions.
PAGENO="0218"
APPENDIX 12
STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS
The National Association of Manufacturers is pleased to present its views
on the subject of income maintenance programs. The NAM is a voluntary orga
nization of industrial and business firms, large and small, located in every state,
and representing the major part of manufacturing output in the country.
In announcing these hearings, Chairman Martha W. Griffiths said that the
Subcommittee would undertake "to find out what objectives an effective and
efficient welfare system should achieve and how it could be designed. In the
process, the Subcommittee shall review the shortcomings of the present system
as well as the advantages and disadvantages of proposed reforms."
Last year, the Board of Directors of the NAM adopted a policy position which
states in part that:
Public assistance programs should encourage recipients who are willing
and able to earn some of their income to do so. Programs which subtract the
total of such income from assistance payments for which the individuals
are otherwise eligible, do not accomplish this objective.
The policy further states that Government programs providing for welfare
or income supplement payments to individuals who are poor should be based
on verified need and not on a self-assessment system or on assumed uniform
need.
Adoption of this limited policy did not, however, foreclose NAM's interest in
the problems now being considered by the Subcommittee. To the contrary, it is
continuing to study the issues involved. Within this framework of present policy
and continuing concern, we shall comment in this statement on the present wel-
fare system and proposals for modifying it.
PRESENT WELFARE SYSTEM
There is considerable agreement that the high and increasing cost of public
assistance in a period of prosperity has led to a widespread dissatisfaction with
the present system. But that is not the only source of difficulty. The present
public assistance system was established in an emergency atmosphere and
therefore was oriented toward temporary help. In terms of the number of cases,
old age assistance was the largest problem and this fact undoubtedly was large-
ly responsible for the inclusion of the public assistance programs in the original
Social Security Act.
The expectation that the resumption of economic growth and the establish-
ment of the wage-related Social Security system-plus the growth of private
pension plans-would gradually eliminate the problem of old age poverty is
being proven correct. The number of people of 65 and over increased from 12.4
million in 1950 to 18.5 million in 1966. As a proportion of the population, they
increased from 8.1% to 9.4% in that interval. Nevertheless, the number of Old
Age Assistance recipients dropped by more than 25% and-including medical
assistance to the aged in 1966-OAA accounted for 34.9% of the yearly public
assistance cost as against 60.4% in 1950.
The architects of the original public assistance programs were basically
correct in their assumption that old age poverty would prove to be a self-liquidat-
ing problem. What they did not foresee-and what is causing the present con-
cern-is the shift in the welfare population from the aged to families with young
children. In Daniel Moynihan's terms, public assistance has been converted from
a program for temporary assistance to individuals to one of subsistence for both
individuals and a class. The situation is further aggravated by the concentra-
tions of such cases in central cities, by the high cost to such cities, and by the
new impatience to correct all the faults of the system in the context of a full
or near-full employment economy.
(658)
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659
That it is the AFDC portion of the public assistance bill that is concerning
the public and the Congress is clear from three provisions of the Social Security
Amendments of 1967: (1) the earnings exemption; (2) the denial of aid to
families if the father is not currently registered with the public employment of-
fices in the state; and (3) the "freeze" on the federal aid level to AFDO families.
In commenting on this last feature of 11.11. 12080, NAM opposed it as being arbi-
trary and discriminatory-and an unreliable and unrealistic way of attempting
to curb illegitimate births.
With rather general agreement as to what the problem is, there is a notable lack
of agreement as to what needs to be done. To the extent that these hearings
provide a forum for clarifying the strengths and weaknesses of the various
reform proposals, they should contribute to finding a solution.
The details of the various negative income tax or income guarantee pro-
posals are varied but most of them are based on the income tax analogy.
NAM has serious reservations about the administrative and practical problems
involved, as well as about the effectiveness of this approach to the welfare
problem confronting us.
INCOME GUARANTEES AND THE INCOME TAX ANALOGY
There are several reasons for questioning the acceptability of the "negative"
tax or income guarantee concept as it relates to the tax structure:
1. It would commit the Nation to a "blank check" program, which is sure
to be very expensive-estimates range from a "modest" $12 to $15 billion to as
high as $38 billion annually-but is not known to be effective. As has been pointed
out to the Subcommittee, the public is already chafing at welfare costs that
run about $7 billion a year-though some elements of that program are non-
controversial. Whether a negative income tax or income guarantee plan could
be financed under the existing tax structure, even assuming some offsets in
lower Federal spending for other welfare programs, is problematical.
2. The separation of income from work could act as a disincentive for the
"positive" taxpayers, particularly those in the lower brackets. According to the
Department of Commerce, the median income of U.S. families in 1966 was
$7,436 and there were 48.9 million families. This means that 241/2 million fam-
ilies had incomes at or below $7,436. Of those, 7 million are classified as "poor"-
i.e., having incomes of $3,000 or less. The other 17+ million families with below
average incomes would, under most of the proposals, continue to pay some taxes.
In many cases what they had left after taxes would not be significantly more
than the "refunds" to their slightly less fortunate neighbors-whom they would
be helping to support.
3. Many negative income tax proponents make a connection between the
needs of the poor on the one hand and the mechanics of computing individual
income taxes-the personal exemption and the standard deduction-on the
other. They argue, in effect, that the poor do not have the advantage of such
exemptions and deductions, although these regulations serve as administrative
devices to remove low income people from the tax rolls.
The justification for exemptions and deductions-as well as the details of
amounts and inclusions-are still matters of debate. To make such contro-
versial matters the basis for a massive and untried system is to institutionalize
aspects of the individual income tax that should be dealt with as elements
of a tax-not a welfare-system.
4. A guaranteed income plan would not be easy to administer, nor would it
eliminate the need for some form of verification. Milton Friedman believes his
negative income tax proposal could be easily administered because the present
tax system "covers the bulk of income recipients." But the labor force status
of the heads of poor households makes this assumption doubtful. An analysis
by the Council of Economic Advisers of the characteristics of the work experi-
ence of the heads of 11 million poor households in 1966 showed:
4.3 million were aged
2.1 million did not work
1.2 million worked part-time
In other words, 7.6 million heads of households (69.1% of the total of those
identified as poor) were unlikely to be in the present tax system. Adding this
many returns for the "negative income tax" would increase the number of
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660
individual returns to be processed by approximately 10%. In both 1965 and
1966, the proportion of 1040-A forms which were found to have errors in them,
when arithmetically checked, was higher than the proportion of 1040's despite
the fact that the computations are made by the Internal Revenue Service when
total income is less than $5,000.
This experience confirms the impression of many taxpayers that not even
the shorter form of tax reporting is really "simple." With the best intentions
possible, the returns from the new, "negative" taxpayers would undoubtedly
have a high proportion of errors which would have to be checked out by the
IRS. Complete elimination of a "means test" would appear impossible.
5. A whole new set of circumstances would have to be considered. For example:
(a) How will "income" be de~ned?-Although wealth is properly a considera-
tion in determining welfare eligibility, it is not-nor should it be-an element in
revenue collection. The Internal Revenue Service deals with the determination of
taxable income and with the assessment and collection of tax. A determination
as to personal wealth ordinarily is not involved in income tax administration ex-
cept in limited circumstances, such as a fraud investigation, estate tax administra-
tion, etc.
(b) How wi7l income fl~iet uations be treated ?-Will one year of earnings below
the family's norm or the defined "poverty" standard be sufficient to qualify for the
guaranteed income, or will an average of several years be considered? What about
the family which suffers an abrupt change of situation in the middle of a year?
(e) How will the filing unit be deflnedf-IJnder some proposals, a breakup of a
family develops higher combined negative bases than the family unit itself.
(d) What will be done about wreesponsible use of guaranteed income-If
a family receives a monthly allowance-and squanders it-how will the neeTs
of the family be met?
(e) What ivili be done about overpayments?-The proponents of negative in-
come tax extend the analogy to present procedures and say that the family would
"settle up" in next year's tax payments. However, one reason for the acceptance
of a graduate withholding was the problem of finding the cash to "settle up."
If this is a problem for the "positive" taxpayer, it will certainly be a far greater
one for the "negative" taxpayer-or the individual just leaving that status. As
a practical matter, it is hard to imagine the Government's exacting any over-
payment from the householder whose income is so meager and responsibilities so
great as to entitle him to benefit from such a program.
(f) How often will poverty be redeflned?-Most of the discussions have been
in terms of an income of something just over $3,000 (in current prices for a
family of four. The poverty of most Americans is a relative matter. It is, there-
fore, likely that the guaranteed income level would have to be redefined pe-
riodically to parallel economic growth. In that case, some current taxpayers (who
continued to earn their income but did not keep pace with the general improve-
ment) might be transferred from "positive" to "negative" taxpayer status.
(g) Who will supervise the distribution of negative income?-These plans
would either make welfare-fund distributors of the Internal Revenue Service or,
what seems more likely, would eventually separate the "negative" tax returns and
make them the province of welfare officials.
GUARANTEED INCOME As WELFARE
The guaranteed income, we are frequently told, gives help in its most useful
form-cash. Variations of that idea are among the chief arguments for the various
plans. However, there is considerable evidence that, with few exceptions, this
"solution" does not find widespread acceptance. The main exception, of course,
is the aged person who, for whatever reasons, did not participate in a public
or private retirement system and has no other source of income. Although aid
to the blind and to the disabled are among the publicly accepted elements of
welfare spending, the emphasis on employing the handicapped and on vocational
rehabilitation is evidence that our society does not really believe that cash is the
solution to poverty except as a last resort.
The significant trend in the last decade has been to attack the problems of
poverty by job creation and by training-not by transfer payments. Certainly one
of the arguments for the "war on poverty" was that the portion of the popula-
PAGENO="0221"
661
tion involved (and for the most part they are the same people who would be
affected by income guarantees in one form or another) were isolated from the
normal processes of the community-they were the "other Americans" who had to
be brought back into the "mainstream" of our way of life. One of the major
characteristics of that way of life is that almost everyone (including many who
do not have to do so) works for a living. Will we really be creating incentives, par-
ticularly for the youngsters who are the objects of so much attention, if we
institutionalize the idea that income is a "right" separate from any effort to
earnit?
If it is our national goal to phase out dependency-as well as poverty-this
may be a poor time to institute an elaborate new program with large incentive-
destroying potential. Using as empirical evidence the work behavior of people
65 and over receiving Social Security benefits, Professor Lowell G-aliaway of the
University of Pennsylvania has concluded that the negative income tax would
have a significantly adverse impact on labor force aictivity. Any provision requir-
ing proof that the person receiving the guaranteed income payments had indeed
attempted to find work-if he or she is deemed able to work-would require the
same type of supervision that characterizes the present public assistance
programs.
Labor force participation is not only desirable from the point of view ~f the
recipient's indome and morale. It is also important to the economy as a whole.
According to the Department `of Labor projections, the labor force participation
rate should increase in the 1970's. The J'oint Economic `Committee, in its Report
on the January 1968 Economic Report o the President, re-emphasized the goal
of maximum employment for potential economic growth. This cannot be achieved
if some significant proportion of those capable of joining the labor force are
discouraged from so doing.
T'he community is, of course, responslble for providing for the needs of those
who cannot take care of themselves. But that raises another prdblem with the
guaranteed income proposals. Writing in the Fall 1966 issue of the The Public
Interest, Mr. A. L. Schorr of the Office of Economic Opj~ortunity pointed out that
the negative income tax is "carefully engineered" t'o the requirements of people
who should work. The incomes provided would, however, `be inadequate for a
single elderly individual and for families without earners. These would still need
supplementary public assistance-whatever it would be called.
Nor can we assume tha't an income guarantee program would simply operate
to `redistribute the income produced `by the market edonomy without affecting
the operation of the market economy itself. It clearly `would have an impact `on
production, employment, a price level and the wage level. But `by setting "floors"
for income under an income guarantee from which all ~a'ge demands would be
scaled upward, a tremendous pressure to `cost-push inflation could develop. As the
Joint Economic Committee has pointed out, no one wants to accept complacently
the theory of the inevitability `of a "tradeoff" between full employment on the
one hand and inflation on the other. However, this type of cost-push would
inevitably operate against the employment of the very "hard-core" unemployed
about whom we are concerned.
SUMMARy
In its 1968 Report, the Joint Economic Committee said about income mainte-
nance `programs:
Our existing programs represent a patchwork based largely upon emer-
gency legislation in the depression years. There is a great need for a fundai-
mental review of basic framework, objectives, and philosophy in the light
of present-day realities.
In these comments we have limited ourselves to the negative income tax or
guaranteed income aspects of income maintenance. We agree that the present
system of public assistance has major weaknesses, but we have serious reserva-
tions about these proposals.
The most cogent argument `made by the proponents ~f the negative income tax
and other forms of guaranteed income is un'doubtedly that present welfare `laws
discourage sel'f-'help attempts by "taxing" at `an effective rate of 100% all earn-
ings of welfare recipients. This arrangement is a serious `disincentive to `self-
help `attempts. However, it l's not necessary to restructure both the internal reve-
PAGENO="0222"
662
nue system and the entire welfare apparatus to remedy this situation. Amend-
ment of the public assistance laws has already started.
Another cogent argument is that not all of those entitled to public ~tssistance
are now receiving it. Gertainly here, again, some system could be devised for
reaching these people without instituting an entirely new form of assistance.
One must consider the probability that those who are too isolated to know about
30-year old public assistance programs would not be aware of their eligibility for
guaranteed incomes either.
If it is your intention to look beyond reform of the present system to some new
type of program, we urge consideration of the following criteria for a new plan:
1. It should increase work incentives for the low-skilled and the young but
avoid lowering work incentives of the present labor force-particularly those
just above the poverty level.
2. It should be designed to phase out dependency, as well as poverty, in a man-
ner that will not create, or increase, antagonism against the recipient of aid.
3. It should avoid increases in cost that would add to the "overkill" of existing
tax burdens.
4. It should not lead to the disemployment of marginal workers because of
increases in labor costs.
5. The needs of different groups of welfare recipients should be recognized and
some should not be left worse off than before.
6. The giving of assistance should be related in some way to the cause of
poverty, as well as to its fact.
7. The present tax system, with its remarkable record of compliance on a
self-assessment basis, should not be interfered with as a means of improving
the welfare system, nor should welfare legislation preclude changes in tax
legislation.
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APPENDIX 13
TESTIMONY OF LAWRENCE. PODELL, PH. D., PROFESSOR OF URBAN
STUDIES, GRADUATE DIVISION, THE CITY UNIVERSITY OF NEW
YORK
In the course of conducting research upon public assistance recipients in the
City of New York, data have been gathered which pertain to some of the ques-
tions that the Subcommittee wishes discussed at these Hearings. These data have
undergone only preliminary analysis but, given the dearth of research evidence
in this area of inquiry, their relevance was such that it seemed desirable to
report them to the Subcommittee.
DATA FROM THE PROJECT "UTLIZATION OF HEALTH SERVICES BY WELFARE
RECIPIENTS"
A survey was conducted in the summer of 1966, using a systematically drawn
sample of families on the New York City welfare rolls, in which 2179 mothers
were interviewed. The survey, supported by a grant from the U.S. Public Health
Services,*~ was primarily concerned with the utilization of health services by
welfare recipients. But questions were asked about the topic of welfare itself.
WELFARE HISTORIES
About fifteen percent of the mothers on welfare reported that their parents
were publicly assisted at one time or another. Respondents born and/or reared
in New York City showed a greater tendency to indicate that their parents were
on welfare than did immigrants reared elsewhere. Many of those on welfare have
parents who lived on the farms or in the towns of the South and Puerto Rico.
As poor as their parents may have been, they may not have been on welfare;
the nature of public assistance in these areas was and is very different from
that of New York City. For a migrant population, the absence of intergenera-
tional public dependency cannot be equated with the absence of intergenerational
poverty.
These observations help to explain why Puerto Rican respondents, the newest
arrivals, were least likely to indicate that their parents were ever on welfare.
Among Puerto Rican respondents, 9% reported that their parents were on
welfare at one time or another, compared to 16% of the white and 21% of the
Negro respondents.
About a quarter of the mothers on welfare reported that they had a brother
or sister on welfare at the time of the interview. Another tenth indicated that,
although they did not have a sibling on the rolls at that time, they had a brother
or sister who was publicly assisted at one time or another.
Based upon their statements, six in ten mothers on welfare had neither
parents nor siblings who were ever publicly assisted. Less than one in ten had
parents and siblings who were on welfare at one time or another.
WELFARE EXPECTANCIES
How did mothers on welfare in New York City view the future? A quarter of
them expected that they would surely be on the rolls the following year; another
third said they would probably be on. In other words, nearly six out of ten
expected to continue to be publicly assisted.
*Incl.uded in the survey were 954 Puerto Rican, 1,017 Negro, and 208 white mothers of
families on welfare.
**Thjs project, developed under the guidance of James H. Dumpson, then Commissioner
of Welfare of the City of New York, is supported by Public Health Service Grant No.
TRO1 CH00369 from the Division of Community Health Services of the U.S. Department
of Health, Education and Welfare. Its research operations, directed by Lawrence Podell and
Robert Lejeune, are aided by the Division of Electronic Data Processing of the New York
City Department of Social Services.
(663)
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664
(a) Women from male-headed households were less likely to expect
to continue on the rolls than those from sole-adult families.
(b) The more children in the household, the more likely the mother was
to expect to remain on welfare. This was especially true for Puerto Rican
women.
(c)Respondents who said that they planned to get job were less prone to
expect to remain publicly assisted. This was especially true for Negro
women.
The less schooling the mother had, the more prone she was to expect to continue
on the rolls. This was true regardless of ethnic or age grouping.
What did mothers on welfare think about the possibility of their children
becoming publicly assisted when they grew up? Eight out of ten believed that
their children would not become dependent adults; four out of ten replied that
they surely would not.
White respondents were far more likely than the rest to reply that their
children surely would not come on welfare as adults. Sixty-two percent of them
said that their children surely would not become dependent adults, in contrast
to forty-four percent of the Negro and thirty-five percent of the Puerto Rican
mothers.
In addition, the higher the grade completed in school, the more prone was the
respondent to be sure that her children would not become dependent as adults.
Fifty-three percent of the high school graduates said this, compared to 44%
of those who attended but were not graduated from high school and 36% of
those who did not go beyond the eighth grade.
WELFARE ATTITUDES
The majority (58%) of the mothers said that being on welfare bothered them.
With regard to other attitudes towards welfare:
(a) Over half (56%) of the publicly assisted mothers agreed with the
statement, "Getting money from welfare makes a person feel ashamed."
(b) Over eight in ten of the mothers on welfare agreed with the state-
ment, "People should be grateful for the money they get from welfare."
The less schooling they completed, the more likely respondents were to agree.
(c) Seven out of ten mothers in publicly assisted families agreed that,
"A lot of people getting money from welfare don't deserve it."
(d) A minority (44%) of the mothers on welfare agreed that, "The
Department of Welfare has no right to ask questions about how people spend
their money."
(e) When asked, "Do welfare investigators ever make you feel that you
shouldn't bother them?", 63% of the publicly assisted mothers replied in
the negative. When asked the same question about doctors, 81% replied
negatively; and when quiried about school teachers, 91% answered nega-
tively.
DATA FROM THE PROJECT, "ALTERNATIVE DEPLOYMENT OF Punric AssIsTANCE
PERSONNEL"
Another survey of mothers on welfare was conducted in the Summer and Fall
of 1966. The project, of which this survey was a part, was supported by the U.S.
Social and Rehabilitation Service and the Social Security Administration.* It
primarily concerned the consequences upon clients of certain organizational and
staff characteristics of a particular welfare center of the City. The 1551 respond-
ents to this survey, all of whom were on A.D.C., resided in the neighborhood
served by that welfare center.
*This project was also developed under the guidance of James R. Dumpson, when he
was Commissioner of Welfare of the City of New York. It is supported by Cooperative
Research and Demonstration Grant No. 151 of the Social and Rehabilitation Service and
the Social Security Administration of the U.S. Department of Health, Education, and
Welifare. Its research operations, directed by Lawrence Podell, Harold Yahr, and Richard
Pomeroy~ are aided by the Division of Electronic Data Processing of the New York City
Department of Social Services.
NoTE-Included in this survey were 624 Puerto Rican, 631 Negro, and 296 white
mothers of A.DC. families.
PAGENO="0225"
665
RECEIPT OF SERVICES
Respondents were asked whether or not the Department of Welfare bad fur-
nished them with particular services.
(a) Eaitra Money.-In view of the relatively low level of sustenance provided
by `the bi-weekly budget check and the continually arising problems of special
~circumstances, the issuance of "extra money" is a primary "service." The vast
majority of our respondents, some three quarters of them, were helped by the case
workers ". . . to get extra money from Welfare for clothing or for household
things." Negroes reported this service somewhat less (73%) than did Puerto
IRicans (81%) and whites (83%).
(b) Health Care.-The discussion with their caseworker of ". . . where to go
to get medical or dental care" was reported by whites at a substantially higher
level (51%) than for Puerto Ricans and Negroes (35%). The actual provision of
appointments for medical or dental care did not appreciably differ from one group
-to another.
(c) Housing.-Puerto Ricans reported considerably higher incidence of aid
in helping to "find a place to live" (24%) than did Negroes (14%) or whites
(10%). The extent to which this reflects differences in actual need, family cir-
cumstances or size, or other considerations has not been assessed, as yet.
(d) Child Rearing-Concerns with children-their problems, behavior, e'du-
cation, etc.-are central to casework with the A.D.O. family. General discussion
of the children and their concerns was reported at a higher level for whites
(44%) than for Puerto Ricans and Negroes (36%). Discussion of the children's
education and " . . . what they should do if they're no longer in school" was
less reported by Puerto Ricans (10%) than by Negroes and whites (16%).
(e) Birth Control-Negroes were more likely to have bad ". . . advice
about how to keep from having babies" (18%) than Puerto Ricans and whites
(8%).
(f) Rehabilitative Services.-Services referant to training, employment and
money management were all reported at relatively low levels, between a tenth
and a quarter of the ethnic sub-samples. Punrto Ricans were least likely to re-
port having discussions with caseworkers about school or job training: 15% of
them did, compared to 27% and 25% for Negroes and whites, respectively.
~They were also least likely to receive actual job-seeking advice: 12% for them,
in contrast to 16% for the others. However, Puerto Ricans were most likely
-to report receiving advice about money management: 18% did, compared to
13% for the others.
Summarily, in terms of extra money and health care, whites appear to re-
ceive most, Negroes least. Training and education for oneself or one's children
-are least likely to be reported by the Puerto Rican respondents. Negroes ap-
pear to receive most advice about family planning and Puerto Ricans are more
likely to receive advice about money management.
The extent to which the differences summarized above represent actual dif-
*ferences in need or in receptivity, or disparate reactions by workers to dif-
ferent ethnic groups, or are due to any of a variety of other "causes," has not
`been determined as yet.
KNOWLEDGE OF AVAILABLE SERVICES
Client knowledge of the services potentially available through the welfare
system is necessary not only to "get what one is entitled to" (in the sense of
assertion of rights) but also to enable the client to articulate a need so that the
-caseworker and the system can be of assistance. When the client does not know
a service is available to her through the Department, she may be less likely to
inform the worker of a concern, thus often precluding a possible resolution of
a problem. The mothers on ADO. were presented with a list of twelve serv-
ices and then asked the following question:
"As far as you know, besides the regular check every two weeks, which
of the following things can people on Welfare sometimes get from the
Welfare Department? Can they ever get . .
