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The fundamental cause of homelessness is insufficient income relative to the cost of housing. Thus both the creation and prevention of homelessness are closely related to the terms and sufficiency of public benefit programs that augment income. Indeed, the eligibility rules and benefit levels of such programs shape the characteristics of homeless populations. To notice that in the United States there are very few homeless people sixty-five years of age or older or with major physical impairments, or to observe that the majority of homeless adults are people without children in their custody, is to see artifacts of income maintenance policy that favors the old, the severely disabled, and custodial parents. To say that income maintenance policy favors certain groups is also to say that the system is based on categorical distinctions. For the most part, eligibility for public income maintenance in the United States is predicated on membership in a specific category defined by statute and administrative rules. Old-age benefits are for those who meet the definition of aged; disability benefits are for those who meet the medical and vocational standards that define a work disability; benefits for children and their legal caretakers require recipients to be members of those categories. Except as discussed later under the rubrics of unemployment insurance and general assistance, there are no income maintenance programs for hale, non-elderly adults without children.
Income maintenance is an ungainly but necessary term. It covers two very different tracks (or tiers) of income support that are distinguished from each other by the history of wage earning required for eligibility. One track consists of insurance-like programs, notably Old-Age and Survivors Insurance (OASI; what Americans refer to colloquially as “Social Security”), Social Security Disability Insurance, and Unemployment Insurance. Eligibility for these programs requires a significant history of payroll deductions—contributions from wages to the public funds that support the programs—which is why these programs are described as insurance-like.
The other track consists of so-called welfare programs. These are means tested. That is, eligibility hinges on falling below a threshold for current earnings and accumulated wealth. Welfare programs are for very poor people, and their benefits are substantially inferior to those of the insurance-like programs.
On the whole, the U.S. income maintenance system rewards consistent workers over episodic workers. For example, a sighted, work-disabled person with a history of regular payroll deductions will qualify for Social Security Disability Insurance, for which the average benefit was $834 per month in 2002. In the absence of such a work history, in 2002 the same individual, if possessed of little or no savings, would have gotten $545 per month from Supplemental Security Income, a welfare program. If that person had even $3,000 in savings above any equity in a home, he or she would not qualify for any benefits at all until such savings were “spent down” to the allowable maximum. The U.S income maintenance system is not generous, particularly on the welfare side.
In addition to categories and tracks, the income maintenance system in the United States is distinguished by its fragmentation. Indeed, it is hardly a system at all. The various components of income maintenance are established, funded, and administered by federal, state, and local (primarily county) governments. This political, fiscal, and administrative fragmentation creates notable differences in rules and benefits and makes it difficult to generalize about income maintenance. Even so, it is fair to say that insurance-like programs usually are funded and administered by the federal government and thus have considerable uniformity in benefits and eligibility rules throughout the country. Welfare programs, on the other hand, usually are funded and administered by two or more levels of government, and benefit levels and eligibility rules vary widely among political jurisdictions.
The different tax bases that support the various programs create incentives for liberal or strict eligibility and adequate or minimal benefits. Programs that draw on the federal government’s broad authority to tax and borrow and its ability to spread costs over a national population usually are entitlements; that is, they are benefits that must be paid to anyone who meets the program’s eligibility requirements, regardless of the government’s ability to pay without borrowing. In contrast, state and local programs usually are capped: Frequently reliant on unpopular and often inequitable sales and property taxes collected from a relatively small population, they pay benefits from fixed budgets. Once these allocations are exhausted, such programs are not legally obliged to pay benefits.
The differences in funding sources among the programs also create incentives for their sponsors to shift costs. Typically, local governments are anxious to shift costs upward by moving beneficiaries to programs funded by the state or federal government.
States, likewise, are anxious to move costs to the federal budget. For sixty years after the passage of the Social Security Act of 1935, the federal government accepted this role as part of its duty to balance the resources of wealthy and poor states. But as discussed below in connection with Supplemental Security Income and Temporary Assistance for Needy Families, in the 1990s Congress passed back to the states and counties the responsibility for supporting certain groups of indigent people. In the case of Supplemental Security Income, there is good evidence that this has increased the prevalence of literal homelessness and residential doubling up.
A final introductory observation is important. Although income maintenance programs sometimes are characterized as forming a social safety net or aiming primarily to help people in need, they also intend to enforce the obligation to work. This is particularly important in the U.S. system, which, following the tradition of nineteenth-century British Poor Law, relies implicitly or explicitly on the principle of “less eligibility” to determine policy. Less eligibility is an antiquated term rarely heard today, but the concept is everywhere apparent in debates about income maintenance policy. It means that those in need should find an income maintenance program to be a “less eligible” choice than paid labor as an income source. That is, the terms of participation and the level of benefits in any program should deter applicants from depending on them as an alternative to work. Thus, unlike the income maintenance systems of more fully developed welfare states such as those in Scandinavia, even U.S. insurance-like programs replace a relatively small fraction of a former worker’s monthly wage.
