Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe [Illustrated] 0198812906, 9780198812906

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Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

Title Pages Dennis C. Spies

(p.i) Immigration and Welfare State Retrenchment (p.ii) (p.iii) Immigration and Welfare State Retrenchment

(p.iv) Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Dennis C. Spies 2018 The moral rights of the author have been asserted First Edition published in 2018 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in

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Title Pages a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2017954210 ISBN 978–0–19–881290–6 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.

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Acknowledgments

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

(p.v) Acknowledgments Dennis C. Spies

This book would not have been possible without the support of many people. First and foremost, the author wishes to express his deepest gratitude to Christine Trampusch, who offered invaluable support and guidance. Her expertise, understanding, and ability to motivate the author added considerably to this project. I would also like to thank my colleagues at the Cologne Center for Comparative Politics, and here especially André Kaiser, for their assistance and the insightful comments they provided at all levels of the manuscript. My special thanks go to Alexander Schmidt-Catran, Leonce Röth, Alexandre Afonso, Achim Goerres. It has been a privilege to work with you. Julia Däumling, Lea Kaftan, Elias Kerperin, and Markus Schopp: thank you for providing such a great job as my student assistants! Finally, the author would like to thank the Fritz Thyssen Foundation for providing him with a travel sponsorship (Az. 50.15.0.025PO). The entire research project benefited a lot from it. Cologne, July 2017 (p.vi)

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List of Figures

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

(p.ix) List of Figures Dennis C. Spies

1.1 The Analytical Framework 35 2.1 Attitudes towards Redistribution in the US and Western Europe 42 2.2 Whites’ Welfare Support Depending on Attitudes towards AfricanAmericans 46 2.3 Whites’ Welfare Support Depending on Attitudes towards Immigrants 46 3.1–3.4 Middle-class Involvement in Sweden, Germany, and the UK 83 3.5 Welfare Dependence Ratios of Immigrants vs. Native Households 88 4.1 Interaction between Economic Concerns and Middle-class Involvement in Pensions 113 4.2 Interaction between Economic Concerns and Middle-class Involvement in Unemployment 113 5.1 Interaction Effect between Immigration and Extreme Right Parties 137 6.1 Interaction Effect between Immigration and Middle-class Involvement in Unemployment Insurance 153 6.2 Interaction Effects of Immigration, Middle-class Involvement in Unemployment Insurance, and ERP Participation in Government 155 (p.x)

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List of Tables

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

(p.xi) List of Tables Dennis C. Spies

1.1 Types of Welfare Institutions 24 2.1 Racial Attitudes and Welfare Support in the US 43 2.2 Characteristics of Republicans, Independents, and Democrats 47 2.3 Regression Results for TANF Benefits after PRWORA 67 2.4 Regression Results for Time-Ban on Foreigners after PRWORA 70 3.1 Summary of Program Characteristics in Three Insurance Areas 81 3.2 Correlations between Middle-class Involvement Indices and Budgets 84 3.3 Welfare Benefit Ratios of Immigrants vs. Native Households 89 3.4 Regressions on Welfare Benefits Received by Immigrant Households 91 4.1 Descriptives 108 4.2 Results of Multi-Level Models 109 5.1 Political Attitudes and Socio-demographics of Native and Immigrant Voters 123 5.2 Results of Multinomial Logistic Regression Models with Social Democrats as Baseline 125 5.3 Results of Multinomial Logistic Regression Models with Extreme Right Parties as Baseline 127 5.4 Party Support by Natives and Immigrants 129 5.5 Regression Models of the Welfare Programs of European Parties 135 6.1 Results of TSCS Models on Four Spending Categories 151 6.2 Results of TSCS Models on Spending on Social Assistance 158 (p.xii)

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List of Tables

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Introduction

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

Introduction Dennis C. Spies

DOI:10.1093/oso/9780198812906.003.0001

Abstract and Keywords By briefly summarizing the New Progressive Dilemma (NPD) debate, this introduction presents to the reader the general research question: does immigration necessarily lead to welfare cuts? It outlines the significance of relationships between immigrants and native citizens, showing how these relate to redistributive policies in the US and Western Europe—but with very different results. In the US, states with high minority populations tend to favor lower welfare benefits, whereas in cross-national comparisons no such depressing effect of immigration on welfare spending can easily be identified. The book applies the insights from comparative welfare state and party research to the NPD to explain this difference, analyzing the effect of immigration on welfare state retrenchment. Finally, the introduction presents the book’s overall line of reasoning and the structure of its chapters. Keywords:   New Progressive Dilemma, NPD, comparative welfare research, party research, redistributive policies, immigrants, in-groups, out-groups, welfare state

If there was one salient political issue in Europe in the year of 2015, it was definitely the “refugee crisis” and the consequences associated with it. By the end of the year, about 1.2 million refugees had entered the twenty-eight EU countries and the European commission estimated that there will be another three million by the end of 2017 (The Telegraph 2015). Germany, the country attracting the largest share of the new arrivals, counted the millionth refugee crossing its border in December 2015. Over the entire year, this meant that an average of 2,900 people per day had entered the country. Similar figures were forecast for 2016 (Spiegel Online 2015).1 Sweden, a country with a population Page 1 of 11

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Introduction eight times smaller than Germany, expected 190,000 refugees to have entered it by the end of that year. As the The Organisation for Economic Co-operation and Development (OECD) states rather reservedly in its yearly International Migration Outlook for 2015: “Immigration flows are on the rise” (OECD 2015b: 11). However, the number of refugees entering the EU is only one, very recent, example of a general trend. Due to permanent or short-term immigration for labor and family reunification purposes, 33.5 million people born outside of the EU live in one of its member states: this includes 17.9 million who were born in a different EU state from the one where they are resident (Eurostat 2015b). While there is a great deal of inter-country variance—indeed, most Eastern European countries send migrants to Western Europe—the share of foreign-born residents among many Western European populations is now closely comparable to the one we find in classic countries of immigration. In absolute terms, the largest numbers of non-nationals living in the EU can be (p.2) found in Spain (6.1 million), France (7.6 million), the United Kingdom (8.4 million) and Germany (10.7 million). The latter is the country that is now the second most popular for immigrants worldwide. It is second only to the US in the number of immigrants it attracts (OECD 2015b: 11). The consequences of these changes in population are at least as heatedly discussed as the actual numbers. As international immigration by definition means that people from one country come to live in another, it is a measure of the increased number of residents with different languages, religions, values, and of course citizenships compared with the native population. In short, immigration leads to ethnically more diverse societies. The most prominent debates have developed about questions of immigrant integration, be it socioeconomic (Koopmans 2009), cultural (Joppke 2009), or political (Heath et al. 2013). At the forefront of these discussions are the reactions of native citizens to increased immigration, the rise of anti-immigrant sentiments (Meulemann 2011), the electoral success of Extreme Right Parties (ERPs) (Van der Brug and Fennema 2007), and decreasing levels of social trust and solidarity (Putnam 2007). In short, immigration is a phenomenon that is seen as containing a great many potential problems and conflicts. Of these economic concerns, the effects of immigration on public budgets are frequently discussed. Looking at the recent refugee crisis in Europe alone, the answer seems very clear: immigration—at least in the short term—will need additional finance in order to provide the resources for the eventual successful integration of the new arrivals. The associated costs for supply and accommodation lead to a very long list of additional public expenditures to cover, for example, new houses, more teachers, language course provision, more civil servants, and the costs of deportation for people not granted asylum status. Taken together and leaving all uncertainties with regard to such calculations Page 2 of 11

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Introduction aside, Sweden estimated that refugee-related costs alone would reach 0.9 percent of its GDP in 2016 (OECD 2015a). Germany expected costs of 0.5 percent of GDP (between 22 and 55 billion euro annually) (Deutsche Welle 2015). That immigration might lead to higher public budgets is not a new aspect of the recent refugee crisis. The impact of immigration on public budgets has long been discussed and the reliance of immigrants on publicly funded welfare programs has attracted considerable attention. The general assumption is that immigrants will rely more heavily on welfare than will native citizens, because they are disadvantaged socio-economically, face discrimination in the labor market, or they freeride on welfare benefits to which they have not contributed. In addition, generous welfare states are suspected of attracting more immigrants, thereby increasing the demands on welfare. When the UK prime minister David Cameron stated that “we want to stop people taking out from a welfare system without contributing to it first” (The Guardian 2016) (p.3) and German interior minister Thomas de Maizière warned that “what is not welcome is migration from EU states into our welfare system” (Financial Times 2016), they were echoing concerns that were raised in classic countries of immigration (for the US, see Fox 2012). Academia has contributed to the debate on these matters and pointed to potential problems that closely resemble those appearing in political (including right-wing) discourse. Accordingly, economists in particular have raised concerns that generous welfare states might act as “welfare magnets” and attract more (and specifically more poorly educated) immigrants (Borjas 1999; 2002). Lower labor market participation rates of the new arrivals, together with the potential welfare costs of immigration, have also raised considerable scholarly interest (Boeri et al. 2002; Borjas 2002; Brücker et al. 2002). Finally, encompassing welfare states—i.e., those offering comparatively high and universal benefits—have been suspected of further raising these costs by lowering the incentives for immigrants to integrate into the host society (Brücker et al. 2001; Koopmans 2009). What political and academic discourses have in common, therefore, is the expectation that immigration will lead to additional costs for welfare states, which means that social expenditure levels will increase. However, while these types of cost-related arguments have dominated the debate since the 1990s, more recently a new body of literature states that generous welfare states might in general be incompatible with large-scale immigration and that welfare budgets will therefore decrease. Theoretically, this more recent debate is only loosely connected with the former debates in economics, but it is strongly influenced by the experiences of the US, where a multi-racial society in combination with a longstanding history of immigration encounters very limited welfare provision that has been vulnerable to further welfare state Page 3 of 11

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Introduction retrenchment. Since the 1980s, US scholars have widely accepted the view that these characteristics are causally related and that the racial diversity of their society prohibits European-like levels of redistribution (for overviews see Fox 2012; Manza 2000; Reese 2005). Furthermore, this US-centered discussion on the relationship between race and welfare has become a kind of “master narrative” (Banting 2005: 107) for analyzing the potential link between immigration and welfare spending in Europe. Consequently, in the last decade it has inspired a rapidly increasing number of international-comparative studies, addressing the warning of Alesina and Glaeser (2004: 175) that “Europe’s new immigrant-based heterogeneity may eventually push the continent toward more American levels of redistribution.” While there is no unified or formalized theory on how immigration and ethnic diversity—to use the more common concept—are related to low social spending, evidence for a link comes from social psychology, sociology, economics and political science. Taken together, these distinct strands of (p.4) literature, with their individual research traditions and methodological approaches, form what has been referred to as the New Progressive Dilemma (NPD) debate (see Goodhart 2004 for this label), which centers on the questions of whether immigration and the ethnic heterogeneity it causes is in general incompatible with an encompassing welfare state and which causal pathways might link ethnic diversity to low welfare spending.2 In order to summarize the already extensive and rapidly growing NPD debate, the theoretical arguments are divided into those focusing on individual attitudes and those interested in the macro-level relationship between ethnic diversity and welfare expenditures.

Anti-minority Sentiments and Welfare Support Beginning at the individual level, the common theoretical starting point of both the US-centered literature and the international-comparative debate is a social psychology concept of racially or ethnically based “group loyalty” (Luttmer 2001: 501), stating that individuals belonging to the same in-group will in general be more willing to support fellow members than outsiders. This in-group bias manifests itself along racial lines in the US and via an equally salient distinction between native citizens and immigrants in both the US and Europe (Brewer 1979). It is a concept with significant implications for the welfare state. As several experimental studies have shown, in-group members not only tend to distribute benefits more to their own group than to members of other groups (Tajfel 1974), but they also allocate resources in a way that causes the greatest difference between groups, even if this means that members of their own group receive less (Tajfel et al. 1971). From this general finding of social psychology follows the expectation that more diverse societies with strong group boundaries might not be willing to redistribute large amounts of money via the welfare state.

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Introduction While such social psychology motives are seen as universal, sociologists interested in US society strongly support the view that race constitutes a very salient group boundary with far-reaching policy consequences for (p.5) welfare. Individual survey data for this strand of literature report a strong relationship between racial- and welfare-oriented attitudes (Fox 2004; Gilens 1995; 1999; Kearns et al. 2014; Luttmer and Singhal 2011; Neubeck and Cazenave 2001), which is seen as the most important explanation for the notoriously low welfare support by White Americans (Gilens 1999). In short, White Americans tend to see the welfare state as something targeted towards African-Americans and increasingly towards Latino immigrants, leaving Whites merely as payers for these seemingly unjustified demands. This pattern has constantly been reported since the late 1980s and appears to be deeply rooted in US public discourse (Quadagno 1994). In recent years, analysis of a comparable relationship between anti-immigrant sentiments and low support for welfare has been the core of the NPD literature, where the general finding is that Europeans with negative attitudes towards minorities are, on average, the most critical of welfare (Eger 2010; Finseraas 2008; Senik et al. 2008; Mau and Burkhardt 2009; Schmidt and Spies 2014). This seems to resemble the racially motivated US pattern (but see Brady and Finnigan 2014 for a skeptical view). As Larsen (2011) reports after comparing the attitudes of US Whites towards African-Americans with those of Europeans towards non-Western migrants, both in-groups rarely differ with regard to their perceptions of the out-groups’ work ethic, are equally hesitant to accept outgroup members as neighbors, and oppose the idea of improving the economic conditions of out-group members by public spending (see Crepaz 2006; Senik et al. 2008). As these types of anti-immigrant sentiments are widespread in Europe (Arzheimer 2008b; Coenders et al. 2005), immigration might indeed lead to less support for redistributive policies—a widespread but not uncontested assumption in the NPD debate (for recent reviews, see Brady and Finnigan 2014; Steele 2016; Stichnoth and Van der Straeten 2013). The general, but often implicit, line of reasoning is therefore that these changed political attitudes will translate, via democratic elections, into public policies that eventually lead to a reduction of social benefits for both out- and in-groups.