(Three "services" were included that the Department of Welfare does not
provide.)
(a) Ewtra Money-Nine out of ten respondents realized that extra money for
clothing or household goods was sometimes available from the Department.
96-602-68-vol. II-15
PAGENO="0226"
666
(b) Health Ca.re.-Almost all of the mothers knew about the availability of
medical and dental care.
(a) Hovsing.-Not only did the Puerto Ricans in our sample receive more
help in finding "another place to live" but they were also far more knowledge-
able about the availability of this service: 82% knew of it, compared to 58%
and 61%, respectively, for Negroes ~nd whites.
(d) Child 1?earing.-Somewhat over half of the mothers knew they could
obtain advice about problems with their children. Sixty percent of the Puerto
Ricans reported it, as did 53% of the Negroes and 52% of the whites.
(a) Birth Control.-The survey was administrated prior to the Department's
revision of its policy so as to allow initiation by caseworkers of discussions of
family planning. Negroes were more knowledgeable (60%) about the avail-
ability of this service than Puerto Ricans (49%) and whites (52%).
(1) Ed'ueation.-Puerto Ricans and Negroes were more likely to realize that
education and training was available for them and their husbands (56% and
57%) than were whites (42%). Included in the list of prospective services was
Departmental help in sending a good student to college (a service actually pro-
vided). This was the least known service of all. 37% of the Puerto Rican
mothers reported this service available, compared to 18% of the Negroes and
15% of the whites. A third or more of each group replied "don't know," and
nearly half of the Negroes and whites replied negatively.
(g) Marital Adviee.-Less than half the sample knew that the Department
provided advice about marital problems. Forty percent of the Puerto Ricans
replied affirmatively, somewhat more than Negroes and whites did (33%).
(h) Money Management-Only about half the sample-55% of the Puerto
Ricans, and 47% of the Negroes and whites-knew that the Department pro-
vided advice about ". . . places to shop Or how to manage . . . money."
Summarily, knowledge was highest for the "basic services"-special "extra
money" grants and medical-dental care-and lowest for the various "social"
and "rehabilitative" services such as money management, education, marital
advice, etc.
wILLIxGxEss TO ASK von SERVICES
Clients were asked, "Would you ask your investigator (now called case-
worker) if you wanted ...," with particular items following. Over nine out of
ten respondents answered affirmatively to "extra money for clothing or house-
hold things." The proportions responding "Yes" to the other items were less,
especially for Negroes and whites.
[In percentj
Puerto Rican Negro White
Medical or dental appointments
84
74
72
Talk about children's problems
81
63
65
A new place to live
Help on finding a job
Advice on money management
82
82
64
57
70
53
59
62
51
ATTITUDES TOWARD ELIGIBILITY INVESTIGATION
As a result of the eligibility investigations, Negroes were somewhat more
likely than the rest to feel insulted, to feel that the Department does not trust
them and has no respect for them; whites were more likely to feel ashamed.
However, as is indicated in the data given below, such negative reactions to
these inquiries, as conducted in New York City, were voiced by only a minority of
the respondents.
PAGENO="0227"
667
In answer to a general question about eligibility investigations, whites were
most likely to dislike them, Negroes less so, and Puerto Ricans least of all.
Puerto Rican
Negro
White
Effects of eligibility investigation:
Percentfeelingashamed
Percent feeling insulted
Percent feeling no respect
Percent feeling no trust
Percent dislike very much
Percent dislike somewhat
Percent don't mind it
Number
30
20
22
39
6
18
76
(619)
33
33
32
44
15
29
56
(623)
42
27
28
41
17
39
43
(293)
Sixty-three percent of the Negroes, 57% of the whites and 41% of the Puerto
Ricans claimed that having their investigator check their eligibility made them
w-ish that they did not have to talk about their personal problems with him.
Preliminary analysis of the data indicates that negative consequences of eligi-
bility investigations is inversely related to the extent to which clients perceive
their caseworker as a "helping person" and the Department as a "helping agency.~n
PERCEPTIONS OF THE DEPARTMENT OF WELFARE
Puerto Rican respondents were more likely to believe that the Department of
Welfare "tries to help anyone who really needs it" (88%, compared to 75% and
80%, respectively, for Negroes and whites) and that it "really cares about Welfare
clients and their problems" (79% in contrast to 57% and 59%).
White clients were less likely to feel that most personnel "in the Department
of Welfare do not understand the problems of welfare clients" (52%, compared to
65% for Negroes and 57% for Puerto Ricans), that the Department "is more
interested in checking to see if you're eligible than in helping you" (63%, in
contrast to 79% and 78%), arid that it "gives some families too much and others
too little" (54%, compared to 75% for Negroes and 67% for Puerto Ricans).
Summarily, Negro respondents were most likely to perceive the Department of
Welfare negatively. Among the A.D.O. mothers in this study, the Negroes were
most disaffected.
* * * * * * *
The data reported upon above, and other information gathered in the course
of the research projects cited, are still being analyzed. When more elaborate
analyses are completed, they will be made available to the Subcommittee.
PAGENO="0228"
APPENDIX 14
STATEMENT OF HOWARD M. SQUADRON ON BEHALF OF THE
AMERICAN JEWISH CONGRESS
GUARANTEED INCOME
The American Jewish Congress welcomes this opportunity to present a state-
Tment to this Committee on the subject of Guaranteed Annual Income.
The American Jewish Congress supports the principle of a guaranteed income
for all Americans, that is, a nationally financed system of cash payments to
families and individauls whose incomes fall below an officially determined na-
tional standard of minimum subsistence. Although we are not committed at this
~time to any particular program or method of achieving this goal, we are firmly
convinced that, in this era of unparalleled material abundance and economic
affluence, this country can and should assure all its people a standard of living
adequate to maintain health and dignity. We do not regard the guaranteed annual
income as a substitute for a program of full employment and job training but
~we recognize that there will remain substantial numbers who cannot avail them-
~se1ves of these programs or whose earnings remain substandard; and for these
the guaranteed annual income is a national imperative.
INTEREST OF THE AMERICAN JEwIsH CONGRESS
The American Jewish Congress is a national organization of American Jews
formed in part to protect the religious, civic, political and economic rights
of Jews, to strengthen and preserve Jewish life and values and to promote and
extend the ideals of American democracy. At its most recent Biennial Conven-
tion, held in Miami, Fla., from May 14-19, 1968, delegates representing American
Jews in all parts of the country reaffirmed our organization's longstanding
commitment to the attainment of economic justice and equality for all Americans.
We regard this commitment to the disadvantaged as an integral part of the social,
religious tradition of the Jewish People, a tradition which this organization seeks
to preserve and extend.
The concept that it is a public responsibility to provide for the poor to enable
them to live in health and dignity is central to Jewish thought.
The Pentateuch, the core document of Jewish law, proclaims that the poor have
both a moral and a legal right to be supported. In fact, the Pentatench speaks
in a sense of a "guaranteed annual income" for the poor when it decrees that
the poor shall receive "that which grows on the corners of the field." It is
also stipulated therein that "the forgotten sheaf and fruit, the produce of the
fields in every seventh year and the tithe of the harvest of every third year"
belong as a matter of right to the poor.
This early Jewish tradition of legal responsibility to the less fortunate of
the community has been retained intact throughout the years of Jewish history.
As the agrarian economy of Judea was replaced by the mixed economy of later
years, the obligation to maintain the poor was translated into money. Thus,
from the taxes and voluntary contributions imposed upon the Jewish community,
the resident poor were entitled under Jewish law to sufficient funds every week
to defray the cost of their meals as well as additional funds to insure that they
would "keep their self-respect."
The traditional Jewish attitude toward the poor which is carried on to this day
is nonjudgmental. Poverty is not considered the "fault" of the poor. "It is not
the bitter fruit of laziness and immorality but overtakes those `who are fallen
on evil days." Poverty as the Jewish mind views it is an aspect of the mystery
of God adored as the God of Justice and Mercy who yet permits that `the wicked
prosper and the righteous suffer'" (Weiss-Mann, T1~e Jewish Spectator, p. 3.
June 1968) Therefore, in the Jew-ish tradition, the poor must be treated so as
to preserve their dignity and nourish their self respect.
(668)
PAGENO="0229"
669
INADEQUACIES OF OUR PRESENT SYSTEM
This religious and ethical concern for economic justice and dignity for all
members of our society compel our organization's commitment to the principle of
income maintenance. This conviction is reinforced by the recognition that present
methods of dealing with the problem of poverty in America are not working.
Today, 11 million households, almost 30 million people, fall below the poverty
line-that minimum level of annual income which the Social Security Admin-
istration has found tolerable from the standpoint of nutritious diet, adequate
shelter and the other aspects of living necessary for a minimum healthful ex-
istence. That this is but a minimum standard is emphasized by the fact that it
allows only 75~ per day for total food expenses and adds only twice this amount
to cover all family living expenses other than food. Of the 30 million people
living below the poverty line, one-half are children. Among those children one-half
again are in families of more than five children.
Nonwhites, the aged, and members of households headed by women are among
those groups whose incidence in the poverty population is greater than their
representatioii in the general population. Yet, no section of this country is
exempt from this scourge of poverty. Almost two out of three poor Americans
are white. There is exfreme poverty in the Appalachian region as well as on
Indian reservations.
We already have, of course, a variety of public income maintenance systems.
Social security, veterans' benefits, unemployment insurance, workmen's com-
pensation, aid to the aged, the blind and the handicapped, the AFDC for female
heads of families and for unemployed fathers, and the general relief of states
and municipalities, all seek to provide an income floor for various categories of
needy persons. 1-lowever, it has been estimated that only about one-fourth of
the current poverty group are in fact receiving public assistance. The fact
that three-fourths of this group do not receive such assistance shows how
restrictive the eligibility requirements are; while the further fact that one-fourth
of those below the poverty line receive public assistance and still fail to meet
minimum subsistence standards graphically demonstrates the inadequacy of some
of our present assistance programs. In Mississippi, the average payment for
an AFDC recipient is $0.25 per month. As of December 1906, South Carolina
paid an average of $62.10 a month for an entire AFDC family. Not only do these
programs leave out far too many poor, with inadequate payments to those
whom do cover, but the manner in which they identify and treat the poor breeds
continued dependency and sows the seeds of character deterioration, crime
and riots. As Daniel Moynihan, student of this subject, so aptly put it ". . . the
present w-elfare system is serving to maintain the poorest groups in society
in a position of impotent fury. Impotent because the system destroys the potential
of individuals and families to improve themselves. Fury because it claims to
do otherwise" (Moynihan, "The Crisis in Welfare," Position Papers, etc. for the
Governor's Conference on Pnblic Welfare, November 2-3, 1967, P. 73).
In his condemnation of the present system, 1\ioynihan is joined by other
students of the subject representing views from almost every point along the
political spectrum. President Johnson himself, in appointing a National Com-
mission to recommend needed revisions in our present welfare and income main-
tenance, termed the present system "outmoded and in need of change." The
American Jewish Congress commends this Joint Committee for initiating its own
inquiry into this vital area of concern and for the completeness and depth of
its investigation. The results of this hearing should no doubt contribute much
to the available information on this vital subject as well as to the formation
of informed conclusions and the framing of appropriate legislation.
INCOME MAINTENANCE JUST A PART OF A MULTIPRONGED ATTACK ON POVERTY
Pending the report of the National Commission and of this Joint Committee
as well as the presentation of detailed legislation embodying various income
guarantee plans with analysis of their costs and benefits and effects on the
recipients and the economy, the American Jewish Congress has not committed
itself to any particular program or method of income guarantee. In broad out-
line, however, and at this point of time, it sees the income maintenance program
as part of a multipronged attack on poverty. We recognize, for example, that
guaranteed income is not a substitute for programs of full employment and
human resources development. We have urged in testimony before the House
Committee on Education and Labor that the Government should, through its
own programs and by stimulating private industry, create enough jobs to give
PAGENO="0230"
670
constructive occupation to all those who can and should work. We are confident
that none of the Federally-created jobs need be make-up jobs because our unmet
needs in the public and private sectors are vast enough to absorb beneficially
this Federal effort. We have also urged that training programs be synchronized
with job creation to insure proper motivation for participation in such training
programs and guarantee constructive utilization of the skills so developed.
We also urge the enactment of increased unemployment and social security
benefits, higher and more inclusive, Federal minimum wage laws to eradicate
sub-standard living conditions among the employed, an all-out effort to wipe
out city ghettoes and rural slums, and expanded outlays for health services,
hospital and school construction, and vocational and other types of education
service. We support more vigorous enforcement of present antidiscrimination
laws, strengthening of the existing Federal law dealing with employment dis-
crimination, and passage of additional legislation in this area by states and
municipalities. It is our firm conviction that these measures will contritbue to
sustained full employment and reduce the number of persons in need of an
income guarantee.
CRITERIA FOR INCOME MAINTENANCE PROGRAM
In considering an income maintenance plan for all those who, despite the
enactment of the programs urged above, are still in need, the American Jewish
Congress urges that such a plan meet the following criteria:
1. Payments should be available to all in need throughout the nation as a
matter of right. Need should be objectively and uniformly measured throughout
the country in terms of the size and composition of the family unit, its income
and other economic resources. Simplified declarations of income or lack thereof
should be all that is required, with spot checking used to prevent fraud as is
now done under the Federal income tax laws.
2. The plan should be adequate to maintain health and human dignity.
3. The plan should be responsive to cost of living differentials throughout
the country and permit adjustments to changes in living costs.
4. The plan should be developed and administered in a manner which will
encourage healthy family life, respect privacy and the needs and rights of indi-
viduals to manage their own lives so long as they do not infringe upon the rights
of others, increase the independence and the individuality of recipients, and
enable recipients to participate in community life.
5. The plan should be designed to encourage productive activity on the part
of recipients, providing incentives to beneficiaries to take vocational training
and accept employment where it is appropriate.
6. Individuals should have a clear right to administrative and judicial review
of agency actions withholding assistance.
We are aware that such a system of income guarantees w-ould involve sub-
stantially increased Federal expenses. However, we agree w-holeheartedly with
the conclusion of the Kerner Commission on this subject. ". . . if the deepening
cycle of poverty and dependence on welfare can be broken, if the children of
the poor can be given the opportunity to scale the wall that now separates them
from the rest of the society, the return on this investment will be great indeed"
(Report of the National Advisory Commission on Civil Disorders (1968), p.
25).
Adopting some form of guaranteed annual income will not only rescue from
poverty those who are not reached by existing programs but also free our present
caseworkers from the burdensome case-by-case investigations of eligibility.
These investigations are not only onerous, confusing and demeaning for the
applicants-the calculation of budget allowances has been known to reach
down to the number of razor blades to which a male on welfare is entitled-
but interfere with the provision of adequate social services and guidance that
people may need almost as much as money. Similarly, the assumption of full
Federal financial responsibility to assure a minimum decent standard of sub-
sistence for all Americans based on need will free state funds to finance other
necessary programs. Such state funds could be used for improved basic literary
and remedial education services, for legal services, adequate day care services
for children of poor working mothers or for special care and training at home
or in foster homes, or in institutions for the physically and mentally handicapped.
We are convinced that the goal of a guranfeed annual income is w-orthy of the
support and sacrifice of all of us. We are also convinced that it is well within
this nation's grasp. We hope the deliberations of this Committee will produce
a viable plan for making this goal a reality.
PAGENO="0231"
APPENDIX 15
POLICY STATEMENT ON POVERTY, JOBS AND INCOME
FRIENDS COMMITTEE ON NATIONAL LEGISLATION*
POVERTY IN THE UNITED STATES
Remunerative employment for those able to work provides the best answer
to the problem of poverty. For those unable to work, present methods of com-
bating poverty and supplementing income-such as Social Security, minimum
wages, food stamps, school lunches, pubic housing, unemployment compensation,
medicare and medicaid, welfare payments, family and old age assistance and
aid to dependent children-while having done much to improve economic and
social conditions still have left many people in dire poverty, often through no
fault of their own. Therefore a comprehensive new approach is needed to assure
jobs and a minimum income with sufficient purchasing power for the approxi-
mately one fifth of the American people now living below what are widely
minimum standards of income for health and decency. Children are the most
tragic victims of poverty, through the stifling of creative potential. In essence,
poverty deprives many Americans of their inalienable rights (as set forth in
the Declaration of Independence) to "Life, Liberty and the Pursuit of Happi-
ness.,,
POVERTY CAN AND MUST BE ELIMINATED
Modern technology is increasingly bringing within man's capabilities the
elimination of poverty in the TJnited States. For the first time in our history
adequate nutrition is possible for every person in the USA. Involuntary poverty
is therefore ethically intolerable. The persistence of poverty has become a mat-
ter for which men are morally responsible.
SOME GENERAL PRINCIPLES WHICH ARE APPLICABLE
An anology with the family is helpful. Each member, within his or her
abilities, is considered responsible for contributing to the welfare of the
family as a whole. No individual member has the inherent right to shift his
responsibility to others, or to have whatever he wants without effort or con-
tribution. But the family as a whole has the responsibility to meet the minimum
needs of any of its members who are unable to contribute. Similar principles
should apply, so far as they can, in the large family which is the people of our
country, and to the people of the world.
GOALS FOR A RESPONSIBLE SOCIETY
1. Basic health, education and training.-The first responsibility of society
is to give everyone the opportunity to be self-supporting, and make a con-
structive contribution to society. This entails the provision of adequate health
care, education and training.
2. Jobs for those able and free to work-The second responsibility of so-
ciety is to provide jobs, either in the private sector, or the public sector of the
economy, for all who are able to work. This means a massive program of jobs,
both in the rural areas of poverty from which many people come to the gliettoes,
and in the cities themselves. Every possible encouragement should be given to
bring industry and other employment into these areas. In order to bring jobs
and people together, the mobilty of the residents of the inner city or rural slums
must be increased. Present transportation facilities are frequently woefully
inadequate.
Special programs are needed to help disadvantaged people to develop their
own businesses and cooperatives. The example of the successful system of farmer
* Statement submitted by E. Raymond Wilson, Executive Secretary Emeritus.
(671)
PAGENO="0232"
672
owned cooperative credit associations and banks for farmer cooperatives, estab-
lished in the 1930s with initial government capital and assistance in manage-
ment and channels of borrowing from the commercial money market, might
well be applied to helping disadvantaged people to help themselves.
We are now in a situation where society must find ways to employ some peo-
ple in other than profit-making enterprises, because the profit-making side of
our industrial complex has not always absorbed the entire labor pool. The dc-
creasing demand for unskilled labor further complicates the problem. We have
to face the fact that w-e are moving into an era where for various reasons in-
cluding the effects of automation on the unskilled labor market, there may not
be jobs available for all w-ho w-ant to work, and that there may be more and more
unemployed. We should recognize also that there may be many contributions
that can be made in addition to earning money in a productive enterprise. Caring
for children and the ill, creative efforts in the field of music and the arts, and
many social services, are examples.
3. Sufficient I?wom.e to provide minimum acceptable standards for those un-
able to worl~, or vnable to find werk.-The third responsibility is to those who
are unable to work. These include those too young, too old, or those who should
take care of their children instead of seeking outside employment, or u-ho are
ill. It also includes those looking for work and unable to find it, or deprived
of work by circumstances beyond their control, or whose w-ork provides less
than a minimum standard for a decent living. Demand for goods and services
resulting from full purchasing power in the hands of every family in the United
States w-ould help create far-reaching prosperity in our entire economy. It
would benefit Agriculture, Industry and Commerce. It would move us in the
direction of using more of our capacity to grow- food, and to provide better
nutrition for our people, and thus lessen the reliance upon restrictive agricultural
policies.
NEED FOR AN IMPROVED SYSTEM OF INCOME SUPPLEMENTS
Wealth in the modern world largely has to be created by the application of
hand and brain. So we believe that everyone has an obligation to contribute as
effectively as he can to the general welfare where possible. so that society as a
u-hole can discharge its responsibility to put a floor under income for every
family unit in the United States. We should recognize as a human right the
claim upon society for that w-hich a person needs in order to contribute to the
social good, and to live at his best as a person.
We believe that a system of assuring income is necessary. morally right and
economically feasible. Widely discussed proposals for providing income sup-
plements include the negative income tax. direct family and children's allow-
ances, and improved welfare programs with adequate standards of assistance.
Among the various alternatives the negative income tax would seem to be the
most feasible. For administration of such a program, one possibility would be
the Internal Revenue Service in conjunction w-ith the Social Security Ad-
ministration.
CRITEFIA FOR AN EFFECTIVE PROGRAM
A program of income supplements should meet the follow-ing criteria:
(1) It should be available as a matter of right.
(2) It should be adequate to maintain health and human decency.
(3) It should be designed so as to reflect changes in the cost of living.
(4) Periodic redetermination of payments should be based primarily on the
individual's certification of income, rather than upon cumbersome, degrading
and costly investigative procedures.
(5) It should be developed in a manner that will respect the freedom of
persons to manage their ow-n affairs, increase their power to choose their own
careers, and to enable them to participate in meeting personal and community
needs.
(6) It should provide greater incentives for recipients to do w-hatever they
can to suport themselves; to maintain the integrity of the family instead of fur-
nishing grounds for the father to leave so his children can get aid to dependent
children; and to encourage family planning.
(7) It should be geared to family size.
(8) It should be designed to afford incentive to socially useful activity.
(9) It should be designed in such a way that existing socially desirable pro-
grams are conserved and enhanced, but should replace as many existing "wel-
fare" programs as possible.
PAGENO="0233"
673
SOME FURTHER CONSIDERATIONS REGARDING THE PAYMENT OF INCOME SUPPLEMENTS-
INCENTIVES SHOULD BE ENCOURAGED
It is important that a policy of underwriting family income should encourage
the earning of additional income rather than discourage it as most welfare pro-
grams now do. Furthermore, motivational research is revealing various sources
for incentives besides the economic, such as prestige, power, and social use-
fulness. Indeed, access to income may strengthen motivation and liberate
creativity.
SOME OTHER EXAMPLES OF INCOME TRANSFER PAYMENTS
The proposed idea of income transfer payments is not at all new in American
political life-just the adaption to those in poverty, who need it most. For years
farmers have been paid more than a billion dollars a year not to raise food on
productive land, and additional millions for price supports and other agricultural
benefits. Business gets huge concessions including oil depletion allowances, tariff
protection and other considerations. There have been income supplements for
airlines and the maritime industry, etc. A negative income tax would be a sup-
plement program based on the need for at least the minimum essentials for a
decent life. The cost would be only a fraction of the cost of the Vietnam war, or
the current Defense budget.
INCOME SUPPLEMENT NOT A PANACEA FOR ALL THE PROBLEMS OF POVERTY
We recognize that a minimum assured income is not a substitute for programs
of full employment and human resource development including training for jobs,
nor for adequate medical care and services, nor for the provisions of good hous-
ing. It is not a panacea for all the social and economic problems encountered by
the family and the individual in the course of a full life cycle. There will still
have to be provisions for meeting temporary emergencies, and for a variety of
social services, but it ought to supplant the present wasteful and degrading
welfare system. Since our system works imperfectly, it is, of course the respon-
sibility of society to devise new institutions which will adequately fulfill basic
human rights.
RELATION TO WORLD WIDE POVERTY
Eliminating poverty in the United States could be an important forerunner for
a world wide attack on poverty. The United States cannot be an island of affluence
in a w-orld of misery and poverty. A program of income maintenance could en-
hance our capacity as a nation to contribute more effectively toward raising the
standard of living and attacking the causes of poverty in the rest of the w-orld.