Each state operates an unemployment insurance (UI) program. Although the federal government helps fund these, each state determines, by and large, who qualifies and what benefits they receive. UI is an exception to the typical federal funding and uniform administration of insurance-like benefits. Average weekly benefits vary a great deal by state, ranging from $174 per week in Alabama in May 2003 to $359 per week in Massachusetts. Since benefit levels are based on previously earned income, UI tends to support best those who need it least and to reproduce regional wage differences.
In recent years, considerably less than 40 percent of those who were unemployed in a given month received UI benefits. This figure is so low because of the initial and continuing eligibility requirements that are typically imposed by UI programs. Generally, claimants must work in employment covered by the UI taxation system, have a history of earnings spread over the previous fifty-two weeks, be “able and available for work,” and not have been discharged from prior employment due to misconduct, have voluntarily left prior employment without good cause, or have refused “suitable work.” Unless extended by federal authority, benefits typically last only twenty-six weeks.
These requirements are especially problematic for members of the unskilled, sporadically employed, persistently poor population from which homeless people are drawn. For example, while 98 percent of all U.S. workers are in employment that is covered by the UI taxation system, those in the day-labor market or the informal economy are not.
The majority of homeless adults in the United States are single men in the prime of life, chronologically speaking. There are several reasons for this, but none more important than the eligibility boundaries of UI, discussed above, and the fact that the federal system of categorical aid does not provide for non-elderly, non-disabled adults without minor children. In some state and local jurisdictions, these uncategorized people may qualify for a program usually known as general assistance (GA), general relief, or home relief. However, most GA programs are also categorical. They provide benefits mainly to those who are waiting for a ruling on their eligibility for a federal program, have been suspended or disqualified from federal aid or, in the case of disability and age, are not quite impaired enough or old enough to qualify for federal benefits. In some states, benefits are time limited, and some GA programs (Pennsylvania’s is one) are both categorical and time limited.
There is no federal participation in the administration or financing of GA programs. States and localities decide whether to run them, what the benefits should be, who should qualify, and under what circumstances they should be eligible. In some states, there is a constitutional requirement to provide GA; in others, the decision is in the hands of the state legislature or county boards. In some states (Pennsylvania, for example), GA is administered by the state with uniform requirements throughout the state’s political subdivisions. In others, counties are obliged to operate GA, but there may be great differences among the programs (as in California). In yet other states, there is no duty to operate GA, and counties may or may not elect to do so (as in Illinois). A survey conducted in 2003 by Philadelphia Community Legal Services found that twenty-two states either administer GA programs or require localities to do so, and fourteen others have programs that operate at local discretion.
Because the federal government is not involved in GA programs and thus does not monitor them, it is very difficult to find clear and consistent information about them. Moreover, because these programs are so various, it is hard to generalize about them even when information is available. Still, GA programs share one very important characteristic: low benefit levels. Typically, the benefit level for a single person is well under $400 per month and sometimes less than $200 per month. GA is at the bottom of the barrel insofar as income maintenance is concerned.
Since the recession of the early 1990s, a number of states have eliminated or sharply curtailed the availability of GA. The political logic of this is not hard to see. Public revenues decline during recessions, and when state and local governments look for ways to retrench, they focus on those programs for which other levels of government provide no support. When a program has a federal financial match or a maintenance-of-effort provision that invokes a penalty when a state reneges, the state loses federal dollars if it fails to ante up its share. GA lacks this disincentive. When a state or a county eliminates or cuts back GA, it saves every dollar not spent—at least on the surface. In fact, some studies of GA retrenchment in Michigan, Ohio, and Pennsylvania have found subsequent increases in the prevalence of homelessness. One might reasonably presume that this entailed increased costs for shelter and other services for homeless people, but these were unmeasured.
Old Age And Survivors Insurance (OASI)
While most Americans know very little about their country’s income maintenance system, almost everyone has heard of Social Security. This is the colloquial term used to refer to federal old-age pensions, established in 1935. In fact, Social Security is more than a pension program for the officially old, as it also provides pension benefits to spouses (even divorced spouses in the case of long marriages) and death benefits to surviving children as old as twenty-two.
