The American Welfare State and Social Contract in Hard Times

How has the American welfare state responded to economic hard times throughout its history? For two reasons, the question is hard to answer. No consensus exists on the definition of the American welfare state, a concept that remains for many an oxymoron. Even more, the attempt to identify common responses among the components of a welfare state with a mixed public/private economy of local, state, and federal governments as well as private charities and employer-provided benefits appears presumptuous, if not mad. The question is important because the welfare state has played an important role in both moderating and exacerbating inequality. The task of designing social policy for the current age of inequality requires that we understand how. This article takes up the challenge aware of the pitfalls in the path of a coherent answer.

I begin with an overview of the origins and architecture of the American welfare state and take a broad, risk-centered view of welfare that embraces both public and private sectors. I then turn to the interaction of this welfare state structure with periods of economic recession. A short article such as this can only be suggestive, not definitive; a thorough examination of the topic would require a much longer and more detailed account. But the accumulation of research on the history of the American welfare state leads the author to conclude that none of the social science theories of welfare state development explain the history of America's distinctive welfare state or its actions in economic hard times. Rather, the explanation lies in the responses of local, state, and federal governments to the configuration of four factors: the social structure of poverty and risk, political coalitions and alignments, preexisting policies and institutional structures, and ideas about poverty and political economy.

Together, the intersection of these four factors over time highlights the limits of America's social contract and truncated version of social citizenship. There is no right to housing, work, income, or, yet, for adults under the age of sixty-five, to medical care. First-class citizens become party to the social contract by earning its benefits. Others remain outside, kept alive by the charity of the state and second-class medical care or by a penal system that substitutes for welfare. In hard times, these limits to the social contract become brutally clear.¹

The Origins and Architecture of the American Welfare State

"Welfare" is the most pejorative term in the American social policy lexicon. It is applied in a narrow, disparaging manner and refers mainly to public assistance. But the common definition of welfare is myopic. "Welfare" originated as a positive term in the early twentieth century. It signified attempts to professionalize and modernize old practices of relief and charity. This positive connotation of "welfare" and "welfare state" lasted through the New Deal of the 1930s and even through the 1940s. In 1949, an editorial in the Saturday Evening Post cautioned critics to avoid the term in discussions of President Harry Truman's proposed extension of social benefits. "The opponents of such a system," the magazine wrote, "have an excellent case, but they do not help it by adopting precisely the words which put it in a favorable light. 'Welfare' is the keyword. Who's against welfare? Nobody. . . . Fighting an election by opposing welfare is on a par with taunting an opponent for being born in a log cabin."²

"Welfare" and "welfare state" came under attack in two stages. In the late 1940s and 1950s, as part of the Cold War, opponents associated them with European socialism and un-American ideas. Then, in the 1960s, as unmarried women of color with children began to dominate public assistance roles, "welfare" acquired the combined stigmas of race, gender, and illicit sex.³

This narrow, pejorative use of welfare obscures its true meaning and inhibits understanding of the American welfare state. In their original sense—as used from the early twentieth-century through the post-World War II years—the terms "welfare" and "welfare state" referred to a collection of programs designed to...