Only a few years ago the contrast between a dynamic, high-employment American labour market and stagnant, low-employment labour markets in Europe was a dominant theme in international political economy. While the low wages, inequality and precariousness associated with the American model were recognised and widely deplored, the U.S.’s low rates of unemployment and swift recovery from recessions during the 1980’s and 1990’s led even those on the left to query aspects of the European social model.

The most extreme expression of the U.S/European contrast- the withdrawal of minimal federal safety net provision for the poor under the Clinton welfare reforms of the 1990’s- even came to be taken seriously as a model for welfare reform among some social democrats. Thus in a promotional piece for Tony Blair’s ‘legacy’ programme of welfare reform in 2006, Will Hutton cited the falls in welfare receipt following the Clinton reforms and made the case for tough policy choices:

‘New Labour has tried hard, but has never felt able to reproduce the robustness of Clinton’s measures in a British context…….. Too many British live on benefit for no better reason than they don’t want to work….Part of the problem is that too many in progressive Britain still do not want to come to terms with the facts.’ [http://www.guardian.co.uk/commentisfree/2006/sep/03/comment.economy]

Similar sentiments are still voiced today. But the advantages previously claimed for the American labour market model are now looking distinctly threadbare. Since the late 1990’s U.S. employment performance has been remarkably weak. The high rates of prime-age male employment of the late 1990’s have never even been approached in the new century, and uniquely among wealthy nations, theU.S.shows a long-term decline in employment and economic activity for prime-age women. These trends contrast with robust growth in employment for men and women in comparable European countries up to the 2008 financial markets crisis.

Even for welfare ‘doves’ unsympathetic to the case for ‘hawkish’ Clinton-style reforms, these findings come as something of a surprise. Economic theory predicts that minimal regulation and low social protection, other things being equal, tend to lead to higher levels of employment and more rapid adjustment to changes in demand for labour. The charts below show just how plausible this story was over much of the last three decades, and especially in the 1990’s. At the end of the twentieth century American and European labour markets seemed in their different ways to be behaving in exactly the way textbooks predicted.

The evidence on comparative employment rates

We concentrate on ‘prime age’ workers, aged 25-54, as their employment is less affected by education and retirement policy variables than other age groups. (Note that the scales on the charts are different and are set to make the changes over time more prominent.) For most of the 1980’s and 1990’s, the U.S. had higher rates of employment for men aged 25-54 than the European economies, and the gap grew over time, reaching its widest point in the mid-1990’s. However at the turn of the century U.S. employment rates for prime-age men shifted down, while European rates had risen during the late 1990’s. In the new century, there has been little to choose between the US and Europe.

Source: OECD: ALFS summary statistics database

For women aged 25-54, the story is one of more gradual erosion of the American employment advantage. In 1981, just under half of European women in this age group were employed compared to over 60% in theU.S.As the chart shows, despite these very different baselines, trends in women’s employment were extraordinarily similar in terms of the rate and tempo of growth up to the mid-1990’s, at which point growth theU.S.first levelled off, and then went into reverse. Meanwhile women’s employment continued its secular rise inEurope, converging with theU.S.in 2008.

Source: OECD: ALFS summary statistics database

What are the lessons from all this? We need to know more about the drivers- on both sides of the Atlantic- of this reversal in comparative performance before any firm conclusions can be drawn. But there is one obvious lesson for those who continue to believe the UK should take inspiration from the brutal welfare reforms of the Clinton era: cutting benefit rolls is not the same thing as raising employment. More tentatively, the U.S.employment performance since the turn of this century makes the previously unthinkable possibility that U.S. welfare reform had no positive economic impact in the medium term not only possible but plausible. If that turned out to be the case, economic failure could be added to political failure (as convincingly argued here) in the long-term judgment on the Clinton reforms.

The government and indeed all major political parties have expressed concern about low social mobility in the UK. These concerns were based on evidence that Britain became less meritocratic for a generation leaving school in the late 1980s than it was previously. Recently, frequent references have been made by politicians about the issue of intergenerational worklessness in the UK, citing families with two or three generations who never work and how we need to deal with this ‘culture of dependency’.

“Our recent *Housing Poverty* report concluded that Britain’s social housing estates, once stepping stones of opportunity, are now ghettos for our poorest people. Life expectancy on some estates, where often three generations of the same family have never worked, is lower than the Gaza Strip” – Iain Duncan Smith MP (2009)

Despite the frequency of these statements and unlike the picture for social mobility, there has been no hard evidence on the subject. Before the process of policy-making begins, the onus is on researchers and politicians to assess both the scale and nature of any problem here.