For present purposes, two simple facts about Social Security will make clear its impact on homelessness. First, as with other insurance-like programs, benefits are related to a history of wage earning. A formula determines the precise benefit for each person, and anyone with a Social Security number can go to the Social Security Administration’s web page (www.socialsecurity.gov) and have his or her future benefit calculated on the basis of contributions to date. But to qualify for Social Security at all, an applicant must have worked forty quarters (ten years) in covered employment, which, as noted in connection with UI, does not include off-book or casual work. Second, an applicant must have reached official old age, which is between the ages of sixty-five and sixty-seven (depending on the applicant’s year of birth).
Put simply, then, Social Security provides reasonably well for retired persistent workers. Along with Supplemental Security Income, discussed below, it is the principal reason why so few people sixty-five years of age and older are found in homeless populations. Social Security does not support them in splendor, but it does pay the rent.
Social Security Disability Insurance
Social Security Disability Insurance (DI) is a federally funded and administered program created in 1954, although its full implementation did not occur until 1956. It is a long-term disability program, meaning that it covers only those with impairment(s) and consequent work disability that is expected to last quite awhile—at least twelve months, to be specific. Impairments that usually disable people for shorter periods (broken bones, soft-tissue injuries, serious viral infections, and so forth) would not qualify someone for DI.
Because it requires long-term impairment to qualify and because the application process usually extends over many months, DI does not prevent the rapid downward mobility that can attend job loss by work-disabled people with modest income and savings. Because short-term disability insurance is not a public benefit in the United States unless an injury occurs on the job (and is covered by a state administered workers’ compensation program), workers disabled for weeks or months, but less than a year, can lose their savings if not covered by a private plan. Private coverage for short-term disability is extremely uncommon in the unskilled and semiskilled sectors of the labor force from which most homeless people are drawn.
Even people with long-term impairments do not necessarily qualify for DI. To be eligible, an applicant must not only meet the medical criteria but also have a fairly substantial work history in covered employment. (The length of the work history requirement varies by age at the onset of disability.)
If a person fails this work history test, as would a high percentage of homeless people, he or she must turn instead to Supplemental Security Income.
Supplemental Security Income
Supplemental Security Income (SSI) is a means-tested federal program that provides cash assistance to the elderly, blind, or disabled who lack the work history to qualify for its insurance-like counterparts or whose benefits from these programs fall below a minimum level because of insufficient covered work.
Over one-third of all SSI beneficiaries also receive OASI or DI benefits. The early history of SSI illustrates the planned shift of income maintenance costs between levels of government. Legislated in 1972, SSI paid its first benefits in January 1974. However, the program was not created de novo, but rather consolidated under federal funding and administration three existing programs that were federal-state partnerships: Old Age Assistance and Aid to the Blind, created in 1935, and Aid to the Permanently and Totally Disabled (APTD), which paid benefits beginning in March 1950. These programs were intended to help states eliminate the need for the notorious local poorhouses that still existed (mainly in the South) and to pay a benefit high enough to provide a moderately decent existence to those not expected to work due to age and impairment. In turn, SSI was created to relieve the states of the substantial cost of their share of these earlier three programs and to facilitate the systematic transfer of poor people from state mental hospitals to community care settings. This process of deinstitutionalization began in earnest in California and New York during the mid-1960s using the financial vehicles of APTD (to pay rent and subsistence) and Medicaid, created in 1965 (to cover medical and psychiatric care).
The recent history of SSI’s disability category illustrates some conflicts involved in cost shifting and a categorical approach to income maintenance. (This discussion also applies to DI, which employs the same impairment criteria and evaluation process.) Unlike official old age, which is easily documented, work disability involves complex judgments about the severity of medical and psychiatric conditions and their relationship to the performance of occupationally relevant activities. Moreover, some kinds of impairments are particularly difficult to evaluate, especially those for which severity is determined largely by self-reported pain or other phenomena that cannot be independently verified. Put simply, the disability category has a boundary that is relatively easy to stretch. To limit eligibility and thus costs, disability programs intensively investigate the medical basis of claims. The application process is protracted and complicated and deters many potential claimants, especially those with persistent mental illness.
Such rigor is employed because a system that provides no benefits to someone who is poor but uncategorized creates an incentive for members of that group to file disability claims, as the disability category is the only one susceptible to manipulation. A single man or woman who does not qualify for UI or who has exhausted those benefits and who lives in an area without GA has no income maintenance alternatives when work cannot be found—unless, of course, he or she can claim a work disability. Further, even if that person does live in a jurisdiction with GA, it is in his or her interest to get SSI rather than GA because of the huge difference in the value of benefits. Perhaps equally important, it is in the interest of the state or county to shift that person from GA to SSI so that more money comes into the jurisdiction to be spent and so that the federal government pays the cost of the benefit. Thus, beginning in the 1980s, with the size of homeless populations rising dramatically and local costs mounting, states and counties began systematically to provide case advocacy and legal services to GA beneficiaries and shelter residents who wanted to apply for SSI. They emphasized advocacy on behalf of applicants with major mental illnesses and drinking and other drug problems because these were people who often had trouble following through on the application process and because these problems are common among homeless people, especially among single men.