Immigration and Welfare Spending That public attitudes with regard to minorities and immigration can lead to policy consequences is well documented for the US. Several studies interested in the reasons for the pronounced differences in welfare benefits across the US point to the role of racial demographics. States with larger African-American populations offer significantly lower welfare benefits than predominately “White” states (Hero and Preuhs 2007; Soss et al. 2001), and some recent studies present evidence that this pattern is repeated in Latino communities (p. 6) (Fellowes and Rowe 2004; Soss et al. 2003). Moreover, states with large minority populations seemed to be much more open to welfare cuts (Reese 2005; Page 5 of 11

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Introduction Fellowes and Rowe 2004). Finally, a well-established literature in American political science has traced the relationship between racial diversity and social policy back to the formative years of the US welfare state, showing that these patterns are not new but have a very long history (Finegold 1988; Fox 2012; Katznelson 2005; Lieberman 1998; Quadagno 1994; Weir et al. 1988). However, a comparable macro-link between immigration and low welfare spending has so far rarely been identified in internationally comparative studies, which can be seen as the weak point of the NPD argument. While much speaks for the view that anti-immigrant sentiments and welfare support are strongly related to each other in Europe too, in contrast to the US, these individual-level attitudes do not seem to translate into actual welfare state retrenchment. Consequently, recent cross-country analyses in the field of political economy conclude that either 1) there is at best limited evidence for a negative effect of immigration on welfare spending and that welfare spending in high-immigration countries merely grows more slowly than in low-immigration ones (Soroka et al. 2016), or even 2) that “if anything there is some support for the view that a greater influx of immigrants has led policy-makers to increase welfare state spending” (Gaston and Rajaguru 2013). Thus, while anti-immigrant sentiments and welfare criticism might be the direct consequences of immigration at the individual level, the NPD literature is facing its own dilemma, as it is unable to explain why both variables seem to be insufficient for explaining welfare retrenchment at the macro-level, at least as far as Europe is concerned. Speaking in analytical terms, something is missing in the causal link between political attitudes and actual policies. In this book, we will try to solve this analytical puzzle by applying the insights from comparative welfare state and party research to the NPD. Incomprehensibly, especially comparative welfare state research has so far been remarkably silent in the NPD debate notwithstanding its shared and strong interest in explaining welfare state retrenchment (see, e.g., Pierson 1996; 2001). At the same time, immigration as an explanatory variable has attracted only very limited attention in the central debates of comparative welfare state research and is neither mentioned in classic volumes on the welfare state (EspingAndersen 1990; Korpi 1983) nor considered in discussions of the effects of globalization on welfare states (Huber and Stephens 2001; Rhodes 1998). As far as the party literature is concerned, immigration has attracted considerable attention as one of most important drivers for new forms of voter–party alignments no longer based on class status but on non-material value orientations—developments that can be observed in both the US and Western Europe. In the latter context, the emergence of a non-material dimension of party competition finds its most visible expression in the rise (p.7) of ERPs. However, the policy consequences stemming from this new party family are

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Introduction rarely analyzed (see Mudde 2013), and only very recently have studies begun to seek the consequences of anti-immigrant parties on the politics of welfare. The purpose of this book is to remedy this situation by offering an analysis of the effect of immigration (essentially ethnic diversity) on welfare state retrenchment by combining the insights of the NPD debate with comparative welfare state and party research in one analytical framework. From the side of the NPD debate, the effects of immigration on support for welfare by natives contributes to this framework and sets the micro-foundations of the causal link between immigration and welfare state retrenchment. In doing so, it teaches comparative welfare state research the role of non-material, cultural attitudes in the politics of welfare, where it is often ignored in a still mainly class-based literature. From the side of comparative welfare state research, the role of welfare institutions enters the framework, making strong arguments that the relationship between immigration and welfare state retrenchment might not be a general pattern but one highly dependent on program-specific institutions. From the side of party research, voter–party alignments (Häusermann 2012; Häusermann and Kriesi 2015) and the welfare coalitions resulting from them (Kitschelt and Rehm 2015), enter the framework, pointing to the role of parties as intermediaries between public opinion and actual policies—lessons of special importance for the NPD debate focusing nearly exclusively on changes in individual attitudes. By pointing to the effects of welfare institutions and parties, comparative welfare state and party research can both offer the mainly micro-oriented NPD literature a convincing solution to its dilemma and contribute towards explaining why ethnic diversity caused such problems for the US welfare state but should not be expected to have similarly destructive consequences for (most of) Western Europe.

Line of Reasoning and Structure of Chapters Chapter 1 (The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research) summarizes the NPD debate and identifies three arguments from comparative welfare state and party research that can be expected to be theoretically relevant to the relationship between immigration and welfare state retrenchment: public opinion, welfare institutions, and political parties. Combining these strands of literature, a common theoretical framework is developed that is subsequently applied to both the American and Western European contexts. (p.8) Starting with the US, Chapter 2 (Racial Diversity, Immigration, and Social Spending in the US) analyzes the fractious relationship between racial diversity and the welfare state as arguably the most influential case in the NPD literature. In view of the notoriously low support for welfare by US citizens compared with other countries, the reasons for this sentiment are analyzed by applying regression models to recent survey data. It is shown that Whites especially are very critical of welfare because their attitude to it rests on negative feelings Page 7 of 11

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Introduction about African-Americans and Latino immigrants. However, not all parts of the US welfare state are affected by this combination of race coding and low public support: means-tested welfare, that is designed for the very poor, is badly affected: but the social security components are not. These differences are then traced back to their origins by comparing a highly race coded and unpopular welfare program, Aid to Families with Dependent Children (AFDC) with a noncoded and highly popular program of social security, Old-Age Retirement, Survivors and Disability Insurance (OAI). As historically oriented analysis reveals, both programs were originally highly affected by racial considerations but subsequently took different routes because of their institutional design as well as their ability to raise and expand their political support bases. Eventually, this led OAI to develop into the most popular and retrenchment-proof program of the US welfare state, while the AFDC program took the very opposite route and was eventually abandoned in favor of the Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA) of 1996. Finally, the PRWORA welfare reform is analyzed in detail, using quantitative macro-data for individual US states. The findings presented indicate that states with larger shares of African-Americans offer far lower welfare benefits than predominately White ones, but that the share of Latinos is not significantly related to less welfare. The reason for this is explained by the different political alignment of the two dominant US minority groups, leaving African-Americans politically far more separable and therefore more exposed to welfare state retrenchment than Latinos. The remaining chapters then apply the same line of reasoning to the European context and closely resemble the analysis presented in the US chapter. In contrast to the US, mass-immigration is a relatively recent phenomenon in Europe, where it encounters mature welfare states that have been in place for several decades. Therefore, Chapter 3 (European Welfare Programs in the Era of Immigration) starts with an overview of the most important welfare programs in Europe, according to their degree of universalism, the generosity of their replacement rates, and their redistributive character. It asks how like OAI or AFDC the European programs are. It is shown that the institutional indicators of middle-class involvement explain a lot about the size of social expenditure budgets (the main variable of interest in the NPD literature), and that programs with high middle-class involvement spend (p.9) significantly more. Using EUhousehold survey data, Chapter 3 also offers an overview on how immigrants fare in the different programs and how this is related to the share of benefits they receive compared with the native population. Chapter 4 (Immigration, Immigration-related Concerns, and Welfare Support in Europe) analyzes the effect of immigration on program-specific welfare support among ten European countries, applying multi-level regression models to European Social Survey (ESS) data. The findings indicate that as far as individual attitudes are concerned the pattern found in the US recurs in Europe. Page 8 of 11

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Introduction In line with the NPD literature, there is indeed much evidence that immigration has both increased anti-immigrant sentiment and lowered support for at least some welfare programs—and especially for those that disproportionally benefit foreign-born citizens. There is also considerable evidence that Europeans would be willing to restrict welfare benefits to the native population and ban foreigners from receiving them. Furthermore, the impact of immigration on welfare support appears to be dependent on the program’s degree of middle-class involvement, universal programs generating far less conflict than targeted ones. Thus, the institutional designs of most European programs already restrict the NPD compared with the US welfare tier as far as individual welfare support is concerned. Another point of departure from the US pattern is presented in Chapter 5 (The Alignment and Representation of European Voters). Applying multinomial logistic regressions to the data introduced in Chapter 4, the analyses show how anti-immigrant sentiment and welfare support influence the voting behavior of natives and foreign-born citizens in Europe. The results indicate that both sets of attitudes are strongly related to party support but that in combination they do not lead to very welfare-critical political coalitions. On the one hand, parts of the US setup are present in many European countries: anti-immigrant votes go nearly exclusively to the Extreme Right and the mainstream-right (similar to the US Republicans), whereas foreign-born voters predominantly support left-wing parties (like the support of African-Americans and Latinos for the US Democrats). On the other hand, the political landscape with regard to welfare that emerges from these alignments is far less likely to foster retrenchment than the political landscape we find in the US. While European mainstream right-wing parties combine anti-welfare and anti-immigrant voters (such as US Republicans) they have already lost many of the latter to the Extreme Right, which has also been very successful in attracting formerly left-wing voters from the Social Democrats. However, the Extreme Right, as the party benefiting most from the anti-immigrant vote, is itself deeply divided by the heterogeneous welfare stance of its supporters, leading it to present a welfare coalition very comparable to Christian Democratic Parties. As an analysis of party positions based on manifesto data (p.10) indicates, this has resulted in a move of ERPs to the left with regard to questions of welfare in the period from 1970 to 2010. Thus, the institutional design of welfare programs and the political alignment of voters in Europe are far less likely to favor welfare state retrenchment than in the US. In the final step of analysis, these differences from the US case are applied to the question of welfare spending. As Chapter 6 (The Effects of Immigration on Welfare Spending in Europe) shows, both the institutional design of most European welfare programs and the internally divided welfare preferences of the political right prevent immigration to Western Europe from leading to welfare state retrenchment. While many native voters would be willing to ban Page 9 of 11

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Introduction immigrants from social benefits, in contrast to the US, the chance of their doing so is severely restricted by the universal character of most European programs. While immigration is found to have a negative impact on spending levels for programs with low degrees of middle-class involvement in the area of unemployment and social assistance, the more universal core programs of pensions and health care are found to be immune to such effects. With regard to political effects, the models covering thirteen Western European countries between 1977 and 2007 show that ERPs are especially unreliable partners in coalition governments inclined to welfare state retrenchment, and they especially defend universal programs against budget cuts. Summarizing the results of the comparative analysis of the US and Western Europe in the Conclusion shows there is therefore little empirical support for the argument that immigration has led to welfare state retrenchment in the latter region. Notwithstanding the negative effects of increased ethnic diversity on support for welfare by natives, both the institutional design of European welfare programs and the economically divided anti-immigrant movement prevent immigration concerns from translating into actual retrenchment in the core areas of welfare. Coming back to the warning of Alesina and Glaeser (2004) about the negative effects of Europe’s new immigration-based ethnic heterogeneity on social spending, the effect is moderated by the more encompassing designs of European welfare states and, somewhat ironically, it is in many cases the anti-immigrant Extreme Right that prevents such an outcome in Western Europe. Notes:

(1) From the perspective of 2017, these numbers look exaggerated. No more than 380.000 refugees entered the EU in 2016, 280.000 of them entering Germany (Eurostat 2017). Even if these numbers are very high in a historical perspective, the decrease compared with 2015 was largely due to a Turkey–EU deal, by which Turkey takes back migrants who cross by sea to the Greek islands and the EU resettles Syrian refugees living in Turkey. The drop is also influenced by much tighter border controls in the western Balkans. (2) While the NPD label is now widely used for the literature on the effects of immigration on welfare politics, the origins of this label are not clear. David Goodhart—the author usually attributed with the term—says that, “it was the Conservative politician David Willetts who drew my attention to the ‘progressive dilemma’” (2004: 30). However, the “New” addition does not appear in Goodhart’s text and seems to be related to the title of a book by David Marquand (1991): The Progressive Dilemma: From Lloyd George to Kinnock. In this, Marquand argues that there was an essential identity of interest between the British Liberal and Labour parties, and that the great tragedy of the twentieth century was that they had been divided, particularly by the issues of trade unionism and socialism. Marquand suggested that, as unions became less Page 10 of 11

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Introduction relevant to politics, and as socialism appeared to be of less relevance than before, it ought to be possible for the two parties to come closer together, thereby overcoming the “Progressive’s Dilemma.”

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research Dennis C. Spies

DOI:10.1093/oso/9780198812906.003.0002

Abstract and Keywords The chapter summarizes the New Progressive Dilemma (NPD) debate, identifying three arguments from comparative welfare state and party research likely to be relevant to the relationship between immigration and welfare state retrenchment: public opinion, welfare institutions, and political parties. Alignment of anti-immigrant sentiments and welfare support varies considerably between countries, especially between the US and Europe, leading to different party incentives vis-à-vis welfare state retrenchment. The chapter introduces insights from comparative welfare state and party research to the debate, discussing inter alia, political parties in terms of welfare retrenchment, immigrants as a voter group, and cross-national variation of existing welfare institutions. It addresses the complex debates around attitudinal change caused by immigration, levels of welfare support, voting behavior, and social expenditures. Combining these strands of literature, a common theoretical framework is developed that is subsequently applied to both the US and Western European context. Keywords:   New Progressive Dilemma, comparative welfare research, party research, public opinion, retrenchment, welfare regimes

Inspired by immigration trends in the US and Europe, in the last twenty-five years, a substantial body of literature has accumulated on the relationship between immigration and the receiving countries’ welfare states. In economics, Page 1 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research the academic discipline which first showed considerable interest in this relationship, the debate has until very recently focused on two main topics (for reviews, see Nannestad 2007; Stichnoth and Van der Straeten 2013). First, the role of welfare states as potential pull factors for international migration has been considered. Here, the common argument is that encompassing welfare states might attract more immigrants—specifically more poorly educated immigrants—than residual welfare states by offering the new arrivals additional opportunities to obtain funds via social transfers, the well-known “welfaremagnet thesis” (Borjas 1999). Second, and closely related to this discussion, the potential costs or advantages of immigration for the host societies’ public finances, including welfare systems, have raised scholarly interest (Borjas 1999, 2004; Boeri et al. 2002; Freeman 1986). This debate has recently been revived through the analysis of the role of migration as a potential remedy for the fiscal problems accompanying the aging of Western European societies (Borjas 1999; Nannestad 2004). While much of this academic discussion has found its way into the political discourse on immigration and the welfare state, it is important to note that these kinds of arguments lead to the expectation that there is a positive relationship between immigration and welfare spending, because more encompassing welfare states might attract more immigrants who in turn might create additional costs in the form of social transfers. Notwithstanding the potential effects of immigration on economic growth,1 we might then (p.12) want to deduce from the classic economic arguments that the countries dedicating more of their wealth to welfare will also be the ones with most immigrants. In both the US and Europe, immigrants often come from countries with different cultures, languages, or dominant religions from the host society, so immigration will necessarily make the receiving countries ethnically more diverse. Therefore, we might also deduce that ethnically heterogeneous societies (caused by long records of immigration) will spend more of their wealth on social provisions than more homogenous ones without such histories. However, this is precisely what we do not find. Instead, the relationship between ethnic diversity and welfare spending appears to be the exact opposite—diverse countries spend significantly less on social benefits than the more homogenous ones (Baldwin and Huber 2010; Habyarimana et al. 2007, 2009; Soroka et al. 2016). This somehow counterintuitive but well-recognized finding has become known as the New Progressive Dilemma (NPD). It has been extensively discussed in the last decade and a half (Goodhart 2004), especially after Alesina and Glaeser’s (2004) influential study on the differences in social spending between the US and Europe. In essence, the NPD debate centers on the questions of whether immigration (particularly the ethnic heterogeneity caused by immigration) is in general incompatible with an encompassing welfare state, and of which causal arguments link ethnic diversity to low welfare spending.