Bringing evidence to the table

Evidence from the Labour Force Survey, from which most of the labour market statistics come, suggests that of all households with two or more generations of working age co-residing (which make up 1 in 5 of all UK households), only 0.3% or 15,000 households are in a position where both generations have never worked. In around a third of these households the younger generation has only been out of full time education for less than 1 year.

Looking at where generations overlap in the same household is somewhat restrictive. If we look at data where fathers and sons can be tracked even when observed in different households, the two British birth cohorts (National Child Development Study and British Cohort Study) and the British Household Panel Survey, the story remains the same.There are very few families who never work across generations, driven by the fact that less than 2% of sons in each of the three data sources considered have never worked by age 23 and under 1% have never worked by age 29. Unsurprisingly then there is no correlation in workless spells across generations if we focus on ‘never working’ for two of the three British data sources considered because very few people never work. It just doesn’t exist on the scale people seem to think it does.

This is not to say however that intergenerational worklessness doesn’t exist.  In 180,000 households (4% of the multigenerational households of working age), both generations are currently out of work and in 140,000 households both generations have been out of work for over a year. In data sources that track families through their working lives, sons with workless dads at age 10 to 16, spend 8-11% more time out of work from 16-23 than sons with employed dads. They are also 15-18% more likely to spend a year or more in concurrent spells out of work during this period.

Previous evidence suggests that lengthy spells out of work like this in youth can have long term scarring effects on future wages and future employment. So while the discourse of ‘never working’ families is wrong, there is clear evidence of people who are cycling in and out of employment having children who are also more likely to have a weaker attachment to the labour market.

Area matters

Interestingly, if we look at the intergenerational correlation in workless spells across different local labour market conditions, sons with workless dads in tighter labour markets are just as likely as sons with employed dads to be workless. It is only in the labour markets with high unemployment that sons with workless dads are disproportionately more likely to be workless than sons with employed dads.

Figure: Variation in the intergenerational correlation of worklessness in the BCS by the county level unemployment rate based on the families’ county of residence in 1986

The ‘culture of dependency’ argument is that in families where people receive welfare, this is a more acceptable lifestyle choice than in families where nobody claims. This clearly isn’t true in tighter labour markets. The fact that the intergenerational relationship varies by outside economic forces suggests that a simple ‘culture of dependency’ story does not hold. Whilst welfare could be a reason why people turn away from the labour market, the problem only exists when work disappears.

An alternative view is that in these high unemployment areas employers can be more particular about the skill-set that they require meaning that those individuals with the lowest skills get very few opportunities. William Julius Wilson makes this argument in his most recent book ‘More than Just Race’. Research suggests that sons with workless dads are not only more likely to have lower cognitive skills and educational attainment but they are also more likely to have lower soft skills including self-esteem and extroversion. These are key skills associated with future employability.

This argument emphasises the role of disadvantage, which makes young people from deprived families the most marginal workers at the back of the queue for jobs when local employment is scarce. If unemployment persists, eventually young people begin to turn away from employment and find other means of existing. Whilst these individuals might be on welfare, it’s not necessarily the reason that they turned away from work in the first place. The lack of opportunities available to these young people leads to the detachment.

The ‘never working’ family may be an easier sound bite but it is not representative of the true situation. For those families where generations struggle to hold stable work, local labour market conditions play a crucial role. More should be done to consider the evidence available rather than attaching labels such as ‘underclass’ to a whole group in our society.

[Lindsey's paper with some of the figures behind these stats is available here, and the Guardian editorial it spurred is here]

In his detailed discussion of conditionality and deservingness, Ben drew attention to the pretty steep decline in people’s support for unemployment benefits. His graph of data from the British Social Attitudes survey (reproduced below) show that, since the mid-90’s, the proportion of people agreeing that “Unemployment benefits are too high and discourage work” has gone from around 40% to almost 60%. I’m interested in why that should be. What has been going on over the last 15 years or so to result in so dramatic a drop in support for these benefits?

Addressing this question is going to take more than one post; so I’m going to split the discussion in two. In this first post I’m going talk generally about proximate causes; about what’s going on in people’s heads when they think about unemployment benefits. In the second post, I want to talk about bigger, society-level causes. What’s been going on in wider society that might have changed what’s in people’s heads? And what’s more, can anything be done about it?