RECOMMENDATIONS
We recommend that citizens-
1. Study the various methods of assuring every individual and family a
job and income capable of supporting human life in dignity and decency.
2. Participate in the development and implementation of those policies and
programs which best fulfill the above criteria.
(The above statement was approved in principle on May 15, 1968, by the
Administrative and Policy Committees of the Friends Committee on National
Legislation, for guidance of the staff prior to the meeting of the FCNL General
Committee.)
PAGENO="0234"
APPENDIX 16
FALLACIES OF THE NEGATIVE INCOME TAX
(By Henry Hazlitt*)
There is talk about guaranteeing every family an income of at least $3200 a
year. If a family earned less than this, the government would make up the differ-
ence. The Gallup Poll recently asked people whether they favored or opposed
such a plan. Only 36% of those questioned answered yes; 58% were opposed
outright.
Their principal objection to the plan is that it would destroy incentives to
work and earn. But some social reformers believe they could escape this result
by what they call a "negative income tax." Instead of guaranteeing every family
$3,200 a year, they would pay every family $1 for every $2 that its own earned-
income fell short of the $3,200. To put it another way, they would give $1,600 a
year to every family with no earned-income, and then tax the family's first $3,200
of self-earnings at a rate of 50%.
The advantage claimed for the negative income tax (NIT) is that it would not,
like the straight guaranteed income, completely destroy the incentive of people
to work and earn money for themselves. But the NIT merely substitutes a dilem-
ma of its own. Either it must pay only half an adequate income to a family that
earns no income, or it must pay twice an adequate income to a family that already
earns an almost adequate income.
An orthodox relief program would pay the jobless head of a family, say, $60
a week. If he then started to earn something, he would be paid simply the differ-
ence between that amount and $60. Under the NIT principle a man who was earn-
ing nothing would also receive a relief payment of $60 a week. But if he then:
earned $30 a week on his own he would still get a $4~5 payment (reduced by only
$1 for every $2 earnings), bringing his total income to $75 a week. If he was
later able to earn the full $60 for himself he would still be getting a relief pay-
ment of $30 a week, bringing his total income to $90. In fact, even if he succeeded
in bringing his total self-earnings to $118 a week he would still be getting $1 a
week in relief payment.
He would then be almost twice as well off economically as he would if be bad
always earned enough-say $61-not to get on the relief rolls in the first place.
This would be clearly inequitable to those who had never got on relief. The incen-
tive to get on relief, and certainly to stay on relief, would be enormously greater
under NIT than under the present system.
If we tried to escape this result by using the NIT formula only in part, and
taking the man off relief, say, as soon as he was himself earning $60 a week, we
would get an even more absurd result. When he was earning $58 a week under
NIT, he would still be getting $31 a week from the government, making his total
income $89. But if he then made the mistake of earning only $2 more be would
end up with a net loss of $29 a week. So the negative income tax would create a
tremendous positive incentive to get and stay on relief permanently.
The NIT scheme could avoid this preposterous result by paying a man with
zero income only, say, $30 a week, or only half as much as its own logic assumes
that he needs to live on.
In addition to this special dilemma. the NIT has the fatal defects of the straight
guaranteed income. By neglecting the careful applicant-by-applicant investiga-
tion of needs and resources made by the ordinary relief system, it would open
the government to massive fraud. cheating and swindling. And it would also
force the taxpayers to support a man regardless of whether he was making any
effort to support himself.
*The Henry Hazlitt Column, Los Angels Times Syndicate, Los Angeles, Calif.
(674)
PAGENO="0235"
APPENDIX 17
STATEMENT BY HAROLD WATTS, UNIVERSITY OF WISCONSIN,
PROFESSOR OF ECONOMICS AND DIRECTOR OF IRP
More than 1228 economists at 143 institutions of `higher learning in the
country have endorsed a bold `statement urging Congress to enact a national
system of income guarantees and supplements.
The economists' statement emphasizes two requirements for a workable and
equitable plan:
(1) "Need, as objectively measured by income and family size, should
be the sole basis of determining payments;
(2) to provide incentives to work, save and train for better jobs, payments
to families should be reduced by only a fraction of their earnings."
In the judgment `of the economists, income guarantees meeting these require-
ments "are feasible and compatible with our economic system."
The statement was sponsored by: Professor Paul A. Samuelson, Massachusetts
institute `of Technology; Professor John Kenneth Galbraith, Harvard Uni-
versity; Professor James Tobin, Yale University; Professor Robert Lampman,
University of Wisconsin; and Professor Harold W. Watts, University of Wis-
consin.
Both `the sponsorship and widespread endorsement of the statement indicate
broadly based support among professional economists for reforms in our pro-
grams of income maintenance and welfare. This expert testimony reinforces
the demands of the Poor People's Campaign, the Kerner Commission's call
for action, and the conclusions of a distinguished panel of business leaders
recently convened by Governor Rockefeller.
Fifty-four `signatures were obtained from economists at the Madison Campus
of the University of Wisconsin; nine additional endorsements came from the
Milwaukee Campus. A supplementary effort i's under way to make sure that
all economists at Wisconsin Colleges and Universities `have an opportunity to
consider and endorse the statement.
Prominent among the `signers at Madison is Professor Harold M. Groves
whose work on taxation, unemployment compensation, and other major social
legislation was honored only three days ago on the occasion of his retirement.
Professor Groves' endorsement, among the many distinguished signers, must
be given extra weight in view `of his particularly relevant experience and
authority.
Since `last Friday more than ~O signatures have been obtained from graduate
students in economics at Madison. The support of the rising, `and socially
aroused, generation of economists juxtaposed with that of the more seasoned
and experienced scholars, demonstrates an almost unique unanimity in favor
of immediate action.
It is the `hope of the sponsors that this statement will make `a timely and
significant contribution to a national consideration of policies to meet our urgent
needs for social and economic justice.
STATEMENT BY HAROLD WATTS, UNIVERSITY OF WISCONSIN,
PROFESSOR OF ECONOMICS
For a long time after proposals of a negative income tax first appeared, I was
opposed to the idea. I found it repugnant to provide people with gratuitous in-
come and thought it better to seek wider opportunity. My present firm support for
income maintenance grows out of study of our present welfare system. It is
properly regarded by objective critics as a national disgrace.
Our welfare system is discriminatory, inadequate, and degrading. Its local
responsibility makes it subject to competition in niggardliness. It is highly per-
verse as to incentives providing in many cases a 100 percent tax on marginal in-
come from a job. It fragments families: in many cases welfare is only available
if the father deserts his family.
(675)
PAGENO="0236"
676
The system could be reformed by the provision of federal funds, the require-
ment of federal standards, and the recognition of some rights for the poor as
against the bureaucracy. But were all this done the system would hardly differ
from the negative income tax proposal.
Automation has made an income maintenance program both necessary and
economically feasible.
A STATEMENT BY ECONOMISTS ON INCOME GUARANTEES AND
SUPPLEMENTS
The undersigned economists urge the Congress to adopt this year a national
system of income guarantees and supplements.
The Poor People's Campaign in Washington is demanding a guaranteed mini-
mum income for all Americans. The Kerner Commission on Civil Disorders called
for a national system of income supplements. A group of business leaders recently
advocated a "negative income tax." These proposals are all similar in design and
purpose.
Like all civilized nations in the twentieth century, this country has long rec-
ognized a public responsibility for the living standards of its citizens. Yet our
present programs of public assistance and social insurance exclude millions who
are in need and meet inadequately the needs of millions more. All too often these
programs unnecessarily penalize work and thrift and discourage the building of
stable families.
The country will not have met its responsibility until everyone in the nation
is assured an income no less than the officially recognized definition of poverty.
A workable and equitable plan of income guarantees and supplements must have
the following features: (1) Need, as objectively measured by income and family
size should be the sole basis of determining payment to which an individual
and/or family is entitled. (2) To provide incentive to work, save and train for
better jobs, payments to families who earn incOme should be reduced by only a
fraction of their earnings.
Practical and detailed proposals meeting these requirements have been sug-
gested by individual sponsors of this statement and by others. The costs of such
plans are substantial but well within the nation's economic and fiscal capacity.
As economists we offer the professional opinion that income guarantees and
supplements are feasible and compatible with our economic system. As citizens we
feel strongly that the time for action is now.
Sponsors:
John K. Galbraith James Tobin
Robert Lampman Harold Watts
Paul A. Samuelson
OTHER SIGNERS
University of Akron:
Emile Grunberg James McLain
Annette K. Seery Mike Pournarakis
Ali M. S. Fatemi Lascelles Anderson
Robert R. Black
Allegheny College:
John B. Reiss K. G. Ainsworth
J. Jason Levens
American University:
James H. Weaver W. S. Hunsberger
Charles K. Wilber W. M. Bailey
Gail Huh F. M. Tamagna
Amherst College:
Arnold Collery Hugh G. J. Aitken
Ralph E. Beals George N. Monsman, Jr.
James A. Chalmers Colston E. Warne
Donald C. Mead Heinz Kohler
University of Arkansas:
Leonard A. White R. E. Kennedy, Jr.
Donald R. Market Darrell L. Spriggs
Roy L. Pearson George E. Himsburger
Jared Sparks
PAGENO="0237"
TJniversity of Arizona:
Robert H. Marshall
Dennis Cox
Phillip J. Bryson
H. Bruce Billings
Atlanta University Center:
David E. Kidder
Charles P. Kindleberger
W. T. Robis
James A. Hefner
Edward B. Williams
Berea College:
Bernard Davis
Birmingham Southern College:
John P. Ripp
Boston College:
David A. Belsley
William J. Duffy
Harold Petersen
H. Michael Maun
Donald H. Sherk
Kozo Ya Ma Me
S. Williams
Boston University:
Mark Karp
John J. Hughes
Blanche Fitzpatrick
Bowdoin College:
Paul G. Darling
William D. Shipman
Edward H. Harris
Brandeis University:
Joseph J. Berliner
Robert Evans, Jr.
Barney K. Schwalberg
Brookings Institution:
Wilfred Lewis, Jr.
Benjamin Okner
A. B. Laffer
John A. Brittain
Walter S. Salant
Joseph A. Pechman
Jorge Salazar
Brooklyn College:
Harry Malisoff
Carl Nordstoin
Edward Marcus
Leo Sveikauskas
Hyinan Sardy
IBrown University:
George H. Borts
\Ternon L. Smith
Mark R. Daniels
Bryn Mawr:
M. S. Baratz
Bucknell University:
Davd E. Horlasher
W. H. Cooper
California Institute of Technology:
B. H. Klein
A. Sweezy
677
G. L. Gifford
Walter H. Pearce
Bernard J. Marks
Steven L. Barsby
Gary B. Shorn
Vivian W. Henderson
Marcia L. Halversen
Alice E. Kidder
Robert G. Menefee
John M. Gersting
George deMenil
Edward J. Kane
Kenneth A. Lewis
Donald J. White
Ann F. Friedlaender
Alice Bourneuf
Robert J. MeEwen
David J. Cantor
Everett J. Burtt, Jr.
Karel Holbik
A. Myrick Freeman, III
James A. Storer
Robert W. Hartman
H. S. Weckstein
Gerald Rosenthal
Joseph Grunwald
Robert E. Baldwin
John E. Tilton, Jr.
William M. Capron
Dennis C. Mueller
Richard D. Morgenstern
Robert A. Asher
J. Loft
Curwin Stoddart
Edward 0. Lutz
L. G. Crosby
Paul Markow~ski
Anthony C. Fisher
Robert J. Rohr
Francis X. Colaco
J. W. Anderson
Kenneth Frederick
Michael R. Dohan
PAGENO="0238"
678
University of California, Berkeley:
C. Wrest Churchman
Richard H. Holton
Barr Rosenberg
Wayne S. Boutell
Leonard A. Doyle
A. H. Schaaf
Lee E. Preston
Edwin H. Neave
Wallace F. Smith
Lief H. Carter
Michael A. Goldberg
Ronald S. Graybeel
Leonard Merewitz
F. F. Maim
Paul F. Wrendt
George Strauss
Dow Votaw
Van D. Kennedy
Thomas Marschak
S. Prakash Leltir
John M. Letiche
University of California, Los Angeles:
Harold M. Somers
Charles L. Nisbit
University of California, Riverside:
James S. Earley
Howard J. Sherman
W. C. Kaziker
University of California, San Diego:
John W. Hooper
R. Rainanathais
Larry E. Ruff
University of California, Santa Barbara
Robert Weintraub
Charles Blackorby
David Podoff
Philip S. Rensen
University of California, Santa Cruz:
Bernard F. Haley
Frederick S. Weaver
Stanley L. Warner
David E. Kaun
Case Western Reserve University:
Gerhard Rosegger
Josef Hadar
Samuel J. Mantel, Jr.
Claude Hillinger
Yoshiro Kuratani
William Peirce
Catholic University of America:
August C. Bolino
John Joseph Murphy
Ransford Palmer
University of Chicago:
G. S. Tolley
R. Fogel
Z. Gkiliches
H. G. Johnson
R. Mundell
S. Chung
Carl Landauer
Steven M. Goldman
Joel Bergsman
Abba P. Lerner
Russell J. Weber
Robert G. Mcliuiway
Richard Sutch
Jacob Marschak
Frank C. Wykoff
Lloyd Ulman
Roy Radner
Richard W. Roehi
Gregory Grossman
Thomas J. Rothenberg
Robert S. Hall
Paul Zarembka
Ralph E. Miller
George B. Simmons
Frank Levy
R. A. Gordon
Lawrence R. Klein
George S. Murphy
Daniel J. B. Mitchell
P. T. Ellsworth
Howard W. Duern
Ramesh C. Bhardwaj
Richard Attiyeh
Sidney G. Winter, Jr.
S. E. Harris
~rittorio Bonomo
Alec P. Alexander
James J. Sullivan
R. Robert Russell
Robert F. Adams
Robert G. Scott
Leonard Kunin
Jacobe Michaelsen
K. Laurence Chang
Marvin J. Barloon
Dallas M. Young
Weldon Welifing
S. Sterling McMillan
Leonard F. Cain
Henry W. Spiegel
Vincent D. Mathews
`\\7 M. Landes
R. W. Parks
Arnold C. Harberger
Larry A. Sjaastad
T. W. Schultz
PAGENO="0239"
Claremont Graduate School:
John P. Herzog
Randall Hinshaw
Paul Sultan
Clark University:
Herrington J. Bryce
F. Eugene Melder
Colgate:
Robert Freedman
Leo M. Elison
Hugh Pinchin
University of Colorado:
K. B. Banding
Irving Mornissett
M. Garnsey
George W. Zinke
John Cassels
Cornell:
Chandler Morse
Thomas Snull
Douglas Davis
Richard T. Selden
Creighton University:
Thomas 0. Nitsch
Davidson College:
Charles B. Ratliff
R. L. Avinger
E. F. Patterson
Dartmouth:
W. L. Baldwin
G. L. Childs
M. 0. Clement
G. Pidot, Jr.
Laurence Hines
John H. Keith
University of Delaware:
Laszlo Zsoldos
Joseph W Hunt, Jr.
Bertram F. Levin
Eleanor D. Craig
Dickinson College:
A. C. Houston
Anthony Mach
Emory University:
W. Tate Whitman
Beverly K. Schaffer
Joseph Airov
William 0. Shropshire
Harold L. Johnson
Grinnell College:
William Pollak
Marvin Schwartz
John Dawson
Hamilton College:
Sidney Wertimer, Jr.
J. D. Peno, Jr.
Haniline University:
William V. Williams
679
Daniel C. Vandermeulen
Stanley Warner
Howard W. Nicholson
Roger C. Van Tassel
Oswald Henkalekto
Frank Farmsworth
C. Horn
Fred R. Glade
Donald J. McClurg
R. Multatch
Bernard Utis
B. Davis
Alfred B. Kahn
Rank K. Golay
Heywood Fleisig
Salvatore Valenti
R. R. Kincaid
G. 0. Lindsey
Louise Nelson
Adrian W. Throop
Martin L. Lindahi
Calvin D. Campbell
Martin Seigal
Gary McDowell
Clyde E. Dankert
F. II. E. Durr
Harry D. Hutchinson
Charles N. Lanier
Kenji Takeuchi
John L. King
Arthur T. Dietz
Alan L. Ritter
Marshall L. Casse
James M. Hund
Alan F. Gummerson
Robert H. Haveman
J. Martin Carovano
Stewart E. Butler
Chung-Tai Lu
PAGENO="0240"
Harvard:
Lance J. Taylor
David Kendrick
Christopher A. Sims
Samuel Bowles
Carl Gotsch
Larry E. Westphal
Hollis B. Chenery
David C. Cole
Joseph Stern
Walter P. Falcon
R. J. Gordon
Lester E. Gordan
Martin Feldsteiu
Albert 0. Hirschman
Haverford College:
Howard M. Teaf, Jr.
Holland Hunter
Hofstra University:
Jacob Weissman
Bertram Silverman
June Zaccone
William M. Kempey
Hope College:
James P. Henderson
1-lollins College:
Bernard Jump. Jr.
Mary D. Houska
Holy Cross College:
Frank Petrella
J. J. Judge
University of Illinois, Chicago Circle:
Allen Sinai
Richard F. Kosbud
J. Niss
University of Illinois, Urbana:
Larry Neal
Laurence Weiser
Royall Brandis
Paul Wells
Walter i\IcMahon
Jane H. Leuthold
John Due
Franklin R. Shupp
James R. Millar
Richard Arnould
I.B.M.:
Curry W. Gillmore
James D. Kelly
Johns Hopkins University:
Herbert E. Klarman
Carl F. Christ
William Poole
Peter Newman
Edwin S. Mills
F. T. Sparrow
Kalamazoo College:
Philip S. Thomas
David B. Mirza
680
Gustav Papanek'
David Felix
Milton Abilson
Richard V. Gilbert
Paul Roberts
Anthony Blackburn
Peter Doeringer
Henry Jacoby
William Comanor
Rodney Dobell
Lester C. Thurow
Henry Rosovsky
Nathan Rosenberg
George I. Treyz
Helen Hurder
Marcel Tenenbaum
David Singer
Joan Bodoff
Steve E. Kontas
Reginald J. Smith
Frederick R. Strobel
Oscar Miller
Mildred B. Levy
Stanley W. Steinkamp
Case M. Sprenkle
Herbert Shiller
Joseph D. Phillips
Lewis Bassie
Carl T. Ant
Marvin Frankel
Ralph Husby
Peter Shcran
A. V. Karchere
John Owen
Bela Balassa
William H. Oakland
H. Louis Stettler, III
G. Heberton Evans, Jr.
William A. Carter
John L. Komives
PAGENO="0241"
University of Kansas:
Ronald Oalgaand
Peter Trevert
Rubin Saposnik
Richard W. Ruppert
Domin Wu
A. M. Zarley
Thomas Weiss
Kansas State University:
B. Wayne Nafziger
Patrick J. Gormely
L. S. Fan
Michael J. Greenwood
Orlan Buller
Kenyon College:
Carl Brehm
Paul M. Titus
Richard Bond
Lafayette College:
George G. Sause
Bernard S. Katz
Lake Forest College:
A. M. Auliky
M. Erickson
La Salle College, Philadelphia:
John S. Grade
John A. Duffy, Jr.
Joseph P. Cairo
Lawrence University:
Thomas B. Wenzlau
Jules N. LaRocque
Louisiana State University:
Robert F. Smith
Jan Warren Duggar
T)on L. Woodland
William J. Stober
George D. Craig
Loyola University, Chicago:
Robert M. Aduddell
George H. Tarsur
Marquette University:
Peter L. Danner
P. F. Marbury
Walter Frveheal
Louis S. Jablonski
University of Maryland:
Allan G. Gruchy
Henry Aaron
Robert L. Bennett
Barbara Bergmann
Robert E. L. Knight
John Boorman
E. Ray Canterbery
Thomas Havrilesky
J. Lawrence Hexter
Thomas Mayor
Melvyn Meer
681
David H. Richardson
James Terish
Donald K. Pemberton
Lulard J. Pritchard
Richard B. Sheridan
Ronald R. Olsen
G. V. Narasin~barn
Ruth E. Clifton
John A. Delehanty
Jay Ladin
Bruce Gensemer
H. Dieter Renning
Morrison Handsaker
Edward J. Starshok
Rosemary D. Hale
Joseph F. Flubacher
Joseph A. Kane
Joseph P. Mooi~~~~
Richard M. Bell
Howard Bloch
Lamar B. Jones
Robert A. Flammang
Bernard F. Sliger
William James Truitt
Thomas R. Beard
Thomas J. Ising
(Mrs. Carol S. Ising)
Richard L. Ruth
S. H. Park
James B. Mullins
Paul Meyer
Neil Singer
Milton D. Lower
Eugene McLoone
David Qualls
Myra Strober
Charles Wilber
Douglas; I. Battenberg
David P. Evans
Albert E. Lowey-Ball
Stephen M. Merchant
96-002-08-vol. II-16
PAGENO="0242"
682
Massachusetts Institute of Technology:
Franklin M. Fisher
Karl Shell
John R. Harris
E. Gary Brown
B. K. Ghosh
Michael J. Piore
E. E. Hagen
Richard S. Eckaus
Evsey D. Domar
Frederic Meyers
Robert L. Bishop
M. A. Adelman
University of Massachusetts:
Bruce R. Morris
James K. Kindahi
Gerald Gunderson
Richcard J. Olsen
Cadwell L. Ray
Miami University. Ohio:
Andrew Gold
George W. Thatcher
Paul B. Trescott
George G. Daly
Harry Landreta
University of Miami, Florida:
Lanny E. Streeter
Warren Samuels
John P. Cooke
Michigan State University:
Victor E. Smith
Charles P. Larrowe
Carl Lidholm
S. Kaeneffan
Leonard Rall
Byron W. Brown
W. Paul Strassmann
Denzel Clime
John P. Henderson
Walter Adams
Milton C. Taylor
M. Kreinin
P. E. Smith
F. J. Brnello
P. J. Lloyd
E. Zanetti
Melvin Segal
Bruce T. Allen
Larry J. Connol
James T. Bonnen
Middlebury College:
Karl L. Anderson
Dan M. Bechter
Thomas H. Hibbard
Millsaps College:
Richard B. Baltz
Peter A. Diamond
Duncan K. Foley
Matthew Edel
Edwin Kuh
Max F. Milhikan
Peter Temin
Paul H. Cootner
S. S. Alexander
Robert W. Crandall
Jerome Rothenberg
Miguel Sidrauski
Thomas M. Love
Franklin B. Sherwood
Robert Hinckley
John L. Blackman, Jr.
Norman D. Aitken
William J. McKinstry
Robert E. Berry
Donald A. Walker
Douglas 0. Stewart
M. F. Hassan
Roy J. Hensley
Warren H. Vincent
George E. Rossmiller
David L. Armstrong
Ralph E. Hepp
Myron P. Kelsey
C. Raymond Hoglund
Alvin E. House
H. G. Heifner
Arthur Manch
Glenn Johnson
Carl K. Eicher
Lestor Manderorheid
Donald J. Ricks
David L. Cole
Allan Schmid
D. E. Hathaway
V. L. Sorenson
Marvin Hayenger
James W. Shaffer
John V. Craven
John T. Erlenders
David Smith
Sam J. Nicholas, Jr.