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research Incomprehensibly, efforts to connect the lively NPD discussion to the central debates of comparative welfare state and party research are largely missing. At the same time, immigration has attracted only very limited attention in the debate on welfare state retrenchment. While some noticeable efforts have recently been made to apply theories of comparative welfare state research to the assimilation of immigrants (Sainsbury 2006), immigration as an explanatory variable has been addressed in neither the classic volumes on the welfare state (Esping-Andersen 1990; Korpi 1983), nor the more recent discussions on welfare state retrenchment (Pierson 2001; Pierson 1994; Starke 2006), nor the effects of different forms of globalization on the future of welfare states (Huber and Stephens 2001). Addressing this regrettable but mutual indifference, summarizing the theoretical arguments made by the NPD literature and the ones discussed in comparative welfare state and party research, and integrating them into a common analytical framework will be the main objective of this chapter. (p.13) Starting with the NPD debate, which is very much influenced by the experiences of the US, three insights from which the debates can learn from each other are identified. First, public support for the welfare state should not be taken for granted, and can be severely restricted in ethnically heterogeneous societies—the US is a very telling example of this problematic relationship. Second, the focus on the US has led the NPD literature to exaggerate the degree of conflict that might emerge from rising levels of immigration in European-style welfare states. This is because the institutional design of the most contested US welfare programs is very special and seems hardly comparable with that of most of Europe, where welfare programs are in general much more generous and universal than in the liberaltype US regime. The NPD literature therefore should pay much more attention to the influence of welfare institutions on the amount of social spending and especially to the so-called “dependent variable problem” prominently discussed in comparative welfare state research (Green-Pedersen 2004). Third, the political coalitions stemming from the changing preferences of native voters regarding immigration and welfare should be analyzed much more deeply in both strands of literature, acknowledging the insights from several debates (voter–party alignments, party competition change, and ERPs) on recent party research. While the class-based power resource theory in comparative welfare state research should pay much more attention to the role of non-economic motivations as anti-immigrant sentiments, the NPD literature should acknowledge that the (re-)alignment of voters and the representation of voters’ interests in welfare policies is a complex process that should be analyzed in detail. Again, the form this process takes in the US two-party system might not be easily transferred to the multi-party systems of Europe. A reasonable way to start the review of the arguments made in the NPD debate (comparative welfare state and party research), and to prepare for their integration as one framework, is to define our key variables of interest: Page 3 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research immigration and welfare state retrenchment. Neither definition is arrived at easily as no shared understanding of them exists and especially retrenchment is defined in different terms in the distinct literatures. Starting with the seemingly less ambiguous concept of immigration it should be noted that especially in Europe this is often equated with the ethnic heterogeneity of a society. This increases because of the inflow of immigrants from countries that are ethnically different from the host country. The same relationship between international immigration and rising diversity is also postulated in the US, but there race rather than ethnicity is seen as the salient factor of separation, differentiating Latino immigrants from the native-born White majority. Another form of racial division is also well documented: that between the White majority and Blacks (in ethnic terms, African-Americans), although of course this division is not caused by recent (p.14) immigration. Notwithstanding these conceptual differences,2 the attempts made in the NPD literature to link the different forms of diversity to welfare retrenchment do not differ. For reasons of rigor, we will therefore use ethnicity as an umbrella concept that includes race (Chandra 2006) and from now on refer only to the former when not exclusively dealing with the US. Also, we will equate ethnic diversity with international immigration in both the US and the European contexts. While welfare state retrenchment appears as a well-defined concept, far greater theoretical effort has been made to conceptualize it in comparative welfare state research than in the NPD debate. When speaking of welfare states, the mainstream definition adopted here is a policy definition that covers the benefits and services provided by the state in different insurance areas, for example, old age, health, or unemployment. As a starting point, retrenchment thus has to do with changes in these policies (Green-Pedersen 2004). There is an important difference between expressing welfare state retrenchment in quantitative terms, focusing on social expenditures, and the institutional design of welfare states, for which additional variables such as program coverage, eligibility rules, and financial aspects are equally as important as mere spending levels. As will be discussed in detail in this chapter, these distinct conceptualizations of retrenchment can also be fruitfully applied when analyzing the relationship between immigration and welfare spending, which is extensively discussed but appears “undertheorized” (Sainsbury 2006: 231) in the NPD literature.

The New Progressive Dilemma The scholarship here referred to as the “New Progressive” or the “New Liberal Dilemma” (Eger 2010; Goodhart 2004; Kulin et al. 2016; Newton 2007; Kumlin and Rothstein 2010; Reeskens and van Oorschot 2012) is not a unified body of research with a common theoretical framework but rather consists of contributions from several academic disciplines3 with very different (p.15) methods and research traditions. These approaches often make reference to one Page 4 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research another, and have in common their dominant view of the relationship between immigration (for these purposes equated with ethnic diversity) and the receiving countries’ welfare states, which is seen as highly problematic. The general line of reasoning is that immigration will lead to less support for the welfare state from the native-born population, which is seen as unwilling to share “their” welfare state with the new arrivals. These changed political attitudes are then expected to translate via democratic elections into public policies, eventually leading to a reduction of social benefits for both immigrants and natives (Luttmer 2001; Johnson 2003). Theoretically, the NPD literature is strongly influenced by the experience in the US, where a multi-racial society in combination with a longstanding history of immigration encounters very limited welfare provision, which has been vulnerable to the politics of welfare retrenchment. Since the 1980s, US scholars have widely accepted the view that these characteristics are causally related and that the ethnic (in the US context, racial) diversity of their society prohibits European levels of redistribution (Fox 2012; Manza 2000; Reese 2005). To summarize the multi-faceted NPD literature, we will start with the studies relating to the US context and then look more closely at the empirical findings already made in the European context. We will further differentiate between those studies that focus on the micro-foundations of the relationship between ethnic diversity and welfare (where individual welfare support is the dependent variable), and those that address the relationship on the macro-level (where the overall amount of social spending is the variable of interest). At the individual level, some findings of social psychology offer a common theoretical starting point for the NPD literature, arguing that individuals show a strong tendency to separate the world into in-groups and out-groups. Whatever informal or formal group individuals associate themselves with constitutes their in-group. An out-group includes individuals who, in the eyes of in-group members, do not share the salient physical or social traits. Group boundaries are a long-established feature of psychology (Brewer 1979; Tajfel et al. 1971) and ingroup bias, or the tendency to favor one’s own group, is a concept that is seen to have significant implications for the welfare state in particular. This is because in experimental situations in-group members, even if randomly assigned to categories regardless of norms (e.g., to the “blue” or the “red” group), not only show a strong tendency to impose costs on out-groups, but also tend to distribute benefits more to their own group than to members (p.16) of other groups (Tajfel et al. 1971; Tajfel 1974; Mullen et al. 1992). Yet in-group members will allocate resources in a way that causes the greatest difference between groups, even if this means that members of their own in-group receive lesser amounts (Tajfel et al. 1971). As these kinds of behavior emerge not only in experimental group settings but also amongst natural groups—race, ethnicity and nationality being among the most salient of them (Brewer 1979)—more Page 5 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research diverse societies with strong group boundaries might not be willing to spend and especially not to redistribute large amounts of money via the welfare state. While the nature of such social-psychological motivations is seen as so general that it might be applied to any group in any country, sociologists interested in US society strongly support the view that race constitutes a very salient grouping with far-reaching policy consequences. Based on individual survey data, this strand of literature reports a strong relationship between the racialand welfare-oriented attitudes of White Americans (Fox 2004; Gilens 1995, 1999; Kearns et al. 2014; Luttmer and Singhal 2011; Neubeck and Cazenave 2001). More precisely, many White Americans characterize both African-Americans and Latino immigrants as lazy and unwilling to work, and suspect them of abusing welfare programs. Combined with the belief that minorities are grossly overrepresented among welfare recipients, White Americans tend to see the welfare state as something targeted toward minorities, with their role being merely that of funders of seemingly unjustified demands. This pattern has constantly been reported since the late 1980s and appears to be deeply rooted in US public discourse on welfare (Quadagno 1994). The title of Martin Gilens’s (1999) influential study “Why Americans Hate Welfare” succinctly sums up the situation. Any welfare program that aims to redistribute money between races is very unpopular among White Americans and politically seen as doomed to fail. Finally, economists and political scientists interested in why there are pronounced differences in welfare benefits across the US point to the role of racial demographics. Indeed, states with large African-American populations offer significantly lower welfare benefits and apply harsher eligibility rules than do predominately White states (Hero and Preuhs 2007; Soss et al. 2001). Some recent studies present evidence that this pattern recurs with regard to the share of Latino immigrants (Fellowes and Rowe 2004; Soss et al. 2003). Making use of quantitative macro-analyses, racial demographics have also been found to be highly relevant in the more recent retrenchment phase of US social policy, in which states with large minority populations seem to be much more open to welfare cuts (Fellowes and Rowe 2004; Reese 2005). As a well-established strand of literature in historically oriented political science argues, the conflict-ridden relationship between race and welfare is not a recent phenomenon but can be traced back to the formative years and the watershed (p.17) moments of US social policy (Finegold 1988; Fox 2012; Katznelson 2005; Lieberman 1998; Quadagno 1994; Weir et al. 1988). Taken together and often referring to one another, the strands of literature mentioned above provide an all-encompassing but still non-unified analytical framework for the depressive effects of racial diversity on the US welfare state. Furthermore, in the last decade the US case has become a kind of “master narrative” (Banting 2005: 107) for analyzing the potential link between immigration and welfare retrenchment outside the US and especially in the Page 6 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research European context. Consequently, there has been a rapidly increasing number of international comparative studies in economics, sociology and—to a much lesser degree—political science, addressing the warning of Alesina and Glaeser (2004: 175) that “Europe’s new immigrant-based heterogeneity may eventually push the continent toward more American levels of redistribution.” From a European point of view, the question is therefore whether the conflict-strewn relationship between ethnic diversity and welfare constitutes simply another form of American exceptionalism, or whether it should be regarded as a harbinger of Europe’s future. So far, international comparative studies addressing the effect of immigration on welfare spending have produced two main findings that might be classified according to their distinctive levels of analysis. First, and with regard to the individual level, sociologists especially have contributed to the discussion and report that Europeans with negative attitudes toward minorities are on average more critical of welfare (Eger 2010; Finseraas 2008; Mau and Burkhardt 2009; Schmidt and Spies 2014; Senik et al. 2008). However, as European societies are far less divided by race, natives perceive immigrants to be the relevant out-group. After comparing the attitudes of US Whites toward African-Americans with those of Europeans toward non-Western immigrants, Larsen (2011) reports that both in-groups rarely differ with regard to their perceptions of the out-groups’ work ethic; are equally hesitant to accept out-group members as neighbors; and oppose the idea of improving economic conditions for out-group members by public spending (Crepaz 2006; Senik et al. 2008). Analyzing the attitudes toward four groups of needy people in several European countries, Van Oorschot (2006) identifies immigrants as the group toward whom native citizens are least sympathetic—significantly less than for the native unemployed. As an example, these kinds of anti-immigrant sentiments, accompanied by low levels of solidarity, are fairly widespread in Europe (see, as two examples out of many others, Arzheimer 2008b; Coenders et al. 2005), and so immigration might indeed lead to less support for welfare in the European context. This assumption is also widespread among economists, who come to very similar conclusions by applying formal modeling and assuming highly rational reasoning by native voters to estimate political equilibria with regard (p.18) to immigration and welfare spending. Hansen (2003) proposes a model in which low-skilled and low-income immigration leads median native voters to realize that they may not be the median voters of the future and consequently choose to reduce welfare spending. As several studies insist, in such a context both lower taxes and social transfers are the likely consequences—even if immigrants are permitted to vote about redistribution and join the pro-welfare coalition (Dolmas and Huffman 2004; Razin et al. 2011; Razin et al. 2002). Combining political demand and supply sides, Roemer et al. (2007) estimate political equilibria by combining the preferences of voters with respect to immigration and welfare spending, arguing that anti-immigrant voters will not support welfare spending Page 7 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research going in large part to minorities, and that right-wing political actors might therefore be able to bundle together xenophobic platforms with policies of welfare retrenchment. In sum, the majority of contributions to the New Progressive Dilemma debate (for recent state-of-the-art reviews, see Steele 2016, Brady and Finnigan 2014, and Stichnoth and Van der Straeten 2013, view the conflict-laden relationship between minority-related attitudes and welfare support, as exemplified in the US, reflected in Europe.4 In recent years, these types of finding have dominated scholarly debate and many commentators have thus come to the conclusion that there is indeed a general trade-off between immigration on the one hand and redistribution on the other (Goodhart 2004). The prevalent finding here is that immigration and anti-immigrant attitudes are negatively related to support for welfare by native citizens, who seem unwilling to share public resources with the new arrivals. This change in public support for welfare is therefore expected to establish the route for long-term welfare-state retrenchment. The weakness of this line of reasoning is that, in sharp contrast with the individual level, very few studies were able to show that there is a negative relationship between immigration and welfare spending at the macro-level. While such a relationship is well documented for the US, international comparisons reporting such a negative impact on ethnic diversity often include or even completely focus on non-OECD countries, often from Latin America and sub-Saharan Africa (Alesina and Glaeser 2004; Baldwin and Huber 2010; Desmet et al. 2009; McCarty 1993; Mueller and Murrell 1986). They therefore (p.19) hardly seem to be comparable to Europe. In addition, the widely recognized findings presented in Alesina and Glaeser (2004) have been criticized for ignoring alternative explanatory variables (Pontusson 2006). More sophisticated and recent analyses focusing on OECD countries conclude only that either there is at best limited evidence for a negative effect of immigration on welfare spending and that spending in high-immigration countries merely grows more slowly than in low-immigration countries (Soroka et al. 2016), or “if anything there is some support for the view that a greater influx of immigrants has led policy-makers to increase welfare state spending” (Gaston and Rajaguru 2013). While the existence of a NPD is therefore widely shared by disciplines predominately interested in the micro-foundations of the relationship between immigration and welfare support, these individual attitudes rarely seem to translate into actual welfare state retrenchment—at least as far as Europe is concerned. Thus, while anti-immigrant sentiment and welfare criticism might be direct consequences of immigration at the individual level, both variables seem to be insufficient to explain welfare retrenchment at the macro-level. As will be argued in the following, much of this micro–macro puzzle might be explained by

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research applying the insights of comparative welfare state and party research: two strands of literature that have been remarkably absent from the NPD debate.

