The Negative Impact of Multi-Generational Welfare

Table 1 Percent of Births on Medicaid by StateThis is from my article published by the Oklahoma Council of Public Affairs in their February Issue of the Perspective Magazine.

Government welfare programs were originally designed to be temporary to help people get back on their financial feet. Today, that is no longer true. For instance, SoonerCare, Oklahoma’s Medicaid system, imposes no time limits on the recipients as long as they meet various income-eligibility requirements. As we have discussed in these pages previously (“Oklahoma Growing Increasingly Dependent on Medicaid,” April 2013), Oklahoma already has an unhealthy dependency on SoonerCare.

As a consequence, it is very easy for families to become trapped in multi-generational welfare, which robs them of personal responsibility and self-reliance. There is a multitude of anecdotal evidence that multi-generational welfare in fact exists. Now, new academic research by economists Gordon Dahl, Andreas Kostol, and Magne Mogstad verifies this reality.

In a new study (“Family Welfare Cultures (pdf),” National Bureau of Economic Research, Working Paper No. 19237, July 2013), the authors examine family welfare cultures by looking at Norway’s disability insurance system. Norway’s homogeneous demographic makeup helps to keep the focus on welfare policies. The authors found “strong evidence that welfare use in one generation causes welfare use in the next generation.”

What really makes this study remarkable is that the authors firmly trust they have found more than a simple correlation. Instead, they believe they have found a causal link between parents dependent on welfare and their children following in their footsteps.

The causal link they found can be summed up succinctly: children learn from their parents. The authors “find suggestive evidence … in favor of children learning from a parent’s experience” with government welfare. In other words, children are conditioned by their parents’ welfare experience that significantly increases the chances that they too will end up dependent on welfare.

More troubling, the study also found that “consistent with this increase in adult children’s welfare dependency, we find that parental DI (disability insurance) receipt decreases the probability that a child will work or pursue higher education.” Therefore, income-based welfare, like Medicaid, becomes a self-fulfilling, multi-generational prophecy—low-income parents on welfare hamper the ability of their children to achieve a better life for themselves.

Of course, the question remains, how big of a problem is this for Oklahoma? To better answer that question, let’s examine a relatively new data series that shows the number of births on Medicaid as a percent of all births for each state.

As shown in Table 1, this percentage ranges from a whopping 71 percent in Louisiana to a low of 27 percent in Virginia, with a median value of 45 percent. (The data come from the National Governors Association (pdf) as reported by the Henry J. Kaiser Family Foundation. The table is an amalgam of several years because not all states report the number of births on Medicaid every year. To fill the gap, we used the highest percentage reported between 2003 and 2009, the latest year of available data. Note: we used the median Montana value because the maximum value appears to have been misreported.)

Unfortunately, Oklahoma is in the very high range, with 62 percent of all births on SoonerCare, the fourth highest in the country. In absolute numbers, that represents, on average, approximately 30,000 babies that are born right into Oklahoma’s welfare system each and every year. These data strongly suggest that Oklahoma has a very significant multi-generational problem in the Medicaid system.

In conclusion, this analysis should give Oklahoma’s policymakers yet another reason to stop expanding the Medicaid rolls. (For starters, how about a moratorium on advertising for SoonerCare?) Oklahoma’s very high number of births on Medicaid strongly suggests that multi-generational welfare is a very real problem with dire outcomes for the parents and especially the children. Breaking this cycle will not be easy, and compounding it by increasing Medicaid rolls would be a step in the wrong direction.

Are We Raising the Next Generation of Criminals?

Picture of a Prison

Recently, I read a fascinating account from a career federal prosecutor, Margaret McGaughey, in Maine who details her understanding of “How to Raise a Dangerous Criminal.” In her words:

During my 35 years as a federal prosecutor, I have been exposed to biographical information about some of the most dangerous drug and violent defendants in the American criminal justice system. What has consistently struck me is how similar these offenders’ backgrounds are. My experience has suggested that four features commonly combine in lethal fashion to create a dangerous criminal. They are:

* families that have fractured and re-configured repeatedly and consider criminal behavior to be an accepted element of family life;

* childhoods that are dominated by drugs, alcohol, physical abuse, verbal mistreatment, sexual predation, or all of those forms of abuse;

* upbringings that reflect no respect for education; and

* the absence of any influence of, or involvement in, religion.

Wow, I really appreciate such brutal honesty from someone who has been in the trenches.  What really surprised me was that she would even mention religion since that seems to be, in today’s world, irrelevant. Her article is rather lengthy so I encourage you to take the time tor read the whole thing.