PAGENO="0243"
TJiiiversity of Minnesota:
V. N. Rutter
Keith Bryant
John P. Heimberger
John J. Naelb
Harold R. Jensen
Willis Peterson
J. P. Aoul
Philip M. Ranp
Arley D. Waldo
J. Mith, Jr.
Lee H. Martin
Anne 0. Krueger
J. Brittain
Francis M. Boddy
Edward Foster
Peter Gregory
Thomas Muench
George Seltzer
John Chipman
Leonid Hurwicz
Edward Coen
E. Scott Maynes
Herbert Mohririg
Marcel Richter
Karl Wallace
N. J. Simler
John Karaken
George L. Perry
George D. Green
I-I. M. Smith
University of Minnesota, Morris:
Michael S. M. Kahng
C. H. Berg
Mississippi State University:
B. J. Eattey
G. L. `\Tenall
University of Missouri, St. Louis:
Joseph P. McKenna
Mount Holyoke College:
Virginia L. Gaibraith
Helen S. Tice
University of Nebraska:
Wallace C. Peterson
Loren B. Casement
John Richard Felton
Gerald E. Thompson
Thomas Iwand
Jerry L. Petr
University of Nevada:
B. M. Wofford
G. W. Atkinson
Richard Wilson
L. Saint
University of New Hampshire:
Lawrence P. Cole
William R. Hosek
A. R. Irwin
M. 0. Dugga, Esq.
John Donovan
Hohn Korbel
Dwayne Wrightsman
Kenneth J. Rotliwell
683
Clifford Hildreth
Walter Adler
John Trunbull
William C. Miller
James L. Weatherby, Jr.
Barbara A. Zoloth
Susan L. Smith
Paul Gilbarg
Richard Westin
Dave Cram
Allan Maslove
Joseph Brada, Jr.
Donald John Rohnts
Paul Schuchter
Laurence B. Morse
Russell Hill
Susan Edelman
James T. Rittle
John Underwood
Peter Greenston
Charles C. Orvis
Charles Plourde
Matthew B. Canzoneri
E. Quincy Haggart
Preston Miller
A. L. Norman
S. H. Sandell
David L. Sjoquist
Paul B. Manchester
Jerry Wandsness
J. Anderson Davis
Herbert D. Werner
Robert L. Robertson
Sarah Montgomery
George E. Rejda
Theodore W. Roseler
Charles Lainphear
E. B. Schmidt
F. G. Hayden
Chester M. Kearney
S. Chu
J. W. Lord
Robert B. Puth
James 0. Honizar
William Witzel, Jr.
Dwight H. Ladd
John A. Hogan
Richard K. Mills
Sam Rosen
John R. Hosbell
PAGENO="0244"
684
New Hampshire College of Accounting
Roland Gibson
State University of New York, Buffalo:
D. Hamberg
C. Strausser
Frank C. Jer
P. Swamy
D. J. Smyth
State University of New York, Binghamton:
John E. La Tourette
Melvin Leiman
Stanley H. Colin
Richard Leighton
John W. Beau
State University of New York, Genesco:
David A. Martin
R. E. Roth
N. Arnold Tolles
State University of New York, Plattsburg:
Francis R. Bethlen
State University of New York,
James Cornehis
Charles Hoffmann
Estelle James
Egon Neuberger
Dieter Zschock
North Carolina State University:
Christopher Green
Leonard Hausman
Jack W. Wilson
J. A. Seagraves
University of North Carolina::
Ralph W. Pfonts
Maurice Lee
Dennis R. Appleyard
Arthur Benaire
\T Parcent
George W. Douglas
B. Fellderen
A. J. Field, Jr.
University of North Carolina, Greensboro:
Paul G. Aithaus
John P. Formby
University of North Dakota:
John T. Berg
Charles J. Lthera
John Gransberg
Northeastern University:
Morris A. Horowitz
Sidney Herman
Conrad P. Caligaris
James W. Meehan, Jr.
James W. Doam
Richard Skillman
James W. Dean
Harold M. Goldstein
Northwestern University:
Karl de Schweinim
Mark Pauly
E. Savin
R. W. Clower
Oberlin College:
Thomas F. Dernburg
M. Brown
W. Chang
R. Thakkar
R. Boddes
James A. Wilde
Hugh W. Knox
Douglas W. Webbink
Edward S. Howh
Paul N. Guthrie
David McFarland
0. T. Mouzon
James C. Igram
Russ Schucter
Donald Shelby
Donald J. Wheafer
I. L. Homstodt
Rita M. Keintz
P. N. Roy
Harris E. Hordon
and Commerce:
A. T. Eapen
Robert M. Lovejoy
Alfred E. Carlip
Laurence E. Leamef
Robert Haseltine
Roger A. McDavis
Warren Dixon
Stony Brook:
Edward Van Roy
Michael Zweig
Charles E. Staley
Helen M. Kramer
Robert Lekachman
Barry L. Friedmall
Edward W. Ericksen
Richard A. King
James G. Maddox
David H. Shelton
David G. Davies
Eugene Fuick
Mel Stone
Charles Bullard
Cohn Wright
Jonathan Hughes
Dale T. Mortensen
George Dalton
PAGENO="0245"
Occidental College:
Joseph B. Haring
Joseph F. Humphrey
Ohio State University:
David B. MeCalmont
Belton M. Fleisher
Helen A. Cameron
Joseph R. Zecher
M. P. Michael
Gilbert Nestel
William G. Dewald
Salvatore Comitini
Gary M. Walton
Samuel C. Kilby
Ohio University:
Lee Soltow
Gerald W. Scully
Stanley P. Mangel
Ira Kaminon
Oklahoma State University:
John C. Shearer
Richard L. Porter
Frank G. St~indl
University of Omaha:
Donald R. Connell
Russell A. Snyder
Percy P. Chang
Oregon State University:
L. G. Harter, Jr.
Floyd McFarland
B. Hughel Wilkins
Charles B. Friday
University of Oregon:
W. Ed. Whitelaw
Robert Campbell
James N. Tattersail
Pennsylvania State University:
Edward Budd
Klaus Friedrich
DavidW. Stevens
Irwin Feller
N. Hu
Will B. Mason
Grant N. Farr
Allen Unaworth
John Riew
Ernst W. Strowsdorfer
Jacob J. Kaufman
James B. Hereneen
Maw Lin Lee
Warren C. Robinson
Bernard H. Booms
J. Patrich Madden
Randall S. Stout
V. E. Marely
Eugene A. Myers
Jan 5. Trytylo
Richard Rosenberg
University of Pittsburg:
Mamoru Ishikawa
Edgar M. Hoover
Jerome C. Wells
David F. Bramhall
Janet G. Chapman
Herbert A. Chesler
Arnold Katz
685
Kent W. Olson
A. C. McConvil
J. Hayden Boyd
Wilford L'Esperance
Richard B. Bennett
Kenneth M. Brown
Michael V. Condril
Richard A. Tybvert
Richard N. Sherman
Herbert S. Parnes
Ruth S. Spitz
Ruth B. Grill
Peter F. Freund
M. S. Westbrook
Mono Lovenstein
Michael R. Edgmond
M. W. Khoujis
Richard H. Liftbank
B. J. Steele
Janet M. West
Donald Farness
R. Charles Vars, Jr.
1\Iurray Wolfson
Richard B. Towey
Henry N. Goldstein
Robert E. Smith
Philip A. Klein
Milton 0. Hallberg
Arthur H. Riede
Owen H. Sauerlender
Irwin Bernhardt
Michael B. Bradley
L. Teme
Milton C. Hallberg
LeeM. Day
William T. Butz
J. Dean Jansma
Clarence B. Trotter
A. P. Stemberger
Donald J. Epp
Earl J. Partenheimer
Peter Beunch
Paul Rigby
Georgo Heitmann
William J. Schrader
J. J. Cramer, Jr.
Huntley Manhertz
Richard S. Thorn
Marina vN Whitman
John Iton
Earl W. Adams, Jr.
Jacob Cohen
PAGENO="0246"
Polytechnic Institute of Brooklyn:
David Mermelstein
Lester 0. Bumas
Pomona College:
Gordon K. Douglass
Gary M. Pickersgill
Princeton University:
S. H. Goldfeed
D. B. Smallwood
J. M. Litvach
L. V. Chandler
R. Fair
B. G. Malkiel
Albert Rees
F. Bury
0. Morgenstern
Queens College:
William Hkmovitch
Reed College:
George A. Hay
Carl M. Stevens
Regis College:
Sister M. Norbert Oates
Sister M. Gamier Fentoness
University of Rhode Island:
Wifflam Hailer, Jr.
Bernard Schurman
Richard A. Sabatino
University of Rochester:
Richard N. Rosett
Edward Zabel
Sid Tsiang
R. G. Primmer
Norman M. Kaplan
St. Louis University:
Heinrich H. Bowselke
George Donald Hauvahar
Paul E. Merz
Dan W. Maientz, Jr.
Thomas M. Stevenson
St. Olaf College:
Frank W. Gery
Thomas P. Enger
College of St. Thomas:
Demos P. Hadjiyanis
Frank C. Emerson
L. W. Kinal
San Diego State College:
Robert Barckley
Raymond A. Floren, Jr.
Harold J. Goerss
Dan Bridenstine
Marjorie S. Turner
Ibrahim Poroy
J. William Leosvu
Sarah Lawrence College:
Albert Lauterbach
Raymond G. Brown
686
Shane Nage
David H. Kaen
Jon H. Goldstein
B. P. Hewrey
Fritz Machlup
W. Baumol
William H. Branson
Sliane Hunt
John D. Heinberg
David F. Bradford
Heather L. Ross
R. Franklin
Arthur H. Leigh
Edward J. Mulballarcl
Robert Rockafellow
James L. Starkey
Lionel W. McKenzie
R. Jones
C. Shaddale
Hugh Rose
B. Drandakis
William Dunkman
Paul D. Roman
Boris Ischbaldin
Arthur L. Mezenf
E. Allan Tomey
R. J. Mody
Franz H. Mueller
M. A. Selim
Dennis A. Flagg
Adam Gifford
L. E. Chadwick
Graydon K. Anderson
George Bahlott
Nicholas W. Schrock
M. S. Portel
Henry G. Aubrey
PAGENO="0247"
Smith College:
Robert D. Britt
Gerald L. Fox
Fred H. Leonard
The University of the South:
Robert A. Degen
Marvin E. Goodstein
University of Southern California:
S. D. Pollard
John E. Elliott
Alan A. Brown
Southern Illinois University:
Milton Edelman
Andrew J. Petro
Charles G. Stalon
Stanford Research Institute:
R. G. Spiegelman
Samuel Weiner
E. W. Lungren
Stanford University:
Bruce Johnston
Benton F. Massell
Pan A. Yotopoulos
Keith Lomsden
John Gurley
Kenneth Arrow
Melvin Reder
Stetson University:
Charles H. Andrews
Swarthmore:
Bernard Saifras
Anita A. Summers
John D. Pattison
Syracuse University:
David Rhiller
John A. Henning
Sidney Sufrin
Melvin A. Eggers
Robert J. Wolfson
Irving Swerdlow
James Thomblade
E. Straun
N. D. Papone
Jesse Buckhead
James S. Price
Temple University:
Sayre P. Schatz
Jay R. Mandie
George F. Rohrlich
Oscar S. Dooley
A. Dubey
Texas A. & M. University:
J. Allen
R. Ekelund
T. Holland
I. Linger
P. Miller
687
David A. Olson
Robert T. Averitt
K. A. Mclarsuky
Arthur M. Schaefer
Michael De Prano
G. Tintner
J. B. Nugent
Richard F. Fuysmour
K. Hartani
Thomas Mantinsek
A. E. Lazar
Stephen Levy
Bert Hickman
Edward Shaw
Tone Tarshis
Ronald McKinnon
Julius Margolis
Paul Hohenberg
Robert Coen
Peter Cole
T. Reraty
Frank C. Purpson
Frederic Puyen
Warren W. Eason
A. Dale Tussing
Jerry S. Kelly
Winthrop H. Munu
A. F. Swison
Jerry Nuner
Norman N. Mint
Eric W. Rawson
George Saunders
J. N. Vedder
Bernard A. Kemp
Arnold H. Raphaelson
Marion Meinkoth
Ingrid H. Rima
W. L. Holmes
C. Maurice
A. Pulsipher
R. Thompson
A. Waters
PAGENO="0248"
University of Texas, Austin:
Vernon M. Briggs, Jr.
Daniel C. Morgan, Jr.
Douglas C. Dacy
3~oe Colwell
C. M. Grubbs
S. L. McDonald
Texas Christian University:
Floyd Durham
John E. Perkins, Jr.
John L. Wortham
University of Texas, El Paso:
Bruno M. Trevino
Lee Vanzant
Allen Baylor
Tufts University:
Newlin R. Smith
Franklyn D. Holzman
Robert M. Clatanoff
B. M. Walsh
Union College, Schenectady:
W. A. Werner
Peter A. Prooper, Jr.
Vanderbilt and Fisk Universities:
L. Charles Miller, Jr.
Ben W. Boich
Webster C. Cash
Douglas H. Graham
James V. Davis
Peter B. Lund
Carlos M. Pelaez
University of Vermont:
Malcolm F. Severance
William M. Diamond
Anthony S. Campagna
Wabash College:
W. C. Bonifield
Washington University:
David Barkin
Marshall Hall
Jack E. Triplett
Fredric Raines
Jose D. Langier
Jack Ochs
Hyman P. Minsky
University of Virginia:
William Breit
William Beazer
Kenneth Elzinga
Anne Cobb
Washington and Lee University:
John F. DeVogt
John M. Gunn, Jr.
S. Todd Lowry
Wellesley College:
Rodney J. Morrison
Joen Greenwood
Richard V Clemence
688
W C. Gordon
Carey C. Thompson
Forest G. Hill
George R. Gebhart
Gerald F. Higgins
Clarence E. Ayres
Elden G. Kelby
A. F. Murphy
C. Richard Waits
R. C. Robak
Dilmus James
Lewis F. Manly
John Cornwald
Dan Ounjian
Paul F. Bryant
William B. Bennett
James S. Worley
Fred M. Westfield
Ewing P. Shahan
Rudolph C. Blitz
Overton H. Taylor
Aryeh Blurnberg
Richard X. Chase
Aruthur A. Bayer
Edwin Greif
Robert C. Pebworth, Jr.
Edward Greenberg
Richard F. Muth
George W. McKenzie
Michael Keran
Perry Shapiro
Harold J. Barnett
Harold Hachman
Alberto DiPierro
Roger Sherman
Bennett McCallum
J. D. Cook, Jr.
John A. Winfrey
M. S. Crandall
Marshall I. Goldman
John Brode
PAGENO="0249"
689
Wesleyan University:
T. M. Whitin Jon Joyce
Basil Moore Peter Kilby
Robert J. Willis
Wheaton College:
John E. Miller
College of William and Mary:
Leonard G. Schifrin Kee Ii Choi
Martin A. Garrett, Jr. Howard M. Gitelman
John R. Matthews, Jr.
Williams College:
John R. Ericksson Roger E. Bolton
John Sheahan James F. Halstead
Gordon C. Winston Robert Armstrong
William A. McCulley Edward H. Moscontel
Stephen R. Lewis, Jr.
University of Wisconsin:
Harold M. Groves Brian T. Motley
Peter 0. Steiner Leonard W. Weiss
Peter Helmberger Murray A. Tucker
Rueben C. Buse Laurits Christensen
Marvin Miracle Dennis J. Aigner
Gustof A. Peterson John Culbertson
N. D. Kimball Ralph L. Andreano
Frank Groves Everett M. Kassalow
C. W. Loomer James L. Stern
Arthur S. Goldberger Roger F. Miller
Edgar Feige John D. Bowman
John Conlisk David Granick
Larry Orr Earl R. Brubaker
Charles C. Holt Robert Ozanne
Dorothy Hodges Burton A. Weisbrod
John Brandl W. Lee Hansen
Raymond Munts Gerald G. Somers
Edward J. Heiden Alan G. Cain
Everitt D. Hawkins David B. Johnson
Peter H. Lindert Allen 0. Kelly
Hans D. Schmitt Lee Bawden
Seiji Naya William Saupe
Jack Barbash Aaron 0. Johnson, Jr.
Eugene Smolensky Donald A. Nichols
Robinso G. Hollister, Jr. Robert E. Kramer
Kang Chao Warren J. Bilkey
Rondo Cameron Gilbert A. Churchill
Wisconsin `State University, Oshkosh:
M. Duchich John S. Austin
David 0. Ley D. Awaseem
R. L. Danfield H. Sang Lee
B. I. Patterson D. W. Raaf
University of Wisconsin, Milwaukee:
Thomas D. Checker Arthur W. Ebey
Melvin June M. Mamalakis
Robert P. Johnson L. M. Schur
U. Sanpar Richard Penman
Samuel L. Thorndliker, Jr.
College of Wooster:
Shirley P. Burggraf Richard Reimer
96-602 0-68-vol. II-17
PAGENO="0250"
690
University of Wyoming:
Raymond W. Hooker Siegfried Karsten
John W. Biveh Curtis A. Cramer
C. Phillips Mark R. Gaeff
D. M. Blood James I. Pikl, Jr.
Xavier University:
Harold L. Bryant Anthony Bryski
John Rothwell G. Richard Dreese
Larry Donnelly Ayyanna Ramineni
Yale University:
T. C. Koopmans Michael P. Todaro
Stephen Hyner Stephen Reswick
Lloyd G. Reynolds Paul D. Gayer
Henry G. Grabowski William Brainard
Raymond P. Powell Donald D. Hester
Mark W. Leiserson Alvin K. Klevorick
James W. Friedman Martin Weitzman
Samuel R. S. Ho Peter Mieszkowski
Robert Triffin Herbert Scarf
David Oass William D. Nordhaus
Joseph Stiglitz David M. Grether
Susan J. Lepper Gustov Ranis
Marc Nerlove Albert Benz
Edwin M. Truman Charles A. Hall, Jr.
Charles W. Bischoff Richard Ruggles
Joseph B. Kadane J. 1\L Montias
Van Doom Ooms Jon Cohen
Scott M. Eddie John Wilson
James Land Hugh Swartz
Arthur Wright John McGowan
David H. Levey Richard N. Copper
Charles E. Lindblom Howard Pack
Rand Corp:
13 sigiiatures-names not as yet received
PAGENO="0251"
691
BY EDWARD E. SCHWARTZ
Reprinted from Journal of the N.A.S.W.,
SOCIAL WORK - Vol. 9, No. 3, July 1961+
A Way To End the Means Test
THE KENNEDY-JOHNSON war on poverty is
avowedly aimed at the abolition of poverty.
The grand strategy as revealed thus far is
prevention through increased provision of
gainful employment.
The social work profession has long been
committed to the objectives of this war and
to the strategy of prevention. Social workers
strongly support measures for increasing the
demand for employment and for preparing
young persons and displaced workers better
to meet the demands of the labor market
through improved educational, health, and
other community services. Yet at any given
time not all persons and families will-or
necessarily should-be related to a payroll.
To insure victory the attack on unemploy-
ment must be supported by a system of de-
fense that will assure the maintenance of
income for all families. The treatment of
poverty, like the treatment of other ills,
through alleviation, reduction, and control,
is in itself a necessary form of prevention
against the spread and perpetuation of the
problem. This may seem obvious to social
workers, but it is also obvious that this fact
has to be repeated frequently.
The current chief defense against poverty
is, of course, the social security system; the
last line of this defense is public assistance.
A most notable aspect of the public assist-
ance programs in the United States today is
the dissatisfaction expressed toward them by
all parties concerned-the applicants for
and the recipients of assistance, the rank-
and-file of public assistance staff, legislators,
and the public at large-and it is hardly
possible to exaggerate the extent and depth
of this dissatisfaction. The treatment as-
pect of the war on poverty will require a
more effective operation than can be pro-
vided through our battered, tired public
assistance programs. The public assistance
programs will not be good enough even
though they be pasted together with surplus-
food stamps, glossed over with pseudo-serv-
ice amendments, or even braced up with
Kerr-Mills old age medical payments.
Like many other groups in the popula-
tion, social workers have become increas-
ingly critical of the public assistance pro-
grams, but for their own reasons. They have
shown their skepticism of the possibilities of
APPENDIX 18
EDWARD E. SCHWARTZ, Ph.D., is George Herbert
Jones Professor, School of Social Service Administra-
tion, University of Chicago, Chicago, Illinois.
PAGENO="0252"
692
providing high-standard professional serv-
ices within the framework of public assis-
tance agencies clearly, but chiefly silently,
by staying away in droves from emp1o~ment
in these programs. More recently a few
lonely academics, crying in the wastelands,
have publicly raised important questions
and given vent tQ righteous indignation
about the vagaries and Inequities of th~
treatment of the poor.1
The recent social work literature of this
country appears to offer no specific pro-
posals that would be better suited to con-
temporary society than is public assistance
for maintaining the income of the millions
of impoverished families who are untouch-
able ("not covered") by the "social insur-
ances." Recently Walter C. Bentrup in-
veighed, feelingly and effectively, against
the archaic public assistance means test ap-
proach and challenged the social work pro-
fession ". . . to visualize the characteristics
of a better one." 2 The purpose of this
article is to propose an income maintenance
program that would involve neither a means
test nor contributions to an earmarked in-
surance fund and to discuss some of the
salient features of this plan.
FAMILY SECURiTY PROGRAM
The proper treatment of poverty in the
United States today is for the federal govern-
ment to guarantee to every family and per-
son in this country, as a right, income suffi-
cient to maintain a level of living consonant
with American standards for the growth and
development of children and youth and for
the physical and mental health and social
well-being of all persons. The right to a
livelihood must be recognized and guaran-
teed as a constitutional civil right. The
most satisfactory way to implement such a
1 See Eveline M. Burns, "What's Wrong With
Public Welfare?" Social Service Review, Vol. 36,
No. 2 (June 1962), pp. 111-122; and Alan D. Wade,
"Social Work and Political Action," Social Work,
Vol. 8, No. 4 (October 1963), pp. 3-10.
2 "The Profession and the Means Test," Social
Work, Vol. 9, No. 2 (April 1964), pp. 10-17.
guarantee is through a modification and
expansion of the present mechanism for the
collection of the federal income tax.
Every person who is either time head of a
family or is not a member of any family
would file each year a financial statement of
his anticipated income for the coming year,
as well as a statement of his income for the
past year, and information on the number
of his dependents. If his anticipated in-
come for the coming yearis below his Feder-
ally Guaranteed Minimum Income (FGMI)
he may then file a claim for a Family Secur-
ity Benefit (FSB) in the amount of the differ-
ence. If his anticipated income is above his
FGMI he will pay an income tax as under
present tax law and procedures. After the
first year of operation of the Family Security
Program, reports of a family's income for
the past year and any changes in the number
and kinds of dependents will be used to
revise prior statements of anticipated in-
come and to make adjustments of Family
Security Benefits received for the past year.
Reports of income on which benefits are
based will be made in the same style used
for individual income tax returns. Methods
of checking and auditing of claims for FSB
will be developed as expansions of present
methods for processing individual income
tax returns. This includes field investiga-
tion of a sample of cases and of all cases
that are highly complex, questionable, or
involve large sums. Procedures for checking
and auditing will include those recently in-
stituted by the Internal Revenue Service for
charging to the individual account of each
taxpayer all payments to him of wages,
salaries, and other income now subject to
identification by a social security number.