As for people’s immediate feelings about unemployment benefits, there are a number of ways in which they could have changed. First, there may have been a more general shift to the right in terms of people’s feeling about the role of the state in social support, with perceptions of unemployment benefit forming just a part of this trend. However, this doesn’t jibe with people’s feelings about, for example, pensions for retirees; people’s support for more spending on pensions has actually increased over the same period that support for unemployment benefits has decreased (again from the British Social Attitudes survey). It seems that people don’t mind the government spending more money, as long as it’s on certain specific groups.

Another possible explanation for the fall in support for unemployment benefits is people’s perception of how much money benefit claimants actually get. If the perceived generosity of benefit payments has increased over time, then more and more people will think they are too high. This would be true even if the amount people think benefit claimants should be paid had actually increased too; as long as the perceived generosity of the payments has increased faster. Again this explanation is definitely plausible. In terms of its relationship with people’s wages, the generosity of unemployment benefit has actually fallen over the last 20 years (see pages 20 and 21 in this report). But thanks to a seemingly unending stream of articles like this in the mainstream press, I imagine a lot of people think it’s the other way around.

However, I don’t think this is the real story. I think people’s support for unemployment benefit would have dropped regardless of how generous they think the payments are. I think that most of the same people who now say they are too high would say the same if they knew they were half what they are now or double. That’s because I think the real story of the last 15-plus years is people’s changing perception of the kind of person who claims unemployment benefit. A perception has emerged of ‘benefit claimants’ as a separate class of people; a class that, in general, do not deserve any sort of help whatsoever. In other words, it doesn’t matter how much money people think benefit claimants actually get; any amount would be too much because they are bad people.

The stereotype of the lazy, feckless, undeserving poor is obviously not new, but I don’t think it has ever been applied as broadly or as firmly as it has come to be in recent years. The mental category to which these negative stereotypes are applied now seems to have expanded to cover anyone ‘on benefits’. The very phrase ‘on benefits’, like ‘council estate’, now activates a set of negative associations that it would not have done a few decades ago. An unfortunate property of these associations is that, because they are attached to a ‘kind of person’, they are necessarily freighted with a sense of permanence. You are not a person currently claiming unemployment benefit; you are one of the ‘people on benefits’.

Essentially, what I’m arguing has changed in recent years is that the extent to which ‘people on benefits’ forms a neat, homogenous, mental category has steadily increased, and every member of this category is tarred with the same negative associations. It is these negative associations that are driving the decline in support for unemployment benefits. They have deeply invaded our mental landscapes, and we can no more escape them than we can those we have built up about people of other ethnicities, genders or sexual orientations. Consciously or not, they are activated whenever we are presented with the concept of unemployment benefits (for example when a survey researcher asks us whether we think they are too high) and, inevitably, they colour our thoughts and responses.

(As a side not, I think that people receiving incapacity benefit have been particularly unfortunate victims of the changing perception I’ve described. There seems to be a horrible kind of circularity to people’s thinking about this: Being disabled and incapable of work means you receive incapacity benefits, but receiving these benefits puts you in the mental category of ‘people on benefits’; people on benefits are bad people, therefore you must not really be disabled.)

In my next post I want to talk more about why people’s perceptions of ‘people on benefits’ might have changed, and what, as people interested in inequalities, we could do to reverse it. In the meantime, as this post is based on a lot of speculation on my part, I would be interested to hear what other people think. Particularly whether you agree that people’s minds have really changed a lot in this respect, or whether you maybe think I’m underestimating the extent to which these prejudices have always existed. Let me know.

The issue of contraceptive policy is often framed as a matter of religious freedom or sexual liberation, but it is also a very serious social policy question. Ben pointed me to these interesting graphics from the Economist that show stunning 25-year declines in teenage pregnancies, birth rates, and abortions for whites, blacks, and Hispanics in the United States. The widest disparities, between blacks and whites in teenage pregnancy rates, are narrowing substantially over time.

This is good news, even if it is blunted by the fact that progress has stalled in the last couple of years. It is also the case that the proportion of children being raised by single mothers is actually steadily increasing over time (see Figure 1). All else equal, it is better for children to be raised by two parents, and it is better for parents to achieve some financial independence.