Instead, I have a different purpose for this blog post. I will take everything that Margaret McGaughey says at face value–and I certainly have no reason not to–and analyze her suppositions through the lens of her home-state’s current socioeconomic status. The data is stunning in that it shows Maine may be heading for a dramatic rise in crime. Keep in mind, however, that while I’m discussing Maine, this analysis could easily apply to all of the New England states.

Currently, Maine is one of the safest states in America. According to the 2012 crime statistics complied by the Federal Bureau of Investigation (FBI), Maine has the lowest violent crime rate in the country (includes murder and non-negligent homicide, rape, robbery, and aggravated assault) and the 16th lowest property crime rate in the country (includes burglary, larceny-theft, and motor vehicle theft). However, a look at data suggests that Maine’s pristine criminal record may begin tarnishing.

While not all of the points made by Margaret McGaughey can be quantified, here is what we know. First, the institution of marriage has seriously eroded in Maine, especially among the lower and middle class. Of course, this is not unique to Maine as I pointed out in a previous post that marriage has been declining in American society. Nonetheless, the rate of declines is stunning.

I like using data from the Internal Revenue Service because compliance is mandatory, under criminal penalties, which makes it a “harder” source of data vis-a-vis survey data. IRS data for Maine in Chart 1 shows that overall between 1997 and 2011 the number of married tax filers as a percent of all filers fell by -8.5 percent to 40.5 percent from 44.2 percent.

Chart Showing Married Tax Returns as a Percent of All Tax Returns in Maine 1997 and 2011

However, the overall data hides the more distressing news that appears when looking at the data by income group. While marriage declined in all income groups, it dropped by a whopping 33 percent for those earning between $1 and $50,000 to a mere 22.7 percent in 2011 from 33.9 percent in 1997. In stark contrast, marriage hardly declined at all for taxpayers earning more than $100,000.

This steep decline in marriage particularly impacts children because 50 percent of all dependents (mostly children) are claimed by those earning between $1 and $50,000 as shown in Chart 2. Chart 2 also shows a small ray of sunshine in that the percentage of dependents in the upper income brackets have grown tremendously, albeit starting at very low levels, meaning more children growing up in married households (though this isn’t proof that they are stable, married households).

Chart Showing Percent of Dependents by Income Group

Overall, this marriage data suggests that the stability that marriage brings to a child is severely lacking. If 50 percent of Maine’s children are being raised in marriage-less, lower income households then the odds are high that there is a lot of fracturing and re-configuring of their family life. Even if it is only a small percentage of children that are exposed to this environment, that would still amount to tens of thousands of children.

Additionally, it does not appear that this dynamic will be changing anytime soon. According to data from the The Henry J. Kaiser Family Foundation, 39 percent of all births in 2009 in Maine were paid for by Medicaid. This situation exists on top of the fact that Maine is only one of two states where there were more deaths than births (xls) (West Virginia is the other). So, there are not only fewer children being born in Maine, but a significant number of them are being born right into the welfare system–a system that has already trapped 1 in 3 Mainers on welfare.

In terms of religion, Maine is one of the least religious states in the country. According to the Pew Research Center, only 42 percent of Mainers say that religion is very important to their lives–as it is in all of New England. So, statistically speaking, Maine children are less likely to be exposed to morality and religion which help curb criminal behavior.

The data paints a pretty bleak future in Maine and suggests that crime will be on the rise in the state that bills itself as “the way life should be.” This does not bode well economically either as a large part of Maine’s economy is centered around tourism. A spate of bad news on the crime front would do little to encourage tourism.

The one point I would disagree with Margaret McGaughey on is her solution to this problem. Naturally, since she is part of the institutional criminal justice system, her solution is very institutional. Put succinctly, she advocates for a more active judiciary which would remove children from abusive/negligent parents and put them into an institutional group homes–though she likens them more to “boarding schools.”

Unfortunately, she neglects to see the bigger picture as her solution is really more of a band-aid. Ultimately, the social status of the family unit will have to return to the loftier status it enjoyed in decades past. A stable, strong family will be one that emphasizes education and religion with positive feedbacks of education and religion stabilizing and strengthening families.

Yet, Maine is going through a spasm of negative family feedbacks. Maine has recently legalized same-sex marriage, expanded gambling (doc), and legalized marijuana in Portland–the state’s largest city. All of these developments only serve to weaken the family.

Instead, Maine needs to chart a very different course. Perhaps a solution can be found in Maine’s agrarian past–hint, hint. There are some ideas I’ve been tossing around, but this blog post is long enough already. Please stay tuned 🙂