The kind of automatic data processing
equipment now installed at Morgantown,
West Virginia, for checking income tax re-
turns against collated information on in-
come payments to individuals can be used
as well for checking the validity and accur-
acy of claims for FSB.
The level of the FGMI for families of dif-
ferent size will be established by a presiden-
PAGENO="0253"
693
tial commission. Provision will be made in
the legislation for annual automatic adjust-
ments of dollar amounts on the basis of
changes in an appropriate cost-of-living in-
dex and for decennial adjustments to reflect
changes in standards of living as indicated
by appropriate research.
To what extent should FGMI be adjusted
to differences in family maintenance costs
related to characteristics of members of the
family such as age and sex, or to place of
residence, regional or urban-rural? Al-
though the use of computers and automatic
data processing makes possible increased
flexibility in the design of a plan, it should
also be recognized that each elaboration in-
creases the complexity of administration
and should be adopted only after the net
advantages are clearly established.
A problem likely to generate popular
interest is involved in the making of FSB
payments to families with limited current
income but substantial non-income or low-
income producing assets. Should FSB pay-
ments be made to an aged couple, for exam-
ple, whose income is below their FGMI
but who have $60,000 invested in tax-free
municipal bonds yielding 3 percent per
annum? Or the widow who lives in her
own home in which she has an equity of
$30,000? A solution to this problem is sug-
gested by the finding that the median net
worth of the fifth of all spending units
(roughly equivalent to the total of families
and unrelated individuals) having the low-
est incomes in 1962 was only $1,000, mostly
in the form of equity in dwellings.3 Persons
claiming FSB could be required to include
in their annual reports of income a state-
ment of their net worth. Families having a
net worth of, perhaps, not over $13,000 of
equity in their own dwellings or $2,000 ex-
clusive of sole equity would then not be
eligible for benefits.
CAN THE NATION AFFORD TH~S?
In discussing the problem of poverty iii
America the President's Council of Eco-
nomic Advisers selected die figure of $3,000
(before taxes and expressed in 1962 prices) as
the minimum income for a decent life for a
non-farm family of four.4 The council noted
a study made by the Social Security Admin-
istration that defines a "low-cost" budget for
a non-farm family of four and finds its cost
in 1962 to have been $3,955. The Bureau of
Labor Statistics City Workers' Budget, also
designed for a family of four, but described
as neither "minimum maintenance" nor
"luxury" but rather as "modest but ade-
quate" when last priced (1959), exclusive of
allowances for the payment of taxes and in-
surance ranged from $4,622 for Houston to
$5,607 in Chicago.5 For the country as a
whole, $5,000 is taken here to represent the
cost of a "modest but adequate" annual
budget for a family of four.
Using these standards as rough guides the
following equally rough estimates may be
made of the general order of magnitude of
total national payments of FSB at the fol-
lowing levels: minimum maintenance level,
$3,000 = $11 billion per annum; economy
level, $4,000=$23 billion per annum;
modest-but-adequate level, $5,000=$38
billion per annum.
The economic feasibility of a proposal for
a Family Security Program at the minimum
maintenance level is specifically attested to
by the Council of Economic Advisers in the
following terms:
Conquest of poverty is well within our
power. About $11 billion a year would
bring all poor families up to the $3,000
income level we have taken to be the
minimum for a decent life. The majority
of the Nation could simply tax themselves
enough to provide the necessary income
supplement to their less fortunate citi-
zens. The burden-one fifth of the an-
nual defense bu(lget, less than 2 percent
of GNP-would certainly not be intoler-
able.6
3 Economic Re/mrt of the President (Washington,
D.C.: ITS. Covernmcnt Printing Office, 1964),- p. 67.
4 lb;d., P. 58.
5 1 Iclen 11. Lani;ile nol Margaret S. Strotz, "The
1,itcritn City Worker's Family Bitdgct," Monthly
labor Revicw, Vol. 83, No. 8 (August 1960), pp.
785-808.
o Economic Re/mit of the Prc~ident, op. cit., p. 77.
PAGENO="0254"
694
The council's report goes on to express a
preference for a solution to the problem of
poverty that would permit Americans "to
earn the American Standard of Living."
However, the report further states:
1~Ve can surely afford greater generosity in
relief of distress, but the major thrust of
our campaign must be against causes
rather than symptoms. `We can afford the
cost of that campaign too.7
The gross national product of the United
States is now about $600 billion per annum.
If the Federally Guaranteed Minimum In-
come for a family of four were set at the
$5,000 per annum modest-but-adequate
level the gross cost would be less than 7 per-
cent of the gross national product-still
quite tolerable. At whatever level the FSB
is set the net cost of benefit payments would
of course depend on the extent to which
these were offset through reductions in ex-
penditures of existing welfare programs.
All public welfare payments under pres-
ent federal, state, and local programs includ-
ing public assistance, veterans' benefits, un-
employment compensation, and old age and
survivors insurance benefits, but excluding
health and education, now total about $33
billion. Public assistance payments alone
are close to $5 billion and almost the entire
amount could be taken immediately as an
offset against payments of Family Security
Benefits. Savings from other welfare pro-
grams would be dependent on the extent
and rate at which they could be "phased
out." Appreciable savings would also be ef-
fected through the substitution of modern
accounting and auditing techniques and
the use of automatic data processing for the
~ costly, slow, and labor-consuming
procedures for determining initial and con-
tinuing eligibility of each family through
office interviews, home visits, investigation
of each family's income and resources, and
computation of individual budgets and
budget deficits on a case-by-case basis.
A fresh and useful perspective on how
muth this country can afford to spend for
7 Ibid.
welfare measures may he gained by a look
abroad. Data gathered by Gordon show
public welfare expenditures in various na-
tions as a percent of national incothe in
1950, 1953, and 1957.8 In each year the
United States ranked lower than any of the
sixteen western and eastern European coun-
tries reported, and lower than Canada,
Chile, Australia, New Zealand, and Israel.
The only nations reported that are out-
ranked by the United States in this "mea-
sure of welfare effort" are Guatemala, four
Asian, and three African and Middle East-
ern countries.
In a recent analysis of the share of in-
dustrial production allocated to tl1e bene-
ficiaries of governmental welfare programs,
Colm selected for comparison Sweden as the
western European country most advanced
toward the "welfare state" and Germany as
that which is often considered the nearest
approximation to a "free enterprise"
country. He found that the relative size
of social welfare expenditures was about
the same in both countries and considerably
higher than in the United States. He de-
clares that there is a great deal of un-
finished business in the development of
our social welfare programs and concludes:
With the technical knowledge of our
age we will have the material means
available for eliminating poverty as a
mass phenomena [sic]. We can only hope
that we will also develop the attitudes
necessary to use these resources for the
benefit of those who will not auto-
matically benefit from economic growth
and rising incomes and from the conven-
tional security and welfare Jn'ograms.
[Author's italics.] °
Now that our war on poverty blows hot we
should be able to find the wherewithal to
wage it.
8 Margaret S. Gordon, The Economics of Welfare
Policies (New York: Columbia University Press,
1963), pp. 15-16.
Gerliard Coim, "The Economic Base and Limits
of Social Welfare," Monthly Labor Review, Vol. 86.
No. 6 (June 1963), pp. 695-700.
PAGENO="0255"
695
ORIGINS OF THE PROPOSAL
Schemes for a redistribution of income have
a long and interesting history and in fact
and iii fancy constitute a substantial portion
of Utopian literature.'0 Utopian ideas repre-
sent leaps-sometimes highly creative and
fruitful leaps-into the future. Proposals
for social policy, such as this modest one,
are more likely to be simply a drawing
together and reformulation of existing ideas
about a state of affairs deemed more de-
sirable than the existing situation and one
that may be achieved by a series of specified
actions, that is, through a plan. An exam-
ination of the origins of the essential ideas
brought together in this proposal for a
Family Security Program will serve to point
up some of the issues that will have to be
faced in considering a plan of action.
The present proposal derives somewhat
from the literature and history of family
allowances, but more directly from the writ-
ings of Lady Rhys Williams. Her proposal
is for a new social contract
whereby the State would acknowledge
the duty to maintain the individual and
his children at all times and to assure
for them all of the necessities of a healthy
life. The individual in his turn would
acknowledge it to be his duty to divert his
best efforts to the production of the
wealth whereby alone the welfare of the
community can be maintained.'1
Under this contract a benefit would be
paid to every person who is employed or
10 See, for example, Lewis Mumford, The Story
of Utopias (New York: Boni and Livewright, 1922).
In the present atomic-space age it is easy~ to forget
that the earliest form of science fiction was social-
science fiction and that this genre too had its uses.
Shall we also think on why latter-day social-science
fiction (e.g., Huxley's Brave New World, Orwell's
1981) is not Utopian but "Dystopian"?
11 Lady Juliet Rhys Williams, Something to Look
Forward to (London, England: MacDonald and
Company, 1943), p. 145. This book is, unfortunately,
out of print, but a short selection from it appears
in William D. Grampp and Emanuel T. Weiler,
Economic Policy, Readings in Political Economy
(Homewood, Ill.: Richard D. Irwin, 1953), pp. 284-
292.
unemployable, or, if unemployed, is will-
ing to accept suitable employment. Bene-
fits would be paid in addition to earnings
and income from other sources. Financing
would be through a flat rate income tax
that, when combined with per capita bene-
fit payments, would produce the net effect
of a progressive income tax.
The social contract is designed to solve the
following problems: (1) the distribution of
wealth, (2) the freeing of the unemployed to
undertake part-time work for profit, (3) the
maintenance of a stable price level, (4) the
ending of opposition between taxpayers and
state beneficiaries, (5) the complete aboli-
tion of the means test, without involving
state bankruptcy, (6) the maintenance of
full employment, without resort to compul-
sory labor. Considering the number and
magnitude of its objectives, the social con-
tract idea seems disarmingly simple, but
when subjected to analysis turns out to be
amazingly powerful. The Beveridge plan,
which relies heavily on the social insurance
principle and was developed contempora-
neously with Something to Look Forward
to, won immediate political interest and
support. Subsequent critiques by compe-
tent British economists point to distinct
advantages in the new social contract.'2
In this country, Friedman and Theobald
recently proposed ways of treating poverty
that are reminiscent of Lady Rhys Williams'
writings.'8 The similarity of Friedman's
and Theobald's proposals is noteworthy in
view of the marked variations in their gen-
eral stance and economic philosophies.
Friedman identifies himself as a liberal,
in the nineteenth-century meaning of that
12 Alan T. Peacock, The Economics of National
insurance (London, England: William Hodge &
Company, 1952), p. 94 if. See also Denstone Berry,
"Modern Welfare Analysis and the Forms of Income
Distribution," in Alan T. Peacock, ed., income Re-
distribution and Social Policy (London, England:
Jonothan Cape, 1954), pp. 41-51.
i2 Milton Friedman, Capitalism and Freedom
(Chicago: University of Chicago Press, 1962); Rob-
ert Theobald, Free Men and Free Markets (New
York: Clarkson and Tatten, 1953).
PAGENO="0256"
696
term. He is committed to political decen-
tralization and to economic reliance on pri-
vate voluntary arrangements arrived at in
the marketplace. He believes that the most
desirable way of alleviating poverty is
through private charity, but recognizes that
government action is necessary, at least in
large impersonal communities. Friedman's
proposal, which he terms "a negative in-
come tax," is that if an individual's income
is less than the sums of his exemptions and
his deductions he would receive from the
government as an income subsidy a percen-
tage of the difference. The levels at which
subsidies would be set would be determined
by how much taxpayers are willing to tax
themselves.14
If Friedman's philosophy is characterized
as the liberalism of the nineteenth century,
then Theobald's can safely be placed in the
twentieth century-if not later. Theobald's
proposal for basic economic security is as
follows:
One of the fundamental principles of the
present United States tax system is the
"exemption" of a part of an individual's
income from taxation. At its inception,
this exemption insured that taxes would
not be paid on that portion of income re-
quired to provide a reasonable standard
of living. However, the Government lost
sight of this aim when increasing the tax
load to pay for World War II, and the
value of this exemption has been further
reduced since the end of World War II by
the effects of inflation. The original aim
of the federal tax exemption should be
raised immediately to a level which would
guarantee an un-taxed income adequate
for minimum subsistence. Those whose
incomes from earnings or from capital did
not reach this level would then be entitled
to receive further government payments
sufficient to raise the incomes to this level
and assure their basic economic support?~
Theobald points out that the provision of
medical care as well as education as a com-
munity responsibility would simplify the
establishment of appropriate levels of basic
economic security. A consulting economist,
he is primarily concerned with the effects
of technology, especially cybernetics, the
combination of automation and computers,
on the distribution of income and on the
labor market. He believes that because of
the increased productive capacity of our
economy it is not only unnecessary but im-
practical to attempt to make everyone's live-
lihood dependent upon his working. He
accepts the position that Galbraith de-
veloped in The Affluent Society that we are
in an economy of abundance rather than
in an economy of scarcity and asserts that
an absolute constitutional right to a "due
income" is not only possible but essential
for the future of the economy.le
THE INCENTIVE TO WORK
Arguments against the treatment of poverty
through the use of taxes represent a curious
congeries of theories, ideas, and biases.
Some are of historic interest only, some per-
sist over time, and still others may be of
more recent coinage.'7 For example, the
early attacks against the Elizabethan Poor
Laws launched by Malthusian enthusiasts:
in its current form this movement has, of
course, been diverted from criticisms con-
cerning support by the state of the "spawn-
ing poor" to the support of birth control
programs. The banner of Social Darwin-
ism has long been raised against the puny
forces of poor relief in this country, and
garnished by the symbols of racial preju-
dice it is still flaunted in the benighted
backwoods around certain state capitals.
Some of the disadvantages of the direct
treatment of poverty cited by some con-
temporary economists are (1) it must be
done over and over again and (2) productiv-
ity may be inhibited by (a) diverting money
16 John Kenneth Gaibraith, The Affluent Society
(Boston: Houghton-Mifflin Co., 1958).
lTSamuel Mencher, "The Changing Balance of
Status and Contract in Assistance Policy," Social
Service Review, VoL 35, No. 1 (March 1961), PP.
17-32.
14 Friedman, ibid., PP. 190-192.
`~ Theobald, op. cit., PP. 192-193.
PAGENO="0257"
697
From capital formation and from investment
in the nation's industrial plant to taxes and
(b) reducing the incentive to work, and
especially to work as much as possible.18
The only comment that will be made here
about the criticism listed first is that, al-
though true, it can also be leveled against
eating. The current curious and unique
phenomenon of universally bullish eco-
nomic indicators together with the recent
tax reduction should help to mute although
not inhibit continued expressions of anxiety
about the tax burden.
The chief argument against the present
proposal and in favor of the retention of
the means test is also one that can be ex-
pected to persist over time and that is based
on the theory that by insuring everyone a
livelihood and removing the whiplash of
hunger "most folk won't work"-and that
this will be not only demoralizing for the
general populace but ruinous of the econ-
omy. Social workers and others famil-
iar with modern dynamic psychology may
contend that this fear and the argument as a
whole derive from an outmoded, simplistic
view of human behavior. We can also op-
pose our professional ethic of ameliorism
against what may appear to us to be an un-
duly pessimistic view of human nature and
we can, if need be, produce a considerable
amount of clinical evidence to show that
mature individuals strive to be productive.
However, perhaps the best that can be
hoped for here is a verdict of "not proved,"
for there appears to be an absence of the
kind of data needed for policy formulation.
Lady Rhys Williams posits the necessity
of providing economic incentives for work
as one of the basic tenets of the social
contract. Her proposal, like state unemploy-
ment compensation laws, provides for pay-
ment only if persons accept suitable em-
ployment. At the other extreme, Theobald's
basic economic security plan is focused on
the problem of too few jobs rather than on
the problem of too few takers, and it
seems likely that increasing numbers of
people will agree with his contention that it
is unjust to insist that a person work or
starve if no one will give him a job.
Friedman says of his proposal:
Like any other measures to alleviate pov-
erty it reduces the incentive of those
helped to help themselves but it does
not eliminate that incentive entirely as a
system of supplementing incomes up to
some fixed minimum worth. An extra
dollar earned always means more money
available for expenditure.19
This effect is gained under Friedman's pro-
posal because the subsidies granted are a
fraction of the sum of personal exemption
and deductions, which in turn may or may
not equal the required income. Friedman's
built-in incentive feature is therefore ob-
tainable only at the expense of sacrificing
the assurance that all families will receive
the income they need.
A work incentive feature can be incorpo-
rated into the present proposal for a Family
Security Program without sacrificing the
guarantee of a minimum income merely by
reducing Family Security Benefits by a per-
centage of earnings. Assuming a family of
four and a Federally Guaranteed Minimum
Income of $3,000 the effects of reducing
FSB by a percentage that would increase
with each earnings bracket is demonstrated
in Table 1.
The net effect in this illustration would
be that in addition to receiving a $3,000
FSB, families earning up to $1,000 would
T~k1tLE1
Earned
Total
Income
FSB/Taxes
Income
$0-$ 999
$3,000-$2,400
$3,000-$3,399
1,000- 1,999
2,399- 1,700
3,399- 3,699
2,000- 2,999
1,699- 900
3,699- 3,899
3,000- 3,999
899- 0
3,899- 3,999
4,000- 4,499
0
4,000- 4,499
4,500 and above
Tax on amounts
above $4,500
4,500+
`a op. cii., p.
192.
18 AlIen G. B. Fisher, "Alternative Techniques
for Promoting Equality in a Capitalist Society," in
Grampp and Weiler, op. cit., pp. 277-278.
PAGENO="0258"
retain up to 40 percent of such earnings. If
family earnings were between $1,000 and
$1,999 the family would retain between 35
and 40 percent of this income in addition
to their FSB, and so on. An extension of
the work incentive feature is gained by fix-
ing an income bracket within which a
family could not claim FSB but would be
tax exempt. Families earning from $4,000
to $4,500 would receive no FSB and would
pay no taxes. Families earning above $4,500
would rcccive no FSB and would pay taxes
only on income above $4,500.
Total national expenditures for FSB pay-
ments including incentive allowances for
earnings if the FGMI were set at $3,000 for
a family of four would of course fall be-
tween previous estimates of $11 and $23
billion. Substantial additional costs, how-
ever, would arise from narrowing the pres-
ent tax base as a result of exempting family
income up to $4,500, in the form of reduced
revenues from the income tax.
The Law of Parsimony, the dictates of
administrative simplicity, and the social
work ethic would all argue against includ-
ing the incentive feature in the FSB plan,
unless and until experience indicates the
need for it. However, this is the kind of
issue that, if properly structured, may pro-
vide reasonable men with grounds for agree-
inent. And those who feel strongly about
the necessity of a work incentive should
have the opportunity of considering the pay-
ment of the additional cost.
FSB AND SOCiAL WELFARE MANPOWER
Of the 105,000 social welfare workers in the
United States, 35,000 or one-third are em-
ployed in state and local public assistance
agencies.2° The overwhelming proportion
of the time of public assistance staffs goes
into the mechanics of eligibility determina-
tion and the handling of details of financial
assistance and precious little into the pro-
vision of restorative, rehabilitative, thera-
698
peutic, integrative, socializing services. Sug-
gestions have been made from time to time
that one way of achieving a better balance
in public assistance progr'ams between the
provision of financial service and other wel-
fare services would be to establish function-
ally specialized staff units for each type of
service in the same agency or possibly in two
separate agencies.2' The weakness of this
type of proposal is that it does not go far
enough. As long as the two functions-the
administration of financial service and of
other welfare services-appear to require
the same kind of activity (e.g., interviewing,
traveling, home visiting) by the same kind
of staff and with the same clientele it seems
highly unlikely that many administrative
takers will be found. Contrast with this the
evident and substantial gains in the efficient
utilization of manpower that would be
made available by the adoption of the pol-
icies and procedures possible under the
federal Family Security Program.
The establishment of a federal Family Se-
curity Program would enable state and lo-
cal public welfare agencies to change the
focus and emphasis of their programs in
the direction so presciently indicated by
the change in the name of the federal
Bureau of Public Assistance to the Bureau
of Family Services. Poverty is, of course,
sometimes preceded by psychological, emo-
tional, health, and other problems of the
individual. However, social workers will
testify that of far greater import is the ef-
fect chronic, hopeless, and grinding pov-
erty, produced by massive external social
and economic forces, has on the appearance
and exacerbation of problems in the indi-
vidual and his family. These effects may
persist even after financial support is pro-
vided and are likely to be of an order that
require and respond to social work treat-
ment, fortified by a strong battery of com-
munity welfare services.
An important part of a plan to transfer
the income maintenance function of the
21 See Editor's Page, Social Work, Vol. 7, No. 1
(January 1962), P. 128; and Eveline M. Burns, op.
cit., P. 122.
20 Salaries and Working Conditions of Social
Welfare Manpower in 1960 (New York: National
Social Welfare Assembly, undated), P. 20. Figures
given are exclusive of recreation workers.
PAGENO="0259"
699
public assistance programs to a federal
Family Security Program would be to ex-
tend and expand the extremely limited
range of state and loi~a1 welfare services now
provided through public assistance agen-
cies, and to fashion them into a comprehen-
sive flexible program of public services for
families. Together with our developing
public child welfare service programs we
would then have an organizational base for
a well-rounded public welfare service avail-
able to all the people. Freed of the incubus
of the means test and properly selected and
equipped and well related to the commun-
ity and to the social work and other profes-
sions, state and local public welfare staffs
would have a fair and rare opportunity of
making a great contribution to the war
against poverty.
POUT~CAL R~AL!T~ES -
Politicians as well as caseworkers know how
to "partialize," and among the kinds of
questions that will be asked about the
present proposal sooner or later will be,
"Do you have to have all of this?" and
"What part of this is most important?" One
possible pioy will be, "Let's start with
children or better yet the aged-they vote."
Almost two decades ago the writer sug-
gested that the unfolding of the Canadian
experience with family allowances could
be observed with benefit by those in the
United States who are concerned with social
security and child welfare.22 Over the years
social workers, when overwhelmed by pub-
lic assistance bureaupathology, are wont to
murmur rather wistfully that perhaps they
ought to start thinking about family allow-
ances. It is, of course, possible that the
present proposal to abolish the means test
may not seem to be overly modest to some
people and we may be forced to settle at this
time for a family allowances program. But
this should be resisted even by those of us
who think children are the most important
people but who would also like to prevent
further "hardening of the categories" and
increased complexity in the intricate mosaic
or crazy-quilt pattern that characterizes our
present social security and welfare nonsys-
tern. The case for starting a noncontribu-
tory Family Security Program for the aged
might have political appeal, but the fact is
that parents of children vote too.
Temporizing is another technique of
practical politics and, in a form that social
workers themselves have been known to use,
includes the appeal to "demonstration and
research." We must have research and we
must also be clear about the function of
research and how it differs from careful
planning, detailing, documentation, and
justification of proposals for social policy.
Nevertheless, consideration may well be
given to the desirability of a geographically
limited demonstration of some aspects of
the proposal for an FSB plan. For example,
through use of federally available research
and demonstration funds a state welfare
agency might develop a procedure for check-
ing the feasibility of a central mechanical
check of eligibility through the use of data
processing equipment after the necessary ar-
rangements were made for social security or
other numerical identification of all salary,
wages, and other types of income payments
within the state.
This kind of jurisdiction-limited demon-
stration would appear to be feasible in a
state having a small daily commuting popu-
lation and an effective state income tax law.