Has increased uptake of contraception caused the decline of teenage pregnancies and abortions? In 1992, 29% of females used no contraceptives at first sex, but this declined to 25% in 2002. Condoms were the most common method, but hormonal contraception use also increased substantially among teens during this period. Despite the emphasis on teenage abstinence – and the claim that abstinence-only education works –quasi-experimental evidence suggests that such policies are useless or worse in decreasing teenage pregnancies.

The truth is that there are many factors that have contributed to the long-run trend in teenage childbearing. In a 2003 paper, Lopoo et al. demonstrate that some policies, such as more aggressive child support enforcement, have led to increased teenage pregnancies. The explanation is probably that teenage males are more likely to use contraception in response to a more credible threat of having to pay child support. Decreasing generosity of welfare benefits also caused single motherhood to be less attractive to teenage women (validating a claim that supporters of welfare reform have frequently made).

The structure of social and demographic disadvantage might also impact teenage pregnancy rates. Poverty is generally considered a risk factor for early childbearing, especially if the opportunity cost of teenage pregnancy is low (for example, if there are few opportunities in the labor market). Moreover, teenage pregnancy could provide validation and companionship to disadvantaged women, and help them to gain esteem in their community. This idea is supported in the research of Kathy Edin and colleagues. However, Melissa Kearney concludes in a 2009 review that the relationship between rates of disadvantage (such as being the child of a single or low-educated parent) and early childbearing is modest after inclusion of state and period fixed effects. Higher income can change the quality of child care that parents can provide once a child is born – both in terms of time spent parenting, and in economic resources. Reducing teenage pregnancy among the poor should still be a priority.

What will be the next frontier for reducing teenage pregnancy? The Obama administration has placed part of their bet on free access to contraception for all women. They have also very deliberately shifted away from the abstinence-only approaches of the Bush Administration. These are positive steps. Changing incentives is also likely to be important: if teens are provided with other avenues to gain personal fulfillment, in school and in the labor market, they may be less likely to engage in risky sexual behaviors.

Inequality and Crime in English areas

The first is by Adam Whitworth, and looks at inequality WITHIN AREAS of England.  He tests whether high-inequality areas have greater levels of crime than low-inequality areas, controlling for a number of area characteristics. An unusual feature of this study is how it defines within-area inequality – this is not about individual incomes, but instead is income inequality between different (small) areas within the bigger area. The main regression results are shown below.

Put simply, Whitworth shows that high-inequality areas have higher crime levels for ALL these types of crime than low-inequality areas. I’ll have a final word on what these results actually mean below.

Inequality and the burden of caring for kids with special needs, in US states

Now this is an outcome I’ve never seen before: does inequality raise the burden of caring for kids with special needs? Parish et al 2012 measure this outcome in multiple ways, and – controlling for child’s condition, ethnicity etc – find that high levels of state inequality are associated with (i) no help in arranging care, (ii) stopping working due to child’s health; (iii) increases in the financial burden of care, as a % of income. They present the results unusually too, in terms of how the financial burden would be different in each state if they had average levels of income inequality.

Inequality and seeing yourself as better than average, internationally

OK, so this is perhaps my favourite of the four (and not just because it was led by a colleague at the University of Kent – I don’t even know Steve Loughnan!).  Loughnan et al (in press) looked at whether high-inequality countries had higher levels of self-enhancement – that is, seeing yourself as better than average. Note that (like most psychological research…), this was a study done on university samples.

In this study, self-enhancement is measured by asking people “How much do you possess this characteristic compared to the average person” across 80 personality traits, and then “This characteristic is desirable, it is a characteristic that people generally want.”  Self-enhancement is shown if people are more likely to say they possessed a characteristic if they saw it as desirable (p1256) – which people in all countries did.

Self-enhancement has reliably been shown to differ between countries, but – according to Loughnan et al – people previously thought this was due to differences in Western and Eastern ways of viewing the world. Their argument is that it’s actually due to inequality – as the chart below would suggest. When they test this more closely, they found inequality is a much better predictor of self-enhancement than individualism vs. collectivism, or power distance, the two cultural variables that are usually used to explain it.

Inequality and social mobility, internationally

Finally, a graph that is already well-known, and deservedly so: do high-inequality countries have lower levels of social mobility? The answer is shown below (taken from Jared Bernstein’s blog, using Miles Corak’s work) – and basically, is ‘yes’. Apparently this is known by some as ‘the Great Gatsby curve’ (!). I discuss this a bit more in the final section below.

So what does this all mean?