The diagnostic ambiguity of drug addiction and alcoholism (DA&A) in particular created a very serious technical problem for the SSI program (and the DI program). Sometimes working under contracts with state and local governments (as in Chicago), lay advocates and attorneys pressured the federal courts to clarify the rules to permit more such people to qualify. By 1987, cooperative federal district courts had dramatically liberalized the criteria for qualifying for SSI or DI due to DA&A. The result was that between the mid-1980s and 1996, the number of DA&A recipients on SSI grew from under 10,000 to almost 200,000. (The relative growth among DI recipients was also very large, but of a smaller absolute magnitude.) Alarmed by this growth and other aspects of the program for drug addicts and alcoholics, in 1994 Congress borrowed an administrative tactic from GA programs and limited benefits to this group to three years in a lifetime. In March 1996, effective on 1 January 1997, Congress eliminated DA&A as an impairment that could qualify someone for SSI (or DI). A study in nine counties and five states of what happened to approximately 1,800 former SSI DA&A beneficiaries found that homelessness and residential doubling up increased dramatically, especially among those who lost benefits and were once more uncategorized for purposes of assistance.
Temporary Assistance For Needy Families
The elimination of the DA&A impairment category in SSI was a little-noticed feature of the 1990s movement for welfare reform. Although welfare refers to any means-tested form of assistance, when Americans think of welfare, they usually think of assistance to poor families. From 1935 until 1996, such assistance was provided under the rubric of Aid to Families with Dependent Children (AFDC), renamed from Aid to Dependent Children (ADC) in 1961, when part of the benefit was dedicated to the adult caretaker. In 1996, AFDC was replaced by Temporary Assistance for Needy Families (TANF), a program with different principles and potentially very different implications for beneficiaries and state governments.
It is sometimes observed that TANF represents a radical devolution of policy authority because it gives the states considerable discretion in operating the program. While this is certainly true, many state AFDC programs had already adopted some of TANF’s provisions through federal waivers of national program rules. The waiver provision is quite old (it dates from a 1939 amendment to the Social Security Act), and many states had actively pursued its application to AFDC beginning in the mid-1980s. Thus, even before the 1996 Personal Responsibility and Work Opportunity Reconciliation Act established TANF, what had initially been a fairly uniform national program (save for benefit levels set by the states) had become quite variegated. For present purposes, the main differences between TANF and AFDC are as follows: Whereas AFDC was an entitlement, TANF Is capped. Each state receives an annual sum fixed by formula. If this block grant is exhausted, the federal government has no obligation to provide more. Because the funding formula is based on a year (1993) when caseload levels were high, the potential limitations of this approach to funding have yet to be tested. However, during the halcyon years of the mid-1990s, few states created rainy-day welfare funds for use in sharp economic downturns, and the recession of the first years of the twenty-first century may prove this shortsighted.
Whereas AFDC recipients could get benefits indefinitely, receipt of TANF is limited to five years in a lifetime. There are exceptions to the time limit, but from the beginning, a great concern about TANF has been the possibility that many families would run out of benefits while their prospects for a decent subsistence remained bleak. The best evidence to date suggests that this may be an acute problem before long.
Federal funding for a state’s TANF program is linked to that state’s ability to place welfare household heads in jobs. This policy intended to motivate states to develop effective welfare-to-work programs. Unfortunately, many studies now show that while large numbers of welfare heads of household have found work, it is most often poorly paid and of insecure tenure, failing to provide stable earnings above the poverty line. The result is that families face staggering rent burdens, even after leaving welfare, and are often precariously housed.
As the phrase “personal responsibility” in its enabling legislation indicates, TANF places a great deal of emphasis on the putative individual sources of impoverishment and welfare use. As a result, federal regulations permit (and sometimes demand) that state programs use a variety of sanctions to ensure that household heads go to work or training and limit their future fertility; that children are immunized and attend school, and so forth. Unless a state legislature declares that it does not adopt the rule (as some have done), adults convicted of a drug felony after August 1996 are permanently ineligible for TANF. We know very little about the consequences of this ban to date. One 1998 Pennsylvania study of women with children who were TANF-ineligible drug felons found that twenty-three of the twenty-six women interviewed had been homeless or nearly so in the period just prior to arrest.