Financing of assistance payments in this
kind of demonstration would not require
new federal legislation inasmuch as nothing
in the present public assistance titles of the
Social Security Act requires the kind of
means test currently used and states are free
to submit their own plans for determining
need. One of the points of administrative
interest in such a demonstration would be a
check on possible differences in the com-
pleteness of social security identification of
income in low- as compared with middle-
and upper-income brackets. Other admin-
istrative problems such as the frequency of
22 Edward E. Schwartz, "Some Observations on
the Canadian Family Allowance Program," Social
Service Review, Vol. 20, No. 4 (December 1946),
pp. 451-473.
PAGENO="0260"
FSB payments and methods of adjusting
reports of anticipated income to subsequent
experience could also be tested in practice
on a restricted demonstration basis. Nec-
essary research on an FSB program would
of course be expedited if there is clear evi-
dence of interest in abolishing the means
test.
If a Family Security Program can be ad-
ministered on a state basis, why go to a
centralized federal program? The answer
to this, in part, is that not all states meet
the conditions necessary for a demonstration
and that in a population as mobile as ours,
national administration would appear to be
an administrative prerequisite. A more
fundamental reason is simply that the ex-
perience of the past three decades clearly
points to the greater probability of meeting
the most essential elements of a Family Se-
curity Program-the right to an adequate
and equitable income-through a federally
administered program than through a fed-
eral-state grant-in-aid scheme. Some of the
disadvantages of the public assistance ap-
proach have been documented as follows:
In theory, public assistance should take
care of all current need, coming into play
when all other sources of income fall
short of socially acceptable minimum
levels and underpinning all other income-
maintenance programs. How far short
of this standard the existing public as-
sistance programs fall can be measured
in several ways.
One recent study used as a standard
of need twice the amount of a low-cost
food budget as calculated, with regional
variations, by the Department of Agricul-
ture.23 A standard Under which 50 per-
cent of total income must go for food is
minimal indeed. Yet in 1958, to meet
this standard, assistance payments for
families receiving aid to families with de-
pendent children would have needed to
be increased for the country as a whole
by 72 percent. . . . In the West a 27-per-
cent increase would have brought actual
28 Ellen J. Perkins, "Unmet Need in Public As-
sistance," Social Security Bulletin, Vol. 23, No. 4
(April 1960), pp. 3-11.
700
expenditures to the level where they
would meet the standard, and in the
South a 149-percent increase wouki have
been required.
It was estimated that to provide an
income of twice the cost of a low-cost food
budget to all persons on the public assist-
ance rolls in 1958 would have required ex-
penditure of $1 billion more than the S3
billion actually spent for public assistance
by all levels of government in that year.
The Michigan study referred to earlier
found that less than one-fourth of the
families living in poverty in 1959 were
receiving public assistance.24
Public assistance is a Federal-State pro-
gram, with levels of assistance and condi-
tions of eligibility determined by the
individual States. For this reason the rais-
ing of standards for public assistance is a
far more complex and difficult problem
than it is for a national insurance pro-
gram. It must be noted, also, that Federal
financial aid is available only for selected
categories; general assistance is financed
entirely by State and local funds and in
many places entirely by local funds. It
is important to keep in mind these struc-
tural barriers to the transfer of resources
released by disarmament.25
The possibility of obtaining equitable and
adequate support for families in all the
states through the federal-state public as-
sistance program may well be more re-
mote-and in that sense more Utopian-
than through a conversion to the proposed
federal Family Security Program.
SOCIAL WORK'S CONTRIBUTION
Assuming that the reader has quickly ad-
justed to the idea of standing the income tax
on its head and that he has perceptively
grasped the economic and administrative
feasibility of a federal Family Security Pro-
24 James M. Morgan et al., income and Welfare
in the United States (New York: McGraw-Hill Book
Co., 1962).
25 Ida C. Merriam, "Social Welfare Opportunities
and Necessities Attendant on Disasinament," Social
Security Bulletin, Vol. 26, No. 10 (October 1963),
pp. 10-14.
PAGENO="0261"
701
gram, as well as the compelling logic and
inherent social justice of this modest pro-
posal, he should now have no difficulty in
recognizing the appeal it will have not only
to prospective beneficiaries, but to fair-
minded, democratic voters in general. He
will also recognize that insuring the civil
right to a livelihood is inextricably bound
up with protecting the civil rights of ethnic
minorities, and the drive for each must
be mutually supportive.
Social workers have here the ingredients
for effective social action-a cause to which
they can dedicate themselves without re-
serve-a friendly administrative atmos-
phere, opportune timing in relation to the
beginning reduction in expenditures for
armament, and the "seed corn" resources to
get things started. The National Associa-
tion of Social Workers is now a larger, more
complex organization than many of us are
used to being in or using. By the same
token, it has the potential resources in
finances and structure to serve as at least
the "secondary mover" in the process of
obtaining favorable public consideration of
this proposal.
The prime movers in social action to
abolish the means test and establish the
right to a livelihood as a constitutional
guarantee must be the individual members
of the association, who can instruct their
chapter and national officers, representa-
tives, and delegates in the association to
declare that as a result of the war on pov-
erty the social work profession is in a state
of emergency. Social work's contribution to
the waging of this war can be fixing the
highest program priority and the greatest
possible focus of association financial and
personnel resources on winning the battle to
abolish the means test and to guarantee a
fair livelihood to all the people of the
nation.
We are aware that substantial gains in
human welfare that require expenditures
of public funds are hard to come by, but,
if social workers do not fight for them, who
will? And, if someone else does and we do
not, then what are we~
PAGENO="0262"
PAGENO="0263"
BY ALVIN L. SCHORR
703
Alternatives in Income Maintenance
The author presents six distinctive approaches to Income maintenance, Identifying
their basic assumptions and controlling issues, and rejects or locates each approach
within the system that will take shape over time. His primary concern is with
suggestion of a pluralistic approach in order to assure income for all Americans.
SOCIAL WORKERS HAVE a tendency to proceed
on issues of domestic policy in terms of
sweeping simplicities. Certainly, the pub-
lic has been presented in grossly simplified
terms with such matters as the services is-
sue in public assistance and the notion
of an all-inclusive, noncategorical public
assistance system. Although we may have
thought these issues through more deeply
than our presentation reflects, we have paid
a penalty for each oversimplification, a
penalty it would be useful to avoid in think-
ing through income maintenance for the
1970's.
It is to be hoped that the profession will
not treat the search for a workable system
as if it were shopping for a new automobile
-trying to pick the single income mainte-
nance program with the shiniest look and
the best ride to replace the vehicles that
now serve us. For the likelihood is that
nothing will be traded in when we adopt
our newest program. We shall have a some-
what more diverse array of programs, pro-
viding much better support for people's in-
comes-if we choose well-and much more
nuisance to the orderly minded among
scholars and administrators. This is both
ALVIN L SCHORR, MSW, is Deputy Chief, Research
and Planning, Office of Economic Opportunity,
Washington, D.C. This paper was presented at the
NASW National Seminar on Social Action, Chicago,
Illinois, May 1966.
a prediction of what is likely to happen and
the writer's personal view of what would be
best.
The half dozen distinctive approaches
to income maintenance are readily defined
and their advantages and disadvantages not
hard to state. Unfortunately, this kind of
presentation pits one program against
another, as if to force a choice among them.
Moreover, even a carefully defined pro-
gram is shaped in each person's mind by
what he thinks a number of other programs
will be doing. With assumptions about
surrounding programs not fixed, contend-
ing arguments fail to meet.
In order to avoid this, the writer has
chosen to name each type of approach to
income maintenance, identify the assump-
tions and issues that seem controlling, and
either reject that type of program or locate
it within the system that will take shape
in perhaps the next ten years. Six distinct
types of programs will be defined and dis-
cussed: public assistance, in-kind, social
security, negative income tax, guaranteed
income or universal demogrant, and the
partial demogrant.1
1 In addition to citations elsewhere in this article,
the following articles will provide a broad back-
ground on the basic issues in income maintenance:
Edith Abbott, "Public Assistance-Whither Bound?"
Proceedings of the National Conference of Social
Work, 1937 (Chicago: University of Chicago Press,
Reprinted from SOCIAL WORK, Vol. 11, No. 3, July, 1966
NATIONAL ASSOCIATION OF SOCIAL WORKERS
2 Park Avenue, New York, N. Y. 10016
PAGENO="0264"
WORK IS NOT REPLACED
704
We begin with a set of assumptions that
is, in a narrow sense, not income mainte-
nance at all. One assumes that work will
constitute the major source of income for
American families in the foreseeable fu-
ture. It has, of course, been argued
fluently that computers and automatic
equipment are rapidly making man's work
obsolete. The evidence does not seem
compelling; most recently the National
Commission on Technology, Automation,
and Economic Progress came to the follow-
ing conclusion:
There has been some increase in the pace
of technological change . . . but there has
not been and there is no evidence that
1937), pp. 3-25; Lord William Beveridge, Social In-
surance and Allied Services (New York: Macmillan
Co., 1942); Eveline M. Burns, Social Security and
Public Policy (New York: McGraw-Hill Book Co.,
1956); Burns, "Social Security in Evolution: Toward
What?" Social Service Review, Vol. 39, No. 2 (June
1965), pp. 129-140; Committee on Economic Secur-
ity, Report to the President of the Committee on
Economic Security (Washington, D.C.: Government
Printing Office, 1935); Paul H. Douglas, Wages and
the Family (Chicago: University of Chicago Press,
1927); Milton Friedman, Capitalism and Freedom
(Chicago: University of Chicago Press, 1962);
Christopher Green, "Transfer by Taxation: An
Approach to Income Maintenance," unpublished
dissertation, Brookings Institution, 1966; Robert J.
Lampman, "Negative Rates Income Taxation,"
paper prepared for the Office of Economic Oppor-
tunity, Washington, D.C., August 1965 (mimeo-
graphed); Tony Lynes, "A Policy for Family
Incomes," The Listener, Vol. 73, No. 1878 (March
25, 1965), pp. 436-437; Alva Myrdal, Nation and Fam-
ily (New York: Harper & Bros., 1941); Lady Juliet
Rhys-Williams, Family Allowances and Social Se-
curity, Lady Rhys-Williams' Scheme (London: Lib-
eral Publications Department, 1944); Alvin L.
Schorr, "The Family Cycle and Income Develop-
ment," Social Security Bulletin, Vol. 29, No. 2 (Feb-
ruary 1966), pp. 14-25; Schorr, "Program for the So-
cial Orphans," New York Ti;sses Magazine (March
13, 1966), pp. 32-33, 101-105; James Tobin, "On Im-
proving the Economic Status of the Negro," Dae-
dalus, Vol. 94, No. 4 (Fall 1965), pp. 878-898; James
C. Vadakin, Family Allowances (Oxford, Ohio: Uni-
versity of Miami Press, 1958).
there will be in the decade ahead an
acceleration in technological change
more rapid than the growth of demand
can offset, given adequate public policies.2
Side by side with the economic factor is
a psychological one. Americans are greatly
devoted to work or at least to a belief in its
virtue for one's character and for feelings
of personal worth. Because such values
have force, it is likely that while work
diminishes modestly we shall methodically.
be inventing an outlook that denies the
change and that clothes leisure with the
semblance of work. One may take a year
off to travel but it will be called a reward
for outstanding work or a training period
for work that is to come. One may daily
in the most pleasant cities of the world but
it will certainly be to confer with one's
peers or otherwise to improve oneself. One
may start work older and retire younger,
but patently because the demands of mod-
em work require more education and
justify earlier retirement. -
For these reasons-both economic and
psychological-the writer does not visualize
a set of income maintenance programs that
widely replace work. We recognize the
significance of ready availability of work
for those for whom it is appropriate, given
the attitudes of the time. Any man strug-
gles with resentment and self-doubt against
his neighbors' or his own feeling that he
should be working. We cannot provide
him with a less-than-adequate income, but
a job would be better.3
2 Technology and the American Economy, report
of the National Commission on Technology, Auto-
mation, and Economic Progress, Vol. 1 (Washing-
ton, D.C.: Government Printing Office, February
1966), p. 109. See also Alvin L. Schorr, "The New
Radicals: The Triple Revolution," Book Reviews,
Social Work, Vol. 10, No. 1 (January 1965), pp.
112-114.
3 Here one could discuss the significance of the
minimum wage and of publicly provided employ-
ment opportunities. They are of course important
but for the purposes of this discussion are not
regarded as income maintenance.
PAGENO="0265"
PUBLIC ASSISTANCE
705
The income maintenance program with
which we are most familiar is public as-
sistance. Definitions of this are tricky and
slip away as one explores other income
maintenance possibilities; it is here de-
fined operationally as the income mainte-
nance program administered by welfare de-
partments. At the moment the program
rests universally on a means test, that is,
an individual determination of needs and
resources applicant by applicant. The
means test l1as proved to be a degrading
experience for many applicants. It has
pitted workers against clients and is ter-
ribly wasteful both of money and profes-
sional time. The NASW Delegate Assem-
bly acted in 1964 to oppose continued use
of the means test.4 At the least, that im-
plies a radical simplification of the ad-
ministration of public assistance-a simple
scale of family needs instead of budgeting,
and affidavits instead of interviews and
proofs.
Two other problems with respect to pub-
lic assistance are the low levels at which
assistance is paid and the fact that so many
people are not helped. Virtually no recip-
ient receives help at a level that avoids pov-
erty; in general, AFDC children are treated
with special penuriousness. Only about one
poor person in four receives help at any
given time. For these reasons, the profession
has from time to time proposed a noncate-
gorical program (or the addition of a miscel-
laneous category to the existing program,
which would achieve the same result) and a
mandatory federal standard of minimum
payments. Such a program can be achieved
only if the federal government is willing to
operate public assistance programs-at
least in some areas-for some states do not
have the resources to contribute even a
small percentage of the cost and others
would not be willing to do so. The issue
of federal operation will not be considered
here; instead the sort of program that
would result from these three proposals
will be pointed out.
There would be 30 million people or
more receiving public assistance at levels
not lower than the definition of the pov-
erty line. Among these would be men and
women who are or might be able to work;
no investigations would be made of them,
nor would they be asked why they are not
working. The problem of incentive-about
which we have been so troubled recently-
would be compounded. No one who could
work full time at the minimum wage or
even a little more would gain much in in-
come by leaving public assistance. In-
centive scales can be devised that might
cope with this problem, but they get
caught between opposing pressures. Either
the bottom of the scale pushes downward
and many people receive inadequate in-
come or it moves upward and people with
comparatively decent incomes-$5,000 or
$6,000 a year-receive assistance. Finally,
the cost of the program is naturally quite
large.
Because people who are now working
would stop, the cost of the program would
exceed the total poverty deficit in the
United States-perhaps costing annually as
much as $20 billion.
Such a program would not be construc-
tive for many of the people involved. It
is not good for one to feel that no effort
he makes can improve matters for himself.
In any event, the nation would probably not
tolerate such a program. If Congress gave
it serious attention, conditions about em-
ployability and training would certainly be
attached to it, and an investigative pro-
cedure would be added to assure that people
were not simply malingering, that children
were receiving proper care, and so on. We
would shortly be back in the dismal busi-
ness of the means test. Recipients would
feel the keen edge of community dis-
4 "Assembly Backs Minimum Income, Asks
New Membership Proposals," and Wanda Collins,
"The 1964 Delegate Assembly: A Delegate's First-
hand Report," NASW News, Vol. 10, No. 2 (Febru-
ary 1965), pp. .1 and 14 respectively.
96-602 0-68-vol. 11-18
PAGENO="0266"
706
pleasure at their slothfulness and many
would be deterred from asking for help
(that is its purpose, to be sure). We would
once again be tutored in the lesson we seem
never to learn-that the effects of poor laws
are not an accident but deliberate. We
are brutal in the giving of money we define
as relief; we are sweetly charitable only
when we have succeeded in defining the
gift as something else-social security,
urban renewal, business deduction.
In fact, the public assistance program
visualized by the Committee on Economic
Security in 1935 was meant to be residual
-a safety net for a few who fell through
all the other protections. The concept is
as right in the 1960's as it was in the 1930's.
Public assistance does not make a good
mass program.
IN-KIND PROGRAMS
A second type of program that is currently
enjoying a renewal of popularity is the pro.
vision of services or goods "in kind"-re-
cent examples are Medicare, food stamps,
and rent subsidies. Restricted *programs
have on occasion stirred powerful emo-
tions in social workers, but these recent
ones seem to have escaped our wrath. In-
kind programs may represent a public con-
viction that beneficiaries are not to be
trusted to manage their own funds, a view
that certainly went into the development of
the food stamp program, and it is to this
paternalistic implication that many social
workers react.
Despite their resurgence, in-kind pro-
grams are not currently being proposed as
the dominant source of income for anyone;
therefore, not much space will be devoted
to the issues involved. They are probably
a sound type of program so long as they
remain a subsidiary type. They are accept-
able so long as they are not felt as con-
trolling. In-kind programs may be espe-
cially suitable when the public interest is
most deeply engaged (as in the nutrition
of children) or when the state is in a better
position to organize services than the family
would be to buy them (as in medical care
or rent subsidies). We might therefore
seek a very broad extension of three specific
programs-school lunch for children, med-
ical care for those who are not aged, and
rent subsidies to broaden the supply of low-
cost housing.
SOCIAL SECURITY
The social security system offers a third line
of development in income maintenance. In
principle, social security provides benefits
for stipulated risks in exchange for a reg-
ular payment during one's work life. The
program is both categorical-that is, lim-
ited to the aged, the disabled, the orphaned
-and directly tied to work. It has, there-
fore, succeeded brilliantly exactly where
public assistance has failed, in providing a
payment to which everyone agrees the
beneficiary has a right.
By the federal standard of poverty, almost
two out of five people who receive retire-
ment benefits and a larger proportion of
those who do not receive benefits are poor.5
The issue that must be faced is the degree
to which social security is an antipoverty
program. In the wake of the War on Pov-
erty, a certain amount of sentiment has
developed that social security should be
primarily an antipoverty device. The Com-
missioner of Social Security observes that
limiting the program to antipoverty would
have been stirring in 1910, "but we can do
much better in the United States in 1966." ~
Social security may prevent poVerty, to be
sure, but it may also replace income well
above poverty for those who have earned it.
The point of view has much to recommend
it. Quite apart from the effect on others,
limitation of social security might do the
poor a great deal of damage in the end.
5 Mollie Orshansky, "More About the Poor in
1964," Social Security Bulletin, Vol. 29, No. 5 (May
1966), pp. 3-58.
Robert M. Ball, "Policy Issues in Social Secur-
ity," p. 5. Paper presented at the Annual Meeting
of the American Society for Public Administration,
Washington, D.C., April 14, 1956. (Mimeographed.)
PAGENO="0267"
707
There would undoubtedly be a drive to
define such a program in poor law terms
while parallel programs for the nonpoor
were established beside it.
The difficult question is how to appor-
tion benefits within the social security sys-
tem. It may be that we should move by
stages to a minimum benefit that avoids
poverty for most people. The minimum
benefit for an aged person is now ~$44.O0;
doubling the figure would be a long step
toward the desired objective. Wage-related
benefits, justified by higher earnings, would
also be raised but not as quickly at first.
Such a strategy would provide an interest-
ing international reversal. England and
Sweden began their systems with a flat-rate
payment that was essentially an antipoverty
device. Recently they have moved to add a
wage-related benefit on top of that. In
effect, in establishing an antipoverty mini-
mum we would be moving toward a similar
two-decker system from the opposite direc-
tion.
Apart from the adequacy of the social se-
curity payment, its coverage can readily be
broadened. Only something over one mil-
lion aged people are now uncovered by so-
cial security or similar public systems. They
may be provided status under the social se-
curity system, following the precedent of
the amendment last year that "blanketed"
people over 72 into social security. The net
public cost would be comparatively small,
as the majority of these people now receive
public assistance. In not too matly years a
special provision to include uncovered aged
people would become vestigial, as we rap-
idly approach the point at which 100 per-
tent of the population is covered by social
security contributions.
More radical ways of broadening social
security are also conceivable. No doubt we
shall see the day when people who have con-
tributed for fifteen years may receive a ben-
efit while they spend a year in school. The
notion would serve society in a variety of
ways but its time has not yet come.
Also reasonable is a program called "fa-
therless child insurance," which was first
proposed by Lord William Beveridge.7 Un-
der such a plan divorced women would be
treated like widows for social security pur-
poses. The special attraction of this pro-
gram is that it would go precisely to chil-
dren in broken homes, the very group that
is now conspicuously overlooked. Some-
thing about the proposal conveys a sense
of hedonism-"Leave your husband and
get a paymentl"-and blocks further con-
sideration. Such consideration is well war-
ranted, but few people are willing to dis-
cuss the program seriously.
At any rate, we may expect from social
security both a minimum payment that
guards against poverty and complete cover-
age for the categories of the population it
serves-the aged, disabled, widowed, and
orphaned. In addition we have already
noted that medical care should be extended
to all age groups. Unemployment insur-
ance should also be mentioned: benefit
levels need to be raised, coverage improved,
and the period over which payments may
be made lengthened.
NEGATIVE INCOME TAX
A fourth line of development in income
maintenance is the negative income tax-
a payment related, according to some
reasonably simple formula, to the number
of persons in a family and their combined
income. Although no important principle
is involved, it is generally assumed that such
a program would be operated by the In-
ternal Revenue Service in connection with
the income tax program. A radically re-
formed program of public assistance might
greatly resemble the negative income tax,
accounting for our earlier difficulty in de-
fining public assistance.
The negative income tax is an attractive
idea. It appeals to the principle of equity
in a way that few people find possible to
T O~. cit.
PAGENO="0268"
708
dispute. That is, a family of four with an
income of $6,000 undeniably receives a gift
of at least $340 (the value of four exemp-
tions at a 14 percent tax rate) from the gov-
ernment as a credit against their tax. `SVith
a $2,000 income such a family receives less
and with no income no payment at all.
Many are coming to think that poor people
should receive at least some payment for
the value of their exemptions. The concept
is also attractive because it seems simple to
administer. It is a program that would,
for once, reach all needy people, without
categorization. It is an efficient program,
for it gives money to poor people without
diverting it to others who do not need it.
Despite these advantages, the negative in-
come tax might, if enacted, be fated to play
a minor role-in income maintenance. It suf-
fers from the difficulty noted in the discus-
sion of public assistance that payments
must be scaled carefully to income in order
to sustain the feeling that one can improve
oneself. Unfortunately, such a scale is most
easily constructed when payments are to
be small. Although the negative income tax
may be supported widely, some of the sup-
port comes from those who see it as one ele-
ment in tax refOrm. Such a perspective
effectively casts the payment per person in
the neighborhood of $84.00 a year (a $600
exemption at a 14 percent rate), a contribu-
tion but obviously far short of what is
needed.
More important, even a substantial neg-
ative income tax would, like public assis-
tance, provide the money payment in a
poor law framework. It would be paid not
for past work, not because of childhood or
old age, not for any of the dozens of reasons
that have been converted into social rights,
but for the one reason we have so far failed
to make into a right-want. The writer's
impression is that poor people would, if
they were consulted, reject the negative in-
come tax. At any rate, civil rights leaders
have shown less-than-spontaneous enthu-
siasm for the notion. It was conspicuously
absent from the recommendations laid be-
fore the June 1966 White House Con-
ference "To Fulfill These Rights." 8 Poor
people would say that they want to make
good as others have-they will be glad to
take the fringe benefits that go with making
good (including exemptions, pensions,
benefits, allowances, and insurance pay-
ments), but are willing to be spared a nega-
tive income tax. They are probably right.