Longstanding readers will know that I think there are problems in reading too much into these analyses (see these two posts of mine, plus Rob’s post). They show an association – but does this really show the causal effect, or is there something else going on behind them?

• Is it that inequality causes the ‘bad thing’, or the other way round? Loughnan et al are suitably cautious about drawing causal conclusions from their work; they say there ‘may’ be an effect, but don’t present their results as definitive. They also say that the link between the two (even if causal) is likely to be complex; it “is unlikely that economic inequality directly leads to biased self-perception.”

• Is there something else that causes BOTH inequality and the ‘bad thing’? This seems especially likely for the study on the burden of caring for kids with special needs – more right-wing states are likely to tolerate (encourage?) more inequality, and to have less generous social welfare budgets that provide lower support. So it seems unlikely to me that the link with inequality is causal.

That said, Miles Corak offers an excellent justification for a causal interpretation of his graph on social mobility. These relationships give us invaluable, interesting clues about the possible effects of inequality – but they need (i) further empirical research + (ii) a theoretical idea of what’s going on, if they are to really provide evidence of the effects of inequality.

So perhaps there’s never been a better time to look at the largest social experiment ever-attempted in the UK, which tried to help people move on at work, and whose final results were revealed late last year.  In this post, I summarise the complex set of results of the experiment in the UK.

The ‘Employment Retention and Advancement’ Demonstration Project

When it was set up in 2003, the ‘Employment Retention and Advancement’ (ERA) project was trying to combat a the problem of the ‘low-pay, no-pay cycle’ – that is, they would take badly-paid temporary jobs, which would then be followed by periods of worklessness. The aim was to get people into sustainable jobs (the retention part), and to get them to progress into better-paid positions over time (the advancement part). I remember writing a (badly-written) speech for John Denham MP in 2004 where he called for a set of ‘advancement agencies’, based on very much the same logic.

The novelty of ERA was what was called ‘post-employment assistance’. People went through the same welfare-to-work programmes they would normally have done, trying to get them back to work. After they got a job, though, they received voluntary extra help that tried to encourage both retention and advancement – partly through help and guidance from personal advisers, and partly through extra financial support like a training budget and an emergency fund to cover anything that might help them stay in work.  Crucially it also included cash bonuses: £400 three times a year for 2yrs for staying in full-time work, plus £1k for completing training.

What was particularly unusual was that this was evaluated using a randomised experiment – that is, of the people who took part, half were randomly put on the programme, and half were left with the existing lack of post-employment assistance. [American readers may find it crazy that UK policies usually aren't evaluated using random experiments - but this really was a rare event, even at the height of the fashion for 'evidence-based policy']. Three groups were invited to join ERA – unemployed lone parents, lone parents working part-time and receiving tax credits, and the long-term unemployed (only the last group being required to receive the pre-employment welfare-to-work programme). People on average spent around two years receiving post-employment assistance from ERA, and no more than 33 months maximum.

So what happened?

To figure out what happened, there’s four particularly useful sources – Jim Riccio’s and Paul Gregg’s excellent presentations at a PSI event last December, the final summary official report, and the last non-summary report (of which I’ve particularly used Jim Riccio’s presentation). Showcasing the complexity of social interventions, the results were different for the three different subgroups, so it’s easiest to present these separately before coming back to a final conclusion.

Unemployed lone parents

Initially, many of the unemployed lone parents didn’t want to work full-time because of caring responsibilities. During the course of the programme – when the incentives were available – they earned slightly more than the control group, mainly because they were more likely to work full-time (rather than part-time) in the initial years of the programme.  After the programme ended, though, their earnings were pretty much identical to those in the control group, as the chart below (from Riccio’s presentation) makes clear. As it happens, the increased hours were particularly strong among the better-educated lone parents (A-levels and above), who earned £3.5k more in total over these 4 years.

Part-time low-paid lone parents

This group had to actively volunteer for ERA, and those volunteering were often attracted by the support for training – although this didn’t mean they all wanted full-time work. As in the unemployed lone-parent group, the incentives seemed to make them more likely work full-time, pushing up their earnings. BUT by the final year of the evaluation (AFTER the  incentives ended) there was no statistically significant impact on earnings – as seen in the graph below.