Comparative Welfare State and Party Research Compared with the NPD literature, what is here referred to as comparative welfare state research theoretically comprises much more homogenous literature. This might be due to the fact that many of the most important contributions in this field stem from political scientists and therefore highlight the role of institutions and power relations between political actors (GreenPedersen and Haverland 2002). Another difference between the literatures comes from comparative welfare state research’s focus on the macro-level, and especially on the explanation of international differences in the institutions and politics of welfare, often referred to as welfare regimes. This different theoretical interest might explain why the insights have rarely found their way into the micro-oriented NPD debate that is dominated by sociological arguments. However, another explanation might be that welfare state researchers show little interest in the consequences of immigration.5 (p.20) This mutual ignorance is therefore not surprising but is regrettable in that both literatures have a strong interest in the same dependent variable: welfare state retrenchment. Besides comparative welfare state research, the second literature of theoretical inspiration for the NPD debate will be referred to as “party research.” As with comparative welfare state research, party research is a literature predominantly occupied by political scientists, but as with the NPD debate, consists of many sub-debates, the most important for the New Progressive Dilemma debate being voter–party alignments (see Häusermann and Kriesi 2015) party competition (see Hooghe and Marks 2017), ERPs (see Mudde 2013), and migrants as voters (see Bloemraad and Schönwälder 2013). While these debates focus on different explananda, they are highly interrelated with regard to their theoretical arguments, the core of these being the democratic representation of voter interests via parties into actual policies. With regard to the NPD debate, it is this theoretical core of party research that has great potential for answering the question of why the individual-level attitudes of anti-immigrant sentiment and welfare criticism result in welfare state retrenchment in the US but—seemingly —not in other contexts. In analyzing the consequences of value-change and nonmaterial interests for politics, party research also provides some important theoretical inspirations for the still mainly class-based theoretical foundations of comparative welfare state research. In contrast to the previous section, the objective of the following pages is not to give a comprehensive overview of comparative welfare state research (but see Levy 2012; Pierson 2001; Ross 2000; and Starke 2006 for encompassing reviews) or party research (see Political Parties, p. 30 for excellent reviews), but to highlight three places where both literatures can be fruitfully combined with the Page 9 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research NPD debate. These consist of, first, the role of public support (see Public Support, p. 21); second, the institutional design of welfare programs, for which comparative welfare state research is highly relevant (see Welfare Institutions, p. 22); and third, the role of political parties in the politics of welfare retrenchment, the core of the party research literature (see Political Parties, p. 30). To develop the first two points, we will take a closer look at two of arguably the most influential studies in comparative welfare state research in recent decades, and the debates they initiated: Esping-Andersen’s “worlds of welfare” (Esping-Andersen 1990) and Pierson’s “the new politics of the welfare state” (Pierson 1994, 1996, 2001)—or, to use another label for this second debate, the “welfare state retrenchment literature.” Representing the theoretical core of comparative welfare state research, both strands highlight the role of institutions and—in contrast to the change-oriented NPD literature— predict a resilience of welfare states even in times of severe pressure to cut back programs of social security (Green-Pedersen and Haverland 2002). (p.21) To develop the third point, we will have a closer look at the debate on changing voter–party alignments as a reaction to immigration—Lipset and Rokkan’s Party Systems and Voter Alignment (1967) being the theoretical starting point here.

Public Support To understand why the welfare state is seen to be so immune to attempts to cut it back, we should take a closer look at the arguments made by Pierson in his highly influential study Dismantling the Welfare State? (1994). Comparing the welfare impact of two of the most likely cases of retrenchment—the conservative and neo-liberal Reagan and Thatcher governments of the 1980s—Pierson observed that both governments had limited success in their attempts to roll back core welfare programs. Pierson therefore detected a “resilience of the welfare state” even under the most likely conditions for retrenchment, which included a clear political agenda of financial reconsolidation through cuts in social budgets; obvious financial problems for core programs of social security; and the formal political power needed to carry out retrenchment against the opposition of other political parties and interest groups. The most important reason for the absence of profound retrenchment has been identified in the “broad and deep” (Pierson 2001: 278) public support for welfare among voters, which makes “frontal assaults on the welfare state politically suicidal in most countries” (2001: 282). This view is widely shared in the retrenchment literature and indeed public support is the theoretical starting point in explaining the unwillingness of political parties to engage in welfare reforms, which are regarded as inherently unpopular and hence difficult to pursue (Bonoli and Natali 2012; Brooks and Manza 2006; Huber and Stephens 2001; Lindbom 2001; Starke 2006).

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research Yet, in contrast to the NPD literature, the retrenchment literature explains public support for welfare not by such exogenous factors as anti-immigrant sentiments, but endogenously, as a result of the welfare state itself. According to this view, the welfare state has expanded to an extent where it creates “commitments, expectations, and interests” (Green-Pedersen and Haverland 2002: 44) among large parts of the population and has therefore managed to produce its own constituency ready to defend it against any retreat from the status quo (Emmenegger et al. 2012; Hemerijck 2013). In short, many voters are convinced that they are beneficiaries of existing welfare programs; have a direct economic interest in them; and are therefore ready to punish any political party committed to restricting “their” benefits. What is left to political actors interested in retrenchment is the so-called “politics of blame (p.22) avoidance” (Pierson 1996): strategies of obfuscation, division, and compensation which might translate into sizable retrenchment in the long run but are fundamentally different from the politics of credit-claiming that shaped the golden ages of welfare expansion (Giger and Nelson 2011; Bonoli 2012). The role of public support for welfare—the main dependent variable in the NPD literature—is therefore by no means neglected in comparative welfare state research. However, whereas NPD strongly predicts an immigration-driven decline in welfare support, caused by the unwillingness of the native population to share benefits with ethnically different groups, the retrenchment literature expects public support for welfare to be very stable. The reason for this is that public support is seen as a product of existing welfare institutions, as these provide large parts of the voting population with direct material interests in the preservation of these benefits—and just as welfare institutions are hard to change so is the welfare support embedded in them. However, it is important to note that theoretically not all welfare programs can be expected to enjoy the same high level of public support. Indeed, public support for welfare should be seen as a function of the institutional design of programs (Goldschmidt 2015).

Welfare Institutions This brings us to the second point, the role of welfare institutions and a view of the welfare state which takes into account not only the size of welfare budgets but also structural issues such as the degree of universalism and selectivity, organizational governance arrangements, or financing structures of welfare states (Starke 2006). As we shall see, this is a perspective from which the NPD literature could learn a lot: particularly from the insights of comparative welfare state research. The prime reason is the focus of the former debate on social spending as the main indicator of welfare state retrenchment. Indeed, to the author’s knowledge, this approach is unanimously shared by scholars interested in the effects of ethnic heterogeneity on retrenchment, as exemplified by the study of Alesina and Glaeser (2004) on differences in social spending levels between the US and Europe; by comparisons between OECD countries (Soroka et al. 2016; Gaston and Rajaguru 2013); and by the numerous studies of the Page 11 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research effects of racial demographics on the cash benefits offered by individual US states (for two examples out of many others, see Hero and Preuhs 2007; Soss et al. 2001). To get the critique right, the focus on spending levels is a straightforward approach, especially for quantitative studies: if the theoretical interest is in the share of public budgets dedicated to welfare, nothing contradicts this variable. However, in the NPD literature the main argument is that native citizens are (p. 23) unwilling to share social benefits with immigrants and will restrict benefit levels for both groups only if forced to. Thus, even citizens who are convinced that all immigrants rely on social assistance might first call for the exclusion of immigrants from these benefits, a political attitude known as “welfare chauvinism” (De Koster et al. 2013; Van Der Waal et al. 2013). Only if this is impossible might a general decline in program support be expected. The NPD’s theoretical argument on the effect of immigration on welfare retrenchment is therefore not about spending levels, but the limited willingness of natives to redistribute resources to the out-group of immigrants. Therefore, the focus on expenditure levels appears as an untheorized convention, known in comparative welfare state research as the “dependent variable problem” (Green-Pedersen 2004). Hence, maybe the most important lesson that the NPD literature can learn from comparative welfare state research is that some welfare institutions are much more redistributive than others. They allow a clear segregation of groups of net beneficiaries and net payers, and in this way define the interest of different social strata in their existing and future development. Furthermore, these differences in program-specific institutional designs not only decide on the important question of “who gets what?” but also strongly affect expenditure levels, the public support a program enjoys, and its expected vulnerability to the politics of retrenchment. Finally, differences in institutional design might also affect the aggregation of program support into welfare alliances represented by political parties which then have strong incentives to prevent or support retrenchment (Korpi and Palme 1998, 2003). To understand in detail these far-reaching effects of distinct welfare institutions, Esping-Andersen’s Worlds of Welfare (1990) provides a good starting point. As we have just discussed, this classic volume of comparative welfare state research starts with the statement that using social expenditure levels to express a state’s commitment to welfare might be misleading, as “the existence of a social program and the amount of money spent on it may be less important than what it does” (Esping-Andersen 1990: 1). From this, Esping-Andersen develops his well-known typology of national welfare regimes, defined by their degree of de-commodification (how much they allow people to maintain their livelihood without reliance on the market) and stratification (how welfare regimes order social relations in monetary and non-monetary terms).6 Applying Page 12 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research these criteria to the OECD world, three worlds of welfare can be identified, which are summarized in the first column of Table 1.1: Liberal, Social Democratic, and Conservative welfare regimes.

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research

Table 1.1. Types of Welfare Institutions Welfare regime

Size of welfare budget

Level of public support

Vulnerability to retrenchment

Typical program design

Expected impact of immigration

Liberal

Low

Low

High

Means-tested type: Targeted Tax-financed Highly redistributive High inequality of benefits

Immigration increases vulnerability to retrenchment

Social Democratic

High

High

Low

Beveridgian type: Mixed expectations Universal (benefits as citizen or resident rights) Tax-financed Redistributive High equality of benefits (often flatrate)

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research

Welfare regime

Size of welfare budget

Level of public support

Vulnerability to retrenchment

Typical program design

Expected impact of immigration

Conservative

High

High

Low

Bismarckian type: No effect of Universal (but linked immigration on to employment) retrenchment Contributionfinanced Limited redistribution High inequality of benefits