Some may be so far-sighted and so altruistic
that they offer poor people what they do
not want and deny them only what the
nonpoor conspicuously have-income as a
matter of undisputed right.
In short, it appears that the negative in-
come tax is in the poor law tradition and
would, as a practical matter, turn out to be
a small amount of money. On the other
hand, even $300 or $400 a year is money
to a poor family and every move toward
equity is a move in the right national di-
rection. The writer does not visualize the
negative tax as a substantial development
in income maintenance, but believes it
should be supported as a part of tax law
reform.
UNIVERSAL PAYMENT
The fifth alternative open is a universal
payment to everyone in the country, with-
out regard to income or status. This is the
original definition of guaranteed income;
it shall here be referred to as the "universal
payment" or "universal demogrant" to dis-
tinguish it from other programs now im-
plied by the term "guaranteed income." ~
The universal payment is the one compara-
tively radical idea mentioned here. It
derives from the concept of a contract be-
tween the state and the individual, assuring
that the individual will receive income and
8 White House Conference, "To Fulfill These
Rights," Council's Report and Recommendations
to the Conference, June 1-2, 1966 (Washington,
D.C.: Government Printing Office, 1966).
9 The term "universal demogrant" has been popu-
larized in the United States by Eveline Burns, who
PAGENO="0269"
709
will give work. The state does not have a
choice on the one hand or the individual on
the other. As the universal payment has
been discussed lately in the United States,
in a not uncommon historic reversal it has
become associated with the expectation that
work will not be required.1° For the next
decade, at least, this is probably a fantasy.
In any event, the universal payment, if it
provided enough money for decent living,
would bring about a sweeping redistribu-
tion of income in the United States. It is
doubtful that this objective will be reached
in one step.
PARTIAL DEMOGRANT
A partial form of the universal payment is
the sixth and last alternative. If we are
not likely to have a universal demogrant in
the very near future, it seems much more
nearly practical to extend a payment to
specific population groups, without income
test or any qualifying test other than age.
The two candidates for such a program
that come readily to mind are the aged
and children. We have in fact already
opted for a demogrant in proposing that
the aged be blanketed into social security.
There will be a certain amount of academic
argument over the principle involved. The
writer ventures to prophesy that scholars
will decide that these old people are re-
ceiving demogrants but that they themselves
will call it social security.
As has been noted, the critical group that
is omitted in our system of income mainte-
nance is children. A demogrant for chil-
dren-that is, a children's allowance-
might correct this long-standing oversight.
It will be said that a children's allowance
wastes money on children who are not poor
that could be spent, in an income-limited
program, on children who are poor. A
children's allowance designdd carefully in
relation to the income tax system would
waste little money. In any event, that
money is well wasted that purchases a sense
of its rightness. It will be said that chil-
dren's allowances would increase the birth
rate, especially among those who really
should have fewer children. Since the `sub-
ject requires its own paper, the writer sim-
ply offers a dictum (but one complete with
citation): There is no evidence that chil-
dren's allowances will affect the birth rate.
If any effect at all is seen, it is likely to be
trivial.11
Apart from the sense of rightness that
may be provided by a demogrant, because it
is not related to income it quite avoids in-
terfering with incentive to work. A third
point has already been made and two esti-
mates will underline it. A children's allow-
ance of $50.00 a month would take beyond
the reach of poverty three out of four chil-
dren now poor. Moreover, family income
is generally pooled; a child exits from pov-
erty only when his whole family avoids pov-
erty. If poverty were only eliminated for
families with children, therefore, fewer
than a third of those now counted poor
would remain poor. It is perfectly plain
who the citizens are who require income
maintenance. How is it that we turn every-
where else?
WHAT SHOULD BE DONE?
Where have we arrived in this discus-
sion? If we strengthen the existing income
maintenance mechanisms and add a couple
of new ones, we can assure a decent income
to virtually everyone in the United States.
In addition, many whom Mollie Orshan-
sky calls the "near poor" would find their
income improved.12 The writer has rejected
11 Alvin L. Schorr, "Income Maintenance and the
Birth Rate," Social Security Bulletin, Vol. 28, No. 12
(December 1965), pp. 22-30.
12 op. cit.
credits William Anderson, a Canadian actuary, with
inventing it. See Bums, "Social Security in Evolu-
tion: Toward What?"
10 Robert Theobald, Free Men and Free Markets
(New York: Clarkson N. Potter, 1963).
PAGENO="0270"
710
fatherless child insurance and the universal
payment as the means toward these ends.
Each is utopian, which is to say appealing
in some rational sense although we are not
ready for it.
We should seek to improve social security,
increasing minimum benefits and reaching
all the aged. We should seek to provide
medical care and decent housing to all the
population. We should seek to right un-
just tax laws by providing at least a modest
negative income tax. And we should seek
a program of allowances for children.
In the context of this ten-year objective,
what of public assistance? Do we not feel
differently about a truly residual program
of public assistance than we do about the
mass program we have conceived? Doubt
about services as an integral part of public
assistance has been growing because, in all
truth, we will not have the staff to make
it work. Doubt has been growing because
"services" carry the implicit promise that
we shall substantially reduce public assis-
tance case loads, a promise we cannot meet
with a case load of old people and mothers
and children. In fact, the means test is the
community's way-if it is in theory not the
profession's-of keeping a vast program to
manageable size. Our reaction to all this
has been to try to convert public assistance
into an insurance-like program. Rather, we
should perfect the social insurances and add
demogrants to carry the main load. In that
context, we may need a public assistance
program much like the one toward which
we have been struggling over the past dec-
ade or so.
It will be a smaller program, dealing with
hundreds of thousands rather than mil-
lions. Because it is difficult to know just
who will need help and why, individual in-
vestigations may indeed be required. Quite
possibly these recipients will be troubled
people requiring a variety of services, which
should be dose at hand. In short, we shall
have the very model of public assistance
that we have been getting ready to reject.
That model will not operate in the current
context-it is overwhelmed by the preva-
lence of stark need-but a public assistance
program that tries to replace social in-
surance and similar programs may be a dis-
aster in its own right.
Financing of these programs will not be
discussed here. Obviously, a great deal of
money is involved but not so much as the
Gross National Product increases in a
single year. That is to say, the cost spread
over ten years would amount to substan-
tially less than one-tenth of our gain in na-
tional production.
CHOICE TO BE MADE
Most of all, the writer has been concerned
with suggesting how a pluralistic approach
to income maintenance may assure income
for all Americans. Brushing away all these
programs and substituting one great new
program would surely be neater. But es-
thetics is not the point so much as warmth
and protection; it is said that a patchwork
quilt may perform those tasks very well.
Over time, the patchwork we have created
should of course be rationalized, especially
to achieve a pluralistic system that is sim-
pler and more complete.
Two things concern the writer about the
recent interest in substituting a general ap-
proach to income maintenance for the cate-
gorical approach that has historically been
used. First, it will introduce poor law con-
cepts into our brave new programs and even
into areas where we have long-established
rights; this has already been dwelt on.
Second, we are a deeply divided nation-
we are divided between those who have and
those who have not, between slums and sub-
urbs, between those who feel competent and
those who feel exploited. The national
structure of income maintenance is not a
small matter. It can be structured to deepen
the schism or it can help to bridge it. In
the next two or three years we must make a
choice.
PAGENO="0271"
.711
Lifting the Poor Out of Poverty.
A Background Paper
For use at Delegate Assembly, April 1967.
Prepared by Alan D. Wade for the
NASW Commission on Social Policy.
NATIONAL ASSOCIATION OF SOCIAL WORKERS
2 PARK AVENUE, NEW YORK, NEW YORK 10016
PAGENO="0272"
The United States is the first nation in
history with the economic capability
of eliminating absolute poverty, as
presently defined in economic terms,
through the redistribution of a portion
of the national income to the poor.'
That this can be done is a matter of
general agreement. Whether it will be
done is more closely tied to political
willingness to take the necessary steps
than to the country's economic capa-
city to provide an adequate income
for all Americans. The idea of a
guaranteed annual income is not new.
Hoavever, discussion conceming its
feasibility and methods for imple-
mentation has moved in recent months
from the academic into the public
arena.
While movement toward substantial
new domestic programs has been
postponed by national preoccupation
with the Vietnam War, it is important
that continued serious attention be
given to the issues posed and the po-
tential for elimination of poverty
offered by the guarantee of a minimum
income for all Americans.
`For a discussion of the history of efforts to
define poverty in economic terms, see Sidney
Zimbalist, `Drawing the Poverty Line," Serial
Work, Vol. 9, No. 3 (July t964), Pp. 19-26.
The process by which the Social Security
Administration's present poverty tine was
determined is described in Motile Orshunsky's
article, "Counting the Poor: Another Look at
the Poverty Profile," Social Security Bulletin,
Vol. 28, No. 1 (January 1965), pp. 3.29.
The National Association of Social
Workers historically has had responsi-
bility for leadership in the develop-
ment and support of measures for
achieving such an income floor
through expansion of employment
opportunities, improvement in wage-
related security benefits for those who
have served in the labor force, and
assurance of more adequate and uni-
versally available cash payments for
those unable to take advantage of
rising technology and productivity.
This responsibility was reaffirmed and
updated by the 1964 Delegate Assem-
bly's adoption of a revised policy
statement on income maintenance,'
The purpose of this paper is to pro-
vide a common base for discussion
leading to agreement by the 1967
Delegate Assembly on the charting of
the association's course in national
political action toward the elimination
of poverty. Recommendations for
such a course of action that have
been approved by the NASW Board
of Directors include the following
combination of approaches, some to
be considered as altemative choices,
others as interlocking necessities: (1)
expansion of work opportunitieu in
the general economy and in the pub-
lic services, (2) improvement and
expansion of the social insurancen,
(3) development of a dignified and
`This oppears in Goals of Public Social
Policy (rev. ed.; New- York: National Associa-
stun of Social Workers, 1966), pp. 53-54.
efficient means for restoring income
deficits for those outside the labor
market, either through the negative
income tax, a family or children's al-
lowance system, or other related pro-
grams, (4) reform and reorganization
of the public assistance system as the
ultimate guarantor against economic
poverty. These recommendations will
be discussed in series, following at-
tention to the historical context of
poverty, the nature of modern pov-
erty, and the limitations of current
programs of income maintenance.
POVERTY IN HISTORY
For centuries poverty was taken for
granted as an accepted concomitant
of the human condition. At certain
periods in history, however, poverty
has emerged as a topic for public
concern and anxiety and has caused
men to raise questions about the in-
evitability of the classic dictum: "The
poor ye have always with you."
At the beginning of the industrial
era, poverty became a topic of special
concern in part because the possibility
of eliminating it seemed within grasp.
The dramatic contrast of the "two
nations-the dichotomy between
fantastic expansion of wealth on the
one hand and the stubborn persistence
of grinding poverty on the other-led
men to conceive of poverty as remedi-
able.
The history of social welfare is
closely identified with a series of cam-
paigns in the long war against poverty.
In the past, efforts to deal with pov-
erty were frequently motivated not by
any special concern on the part of the
dominant classes to help the poor, but
rather by the effort tu ward off the
dynamics of economic change and
social disruption in the early phases
of the industrialization of society.
Efforts to deal with poverty during
the nineteenth century were, as in
more recent times, intimately linked
with prevailing ideas about the human
condition. It was believed that pov-
erty was the result not of economic
forces that could be controlled, but
rather of personal inadequacies and
the refusal of men to follow the guid-
ance of an Almighty whose unseen
hand would move them toward the
712
Lifting the Poor Out of Poverty:
A Background Paper
BY ALAN D. WADE
This paper was prepared for the NASW Commission on Social Policy
by Alan D. Wade, Ph.D., who is Associate Professor, School of
Social Service Administration, University of Chicago, Chicago,
Illinois. The paper provides background for a policy statement
on income maintenance, which, in revised form, will be presented
to the Delegate Assembly of the National Association of Social
Workers in April 1967. Ii is hoped that it will provide a
common base for discussion that can lead to agreement on a
national program directed toward the elimination of poverty.
PAGENO="0273"
Great Society if only they would at-
tend to the sturdy virtues of work and
shrift and avoid excessive indulgence
in the pleasures of the flesh. The na-
ture of poverty was seen as personal,
with no relation to social and eco-
nomic forces. The conclusion was
apparent: to help the poor by the pro-
vision of govemmental relief save
under the harshest strictures was the
worst, the least moral, thing that
could be done. Not only would gov-
ernment relief be personally demor-
alizing, but its provision would remove
the threat of the "economic whip,"
which, it was believed, was the ulti-
mate social device to insure that the
mass of men would work.
These perceptions of poverty and
work have continued to influence pub-
lic social policy in the field of income
maintenance long after the period dur-
ing which they held utilitarian value.
Their influence, however, has been
most pronounced in this country with
respect to public assistance policy.
The Poor Law philosophy has not af-
fected the social insurance programs,
however, because benefits are usually
related to the duration and extent of
a person's participation in the labor
force. Thus, social insurance pro-
grams, as instituted on the European
continent during the late nineteenth
century and in England and the
United States during the first half of
the twentieth century, have achieved
the support of the citizenry.
Programs of public assistance for
persons generally outside the labor
market have, especially in the United
States, continued to be operated under
precepts that have undergone little
change since the days of the first Poor
Law. It is the impact of the collision
between the Poor Law heritage of our
public assistance programs and the
movement for the elimination of pov-
erty in the United States that has led
NASW to take leadership in the effort
to provide a guaranteed annual in-
come for all Americans.
ARGUMENTS AGAINST A
GUARANTEED INCOME
The current national debate over the
prospect of such an income guarantee
for all Americans must concern itself
with the effects of the proposal on
several aspects of American life, in-
cluding public morality, the economy,
and social and political structure. Two
arguments against the proposal are,
however, likely to dominate discus-
sion: (1) money is not enough to deal
with the massive social problems en-
demic to poverty and (2) people will
not work if income is assured.
The first of these arguments is, as
might be expected, frequently used by
those who, never having known
hunger and want, prefer to ignore the
presence of these in current American
life, and to call for the further devel-
opment of more highly personalized
measures-casework, counseling, and
other social services, educational and
other rehabilitative approaches-as
first-priority investments in a national
strategy against poverty. Still others
use this argument on different
grounds. They recognize the reality
that government programs to increase
the purchasing power of those now
defined as poor will not provide em-
ployment for the employable or sig-
nificantly increase the power of the
poor to purchase such resources as
better education, medical care, and
housing.
It is, of course, true that man does
not live by bread alone. It is also
true that without bread his essential
humanity is diminished. Arguments
as to whether money is or is not
"enough" tend to be tedious as well
as pointless. Perhaps it is sufficient
for the purpose of getting on with the
task of modernizing income mainte-
nance programs simply to recognize
that, while the provision of adequate
income is by no means a panacea or
a sufficient condition for the elimina-
tion of major social problems, it is
at the same time an absolutely neces-
sary condition and one that must be
fulfilled before ameliorative alid cura-
tive efforts can succeed.
The second major argument against
the guaranteed income is that poor
people will not work if their income is
assured by the government. This is
the modern variant of nineteenth-cen-
tury England's principle of less eligi-
bility, which asserted that those
receiving aid must be paid at a level
below that of the lowest-paid laborer
in the community, in order to assure
the efficient application of the eco-
nomic whip. There is little firm evi-
dence to support arguments on either
side, i.e., that the guarantee of an
adequate income will or will not cause
low wage-earners to leave the labor
market. Antagonists must rely largely
on personal notions about the human
condition, folklore, and estimates of
the degree to which the nature of
work and the labor force are chang-
ing as the result of automation. Those
who claim that a radical change in
the method of income redistribution
will result in a serious problem of
work disincentive base their claim on
the premise that the normal state of
the human being is one of repose and
indolence, and that the poor are more
likely than others to behave as ra-
tional economic creatures when con-
fronted with the choice between hard,
often disagreeable, work and the op-
portunity for a minimal but adequate
income without work.
Those who discount this effect of
the guaranteed income offer as testi-
mony their belief that men work and
create because they must, not merely
to avoid starvation, but because the
nature of the human condition is such
that assertion, creative activity, and
active engagement with the environ-
ment are the very stuff of which life
itself it made. Hannah Arendt makes
the useful distinction between labor,
or toil, and work.3 If labor is regarded
as the activities necessary for main-
taining a bare level of survival, and
work connotes productivity and cre-
ativity with personal gratification as
well as economic recompense as its
end products, progress may be made
toward dealing systematically with the
"some people won't work" argument
against an income floor. Such an in-
tellectual distinction between human
activities must, of course, be trans-
lated into positive governmental and
private programs for the maintenance
of full employment for all employ-
ables, with planned expansion of op-
`Arendt's discussions of she differences be-
sss'ees tahor and ss'oek are to be found in The
Hae:an Conditio,, (Chicago: Uniceesity of
Chicago Press, 1958). See especiatty chaps.
3 and 4.
713
PAGENO="0274"
714
portunities in the creative arts and
the human services.
At the same time that the historic
argument conceming what motivates
men to work is being revived in con-
nection with the current discussion
about the redistribution of a larger
proportion of the national income to
the poor, vast sums of the national
wealth are being transferred to other
segments of society. Oil companies,
railroads and airlines, ship-builders,
and farmers and ranchers are only a
few of the groups who benefit from
federal funds received without the
prerequisite of behavior patterns that
have traditionally been defined as
"work." As in the past, it is the poor
who must undergo the "workhouse
test" or its equivalent in proving the
validity of their claim on the com-
munity's wealth.
In the absence of data based on
controlled study over a period of time
of the effect of an adequate income on
the life-styles of persons previously
below the poverty line, a verdict of
"not proved" must at this time be
rendered on the disincentive effect of
the guaranteed income. NASW must
develop support for a sound approach
to full employment and income redis-
tribution-one aimed at cutting the
Gordian knot of poverty rather than
the more tedious process of untying
it-on grounds of available data
about the poor who would be affected
and an understanding of the limita-
tions of current measures for employ-
ment and income redistribution. It is
self-evident that, in addition to these
data, such factors as humanity, equity,
simple social justice, and the national
interest should not be overiooked.
WHO ARE THE POOR?
A variety of questions about the na-
ture of the population affected must
be answered in the planning of an
income maintenance program that
meets the association's goals. Among
these are the following: What are the
handicapping characteristics of the
poor? What is their relationship to
the labor market? What portion of
the national income have they com-
manded over time? What is their geo-
graphic distribution? Where should
the poverty line be set? There will be
no effort made here to provide de-
tailed answers to these questions~ The
data bearing on them are available
from a variety of sources.'
Briefly, the incidence of poverty in
America fails most heavily on families
headed by persons with one or more
of the following characteristics: fe-
male sex, limited educational attain-
ment, old age, disability, and nonwhite
color. Of all persons living below the
poverty line half-or more than 15
million-are children under 18.
In terms of their relationship to the
labor market, two-thirds of the male
heads of families below the poverty
line were in the labor force in March
1964. Of this group, one in ten, al-
though in the labor force, was out of
work. In contrast, two-thirds of the
female heads of poor families were
not in the labor force during that
month. Data on work experience of
family heads during 1963 indicate
that only one in three of the male
heads of poor families was a full-time
worker all during the year, while only
one in ten of the female heads worked
full time all year.5
In 1935 families ranked in the low-
est quintile of the nation by family
income received a total of 4.1 percent
of the total income available to all
families, while by 1962 this amount
had increased to only 4.6 percent.5
Clearly, the relative purchasing power
of the poor in relation to the rest of
the population has not increased sig-
nificantiy.
Wish reference to geographic dis-
tribution, most of the poor are urban-
dwellers who live in metropolitan
communities of more than 250,000.
A significant minority live in rural
nonfarm settings, but only a few are
farm residents. Although almost half
the poor live in the South, relatively
few actually live in the widely her-
alded "pockets of poverty."
Those numbered among the poor
`For sources providing data concerning the
poor, see the section on `Who Are the Poor?"
of the Bibtiography appended to this papee.
`See Orshansky, op. cit., pp. 17-26, for
further anatysis of data reeaeding work and
poverty.
`Statistical Abstract of the United States,
1965 tWashincton, D.C.: U.S. Oovernment
Printing Office, 1965), Tahte 465, p. 340.
include representatives from every
demographic group. Minorities in the
population make up sizable minorities
in the poverty group. While only about
25 percent of the poor are nonwhite
persons, about half of all nonwhites
live in families with incomes below
the poverty line.
Efforts to define poverty with the
degree of precision demanded for the
planning of adequate treatment meas-
ures flounder in a mass of confusing
and contradictory notions about
symptoms and causes, unless an eco-
nomic definition in sought based on
the discrepancy between needs and
resources or betoveen required and
actual consumption. Such a definition
must be arbitrary and must grow out
of a guiding assumption that the
standard should be set high enough
not to offend the public conscience
and low enough to make a reasonable
differentiation between the elusive
concepts of "the poor" and all others.
The setting of such a definition, or
poverty line, must of necessity be
based on decisions more political (in
the broadest sense) than scientific.
Since families differ, for example, in
the amount of nutrients required to
maintain energy and sustain growth,
a standard must be developed that is
useful for statistical purposes in esti-
mating the numbers and kinds of per-
sons affected. Such a standard may
be "adequate" for some and "inade-
quate" for others.
The poverty line in most frequent
use today is that of the Social Security
Administration, the pivotal standard
of which is an annual income of
$3,130 for a family of four and
SI 540 for individual consumer units.
It is based on the Department of Agri-
culture's "economy" food budget, the
least adequate of four food-cost plans
reflecting a variety of living stand-
ards. Defined as advisable for "tem-
porary and emergency purposes only,"
the economy budget allows approxi-
mately twenty-two cents per person
per meal for a family of four. On the
assumption that the poor spend ap-
proximately one-third of their income
on food, the annual requirement of
$3,130 is derived by multiplying food
costs by three.
PAGENO="0275"
715
It is one thing to develop a hypo- paid out wage-related benefits of more
thetical standard of living that pro- than $28 billion to approximately 20
vides the opportunity to differentiate million people. Although payments
the poor from the nonpoor for statis- went to both the poor and the non-
tical purposes, and quite another to poor, only about half the benefits were
arrive at some sort of national agree- paid to persons below the poverty
ment as to what ought to constitute an line. Benefit levels, however, unless
amount "sufficient to maintain all aided by other sources of income,
persons throughout the nation at a are inadequate to lift individuals or
uniformly adequate level of living." families eligible for them up to the
An infinite number of formulas for poverty line.
determining an adequate level based The federal-state system of unem-
on a variety of measures of human ployment insurance benefits is handi-
need and consumption patterns will capped by great variations among the
be advanced as debate concerning states in benefit amounts and dora-
the guaranteed annual income pro- tion. Benefits average approximately
gresses. Social workers should be 35 percent of former income and are
prepared for the fact that the final designed to deal with short-term and
decision will be made primarily in the temporary unemployment.
political rather than in the scientific Federally aided state-administered
arena and be prepared to participate programs of public assistance have, of
in that decision. To insure that all all current programs, been subjected
judgments relevant to the decision are to the most searching criticisms. The
given consideration, one possible limitations of these programs are
course of action would be to establish clearly summarized in the following
a special presidential commission quotation from the Report of the Ad-
comprised of persons of the highest visory Council on Public Welfare,
status from a variety of disciplines, to released June 29, 1966:
set the desirable income level. What-
On all counts and from all sources
ever level of living is deemed adequate the weight of the evidence is incon-
should be related to the cost of living, testable: a major updating of our
LIMITATIONS OF public welfare system is essential
CURRENT PROGRAMS if it is to fulfill its assigned task of
assuring a basic floor of economic
The present system of government and social security for all Amen-
transfer payments for the relief or cans. The remedies must match
prevention of poverty consists of the these indictments:
social insurances and public assist- a Public assistance payments are
ance. The social insurances are not so low and so uneven that the Gov-
primarily designed to lift the poor emment is, by its own standards
out of poverty, but rather to prevent and definitions, a major source of
individuals and families suffering loss the poverty on which it has de-
of wages or death of a breadwinner dared unconditional war.
from falling into poverty. Public a Large numbers of those in des-
assistance, thought of initially as a perate need, including many chil-
residual program that would gradually dren, are excluded even from this
disappear as social insurance coy- level of aid by arbitrary eligibility
erage of the population at risk in- requirements unrelated to need
creased, has instead increased in size such as those based on age, family
and cost and has not proved adequate situation, degree of disability, al-
to lift the poor out of poverty. leged employability, low earnings,
The program popularly known as unrealistic requirements for family
"social security" (more properly, Old contribution, durational residence
Age, Survivors', Disability, and requirements, and absence of pro-
visions for emergency assistance.