What’s really interesting here is that these lone parents (remember: they often wanted to get more qualifications) were helped to get more qualifications by ERA – there was a 13 percentage point overall increase in people participating in training/education, and a 4.5 percentage point increase in actually getting qualifications, the latter being spread across all initial educational levels.  Riccio asks why these extra qualifications didn’t translate into higher earnings, suggesting that it’s because (i) training wasn’t driven by employer demand, so the lone parents may have had unrealistic expectations; (ii) a lack of help from ERA in matching specific training to specific job opportunities. This reminded me of the ideas suggested by MIT’s Paul Osterman that I’ve previously blogged about, where the critical step is constructing a ladder between jobs rather than leaving it to people themselves.

Long-term unemployed

The long-term unemployed group – which mainly included older men – tended to work full-time anyway if they got a job, unlike the lone parent groups; many people didn’t really want to keep contact with the ERA services after getting a job. Still, the effect of ERA on this group was the sharpest and most sustained out of any of the three groups, as shown below:

Statistically significant effects were found across a whole range of outcomes: 2.2 percentage points (pp) more likely to have ever-worked across the five years, 1.1pp increase in total months worked, £350/yr increased earnings after ERA ended, 2.4pp reduction in receiving Jobseekers Allowance at the end of the fifth year etc.

However, Sianesi’s evaluation – the last pre-summary report – notes a word of caution here, as there are no signs that ERA had any impact on earnings among those actually working; it just raised the numbers working per se. Some caution is needed here (it’s actually a huge methodological challenge to look at the impact on earnings, as different groups of people work in the intervention and control groups), but Sianesi’s evidence seems to be convincing.

Drawing this all together

The bottom-line question then: was it all worth it?  Can we really get people into better-paid jobs by offering in-work support?  And does it pay-off for Governments to be doing this?

The answer to this is mixed, depending on which people we’re talking about.

• Among lone parents, slightly more people can be incentivised to work full-time if you give them generous incentives for full-time working. But in the long-term there was little effect on their employment or earnings outcomes, and generally this cost the Government more than it saved, nor did it have a noticeable effect on participants (although the costs outweighed the benefits among the higher-qualified unemployed lone parents). Those who are motivated to get qualifications did end up getting more qualifications, but this hadn’t yet translated into any earnings gains in work.

• Among the long-term unemployed, more people worked and this was a spectacular success in terms of helping the finances of both claimants and the Government. But it didn’t increase the earnings of people in-work; it just made people more likely to work per se.

As the main summary document concludes, “The ERA findings underscore the difficulty of achieving long-term improvement in employment retention and advancement.”  The Osterman is one model of improving this; but the other alternative is to try and change the jobs themselves rather than the individuals in them, and this is where a policy agenda seems to be emerging. We’ll return to this over the coming months and years.

Drawing on BLS data from 2008 to 2012, I have created three pictures that dramatically underscore these differences. (These data are easily available in tabular form, if you want to check them out.)

First, there is a huge gradient in unemployment by education, and that has grown substantially since the recession. Here I show the unemployment rate for those with less than a high school diploma versus college graduates. In January 2008, the gap was 5.6 percentage points, in January 2010 it was 10.5 points, last month the gap was 8.9 points, suggesting that the recovery may finally be setting in among the less education.

Second, there is a huge disparity between whites and blacks, and a smaller gap between whites and Hispanics. The white-black gap in 2008 was 4.7 points, and the white-Hispanic gap was 2.1 points. This gap increased to 7.8 and 3.9 points respectively, but is now starting to decrease.

Finally, the difference between the official unemployment rate (called U-3) and broad unemployment (U-6) has grown but is also starting to narrow. U-6 adds in the marginally attached (people who are not actively looking for work, but have looked in the last year and want to get back to work) and people that are working part-time because of economic circumstances. At the height of the downturn in 2010, almost 17 percent of individuals in this broader category could be classified as unemployed.

In future posts I’ll delve into some of the more econometrically sophisticated analyses of the broadening and narrowing over time, but sometimes it’s informative to just see some unadjusted numbers.

Comparative social policy tends to underline policy differences (e.g. in the worlds of welfare literature), but common austerity trends in Europe are leading to similar internal reactions. In Italy and in the UK, social policy academics have produced two  documents to defend welfare state intervention: “In Defense of Welfare” (by the Social Policy Association) and “The Manifest for the welfare of the XXI century” (by the Italian Journal of Social Policy and ESPAnet-Italy, the equivalent of the SPA community in Italy). Comparing those documents allows to capture the ‘zeitgeist’ of European social policy.