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research (p.24) (p.25) The typical feature of the liberal regime is a heavy reliance on means-tested programs combined with a strong preference for market solutions. Means-tested benefits are targeted at a limited clientele—the needy—and in this way stratify the population financially, into the poor and non-poor. The latter are expected to pay for the former’s benefits for which they themselves are not eligible. The degree of de-commodification is minimal and insufficient to maintain the customary standards of living of better-off categories of citizens, who are therefore likely to develop various types of private solution (Korpi and Palme 2003). All of these features explain why support among middle-class voters is low in liberal regimes, which therefore tend to have relatively small welfare budgets. In contrast to this, the social democratic regime features universal schemes, entitlement to which is based on citizenship or residence, not on need. Programs offer high replacement rates that compensate for loss of earnings, a combination that diminishes the importance of the market, enhances de-commodification, and minimizes stratification. As the main objective of the social democratic regime is to provide middle-class levels of benefit to all citizens, budget sizes are very high: but they also enjoy broad public support. Finally, conservative regimes are characterized by social insurance schemes that offer generous benefits in work-related schemes financed via payroll taxes. The stratifying effects of social policies perpetuate traditional status relations in the labor market, but de-commodification levels are relatively high for permanently employed full-time workers (Morissens and Sainsbury 2005). As social benefits guarantee income maintenance that has been paid for by former contributions, conservative welfare regimes generate relatively large welfare budgets, backed by high public support. It is hard to overstate the impact of this typology on comparative welfare state research (see review by Emmenegger et al. 2015) and it has become common to classify countries as one of the three “worlds” of welfare or some other comparable typology (Bonoli 1997; Castles and Mitchell 1992; Ferrera 1993; Korpi and Palme 2003; Leibfried 1992). As we have seen, for cross-country comparisons this is a very useful approach because welfare regimes not only determine spending levels (Korpi and Palme 2003) but also influence public support (Jæger 2009; Svallfors 1997), especially that of middle-class voters for existing social policies (Esping-Andersen 1990; Korpi 1980; Korpi and Palme 1998; Lupu and Pontusson 2011). Most important for our purposes is the theoretical expectation that all three worlds of welfare show a distinct vulnerability to the politics of retrenchment (Pierson 2001). Following this line of reasoning, a welfare regime’s vulnerability to retrenchment is deduced from its institutional set-up, which generates different benefit structures for distinct voter groups and in this way determines the level of public support. In short, liberal regimes, with their dominant form of meanstested and highly stratified programs for clearly defined target groups, (p.26) are expected to be most vulnerable to budget cuts; it is their inability to include Page 16 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research better-off, middle-class citizens that causes this (Green-Pedersen 2001; Korpi and Palme 2003; Lindbom 2008; Pierson 2001). In liberal regimes, middle-class voters—the group expected to be most important to political parties because of their numbers (see Lupu and Pontusson 2011)—are not eligible for welfare programs financed by their own tax money, which explains their lack of support for and their personal lack of interest in the future of these highly redistributive forms of welfare. Therefore, retrenchment politics in liberal regimes might not be an exercise in blame avoidance but rather credit claiming by political actors, as any budget cuts might lower the financial burden of middle-class taxation. In sharp contrast to this, retrenchment is expected to be a much riskier task for governments in social democratic and conservative regimes, both of which have managed to include middle-class voters in pro-welfare coalitions. In social democratic regimes, this was achieved by setting up universal programs with benefits high enough to guarantee middle-class voters a secure living standard via insurance against unemployment, sickness or aging (Esping-Andersen 1990: 23, 33). In conservative regimes, middle-class loyalty is guaranteed by the limited degree of redistribution between rich and poor, as the benefits received are largely determined by former contributions, producing a strong sense of entitlement. Because of these different interests, “there is no single new politics of the welfare state but different politics in different configurations” (Pierson 2001: 455). The view that welfare regimes have a distinct vulnerability to the politics of retrenchment is widespread in the literature: however, the pioneering study by Pierson (1994) found that there was “more variation in the outcomes among particular programs than there is between the overall records in the two countries” analyzed. This view is also stressed by Green-Pedersen (2001), comparing the Netherlands and Denmark, and by Lindbom (2001), focusing on the retrenchment of different programs in Sweden. Making sense of these program-specific findings, we should remind ourselves that welfare regimes each consist of a whole bunch of welfare programs with distinct guiding principles and differ only in the importance they accord to the dominant principle (Esping-Andersen 1990; Clayton and Pontusson 1998). Therefore, welfare regimes are an ideal-type approach and do not exist in the real world. To put it differently: no country represents a purely liberal, social democratic, or conservative regime. This becomes clear when looking, for example, at programs of social assistance, which provide a minimum standard of living for long-term unemployed or disabled persons. Every country has some form of this but even social democratic and conservative welfare regimes apply a strict means test and finance it via taxes, thereby following the guiding principle of the liberal regime type. Other deviations from the regime logic (p.27) appear when more than one program is available in the same insurance area (e.g., both a taxfinanced and a contribution-based pension program occur in Sweden) or when program structures and their guiding principles change over time (see Korpi and Page 17 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research Palme 1998). Most important for our interest in the effects of immigration on welfare retrenchment is the tendency of immigrants to rely on some welfare programs much more than on others (Brücker et al. 2002). These inherent problems of classification mean that a more fine-graded look at the design of welfare is necessary (Lindbom 2001; Kasza 2002), since program differences might be much more closely related to the potential of retrenchment than whole welfare regimes. This extra scrutiny shows typical examples of welfare programs following the liberal, social democratic, or conservative guiding principles (see Table 1.1). As just discussed for differences between welfare regimes, differences in programs might be due to their institutional design, which can be expressed by such indicators as program coverage, replacement rates, and financial aspects, or due to the degree of equality in the benefit structure (see Bonoli 1997; Esping-Andersen 1990; Korpi and Palme 2003). In addition, programs cover different types of insurance area (e.g., pensions, health care, or social assistance). This perspective may be of limited relevance for whole regimes but of great importance at the program level. Let us start with an ideal-type liberal program that is means-tested and therefore limited to covering the least well-off citizens. These kinds of programs offer limited replacement rates guaranteeing no more than a safety net of last resort; income maintenance is not desired. In terms of insurance areas, social assistance programs are the most important examples and are invariably financed via tax contributions. They pay clearly defined benefits that are not dependent on former market income or contributions, but are adjusted to needs; some liberal programs outside the social assistance area might also come in the form of flat-rate benefits. We have already argued that liberal programs do not enjoy wide support because of their structure, in that they exclude middle-class members. Program support from the middle class is therefore limited—as far as direct material interests are concerned—to the perspective that they may need social assistance in the future, which usually means joining the long-term unemployed. However, the risk of future unemployment can expect to be significantly lower among the middle class than among low-income members because of the formers’ generally higher education—one of the most important drivers of income and employment status (see Korpi and Palme 2003). Thus, compared with other insurance areas, social assistance is known to have low levels of public support, followed by unemployment insurance (Van Oorschot 2006). Coming to social democratic and conservative ideal-type programs, pensions and health care are the dominant examples in the literature. It is (p.28) important to note that both programs are very expensive to operate and are fundamentally different from social assistance in what they cover. As the risks of becoming old or sick are not skewed between different social strata they are to a very high degree universally shared. Also, even the youngest and healthiest in the Page 18 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research population might benefit from these programs in the future. Therefore, pension and health care programs are known to be by far the most popular and their beneficiaries are seen as highly deserving (Van Oorschot 2006). Nonetheless, differences in middle-class support for these core programs can be expected to differ when we take into account institutional differences inside both insurance areas. To illustrate this, let us focus on a pension program following either an idealtype conservative or social democratic principle. This distinction is well developed in comparative welfare state research and is often referred to as differences between Bismarckian and Beveridgian programs (see, for example, Bonoli 1997; Ferrera 1993).7 While both types differ from the liberal type because they do not apply a means test, their underlying objective is substantially different and means that it is important to take into account institutional factors when analyzing the public support a program enjoys. A purely Bismarckian pension program covers only working people who earn benefits by their own or by their employer’s contributions. These contributions are based on income, so the stratifying effect of Bismarckian programs is very marked because high-income employees will receive a much higher pension than low-income ones. Also, there is strictly speaking no redistribution between income groups as contributions are either proportional (contributors have to pay the same proportion of their salary, regardless of their income) or even regressive (the higher the income, the lower the proportion paid in contributions) because of the existence of income ceilings (see Bonoli 1997). Finally, the fact that entitlement is based on contributions ensures that the funds collected will not benefit individuals outside the contributing community. In contrast, Beveridgian programs have developed historically as extensions of existing means-tested schemes (Baldwin 1990). Here, program coverage is due to either citizenship or residence criteria, meaning all residents qualify for pensions, regardless of whether they had contributed to financing the program. However, under conditions of (nearly) full employment, coverage is not the most important distinction between Bismarckian and Beveridgian programs. Rather, the difference lies in the much more redistributive character of the latter, where the reduction of poverty according to middle-class standards (p.29) is the guiding principle (Bonoli 1997: 358; Esping-Andersen 1990). This is achieved by both spending and financing aspects since Beveridgian programs offer flat-rate benefits financed by an often highly progressive income tax. While benefits are the same for all, in relative terms Beveridgian programs offer more to lowincome than to better-off earners (see also Korpi and Palme 2003).8 The most important point to take from this comparison between welfare programs for the NPD debate is the different interest the middle class has in each type. This interest is very limited in liberal-type programs tackling risks Page 19 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research skewed toward low-income groups but it is very high in the universal and income-maintaining Bismarckian and Beveridgian programs. However, Beveridgian programs demand a much higher degree of middle-class solidarity with lower income groups than do Bismarckian programs, as they do not differentiate between levels of contribution when it comes to benefits. When we relate this central finding of comparative welfare state research to the central finding of the NPD debate—the limited solidarity between natives and immigrants—it leads to the assumption that the consequences of immigration for welfare state retrenchment (as measured by spending levels) might differ according to the institutional design of specific programs. If immigrants tend to rely heavily on means-tested programs, we might expect an even further decline in public support for them, as middle-class voters already show low willingness to redistribute between rich and poor inside the same ethnic group. Faced with immigration into liberal-type programs, middleclass support can therefore be expected to decline even further, opening the room for political actors interested in retrenchment, especially when the share of immigrants among beneficiaries is so high that program cuts will exclusively or at least disproportionally hit the ethnic out-group. In contrast to this, immigration into conservative-type programs can be expected to be less problematic, as middle-class voters have a direct interest in programs of income maintenance and might also see immigrants as rightly receiving high benefits as long as they have contributed their share to the program (see also Clayton and Pontusson 1998: 96). As Bismarckian programs also contain a very limited amount of redistribution between income groups, native members of the middle class should be less concerned about immigration, especially if immigrants in the short term only contribute without receiving any benefits because of their younger ages (Borjas 2002; Nannestad 2004). Finally, the expectations about the effect of immigration on social democratic welfare (p.30) programs are mixed. On the one hand, these programs are known to enjoy high levels of middle-class support because they offer what Esping-Andersen describes as the “universalism of middle-class standards” (1990: 69): high replacement rates that are available to most households in one way or another. On the other hand, they also contain a high degree of redistribution and therefore rely on a very high level of crossclass solidarity. Faced with immigration, this solidarity is tested rigorously because middle-class natives who were willing to support less well-off ethnics in the past might now increasingly be faced with the less well-off from ethnically diverse backgrounds. More conflict may arise because the new arrivals might not have contributed much to the programs in taxes but are immediately eligible, because of either their residence or their citizenship (if they have been naturalized). If the self-interest of middle-class voters in Beveridgian programs stands this test, it is of central importance to the effects of immigration on welfare state retrenchment.

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research Political Parties The third point is about the role of political parties and voter–party relations for welfare state retrenchment, a topic that should be analyzed much more deeply in both the NPD debate and comparative welfare state research. Especially the NPD literature, focusing on the relationship between immigration, antiimmigrant sentiment, and welfare support, mainly stops at showing that these variables are connected at the individual level, and then speculates that these sets of beliefs will also translate into welfare retrenchment. However, the representation of such preferences in welfare policies should be understood as a complex process, for which changing political preferences stemming from immigration are only the starting point. It is precisely here that party research enters the formula and points us to separate at least three stages. First, political attitudes to welfare support and anti-immigrant sentiment should not only be very salient but should also be related to voting behavior, in this way forming alignments of voter groups to political parties (Hutter et al. 2016; Achterberg 2006). Second, parties should represent the interest of their supporters by developing political agendas in line with these preferences (Kitschelt 1994; Bornschier and Kriesi 2012), and third, once in government, parties should enact (welfare) policies in line with those agendas (Franklin et al. 1992; Schmitt 2016). From a comparative perspective, we also have reason to expect that such processes of alignment and representation will take place very differently in the US two-party system compared with the multi-party systems of Western Europe. While the importance of welfare and immigration is clearly given (p.31) in both contexts, in the US, alignment processes follow a very straightforward pattern: the Republicans are both anti-welfare and very critical of minorities, and the Democrats are more pro-welfare and strongly supported by (especially) AfricanAmericans. As only two parties exist and government is formed by only one of them, the focus on mean political attitudes here is straightforward as both parties must compete for the median voter, whose support is decisive for winning electoral majorities (see Downs 1957). The focus on mean attitudinal change—so prominent in the NPD debate—might in this way be sufficient to explain changes in welfare policy. In contrast to this simple form of political competition in the main reference case of the NPD literature, the translation of political attitudes into actual policies can be expected to be much more complicated in Europe. As most European electoral systems are proportional, both multi-party systems and coalition governments are the rule, and both make the representation of anti-welfare and anti-immigrant attitudes potentially much more complex than in the US. Questions of redistribution and immigration are also very salient for European voters and are known to be highly related to the voting behavior of individuals (for welfare, see pp. 125 and 127; for immigration, see Arzheimer 2008b; Carter 2005; Mudde 2007). However, the more differentiated supply side in the form of party agendas offers Europeans more possibilities for combining the issues. The Page 21 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research growing share of voters holding pronounced anti-immigrant sentiments might therefore be able to choose between an anti-immigrant party that is anti-welfare; one that is in favor of more redistribution; or one that is not interested in the welfare state at all. This decision has been heatedly discussed, especially in the literature on ERPs (Ivarsflaten 2005; Kitschelt and McGann 2005; Rovny 2013). In addition, in Europe, anti-immigrant parties’ ability to affect policies not only hinges on their ability to attract votes, but also on their ability to form coalitions with other parties—and so far Europe’s ERPs have been very restricted here, thanks to the unwillingness of mainstream parties to legitimize these newly emerged “political pariahs” (De Lange 2008; Van Spanje and Van der Brug 2007). We will address processes of alignment and representation in detail for both the US and Europe, but it is sufficient here to state that an equivalent of the US pattern of an alignment of welfare critique and anti-immigrant sentiments to one and the same political party—and thereby government— should not also be taken for granted for the European context. But it is not only the NPD literature that could benefit from the party literature, as the analysis of voter–party relations and party competition have also lost much of their significance in comparative welfare state research (for recent reviews, see Häusermann et al. 2013; Schmitt 2016). This might come as a surprise, because traditionally parties have been considered as the central actors in the politics of welfare and it is no coincidence that (p.32) EspingAndersen’s three worlds carry the names of party families. According to the once dominant and still very influential power resource theory (Esping-Andersen 1990; Korpi 1980, 1983), parties take center stage in the process of accumulating and representing the class interests9 of their voters—which among other things includes what we have defined as welfare support—in actual welfare policies. Doing so, left-wing parties are expected to satisfy the welfare interests of their core clientele—wage earners and low-income groups—and therefore to increase expenditure levels once in government. In contrast, since more market-oriented conservative and liberal parties represent mainly those who are better-off, they are expected to cut back social spending, especially when it is devoted to increased redistribution between rich and poor (Jensen 2014). This competition between political actors representing the material interests of their supporters is what Korpi famously referred to when speaking of the welfare state as “the democratic class struggle” (Korpi 1983)—and for this struggle, political power in the form of voter support and the coalition potential of parties are both relevant (Esping-Andersen 1985). Until recently, such effects of parties on welfare policies were seen as one of the most established findings in comparative welfare state research (see review in Jensen 2014). However, this consensus has faded and the new conventional wisdom is that the impact of parties has declined since the phase of welfare retrenchment. Three main arguments for this can be identified. First, because of the high public support for existing welfare programs, parties are not willing to Page 22 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research engage in welfare reforms because of the electoral risks associated with them— this is the dominant argument in the welfare retrenchment literature, as we have already discussed. Second, parties may still want to have an impact on welfare policy but developments such as international competition, European integration, fiscal austerity, and the existence of veto-points restrict them (Bonoli and Natali 2012; Schmitt and Obinger 2013; Iversen 2001; Kittel and Obinger 2003; Hemerijck 2013). This is especially so when they want to expand existing programs. Third, the fading relevance of parties for the politics of welfare might be explained by changes in the electoral landscape and especially in the core constituencies of parties, which might have changed since the golden years of welfare expansion. Such changes take center stage in the literatures on party competition and ERPs and it is worth discussing these debates, the role of immigration for them, and their potential for explaining welfare politics in some detail. The common starting point for this discussion is Lipset and Rokkan’s Party Systems and Voter Alignment (1967). In this now classic work of party competition research, the authors developed the well-known “frozen-party thesis,” (p.33) stating that the party systems of the 1960s were structured according to the same basic political conflicts deeply rooted in Western European societies (the so-called cleavages) since the 1920s—and therefore show a remarkable continuity in terms of relevant parties. Lipset and Rokkan identified four cleavages structuring party systems, and showed that the dominant one in Western Europe is the economic-related class conflict, as this conflict has absorbed the other three. Party competition was therefore seen as one-dimensional, usually described in terms of “left” and “right,” and highly structured by economic issues such as taxation, labor market policies, and welfare. In the following decades, this one-dimensional, economy-centered view on party competition was extremely influential (see review in Enyedi and Deegan-Krause 2010) and left its mark on the class-based power resource theory in comparative welfare state research. However, since the time of Lipset and Rokkan’s influential study, at least two phenomena have pointed to a fundamental change in the patterns of party competition in Western Europe. The first was the emergence of Green parties during the 1980s, accompanied and driven by the rise of self-expressing, ecological-oriented, and non-material issues (Flanagan and Lee 2003; Inglehart 1990). A decade later, the emergence of ERPs, advocating traditional value orientations, law-and-order policies, and primarily a tough stand on immigration, again signaled that the party systems of Western Europe are now anything but frozen. Consequently, since the mid-1990s scholars increasingly started to share the view that the former dominant class-based conflict has lost much of its political importance (Franklin et al. 1992; Kriesi et al. 2006, 2008) and is increasingly replaced by cultural-related issues primarily concerned with questions of cultural diversity, nationalism, and immigration (Kitschelt 1994, Page 23 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research 1995; Kriesi 1998; Hooghe and Marks 2017). With regard to voters, this trend is accompanied—or even driven—by a higher ranking of cultural-related issues, replacing former voter–party alignments based solely on class status (Aichholzer et al. 2014; Häusermann and Kriesi 2015). While party competition research has very much centered on the questions of whether a new dimension of party competition is developing and how this might be explained, the policy implications of these trends have rarely been analyzed, especially with regard to the politics of welfare. This might best be exemplified by the latest and most successful newcomer to Western European party systems: ERPs. While electoral research (Ivarsflaten 2005; Kitschelt 2007; Spies 2013) shows that ERP voters are primarily motivated by cultural concerns—and most importantly by immigration-related attitudes— there is also increasing evidence that ERPs are strongly supported by traditional working-class voters, who have long been associated with economically left-wing parties because of their class status (Castles 1985; Ignazi 2003). Thus, the importance of these economics-based interests for voting (p.34) behavior are seemingly fading and being replaced by culturally-oriented considerations (Aichholzer et al. 2014; Achterberg and Houtman 2006; Bornschier and Kriesi 2012). This indicates that the relationship between welfare- and immigrationrelated attitudes—the central finding of the NPD debate—might find its expression in new patterns of voter–party alignments. However, until very recently, the implications of the rise of ERPs for the politics of welfare retrenchment have rarely been analyzed (but see Röth et al. 2017). This research gap will be addressed in Chapter 5 (which focuses on alignment and representation processes) and Chapter 6 (which focuses on the welfare policies of ERPs). Finally, both the comparative welfare state research and the NPD literature have ignored an obvious potential for change in the politics of welfare: the rising proportion of immigrants among the electorates of both the US and Europe. Lack of interest by the former might again be explained by its traditional classbased focus—whereby immigrants are defined by their class and are expected to act in line with it when participating in elections (Castles and Kosack 1973). However, the NPD literature has exclusively focused on the reactions to immigration by native citizens. Notably, although we have just discussed the potential consequences of such reactions for voter–party alignments, the idea that immigrants have become a relevant voter group is largely ignored. Taking the US as an example, ethnic minorities represent at least 25 percent of the core supporters of the Democrats. The loyalty of African-Americans is well known. For the most recent presidential elections, the “Latino-vote” (Barreto 2007) has even been considered as so decisive that no candidate will be able to win a majority without the support of such immigrant voters and their descendants. While electoral research in Europe has only recently begun to consider immigrants as voters (see review in Bloemraad and Schönwälder 2013), the first Page 24 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research results indicate that they show disproportionally strong support for left-wing and therefore for pro-welfare parties (Bird et al. 2011; Heath et al. 2013; Koopmans et al. 2012). Even if these parties face severe problems because of rising antiimmigrant sentiments and a re-alignment of their former core constituencies toward the right, they might be able to replace these losses by immigrant votes. In any case, when addressing alignment and representation it seems insufficient to focus on the reactions of parties to native voters alone as immigration has already updated the electoral landscape and therefore potentially the politics of welfare retrenchment.