Health Insurance, or OASDHI) is the a The methods for determining and
most universally accepted income re-determining eligibility for assist-
maintenance program. In 1964-65, it ance and the amount to which the
`Goals of Public Social Policy, p. 54. applicant is entitled are, in most
States, confusing, onerous, and de-
meaning for the applicant; complex
and time consuming for the worker;
and incompatible with the concept
of assistance as a legal right.
a The lack of adequate social serv-
ices for families, children, young
people, and individuals isolated by
age or disability is itself a major
factor in the perpetuation of such
social evils as crime and juvenile
delinquency, mental illness, illegiti-
macy, multigenerational depend-
ency, slum environments, and the
widely deplored climate of unrest,
alienation, and discouragement
among many groups in the popula-
tion.'
Grant levels for the approximately
7.5 million persons served by public
assistance amount to a nationwide
average of slightly more than half the
poverty line for a family of four under
the largest and least popular of the
programs, Aid to Families with De-
pendent Children. Few states pay
grants that, even under the most fav-
orable conditions, lift families or in-
dividuals up to the poverty line. And
yet gross inequities exist in grant
levels among the states, with the more
generous paying grants that amount
to as much as five times those paid by
the states at the bottom of the scale.
The challenge facing the nation-
and toward which the social work pro-
fession has an obligation for leader-
ship-is to find methods for making
suitable employment available to
those able to work and for providing
income as a matter of right to all those
unable to work or find employment.
EXPANDING EMPLOYMENT
OPPORTUNITIES
Proper concern for the provision of
money to those whose income is in-
sufficient or has been interrupted must
not obscure the fact that now and for
the foreseeable future the income of
most Americans will continue to be
related to employment. Recent gov-
ernment policy, from the Full Em-
ployment Act of 1946 through the
`Having she Power, We Have she Duly,
Report of the Advisory Council on Public
Welfare (Washington, D.C.: U.S. Oovernment
Printing Office, 1966), p. nsi.
PAGENO="0276"
Manpower Development and Train-
ing Act and the work opportunities
titles of the Economic Opportunity
Act of the present decade recognize
this fact. Further, the NASW state-
ment on income maintenance calls
for the recognition of new forms of
creative activity that will allow for
self-fulfillment and social responsi-
bility. This is within the tradition
both of social work and of American
society, for it suggests that work itself
is of such fundamental importance as
a balancing factor in human life as to
require parallel attention along with
consideration of the question of in-
come redistribution for those who
cannot work.
Freud stated his view of the mean-
ing of work in the following terms:
in his work he [the individual]
is at least securely attached to a
part of reality, the human commun-
ity. Work is no less valuable for
the opportunity which it, and the
human relations connected with it,
provide for a very considerable dis-
charge of fundamental libidinal im-
pulses, narcissistic, aggressive and
even erotic, than because it is in-
dispensable for subsistence and jus-
tifies existence in society. The daily
work of earning a livelihood affords
especial sublimation when it en-
ables use to be made of existing
inclinations, of instinctual impulses,
hitherto repressed, or more intense
than usual for constitutional rea-
sons.9
The suggestion for today in Freud's
statement is that in order to be truly
creative, man's work must be freely
chosen in such a way that it can sup-
port his individuality and his own
peculiar talents. Until now, such
freedom of choice in the kinds of
socially valuable functions they will
perform has not been possible for
many men. The great promise of the
economy of abundance and of our
revolution in production and tech-
nology is that for the first time it is
economically possible for us to devise
ways for men to be truly free in the
pursuit of satisfying work goals.
The great challenge, and one that
`Sigmund Fresd, Civilization and Its Dis.
contents, Joan Riviere, trans. (Losdon, Eng.:
Hogarth Press, 1935), P. 34.
makes special demands on the social
work profession, is not only that of
engaging responsibly and effectively
in the technical and political task of
bringing about a more rational distri-
bution of income. Social work's most
important contribution may well be
in relation to the task of helping to
redefine the concept of work by spe-
cifying the work that needs to be
done in serving the modern com-
munity.
The February 1966 report on
Technology and the American Econ-
omy recognizes that technological
change and productivity are the pri-
mary sources of the nation's unprece-
dented wealth, but urges application
of new technology to unmet human
and community needs as a major
means for expanding employment op-
portunities. The report recommends
improvements in health care, trans-
portation, control of air and water
pollution, and housing as viable fields
for the expansion of employment and
the general improvement of the econ-
omy. It also specifies areas of the
economy in which key social needs
are presently met inadequately, if at
alt, and offers estimates of the amount
of useful employment that might be
provided to persons with relatively
low skills through expansion of jobs
in the state and local sectors of the
public economy.'° The estimates are
included in Table 1.
The 5.3 million potential jobs esti-
mated in the public service fields de-
scribed in the table would exceed the
4.6 million net additional jobs that
the A. Philip Randolph Institute sug-
gests are required by 1967 in order
to restore so-called full employment
by eariy 1968."
The social work profession must
play a leadership role in defining the
kinds of human services that are
worth paying for-services that
before the arrival of the abundant
society were treated as luxuries rather
`Technology and the American Economy,
Report of the National Commission on Tech-
nology, Automation, and Economic Progress,
Vol. 1 (Washington, D.C.: U.S. Government
Printing Office, February 1966), Table 6, p. 36.
`A "Freedom Budges" for All Americans
(New York: A. Philip Randolph Institute,
October 1966), p. 28.
TABLE 1. POTENTIAL SOURCES OF
NEW Jons THROUGH PUBLIC SERVICE
EMPLOYMENT
Source of Employment Job
Potential
(millions)
Medical institutions and
health services L2
Educational institutions 1.1
National beautification 1.3
Welfare and home care 0.7
Public protection 0.35
Urban renewal and sanitation 0.65
Total 5.3
than as necessities. Social workers
must systematically plan for the de-
velopment of the kinds of jobs that
human beings can perform in the
service of other human beings. At
least the 700,000 potential jobs esti-
mated in welfare and home care could
be developed in the service of the
millions of the aged who are wasting
away, their essential humanity denied
them, in nursing homes, mental hos-
pitals, and rooming houses; for the
benefit of the vast numbers of chil-
dren who require day care, educa-
tional aids, and other basic services to
insure sound growth and develop-
ment; and in support of families that
require homemaker and other forms
of social and emotional support in
times of crisis. Dim though the pros-
pects may seem for meeting massive
community need, if reliance must be
placed primarily on persons with full
professional training for the major
portion of the direct services, the need
for the expansion of employment op-
portunities in the social welfare and
health fields offers new opportunities
for immensely multiplying social
work's effectiveness by developing
nesv modes for articulating profes-
sional knowledge and skill with the
activities of the proposed new corps
of public service employees.
Attention is now turned to meas-
ures for compensating for income in-
terruption and income deficiency,
keeping in mind that these must
always be seen as supplemental to,
rather than as alternatives for, large-
scale efforts leading to full employ-
716
PAGENO="0277"
ment for all Americans who can
reasonably be regarded as members
of the labor force.
SOCIAL INSURANCE
Expansion of benefit levels and cov-
erage of OASDHI has two major
points in its favor as a means of
treating poverty: its great political
popularity and the avoidance of a
means test in tying eligibility for
benefits to credits earned in covered
employment. Because benefits arc re-
lated to participation in the labor
force, the traditional fear of the
work disincentive effect that inhibits
liberalization of public assistance
does not apply. Expansion of benefit
levels must be financed by increased
taxes on the wages of insured workers
and/or by diverting general tax rev-
enues into the OASDHI trust funds.
The tax on employees and employers
is currently 4.2 percent on the first
$6,600 of wages, slated to rise to 5.4
percent by 1973. The tax is a regres-
sive one, falling most heavily on low-
income workers. At what point wide
taxpayer resistance to further in-
creases will be encountered is as yet
undetermined.
Without supplementation from
general revenue sources, this most
popular of the social insurance pro-
grams will continue to replace in-
terrupted income (as opposed to
deficient income) by keeping retired
workers or their dependents
from falling into poverty, but will do
little to lift the marginally employed
or nonemployed (i.e., unemployed
and not seeking employment) person
and his survivors or dependents out of
poverty. While the principle of relat-
ing benefits to wages is not sacrosanct
(departures already exist in the health
insurance features under Title XIX
of the Social Security Act and in the
1966 provision for payment of cash
benefits to all persons aged 72 or over
without any contribution to the fund)
further departures in the direction of
payment of benefits to those not cov-
ered by the system could seriously
alter the character and philosophy of
the program, and perhaps ultimately
its political acceptability based on its
capacity to shore up the retirement
income of the vast majority of Ameri-
can workers.
In short, while OASDHt must be
considered an integral part of the
American system of income transfers,
it is not, strictly speaking, a com-
pletely efficient antipoverty program.
Efforts to make it so could limit its
capacity to maintain a reasonable
level of living for the great majority
of Americans when they cease work
or lose a breadwinner. If unem-
ployment insurance is to become a
more significant factor in the relief
of poverty, benefit levels must be
raised, eligibility periods lengthened,
federal standards strengthened, and
the technical devices that up to now
have operated to keep grants low
must be replaced.
NEGATIVE INCOME TAX AND
ALLOWANCES
NASW's recommendations for imple-
menting the 1964 Delegate Assembly
policy statement call for an expanded
and improved system for raising to
an adequate income level those per-
sons not in the labor force or those
whose work experience is so insub-
stantial as to prevent them from quali-
fying for adequate social insurance
benefits. Two possibilities are sug-
gested, with the choice dependent
on one's own views as to the method
that most nearly approaches the goals
of dignity and efficiency, as well as
on political realities as national de-
bate develops. These are the nega-
tive income tax and a system of
family or children's allowances, the
latter sometimes referred to as a
"demogrant."~
Perhaps the most widely discussed
of the alternative approaches to a
guaranteed income are the several
schemes falling under the heading
"negative income tax." These pro-
posals have several factors in com-
mon: (1) They are to be differenti-
ated from public assistance in that
they are largely self-administered and
from social insurance in that income
"For an extensive diseussion of the various
possibitities with respect to income mainte-
nance, see Atvin L. Schorr, "Alternatives in
Income Maintenance," Social Work, Vol. 11,
No. 3 (July 1965), pp. 22-29.
disbursements are unrelated to labor
force participation or to a trust fund
derived from earmarked taxes. (2)
They would use the federal individual
tax system to redistribute income to
all the poor, irrespective of their
status or geographic location, but
simply because they are poor. (3)
They would lead to greater fairness
in the present tax structure. The pro-
ponents of these proposals urge,
further, that they would be simple
and efficient to administer, and that
their adoption would result in con-
siderable savings in administration
over current methods,
Certain features such as personal
deductions and exemptions for de-
pendents are built into the income
tax system as aids to families. Those
below the poverty line by definition
pay no income taxes, but bear a pro-
portionately heavier burden of con-
sumption taxes (sales, excise, and so
on) than those with higher income,
Exemptions and minimum standard
deductions in the federal income tax
system offer in essence a subsidy for
those in higher income brackets that
is of little or no value to the poor.
The failure of the tax system to re-
spond with equity to the needs of
those with lower incomes is seen in
the following example: A family of
four with an annual income of $3,000
is treated the same, i.e., with indif-
ference, by the income tax system as
a family of ten with the same income.
Neither earns enough to pay an in-
come tax, but consumer taxes of vari-
ous kinds exact a far heavier toll on
the larger family. It is to the problem
of tax inequities that some advocates
of the negative income tax address
their proposals.t'
One proposal, for example, would
simply return to families below the
poverty line a percentage of their un-
used exemptions under the income tax
system. Another would replace a
fiat 50 percent of the difference be-
tween a family's total income and a
poverty line. Thus, a family of four
"Robert 3. Lampman is among those advo.
eating the negative income tan as a measure
for increasing equity in the tax structure. See
his "Approaches to the Reduction of Poverty,"
is Louis A. Ferman, Joyce L. Kornbluh, and
717
PAGENO="0278"
with no income would receive a
payment amounting to half the dif-
ference between zero and the poverty
line, or $1,565 (one-half of $3,130,
to suggest only one poverty-line fig-
ure). A family of four with an in-
come of $2,500 would receive one-
half the difference between that fig-
ure and the poverty line, or $315, for
a net income of $2,813. Such a plan
would establish a minimum subsist-
ence level of income for all Ameri-
cans, although it will be argued that
the level of payments is so low as to
contribute to tax equity without ef-
fectively dealing with poverty. An-
other plan would replace 100 percent
of the gap between individual or
family income and the poverty line
and would use the income tax system
as a primary welfare instrument,
rather than merely make it more
equitable.
Theobald, Schwartz, Lampman,
and Friedman are perhaps the most
prominent among those advancing
negative income tax proposals. Their
plans are discussed in their own writ-
ings, and are summarized with clarity
by Nicol.t' Each, with differing philo-
sophical bases and procedural ap-
proaches, alms at reducing at least in
part the poverty-income gap, or the
difference between the current income
of those below the poverty line and
what it would take to lift them up
to that line. This gap is estimated at
present to be approximately $12
billion.
Cost estimates of the various nega-
tive tax plans vary widely, ranging
from $2 billion for the plan designed
Alan Haber, eds., Poverty in Aoserka (Ann
Arbor: Unisersity of Michigss Press, 1965),
pp. 415-421; and "The Future of the Low.
Income Problem." in Burton A. \veisbeod, ed.,
The Economics of Poserty: An American
Paradox (Englewood Cliffs, N.J.: Prentice.
Hall, 1965), pp. 57.63. See also Milton Fried-
man, Capitalism and Freedom (Chicago:
University of Chicago Press, 1962), chaps. 11
and 12.
"Helen 0. Nicol, "Ouaranteed Income
Maintenance," Welfare in Review, Vol. 4, No.
4 (April 1966), pp. 1.10. See also Robert
Theobald, Free Men and Free Markets (New
York: Claekson N. Poller, 1963); Tbeobald,
The O,,arae,teed Income (New York: Double-
day & Co., 1966); Edward E. Schwartz, "A
Way To End the Means Test," Social tVork,
Vol. 9, No. 3 (July 1964), pp. 3.12, 97;
Lampman, op. cit.; and Friedman, op. cit.
only to restore a degree of equity to
the income tax system, to as high as
$30 billion for the plan designed to
replace 100 percent of the gap be-
tween current income and the cur-
rent poverty line, The $30 billion
estimate is based not on firm data,
but on estimates of loss to the total
income of the nation resulting from
pessimistic estimates of the numbers
of persons who would choose the
subsidy as an alternative to work, and
of the additional claims on the sys-
tem that would be made by the so-
called "hidden poor" who currently
accept subsidies from relatives rather
than receiving public assistance.
In addition to the presumed effi-
ciency of the negative tax plans, their
supporters claim for them the addi-
tional virtue that economic need is
the sole criterion for receipt of bene-
fits, not social status or moral fitness
as determined with no matter how
much magnanimity by public offi-
cials." Those who favor a guaranteed
income but oppose the negative tax
approach claim that what is cited here
as a virtue is actually a defect, since
the tax approach would serve greatly
to expand the numbers of those of-
ficially identifiable as "poor" and to
subject them to community oppro-
brium and ostracism that would lead
to increasingly restrictive and punitive
legislative action,
Those who take this position argue
for an approach to income distribu-
tion that would not precisely aim at
relieving poverty, but instead provide
subsidies based not on need, but on
defined social status. Under such
proposals, fiat rate allowances would
be paid to all members of a particular
social group, such as to mothers or
fathers of all children between birth
and 18, or to all persons over, for ex-
ample, 65. Under such a plan, the
poor would not be differentiated from
others in the group receiving the
"Since economic need would be the cri-
terion for benefits, it is apparent that the
negative income tax proposals will require a
means test, in lb e sense that a statement of
current resources is demanded. A simplified
means test of the kind anticipated under such
proposals is to be differentiated from the com-
plex and demeaning process associated with
current public assistance programs.
benefit, since all in the defined group
would receive it, regardless of income.
Benefits received would presumably
be considered taxable income and
would be returned to the government
in the form of income taxes by the
more affluent, It is claimed that un-
der such programs public and ulti-
mately legislative harassment of the
poor would be minimized, since the
numbers of poor persons receiving
such benefits would not be subject to
public scrutiny.
The family or children's allowance
proposals might have the advantage
of capitalizing on political interest in
improving the lot of some particular
demographic group, such as children,
although experience with AFDC has
not demonstrated that this group has
any special claim on public sympathy.
Advocates of such proposals recog-
nize that they would not aid poor
persons not belonging to the defined
demographic groups, and would
therefore be only a partial or evolu-
tionary approach to the concept of
the guaranteed income,
It is difficult at this stage to com-
pare the anticipated effect on poverty
of the partial demogrant proposals
with the various negative income tax
plans, since specific proposals based
on the demogrant idea are not avail-
able to show the extent to which the
poverty gap could be reduced by their
application.
PUBLIC ASSISTANCE
The case for improving the existing
public assistance programs has been
made in the report of the Advisory
Council on Public Welfare." The re-
port presents a plan for reconciling
the major paradox of the current sys-
tem-i.e., the collision of the concept
of states' rights with state fiscal in-
capacity-through adoption of th2
following major recommendations:
establishment of federal standards for
grant levels, elimination of the cate-
gories with the substitution of a single
standard for eligibility based on need,
development of simplified methods
for eligibility determination, expan-
"Having the Power, IVe Mace the Duty.
718
PAGENO="0279"
sion of the social service potential of
public welfare, elimination of resi-
dence requirements, substantial re-
vision of the present grant-in-aid
formula, and strengthening of meas-
ures to support the capacity of clients
to assert in practice the rights that are
theirs in theory. Although none of
these proposals is new, their combined
appearance in an official government
report offers the theoretical prospect
for improvements in current pro-
grams long sought by NASW.
There is one important difference
between the goal of the advisory coun-
cil and current NASW policy. The
report urges drastic improvements in
public assistance in order that it may
become the major governmental pro-
gram for the replacement of income
for those below the poverty line.
NASW's policy statement regards im-
provements in public assistance as
necessary interim measures during
the evolution of other approaches to
a national income floor, and as an
ultimate guarantor against poverty
for the minority who may still be un-
able to manage within the terms pro.
vided by expanded job opportunities,
improved social insurance, and the
negative tax or family allowance
plans.
CONCLUSION
It is useful to suggest what the pro-
posal for a guaranteed income will
not accomplish in terms of national
goals, as well as to summarize what
may be expected of it.
1. It is not intended as a panacea.
It does not suggest that a national in-
come floor will cure all social ills.
Many will remain. It will scarcely aid
the poor to purchase better housing,
when hcusing is in such short supply.
It will pat enablqat~Yem to purchase
significantly better medical care. It
will not eliminate the necessity for
the expansion of social services.
2. The guaranteed income does
not demand the fulfillment of the
more dire predictions concerning
replacement of manpower through
automation before it can claim sup-
port. Poverty must be dealt with to-
day, although it is well to keep in
mind that drastic* displacement of
men by machines will intensify the
demand for a national minimum.
3. The guaranteed income does
not present a real threat to the cur-
rent public welfare system. Rather,
it presents it with its greatest op-
portunity for freeing social workers
from unproductive work such as en-
forcing the means test and enabling
them to fulfill their potential for be-
coming the major cadre for the
development of state and locally in-
spired programs of social service for
all who need them.
4. The guaranteed income would
not bankrupt the nation. Even the
more extreme estimates of cost are
small when compared with a gross
national product that will in the next
decade approach the trillion dollar
mark.
5. The national minimum would
not obviate the need for working
toward full employment for all em-
ployables and the development of
creative new work opportunities for
the majority of Americans, including
many of those currently outside the
labor market. Instead, it would
complement such efforts.
What, then, can be expected of it?
A major principle in an epidemio-
logic approach to disease is that ut-
most leverage in effecting control
depends on locating a link in the
chain of events leading to the disease
that can be eliminated and that is
sufficiently close to the disabling con-
dition to have a significant effect on
its incidence. In terms of setting
goals for dealing with poverty, effec-
tive action does not require that
causal mechanisms be understood and
attacked in their entirety. Thus, pov-
erty in a particular family may stem
from a complex web of interacting
and interdependent variables, such as
nonwhite color, slum residence, dis-
ability of the breadwinner, limited
education, and large family size. The
principle of parsimony suggests that
the precise point at which to start is
with the provision of jobs and money
in amounts sufficient to support hu-
man life uniformly, adequately, and
with dignity. If poverty is thought of
in terms of its distribution and in-
cidence throughout the population,
such a course of action becomes ab-
solutely necessary.
The history of social welfare legis-
lation and its income maintenance
phase in particular has been marked
by gradual, step-by-step evolutionary
rather than revolutionary increments
toward the goal of the national mini-
mum. The chances are good that it
will continue to be so characterized.
Ultimately, a triple-decker system of
income transfers could evolve, aimed
both at making up for income de-
ficiencies among the poor and at pro-
viding protection against income in-
terruption for the majority of Amer-
icans. Such a system could consist,
for example, of (1) an income-
conditioned social insurance contrib-
utory system for the majority subject
to the predictable but incurable risks
of income interruption through re-
tirement, disability, or death of the
breadwinner, (2) a plan based on the
negative income tax or a partial or
universal demogrant for those with
insufficient income and limited at-
tachment to the labor force, and (3)
an improved means test program un-
der public assistance for those who
still remain below the floor provided
by other programs. NASW's task is
to move with vigor, supported by its
base of knowledge and values, toward
the best possible means, in the words
of the late Charlotte Towle, ". . . to
make real man's claim of right on
society."
"Charlotte Towle, Common Human Needs
(rev. ed.; New York: National Association of
Social Workers, 1965), p. 45.
719
PAGENO="0280"
720
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Friedman, Milton. Capitalism and Free.
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"Guaranteed Income Maintenance:
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Schorr, Alvin. "Alternatives in Income
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Theobald, Robert. Free Men and Free
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Potter, 1963.
The Guaranteed income. New
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Critiques of Current Programs
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Therkildsen, Paul T. Poblic Assistance and
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Who Are the Poor?
Ferman, Louis A., Kornbluh, Joyce L., and
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Titmuss, Richard M. "The Rote of Redis.
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