Both the Italian the British ‘epistemic communities’, have chosen to produce something that is downloadable for free on line, bypassing traditional media less receptive of social news. As underlined by Mark Easton, BBC News Home editor during the last ESRC Celebrating the Social Sciences event, the word ‘social’ comes across as ‘fluffy, fuzzy, imprecise and soft’ in traditional media.

The British defence

The two documents are also very different. The British “In Defence of Welfare” has the double scope of assessing the current dynamics and reflecting on the potential impact of the spending review in areas that are central in social policy intervention. It is composed by three main sections: the new politics of welfare, implications for specific groups and policies (e.g. youth, women, housing, higher education) and a more prescriptive part “towards an alternative”.

In Defence of Welfare represents the state of art of British social policy right now and shows how far UK welfare state is moving from the idea of the ‘founding fathers’ of the welfare state, yet repeating his history. The final outcome is a document too long to be easily sold to the large public: a 68 pages academic paper, but also an excellent and succinct (at least in academic standards) attempt to describe the very complex current situation of social Britain.

But how to create a national campaign to communicate those findings to the outside world? Timmins affirms at p.3 that the paper aims to be a technical document but also puts forward a campaign against cuts pointing out that ‘this is how you break a society’. In Defence of Welfare has been delivered to elected MPs, senior civil servants, pressure groups, voluntary organisations and think tank. Interestingly, another research report involving inequalities and social policy promoted by Compass (somehow playing the role of the Fabian society during Titmuss and Townsend times), has received much wider coverage in the UK. This opens up the space for a reflection on the possibility of re-establishing the communication between the SPA and the civil society/media, even before attempting to ‘advice policy-makers’ (the main focus of established social policy academics for a long while).

The Italian defence

The Manifest for a Welfare of the XXI Century in Italy is a surprising short (for lengthy Italian standards) 4-pages paper which aims also to react to the reductions of welfare state spending which took place in Italy in 2010/2011. The argument is essentially the same: welfare cuts risk to damage a social situation which is already extremely weak. Although sponsored by the Italian Journal of Social Policy and ESPAnet Italia this Manifest gained a stronger political support than the British equivalent and was presented by the president of one of the three Italian leading unions (Cgil) last March 2011.

The Manifesto does not offer a systematic review of social policy dynamics in Italy as the SPA Document, but mentions very briefly – and much less empirically- the most salient social issues (social inequalities, generational issue, inclusion of migrants); finally, it presents also a list of the potential functions of the welfare state in Italy within wider European perspective (this last one, the European view, is an element which is unfortunately neglected in the SPA document).

Here the goal is, since the beginning,  to involve the civil society: it is possible to ‘subscribe’ on line the Manifesto, showing the support of individuals and civil society organisations – maybe a good suggestion for the British counter-part about how to make in Defense of Welfare heard from the outside.

A European defence?

Given the similarities, the question arise: why not to unify these efforts and create a document at the European level through ESPAnet?  European trend of austerity enhances similarities across different epistemic communities which already communicate through Jiscmail, as proved by the recent successful petition for European research funding. An ESPAnet paper should combine the technical depth of the British SPA analysis with the civil-society engagement of the Italian social policy community.

Is the public receptive to the inequality message? A recent NY Times blog post lays out some recent polling data from Pew and Gallup. There has been a clear shift in public opinion, but lots of subtlety in which messages resonate with different electorates. Here is a summary of some key patterns.

Growing Perceptions of Class Conflict Among All Groups

In 2009 and 2011 Pew asked respondents in a phone survey about the degree to which conflicts existed between different groups – rich and poor, old and young, immigrants and native born, and black and white. In 2009, 47 percent of respondents said that there were “strong” or “very strong” conflicts between rich and poor, but by 2011, 66 percent perceived this conflict, a 19-point increase.

The major spike is not surprising given the sudden blitz of media attention around Occupy Wall Street. The growth in perceived conflict was greatest among whites (black and Hispanics were more likely to already perceive class conflict in 2009), but the growth was uniform among Democrats, Republicans, and independents. There was also a noticeable increase in the perception of other kinds of conflict (for example, a ten point increase in percent perceiving conflict between old and young, which may reflect awareness that federal programs for the elderly are a target for future cuts).

Perceiving conflict does not necessarily mean that respondents are sympathetic to messages about inequality, although in the Pew survey respondents that perceived conflict were also more likely to believe that the wealthy achieved their status through family connections and inheritance than through hard work and ambition.