The Analytical Framework In order to structure the theoretical arguments discussed in the NPD debate, comparative welfare state, and party research, Figure 1.1 summarizes the main (p.35) line of reasoning. This analytical framework should be understood as a causal mechanism,10 linking immigration to welfare state retrenchment by dividing the causal chain into three parts: attitudinal change, (re-)alignment, and representation, thereby establishing a micro-foundation connecting the two macro-phenomena (Coleman 1990). The micro-foundation of the mechanism is the essence of what is discussed in the NPD literature and is indicated by the solid ovals. It is argued that immigration will cause an attitudinal change by native citizens, leading to increased anti-immigrant sentiment and (in this way) also to less welfare support. In a second step, this change in attitudes is first aligned to political parties via voting behavior and then represented by governments in terms of decreasing social expenditures that we will define as welfare state retrenchment in the following. The insights of comparative welfare state research on the effects of welfare institutions enter this framework at the macro–micro (moderating the effect of immigration on welfare support) and the micro–macro part of the mechanism Figure 1.1. The Analytical Framework (moderating the effect of political parties on welfare state retrenchment), as indicated by the solid box. The arguments stemming from party research are represented by the dashed box, moderating how immigrationand welfare-related attitudes are transformed into political coalitions and how in this way established governments engage in welfare reforms depending on the program-specific context. Please note that only the combination of the (p.36) general mechanism with a specific contextual setting—defined by welfare institutions and parties—will indicate the potential outcome of welfare state retrenchment.11

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research With regard to these context-specific effects, welfare institutions are first expected to play their part in affecting both the public support enjoyed by a welfare program and the way immigration will have an impact on it. More precisely, means-tested programs of social assistance are expected to have a low degree of public support in ethnically homogenous countries, and immigration might further decrease this because citizens are even more unwilling to redistribute resources to the ethnically different new arrivals. In contrast, programs following a Beveridgian or a Bismarckian ideal are expected to be much more popular and, as large segments of the native population have a direct interest in them, the effects of immigration on program support are expected to be less contested here. Second, the arguments offered by the NPD literature on the representation of welfare support and anti-immigrant sentiments in actual welfare retrenchment are at best vague. Therefore, we will explicitly differentiate between the alignment of native and immigrant (representing ethnic minority) voters with political parties. This will allow us to categorize parties according to their political support base with respect to the issues of welfare and immigration. As parties are expected to represent the political preferences of their constituents, the combination of these two issues should be of direct significance to the policies of welfare state retrenchment. In the case of coalition governments, we will also take into account the distinct political agendas of individual members. Please note that the relevant point to make with regard to these processes of alignment and representation is not to explain why voters with anti-immigrant sentiments align with a welfare-critical party in country x but a welfare-friendly party in country y. This decision is very complex and hinges on a number of factors with which we are not concerned here (but see Kitschelt 1995; Lubbers et al. 2002). The relevant point is that anti-immigrant sentiments and welfare support are aligned with each other and that this alignment varies between countries—and especially between the US and Europe—leading to different party incentives when it comes to the question of welfare state retrenchment. Third, parties and the governments they form are seen to be the most relevant actors in deciding the level of social expenditures dedicated to specific welfare programs. This decision is primarily based on the preferences of their native and immigrant supporters but is also restricted by the institutional design of welfare programs and the number of immigrants among the program’s (p.37) beneficiaries. Let us illustrate this point by the example of a one-party government in which voters are very critical of immigration, and would readily cut welfare benefits for this group. However, these welfare chauvinists are not willing to accept welfare cuts for natives too as they fear being hit by such cuts themselves—a combination very widespread in Europe, as we will see later on. In representing these preferences, the governing party would then look for a program with very high levels of immigrants—and if there is no such program because immigrants do not rely on welfare, retrenchment would be a senseless Page 26 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research task for the party in terms of representing voters’ preferences. Looking around, two programs show very high shares—not less than 60 percent of both programs’ clientele consists of immigrants. While any cuts in these programs would therefore hit immigrants harder than natives, natives will still be affected by the cuts. To fulfill its voters’ demands, the government would then not only look for high immigrant shares but would also cut benefits for the program in which natives have the lowest interest. Speaking in terms of welfare institutions, means-tested programs for the very poor fulfill these criteria because they concern relatively few natives and in this way separate both the least well-off natives and immigrants from the middle class. In contrast, even if immigrants made up 60 percent of a universal program with very high benefit levels, e.g., a contribution-based pension program, the trade-off between cuts for immigrants and cuts for natives is far less favorable and therefore retrenchment seems unlikely. Thus, welfare institutions might not only enter the causal chain by determining public support but also by restricting the possibility of rational governments when it comes to the question of welfare retrenchment under conditions of immigration. Because of these program-specific effects, there is little reason to expect that immigration will always lead to welfare state retrenchment or that there will be only one and the same effect of immigration in any one country. Rather, immigration will have an effect on the future of welfare programs that differ in the area of insurance they cover, their institutional design and the proportion of immigrants among program beneficiaries. In the following chapters, we will apply the analytical framework presented in Figure 1.1 to both the US and Western Europe. We start with an analysis of the US (Chapter 2) where a racially heterogeneous society encounters a residual liberal welfare regime leading to highly salient conflicts between the White majority and the two most relevant minority groups. However, even under these most contested conditions, a closer analysis of US intra-case variation reveals that differences in welfare program design, minority alignment, and representation lead to very different results with regard to actual retrenchment. More precisely, some programs of the US regime seem to be immune to the politics of retrenchment, while others have been completely (p.38) abandoned, and replaced by far less generous successors. The combination of public program support, minority involvement, institutional design, and party competition explains these different fortunes, as will be shown by a comparison of the Old Age Insurance (OAI) and the Aid to Families with Dependent Children (AFDC) programs. In the remaining chapters, we will apply the same framework to Western Europe and analyze the causal steps linking immigration to welfare state retrenchment. At each step, we will pay special attention to differences between the US and Europe, and how they impact on the relationship between immigration and Page 27 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research welfare state retrenchment. We will first look at the variety of institutional designs of European welfare programs and see how immigrants actually fare in them (Chapter 3) before we analyze the impact of different welfare institutions and immigration on public support for welfare (Chapter 4). In Chapter 5, we will have a closer look at how these attitudinal changes are related to voting behavior, which alignment processes can be observed for both native and immigrant voters and how parties have reacted to the changes by their stance toward the welfare state. Finally, a cross-national analysis of the effects of immigration on welfare state retrenchment in Western Europe will be presented in Chapter 6, taking institutional and party effects into account. Notes:

(1) In economics, immigration is assumed to increase not only welfare spending but potentially also economic growth (see review in Hanson 2012). While the causality between immigration and growth is a repeatedly discussed issue (see Morley 2006), ultimately immigration might result in less social spending simply because it increases GDP growth rates. However, such an effect is restricted to an operationalization of welfare efforts as expressed by social spending as percentage of the national GDP (see discussion of the depending variable problem Welfare Institutions, p. 22). (2) Following Dabady et al. (2004), “race” can be defined as a construct based on observable physical characteristics (e.g., skin color) that have acquired socially significant meaning. In contrast, “ethnicity” refers to cultural factors such as language, religion and nationality, which might be only subjectively of concern to groups of people sharing a common cultural heritage (Fearon 2003). However, such a clear analytical separation is often not possible nor desired by either ethnic minority or majority. The equation of “African-Americans” (an ethnic construct referring to descent from enslaved Africans) with “Blacks” (referring to skin color) is a telling example of such fluid conceptual boundaries. (3) This chapter draws strongly on the existing literature among several academic disciplines. While there is good reason to do so—in the end psychologists are much more interested in micro-foundations and less in macrorelations than, for instance, political scientists are—this categorization has its limitations and has been chosen to structure the comprehensive literature on the effects of ethnic diversity on the welfare state. Having said this, the contributions of social psychologists, sociologists, economists, and political scientists to disciplines other than their own should not be downplayed. (4) Please note that this statement is about only the relationship between minority-related attitudes and welfare support, i.e., two individual-level attitudes. Here, the findings for both the US and Europe are consistent: they show a strong relationship between respondents critical of migration and those significantly more critical of welfare. In contrast to this, the relationship Page 28 of 30

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research between immigration/ethnic diversity and individual welfare support is much more contested in the literature. On this, Schaeffer (2013, Table 1) concludes that 61 percent of all studies find a negative effect of immigration, and 39 percent do not. Studies focusing on this macro–micro effect (e.g., Steele 2016; Brady and Finnigan 2014) between immigration and welfare-related attitudes, are therefore much more hesitant to present the NPD literature being dominated by one perspective—as I do here. (5) See Castles and Schierup (2012) and Sainsbury (2006) for a similar judgment. In contrast to this, the effects of financial forms of globalization—e.g., trade and foreign direct investments—have frequently been discussed among welfare scholars (for two examples out of many others, see Huber and Stephens 2001; Rhodes 1998). (6) Responding to early critiques, Esping-Andersen included the role of families as providers of social security as a third dimension (1999). (7) The terms Bismarckian and Beveridgian refer to William Beveridge’s Report on Poverty (1942) which was influential in founding the UK’s welfare state, and Otto von Bismarck’s social welfare policies in the late nineteenth century in Germany. (8) While flat-rate benefits might offer a fairly high safety net for all, many Beveridgian pension programs have been complemented by private, collectivelyorganized, or contribution-based tiers. This already speaks for their inadequacy in providing middle class members with high enough benefits to rely on flat-rate programs alone—a tendency which, to be fair, can also be observed in many Bismarckian systems. (9) By definition, class is related to the income and labor-market status of individuals and is therefore a purely material concept (Korpi 2006). (10) Causal mechanisms are defined in many different ways that hinge on the ontological and epistemological orientation of scholars (Gerring 2010; Mayntz 2004). The one proposed here is causal, as it aims to identify regular (but context-dependent) associations between immigration and welfare state retrenchment, and splits the relationship into several stages of analysis. The mechanism consists of a chain of intervening variables (King et al. 1994: 85–7), controlling for alternative explanations in each of the single links in the chain. As exclusively quantitative methods will be applied to analyze these causal relationships, this probabilistic view of causality should not be confused with a deterministic one (see, for example, Trampusch and Palier 2016). (11) See Falleti and Lynch (2009) for this differentiation between mechanism and context.

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The New Progressive Dilemma through the Lens of Comparative Welfare State and Party Research

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Racial Diversity, Immigration, and Social Spending in the US

Immigration and Welfare State Retrenchment: Why the US Experience is not Reflected in Western Europe Dennis C. Spies

Print publication date: 2018 Print ISBN-13: 9780198812906 Published to Oxford Scholarship Online: May 2018 DOI: 10.1093/oso/9780198812906.001.0001

Racial Diversity, Immigration, and Social Spending in the US Dennis C. Spies

DOI:10.1093/oso/9780198812906.003.0003

Abstract and Keywords The chapter analyses the fractious relationship between racial diversity and the welfare state in the US—arguably the most influential case in NPD literature. It shows that US Whites are critical of welfare because their attitude rests on negative feelings about African-Americans and Latino immigrants. However, not all parts of the US welfare state are affected by this combination of race coding and low public support: means-tested welfare is badly affected but the social security components are not. These differences are traced back to their origins by comparing a highly race coded and unpopular welfare program (AFDC, and later TANF) with a non-coded, popular program of old age social security (OAI). Originally highly affected by racial considerations, the programs diverged because of their institutional design and their ability to raise and expand their political support bases. Keywords:   Race coding, AFDC, TANF, OAI, racial diversity, welfare state, public support

Since the start of the NPD debate, the US has taken the role of an exemplary case for analyzing the link between ethnic diversity and the welfare state (see Banting 2005). Sociologists, economists, and political scientists alike explicitly refer to the US when deriving their theoretical assumptions about the effect of immigration on welfare spending in a cross-national perspective. The prevalent lesson taken from the US is that redistribution between different ethnic (in the US this equates with racial) groups can be very fractious, severely restricting both the size and scope of the welfare state, and making welfare retrenchment Page 1 of 45