A final important point about TANF is the inadequacy of its benefits to the cost of housing in most states. While a relatively generous state such as Minnesota gives a family of four $903 per month and a family of three $763, a less open-handed state such as Maryland provides merely $481 and $399 respectively to families of these sizes. The fair-market rent for a one-bedroom apartment in Minneapolis-St. Paul in 2002 was $674 per month; a two-bedroom apartment, which is much more appropriate in size for a family of four, was $862—95 percent of the value of the family’s cash benefits. In Baltimore, where the monthly fair-market rent is $564 for a one-bedroom apartment and $688 for a two-bedroom, the TANF benefit does not cover the going rent.
TANF has thus failed to stop the now thirty-yearlong erosion of the real value of welfare benefits for families. The result is a huge amount of doubling up and overcrowding in the most rundown housing— and residential instability. While homelessness is more common among adults without children, the percentage of homeless families grew substantially during the 1990s, and the low ratio of the value of welfare benefits to housing costs was a major reason.
Cash Or In-Kind Assistance
In November 2002, voters in San Francisco elected to reform the county’s GA program so that homeless beneficiaries would receive “care not cash,” as the local electioneering slogan put it. Recipients are now to get shelter and human services, not a check. This is but the most recent episode in a decades-old controversy about whether cash payments are harmful to many who receive them.
Until the Great Depression (1929-1941), policymakers and those who worked directly with poor people generally took as axiomatic the danger of cash relief. It was widely believed that poor people were given to extravagance and vice or were incompetent consumers who needed the protection of assistance dispensed as grocery vouchers, wood or coal, transportation tokens, and so forth. The magnitude of the Depression and the large numbers of life-long workers who were made indigent and often homeless stimulated adoption of the cash payment principle in federal programs. This outlawed in-kind assistance for federal beneficiaries, thus forcing reluctant jurisdictions (mainly in the South) to comply or lose federal contribution to assistance grants.
Many GA programs continued to provide only or mainly in-kind assistance, however, particularly when dealing with homeless people and the residents of postwar skid rows.
Despite the cash payment principle, federal programs did permit the oversight of benefits in some cases. Most important, a 1939 amendment to the Social Security Act permitted the use of representative payees, third parties who receive recipients’ checks and assume a quasi-fiduciary responsibility for their proper use. Originally intended as a mechanism to provide for the non-institutional support of indigent orphans, the use of representative payment was expanded to permit caseworkers to control grants to the children of alcoholic mothers under ADC, for example. In the mid-1960s, when California began to provide benefits under APTD to persons with mental illness who did not live in institutions, and to a small number of severely impaired alcoholics, several counties experimented with representative payment under a federal waiver permitting them to do so. SSI, the successor to APTD, adopted representative payment from the beginning, requiring all recipients in the DA&A program to have a payee. In 1994, DI adopted this rule for alcoholics and addicts only. This was the first application of such oversight in an insurance-like program. (Under the assumption that beneficiaries have earned their way, insurance-like programs tend to treat their beneficiaries as workers rather than paupers and thus do not condition benefits with behavioral requirements.)
In recent years, representative payment has become part of the case management role in some GA programs, and this is likely to become more common, although there are few good data on how well representative payment works if the aim is to prevent behavior such as substance use. However, there is some evidence from a federal demonstration project that representative payment does reduce homelessness among people with both severe mental illness and substance use disorder, and many practitioners who work with homeless people strongly favor direct rent payment to landlords who properly maintain their units.
Income maintenance policy has a huge impact on both the prevention and creation of homelessness. In the United States, very few homeless people qualify for the more adequate insurance-like programs, and of the welfare programs, only SSI—and in a very few, mostly rural, counties, TANF—pay benefits that cover the rent of even the most modest housing. These programs therefore leave their beneficiaries with staggering rent burdens relative to income.
None of this will change in the foreseeable future. Rather, at all levels of government, American income maintenance policy will almost certainly continue to promote the employment of welfare recipients through job-search and training programs linked to other services, such as mental health and substance abuse treatment. Increasingly, case management and representative payment strategies will be used to “motivate and protect” beneficiaries. If history is a reliable guide, the results will be indifferent, and shelters will continue to be populated disproportionately by the uncategorized poor. Should large numbers of TANF recipients exhaust their benefits or lose them as the result of administrative sanctions, states are likely to develop their own programs to provide basic relief. Indeed, thirty states have already created separate state programs under TANF that rely only on state funds. Should this response be inadequate, family stays in shelters may soar.
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