It’s Still the Economy, Stupid

When respondents are asked about what issues they believe the government should tackle, support is still overwhelmingly focused on economic recovery rather than to “increase the equality of opportunity for people to get ahead if they want to.” In a Gallup survey, large majorities (71-91 percent) of all political affiliations want government to focus on growing and expanding the economy. Support for promoting opportunity is about 20 points lower across the spectrum on average. Support is very low (21 percent) among Republicans reducing the inequality between rich and poor, and 72 percent among Democrats.

One surprising finding is that a slight majority of Americans now say that inequalities are an acceptable part of the economic system (52 percent), compared to the last poll in 1998 when 45 percent of respondents endorsed this statement. (The small sample size of the survey means that this difference may be on the edge of sampling error, however).

A Winning Message?

What is a winning message on inequality for progressives in 2012? As I have said, a window of opportunity has been created by Occupy Wall Street to begin a national dialogue about economic inequality. Judging from President Obama’s State of the Union speech, he clearly believes that tax fairness is a winning issue. It may well be. If Mitt Romney emerges as the Republican front-runner there will be plenty of scope to use Romney as a powerful symbol of how the ultra rich are not paying their fair share, and this message will likely resonate with voters anxious about how to resolve the budgetary impasse. I predict that the Republican message about “not taxing the job creators” will become increasingly stale and out of touch in the coming months.

What about a larger conversation about protecting labor and changing the working conditions of the middle class? Here, I think Republicans will continue to turn the message away from Democrats, and toward their narrative about greedy unions that are making industry less competitive and bankrupting states. This battle will be waged in the states, and it is worth continuing to watch the battlegrounds in the Midwest (especially the recall of the governor in Wisconsin). This could also be an important year for the worker’s movement. To make an effective pitch, progressives need powerful symbols of workers such as firefighters and teachers that are being played as pawns in state budget politics.

Finally, Obama’s message that budget cutting should not undermine smart investments in education and the workforce will need to be coupled with a strong economic narrative about growth and competitiveness. Beyond scaremongering about a (largely fictional) Chinese economic menace, voters will need positive reasons to believe that investing in human capital nationally will yield payoffs over a shorter period of time. It’s a tough message to sell: when people are still worried about staying in their houses and jobs, they may not want to think about building the workforce of tomorrow.

A more generous benefits system…

In their wide-ranging report Growth Without Gain, they look at how much support the benefits/tax credits system provides for people throughout the income distribution, and how this has changed 1988 to 1998 to 2008. Their first graph (below) looks at the % of income you get from the benefits system from a given income in £, and shows two things:

• As you would expect, people earning less money get more of their income from the benefits system than people earning more money.

• Over time, though, it looks the state has generally become more generous - particularly for people earning about £12.5k to £35k. When I first looked at this, I thought this was the predictable consequence of the introduction of tax credits, which were designed to help people in low-wage jobs.

…or a less generous one?

However, if you cut up the numbers a different way then you get a very different picture. The next figure, below, shows how much support people get at different points in the income distribution - so rather than showing a constant sum of money, it shows e.g. the 10th percentile (where 90% of people earn more and 10% earn less).

This shows the opposite finding - that the state has become less generous over time, rather than more. Between 1988 and 1998 this can be seen over virtually the whole income distribution, but 1998 to 2008 it’s only at the bottom end; for lower-middle incomes and above (from about the 25th percentile), there was little change over the most recent decade.

What does this all mean?

As the Resolution Foundation correctly say, this strange pattern is because earnings have grown faster than benefits payments/tax credits.  So while the support for someone on £15k has grown, if you earn £15k you are relatively much poorer in 2008 than you were in 1988.  So the support for (say) the poorest 10% is actually less generous than it used to be in relative terms.  Or put another way, “people at any position on the income spectrum now earn a higher percentage of their income themselves” (RF p40).

What’s really striking about this, though, is the impact of tax credits. Gordon Brown spoke about ‘progressive universalism’ as Chancellor, where most people get something but the poorest get the most. This is opposed by those on the right as the growth of benefits payments so that increasing numbers are ‘locked into benefit dependency’.

But despite this whole debate, the erosion of other (universal/contributory) benefits means that tax credits simply meant that the state didn’t whither away yet further; it definitely did not seem to have extended state support further up the income distribution, compared to the situation in 1988 after almost a decade of Thatcher.

All of which I found surprising.