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Racial Diversity, Immigration, and Social Spending in the US very likely. The experiences of the US therefore serve as a warning sign, especially for European countries, a view that is explicitly put forward by some US scholars, warning that immigration to Europe might eventually lead to welfare levels comparable to those in the US (see, for example, Alesina and Glaeser 2004). Because of its influential status and the far-reaching theoretical assumptions derived from it, detailed understanding of what has happened in the US is crucial before we turn our attention to the effects of immigration on the welfare states of Europe. Therefore, the US will act as the reference for showing the value of the analytical framework developed in the foregoing chapter. Before we start, a few words on the US as an example seem to be in order as, in terms of case selection strategy, the US can be considered an “extreme case,” which Seawright and Gerring (2008), for instance, rightly warn us to treat as representative of larger populations. This categorization is due to the very special history of racial relations and the well-known character of the liberal US welfare regime: it therefore concerns our main variables of interest. First, while today other countries experience comparable levels of immigration, US society is particularly defined by the racial divide between the White majority and the African-American minority. This is perceived by many American scholars as the most important and still dominant cleavage in US (p.40) politics (Manza 2000; Orfield 1988; Reese 2005). It is also regarded as the main explanatory variable for both the founding phase of welfare provision (Katznelson 2005; Lieberman 2003; Quadagno 1994) and the retrenchment phase (Fellowes and Rowe 2004; Fording 2003; Johnson 2003). Immigration by so-called Hispanics or Latinos is often regarded by US scholars as a second racial divide, leading to consequences for the welfare state similar to those stemming from the Black/White divide (Fox 2004). Acknowledging these differences, this chapter will pay special attention to analysis of the effects of (mainly Mexican) immigration and the domestic Black/White cleavage on US social policy, although as it will transpire, the effects are by no means wholly comparable—the first lesson for the European context. Second, the distinctiveness of the US welfare regime has long been recognized by scholars of comparative political economy (see Castles and Mitchell 1992; Korpi and Palme 1998, 2003; Scruggs and Allan 2006). Not only does the US spend relatively little of its wealth on social programs, but it also makes strong use of both means-tested and market-oriented programs of social policy (EspingAndersen 1990; Myles 1996). It therefore has rightly been characterized as a residual and programmatically incomplete example of a liberal welfare regime (Esping-Andersen 1990). However, not all US welfare programs follow this liberal logic and indeed one of the most popular programs in the US is the nearly universal, contribution-based and strictly Bismarckian public pension program: Old Age Insurance (OAI). The second main objective of this chapter (and the Page 2 of 45

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Racial Diversity, Immigration, and Social Spending in the US second lesson for European comparison) will be contrasting public support, voter alignment, and finally OAI’s remarkable resistance to retrenchment with the far less successful history of a means-tested program of social assistance, Aid to Families with Dependent Children (AFDC), inside the same and highly fraught racial context. Making use of the intra-case variance with regard to both distinct minority groups and welfare program designs we proceed with our analysis of the US in three steps, as indicated in the theoretical chapter, Chapter 1 (The Analytical Framework, p. 34). First, we analyze the attitudinal change with respect to welfare support on the individual level, then we look at the (re-)alignment of US voters to political parties that is motivated by these changes, and finally we analyze the representation of the political demand for welfare state retrenchment at the macro-level. The results of these analyses lead to the conclusion that the institutional design of welfare programs as political alignment processes is decisive for the effects of ethnic diversity on welfare state retrenchment. Indeed, the analyses of the main reference case of the NPD literature advises us that some parts of the welfare state can be expected to be immune to potential effects of ethnic diversity on welfare state retrenchment— even under the most abrasive conditions regarding questions of ethnicity or race.

(p.41) Race, Racial Attitudes and Welfare Support The residual character of the US welfare regime in terms of both spending levels and scope has long attracted scholarly attention and several arguments have tried to explain this form of American exceptionalism compared to the far more generous European patterns (for overviews, see Alesina and Glaeser 2004; Skocpol 1995; Weir et al. 1988). Among the most popular arguments are the distinctive institutional setting of the US compared with most other states, including a judicial review of the Supreme Court, historically critical of welfare, as well as several other veto points in the federalist political system, the most prominent being the US Senate. In addition, power resource arguments point to the lack of a social-democratic political party dedicated to redistribution (Lipset and Marks 2000) and the notoriously weak organization and policy impact of US trade unions (Briggs 2001). Sociological explanations add to this list the welfarerelated attitudes of US citizens who are significantly more critical than Europeans of welfare with regard to redistribution via the welfare state (Andreß and Heien 2001; Bean and Papadakis 1998). According to this interpretation, the comparatively low level of US social expenditure is mainly due to the fact that Americans just want it to be like that—and many would even accept additional cuts (Brooks and Manza 2007).

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Racial Diversity, Immigration, and Social Spending in the US As Figure 2.1 indicates, these ideological arguments might indeed play a role in the underdevelopment of the US welfare state. Asked if “it should be the government’s responsibility to reduce income differences between the rich and the poor”—a standard item used to measure welfare-related attitudes in cross-national research—a decisive majority of US respondents answer that this should not be the government’s concern. Compared with clear majorities in favor of government

Figure 2.1. Attitudes towards Redistribution in the US and Western Europe

intervention across all Western European countries in the

Notes: Respondents were asked to what extent they agree or disagree with the statement that “it is the responsibility of the government to reduce the differences

sample, the anti-welfare sentiment of US citizens

in income between people with high incomes and those with low incomes.”

appears striking and has long been documented. As Gilens

Source: International Social Survey Programme (ISSP Research Group 2012).

(1999) puts it provocatively: “Americans hate welfare,” and this strong anti-welfare sentiment is seen as the ideological basis for the residual nature of welfare in the US (Alesina and Glaeser 2004; Fox 2004; Gilens 1995, 1999; Luttmer and Singhal 2011; Reese et al. 2013; Shaw and Shapiro 2002; Stokes 2013). But, what explains this low level of welfare support among the US public? As several US scholars have pointed out, the answer to this question lies in the racial division(s) of US society. According to these arguments, which have become very influential and widely accepted since the late 1980s (for overviews, see Fox 2012; Manza 2000; Reese 2005), the US welfare state is so residual because the racial diversity of US society does not allow for greater levels of redistribution. Data provided by the American National Election Studies (ANES), a Time Series Cumulative Data File containing representative samples of the US voting-age population for every national election since (p.42) 1948, can be used to address this statement in more detail. In Table 2.1, data for the elections of 1992 (Clinton 1), 1996 (Clinton 2), and 2000 (Bush Jr. 1) are used because they give the most comprehensive coverage of items and span the important welfare reform of 1996.

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Racial Diversity, Immigration, and Social Spending in the US

Table 2.1. Racial Attitudes and Welfare Support in the US Variables

M1

M2

M3

Controls Income

−0.15*** −0.11*** −0.16*** (0.00)

(0.01)

(0.01)

Unemployed (ref.: all other categories)

0.08***

0.06***

0.07***

(0.02)

(0.03)

(0.04)

Age

−0.12 *** −0.14*** −0.16*** (0.00)

Education

(0.00)

(0.00)

−0.08*** −0.16*** −0.15*** (0.01)

(0.01)

(0.00)

Female

0.12***

0.13***

0.14***

(ref.: male)

(0.01)

(0.02)

(0.02)

White

−0.21***

(ref.: other than White)

−

−

(0.01)

Attitudes towards African-Americans Opposes fair treatment for Blacks in Jobs

−0.12*** (0.02)

Opposes affirmative action for Blacks

−0.09*** (0.01)

Opposes social and economic assistance for

−0.22***

Blacks

(0.01)

Dislikes Blacks

−0.03* (0.00)

Attitudes towards Immigrants Opposes Immigration

−0.08*** (0.01)

Dislikes Latinos

−0.08*** (0.01)

Constant

2.84***

3.16***

2.94***

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Racial Diversity, Immigration, and Social Spending in the US

Variables

M1

M2

M3

(0.03)

(0.05)

(0.06)

N

4.926

2.612

2.341

R-squared

0.16

0.21

0.13

Notes: All coefficients are standardized with standard errors reported in parenthesis. OLS regression with *p < 0.05; **p < 0.01; ***p < 0.001. Source: ANES, Time Series Cumulative Data File 1948–2012. Reduced sample including the elections of 1992, 1996, and 2000. For description of variables, see Table 2.1A (Appendix 1). Table 2.1 shows the results of several OLS regression models based on this data. The dependent variable support for social spending is an additive index of five items, asking respondents if they would like social spending to decrease (0), stay about the same (1), or to increase (2), with regard to different groups or purposes: the poor, children, public schools, social security, and food stamps. The resulting index of support for social spending should therefore be interpreted as the general mean support for the US welfare state as the five domains cover a range of very different programs and target groups. Table 2.1 includes five prominent independent variables derived from the literature on cross-national welfare support: income, labour market status, age, education and gender (Brady and Finnigan 2014; Breznau 2010; Ervasti and Hjerm 2012). Income as well as being unemployed accounts for the economic self-interest of respondents: age accounts for life-cycle effects, and education for the economic interest as well as the value-orientations of respondents. Furthermore, females have been identified as showing stronger support for public redistribution than males. Finally, and central to our argument, (p.43) the model includes a sixth variable, White, which accounts for the subjectively reported respondent’s race (White in contrast to being African-American, Hispanic or other). A detailed description of all variables and additional descriptive statistics is provided in Table 2.1A (in Appendix 1). Model 1 shows the effects of these standard explanatory variables on the general support for social spending. Each variable is significantly related to the dependent variable as has already been identified in previous contributions: high-income respondents are much more critical of welfare payments than lowincome ones, unemployed people are more supportive than the employed, and females are more supportive than males. In order to estimate the relative impact of the six independent variables, standardized beta-coefficients have (p.44) been calculated and here it is the effect of the White variable that deserves closest attention: its effect (−0.21) is the strongest of all included in the model and clearly outperforms both income (−0.15) and being unemployed (0.08). Page 6 of 45

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Racial Diversity, Immigration, and Social Spending in the US These two variables are among the strongest predictors in cross-national studies of welfare support (Bean and Papadakis 1998; Jæger 2009). In other words, if we know the respondent’s race, we know a lot about the respondent’s preferences regarding the welfare state. The notoriously anti-welfare sentiment of US citizens should therefore be seen as the most differentiated: it is mainly due to the attitudes of the White majority, while both African-Americans and Hispanics are much more supportive of social spending, often reaching levels comparable to those found in Western Europe (compare Lind 2007). Model 2 focuses exclusively on the group of White citizens. The same control variables are used as in Model 1 but contain in addition several items designed to capture respondents’ sentiments with regard to African-Americans. These four items ask whether “the government should see that Black people get a fair treatment in jobs”; “Blacks should be given preference in hiring and promotion”; “the government in Washington should make every effort to improve the social and economic position of Blacks,” and finally, how much the respondent likes or dislikes Black people. Each of these variables has been recoded so that higher values indicate more negative sentiments with regard to Blacks and, as clearly turns out, each variable is negatively related to the support for social spending; the more negative Whites’ attitudes are with regard to African-Americans, the more critical their attitude with regard to social spending. Again, betacoefficients have been calculated to get an impression of the relative importance of these attitudinal variables. Criticism of government efforts to improve the social and economic position of Blacks (−0.22) stands out as the most important explanatory factor among all variables included, being twice as influential as income and more than three times larger than being unemployed. Negative sentiments with regard to Blacks among Whites are therefore the strongest predictors of the low support for social spending in the US (see also Gilens 1995, 1999; Fox 2004). Let us now focus on the other dominant ethnic minority group in the US: immigrants. As in most countries, this group consists of people originating in very different countries. However, it should be noted that, for the last three decades, migration to the US has been dominated by immigration from Latin America and especially from Mexico. Therefore, attitudes towards Hispanics will serve as a proxy for attitudes towards migrants in general, a simplification that seems justified as Hispanics are not only the largest and fastest growing minority group in the US but also dominate news stories and discourse about migration policy (see Newman 2013: 2). Model 3 includes two attitudinal items asking what respondents think about immigration and Latinos: Opposes Immigration is based on a five-category (p. 45) scale asking if the number of migrants to the US should decrease or increase; Dislikes Latinos is measured on a like/dislike scale resembling the one towards African-Americans used in Model 2. Again, both items have been Page 7 of 45

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Racial Diversity, Immigration, and Social Spending in the US recorded so that higher values indicate negative sentiments. The migrationrelated items are negatively correlated with the dependent variable: White citizens with poorer attitudes to migrants are also more critical of social spending. However, the beta-coefficients tell us that the effects of the migrationrelated variables are much weaker than the ones reported for attitudes towards African-Americans and that they do not outperform the standard predictors included. We can therefore summarize that attitudes towards immigrants are, in their direction, comparable to attitudes towards African-Americans but do not match these in the scale of their impact (see also Hussey and Pearson-Merkowitz 2013). At this stage in the analysis, we might easily conclude that the reason for the low levels of social spending in the US has been identified as the White majority simply not supporting more social spending and being highly critical of it because they do not like African-Americans and/or immigrants. In a democratic system, these attitudes can then be expected to translate via elections into public policies, eventually leading to a limited amount of social spending with the potential for further retrenchment. While this straightforward view is implicitly widespread in the literature (for an example, see Johnson 2003; Luttmer 2001), it fails to capture some important nuances, as the next step of analysis shows. For this, we now break up the dependent variable, support for social spending, into its five original categories. In doing so, we will no longer be able to analyze what White Americans think of their welfare state in general but will be able to analyze differences in their support for different target populations and programs inside the US welfare regime. For this analysis, Models 2 and 3 have been recalculated for each of the five original items plus support for federal spending on “welfare,” asking respondents if spending on the poor, children, public schools, social security, and food stamps should be decreased (0), kept about the same (1) or increased (2). Based on these models, Figures 2.2 and 2.3 show the percentage of White respondents speaking out for a reduction in social spending dependent on their attitudes towards African-Americans (Figure 2.2) and immigrants (Figure 2.3), which have been summarized into indices ranging from highly negative to highly positive attitudes towards each minority group (for details see Table 2.2A, Appendix 1).

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Racial Diversity, Immigration, and Social Spending in the US

Figure 2.2. Whites’ Welfare Support Depending on Attitudes towards AfricanAmericans Notes: Figure 2.2 shows the percentage of White voters speaking out for a reduction in six programs of social assistance depending on their attitudes towards Blacks. Source: American National Election Studies (ANES) Time Series Cumulative Data File 1948–2012. Reduced sample including the elections of 1992, 1996, and 2000. For description of variables, see Table 2.2A (in Appendix to Chapter 2).

Figure 2.3. Whites’ Welfare Support Depending on Attitudes towards Immigrants

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Racial Diversity, Immigration, and Social Spending in the US

Notes: Figure 2.3 shows the percentage of Whites speaking out for a reduction in six programs of social assistance depending on their attitudes towards immigrants/immigration. Source: American National Election Studies (ANES) Time Series Cumulative Data File 1948–2012. Reduced sample including the elections of 1992, 1996 and 2000. For description of variables, see Table 2.2A (in Appendix to Chapter 2).

Table 2.2A. Variable Description for Figures 2.2 and 2.3 Variable

Summary Statistics (Mean; SD;

Description

Range) Support for social spending

1.42; 0.65; 0–2 Should social spending for poor people be…: 0 (decreased), 1 (kept about the

for poor people

same), 2 (increased). Only respondents favoring a decrease are reported.

Support for social spending for children

1.44; 0.66;0–2

Should social spending for children be…: 0 (decreased), 1 (kept about the same), 2 (increased). Only respondents favoring a decrease are reported.

Support for social spending for public schools

1.63; 0.58; 0–2 Should social spending for public schools be…: 0 (decreased), 1 (kept about the same), 2 (increased). Only respondents favoring a decrease are reported.

Support for social spending for social security

1.47; 0.58; 0–2 Should social spending for social security be…: 0 (decreased), 1 (kept about the same), 2 (increased). Only respondents favoring a decrease are reported.

Support for social spending for food stamps

0.76; 0.67; 0–2 Should social spending for food stamps be…: 0 (decreased), 1 (kept about the same), 2 (increased). Only respondents favoring a decrease are reported.

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Racial Diversity, Immigration, and Social Spending in the US

Variable

Summary Statistics (Mean; SD; Range)

Support for social spending for welfare

0.67; 0.71; 0–2 Should social spending for welfare be…: 0 (decreased), 1 (kept about the same), 2 (increased). Only respondents favoring a decrease are reported.

Index for opinion about Blacks

0.06; 1.29; 3.27–3.13

Predicted factor-scores of the standardized variables “Opposes fair treatment for Blacks in Jobs,” “Opposes affirmative action for Blacks,” “Opposes social and economic assistance for Blacks” and “Dislikes Blacks” (see Table 2.1A, in appendix to Chapter 2) resulting from principal component analysis.

Index for opinion about

0.24; 1.03; −2.83–3.13

Predicted factor-scores of the standardized variables “Opposes

Latino immigrants

Description

Immigration” and “Dislikes Latinos” (see Table 2.1A in appendix to Chapter 2) resulting from principal component analysis.

Source: All variables were taken from the American National Election Studies (ANES Time Series Cumulative Data File 1948– 2012). Reduced sample including the elections of 1992, 1996, and 2000. Figures 2.2 and 2.3 replicate the findings presented in Table 2.1 and show that Whites’ support for the different programs is in general related to their opinion about both minority groups. However, the Figures also reveal that there are pronounced differences in this race coding between the distinct programs and target populations. Focusing on the percentage of respondents supporting further decreases in welfare spending, we see that only 12 percent (p.46) (p. 47) of the Whites with the most favorable attitudes towards Blacks support further program cuts but this share steadily increases with more negative attitudes towards Blacks, eventually resulting in a 70 percent majority in the most critical group supporting further reduction in welfare spending (Figure 2.2). For immigrant-related attitudes, a similar but less pronounced picture emerges: support for further reduction ranges from 39 percent in the group more favorable towards immigrants to 63 percent in the group most critical of them (Figure 2.3). The reason for this difference is that Whites are almost unanimously in favor of slightly decreasing the number of immigrants to the US

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Racial Diversity, Immigration, and Social Spending in the US (see Table 2.1A, in Appendix 1), while they are more divided with regard to their attitudes towards African-Americans.1 Table 2.1A. Variable Description for Table 2.1 Variable

Summary Statistics (Mean; SD; Range)

Description

Support for social spending

1.36; 0.41; 0–2

Additive Index: [Support for social spending for the poor + children + schools + social security + food stamps]/ 5

Income

2.88; 1.14; 1–5

Family income in percentiles: 1 (0–16), 2 (17–33), 3 (34–67), 4 (68–95), 5 (96–100)

Unemployed

0.07; 0.25; 0

Labor market status: 1 (being

and 1

unemployed or permanently disabled), 0 (all other categories)

46.48; 17.44;

Respondent’s age

Age

17–97 Education

2.75; 0.91; 1–4

Level of education: 1 (grade school or less), 2 (high-school), 3 (some college), 4 (college or advanced degree)

Female

0.55; 0.49; 0 and 1

Respondent’s sex: 0 (male), 1 (female)

White

0.76; 0.42; 0

Respondent’s racial category: 1 (White),

and 1

0 (all other categories)

0.28; 0.45; 0 and 1

Should the government in Washington see to it that black people get fair

Opposes fair treatment for Blacks in Jobs

treatment in jobs? 1 (not the government’s business), 0 (all other categories)

Opposes 2.35; 1.00; 0–3 affirmative action for Blacks

Are you for or against preferential hiring and promotion of Blacks? 0 (strongly favors), 1 (favors), 2 (opposes), 3 (strongly opposes)

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Racial Diversity, Immigration, and Social Spending in the US

Variable

Summary Statistics (Mean; SD; Range)

Description

Opposes social and economic assistance for Blacks

4.68; 1.72; 1–7

Should the government make every effort to improve the social and economic position of Blacks or should Blacks help themselves? 1 (Government should help Blacks) to 7 (Blacks should help themselves)

Dislikes Blacks

31.29; 19.77; 0– Recoded feeling thermometer with 97 regard to Blacks ranging from 0 (most favorable) to 97 (least favorable)

Opposes Immigration

3.74; 1.00; 1–5

The number of immigrants who are permitted to come to the United States should be: 1 (increased a lot) to 5 (decreased a lot)

Dislikes Latinos

34.90; 19.82; 0– Recoded feeling thermometer with 97 regard to Latinos ranging from 0 (most favorable) to 97 (least favorable)

Source: All variables were taken from the American National Election Studies (ANES Time Series Cumulative Data File 1948– 2012). Reduced sample including the elections of 1992, 1996, and 2000. (p.48) A very different picture emerges if we focus on support for further reductions in the category of social security. As will be discussed in detail in the next section (The Race Coding of Welfare and the Popularity of Social Security) social security is not a distinct program, but in the minds of US citizens is strongly associated with the federal Old Age, Survivors, and Disability Insurance (OASDI, formerly OAI) and the Medicare program, offering publicly funded medical insurance for pensioners receiving OAI (see Weir et al. 1988). As Figures 2.2 and 2.3 indicate, support for social security is much higher than it is for welfare, and most importantly, not very congruent with attitudes towards Blacks or immigrants. Comparing the most favorable with the most critical groups, we see that Whites’ support for a reduction in social security ranges between 4 percent and 9 percent with regard to their attitudes towards Blacks and between 6 percent and 7 percent with regard to their feelings about immigrants. Therefore, at least 90 percent in all groups would favor spending on social security being increased or staying about the same. In contrast to the

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Racial Diversity, Immigration, and Social Spending in the US pronounced differences identified for welfare, support for social security obviously is not race coded but undividedly high.

The Race Coding of Welfare and the Popularity of Social Security As the previous analyses have shown, the finding of the notoriously critical sentiment of Americans with regard to social spending should be re-evaluated in two ways. First, it is driven largely by the welfare attitudes of White Americans, while members of other races show much higher support for redistribution. Second, while Whites see some programs of the US welfare regime very skeptically, and link these to attitudes towards African-Americans and immigrants, other programs are nearly unanimously supported, but lack this kind of race coding. More precisely, differences in both public support and race coding are strongest between the welfare and the social security parts of the US welfare state. How can we explain these differences? Are they faint sounds in the minds of US citizens or do they have policy consequences for the separate programs? It is to these questions we will now turn by analyzing the developments of two programs that have become representative of the two parts of the US welfare regime: OAI standing for its social security part, and AFDC being the synonym for welfare in the eyes of the American public (Skocpol 1988: 296). Because the US welfare state consists of more than eighty programs of social assistance with very distinct designs and target populations (Myles 1998) the decision to choose the AFDC and OAI programs for comparison deserves some explanation. First, both programs were introduced with the Social Security Act (SSA) of 1935, so tracing their different developments back therefore allows us (p.49) to draw a comprehensive picture of US welfare policies from their very beginning. Second, AFDC has been closely linked with racial politics, while OAI has not, allowing us to analyze variations in the impact of race coding for each program’s development. Third, each program represents one of the two basic types of social assistance, which, together with private insurances as the third one, constitute the US welfare regime (Myles 1998). AFDC stands for the meanstested and tax-financed welfare programs for the poor (such as food stamps, public housing, Medicaid, and Supplemental Security Income), and OAI for the social security, contribution-based part of the system (such as Medicare and unemployment insurance). However, while their representativeness gives both programs relevance beyond their own histories, it also becomes clear that their degree of race coding is not their only dividing characteristic: OAI is a contribution-based, nearly universal program of social insurance that is run by the federal state. In contrast, AFDC is a tax-funded, means-tested welfare program assisting exclusively poor single mothers and their families. From its very beginning, the states were given distinctive competencies in the program’s administration resulting in very uneven standards of AFDC eligibility, coverage, and benefits. From an analytical Page 14 of 45

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Racial Diversity, Immigration, and Social Spending in the US point of view this makes it hard to separate the potential effects of the programs’ degree of race coding from their institutional designs—and such differences might well have an impact in terms of support as well as the likelihood of welfare retrenchment, as we have discussed in Chapter 1 (The Analytical Framework, p. 34) (Korpi and Palme 2003; Pierson 1994, 1996). While we will take this point up in the chapters on Europe (Chapters 3–6), for the US this case selection problem cannot be solved as all such means-tested welfare programs as AFDC have been found to be highly race coded (Quadagno 1988, 1994; Slessarev 1988; see also Figures 2.2 and 2.3) and we thus cannot hold program design constant without losing the variation in our main explanatory variable. At the same time, the historical analysis will show that racial motivations made a strong impact on AFDC’s decentralized program design in its initial phase. Therefore, AFDC’s racialization and its institutional program design should not be seen as separate program characteristics but as inseparably related. The argument presented in the historical analysis will be that some programs of the US welfare state, like AFDC, have from the start been closely linked to African-Americans (and are increasingly linked to Latino immigrants) because both minority groups are overrepresented among the beneficiaries. Therefore, Whites’ attitudes towards welfare can be seen as being both an expression of their racial attitudes but also of their limited interest in this kind of social assistance. More importantly, the interest of Whites, African-Americans, and Latinos in welfare also clearly influences competition between the two political parties—a process that started with the New Deal (a series of (p.50) 1930s US federal programs, public work projects, financial reforms, and regulations in response to the Great Depression) and became strongly manifested during the Civil Rights era of the 1960s. In the phase of welfare state retrenchment starting in the 1980s with Reagan’s “war on welfare” (Chappell 2011), these processes of party–voter alignment and re-alignment among the categories of race, income, racial attitudes, and welfare support led to a political landscape highly supportive of welfare state retrenchment. In contrast to the political landscape with regard to AFDC, the structure of the social security part of the US welfare regime, presented by OAI, is today not influenced by race. While OAI also began as highly racialized in the 1930s, the program was soon able to overcome this legacy and form a very broad crossclass, cross-race, and most importantly cross-party support base. In the phase of welfare state retrenchment, OAI therefore stands out as by far the most popular part of the US regime, or, as Skocpol says, it is “politically sacrosanct” (1988: 297). Consequently, and in sharp contrast to AFDC, any efforts to cut OAI benefits turned out to be a very risky political task for any government and severely limited any attempts to cut program benefits.

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Racial Diversity, Immigration, and Social Spending in the US The remaining part of this section will contrast the two programs’ histories from their foundational phase as part of the New Deal legislation (in the 1930s), through their expansionist phase (until the 1960s), to the welfare retrenchment phase starting (in the 1980s). For the AFDC program, the period of investigation will end with the Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA) of 1996, which replaced AFDC as the far more residual Temporary Assistance for Needy Families (TANF) program. For OAI, the period of investigation will end much earlier with US president Ronald Reagan’s efforts to cut back OAI during his first electoral term in 1982. While OAI has been the subject of several other reform initiatives afterwards, each of these has met considerable political resistance, limiting the scope of OAI retrenchment (see Pierson 1994, 1996).

Foundational Phase: the Legacy of the New Deal OAI and AFDC constituted two of the four core programs of social assistance introduced by the SSA of 1935. Before then, US welfare policies were highly decentralized, fragmented, and run by the individual states, offering limited benefits especially to veterans and widows (Fox 2012; Skocpol 1995). It was not until the New Deal under F. D. Roosevelt that the federal government began to engage in patterns of social assistance, notably at a time of severe hardship, when the US economy was still stalled after the world economic crisis from 1929. (p.51) Roosevelt was the leader of a strange coalition, because his political party was deeply divided into two very dissimilar blocks acting together under the Democratic label (Katznelson et al. 1993). This “marriage of Sweden and South Africa,” as Katznelson (quoted in Lieberman 2003: 24) has described the Democratic party of the 1930s, consisted on the one hand of the representatives of the highly urbanized and industrialized Northern states, standing in for most of the US working-class. Democratic Congressmen/women and Senators from these states were among the greatest advocates of the New Deal legislation, as was Roosevelt himself. On the other hand, there were the Democrats from the still very rural Southern2 part of the country, highly dependent on agricultural production on very large estates owned by a class of White landowners with enormous political influence. For this rural economy, and especially for the “cotton-belt” states, large numbers of African-American field workers were crucial and this economic interest would leave its mark on the formulation of the New Deal programs of social assistance. While the interest of organized labor and its political representatives in social security legislation is a common pattern in comparative welfare state research (Korpi 1983), the interest of Southern rural elites in supporting the New Deal legislation was motivated by the disastrous decrease in demand for agricultural products following the economic crisis of the 1930s. In this time of severe depression, even landowners began to fear a radicalization of the rural underPage 16 of 45

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Racial Diversity, Immigration, and Social Spending in the US classes, which federal-funded programs of social assistance promised to prevent (Kirkendall 1975: 98; Gilbert and Howe 1991: 210). However, it was unacceptable to both the economic and the political elite of the South that these kinds of social programs would threaten the supply of large numbers of wagedependent workers (Baldwin 1968: 264–83; Finegold 1988: 209; Kirkendall 1975: 102–4; Pfeffer 1983). Southern landowners therefore had to perform a balancing act with regard to the New Deal legislation: “they wanted to capture as much as they could of the new federal spending while at the same time resisting federal interference in their regional patterns of race and color” (Lieberman 2003: 37). Politically, the South was in a very advantageous position to get precisely what it wanted, as the Roosevelt administration was not able to pass the SSA against both the Southern Democratic votes and the Republican congressmen/women representing the interests of Northern capital. In addition, the political (p.52) strength of its Southern part was also decisive for the national Democratic Party itself. It is no exaggeration to state that in the period from 1896 to 1964, the Southern part of the Democratic Party in fact equated with Southern politics, as it was the more influential segment within the national Democratic Party until the 1940s. In this phase, often referred to as the Solid South, the Democrats never received less than 86 percent of the region’s votes in congressional and presidential elections, which gave this group immense influence, especially in the important Senate committees (Katznelson et al. 1993: 284–5). This gave Southern Democrats extraordinary potential for making policy package deals, which they used to ensure a common platform devoted to the “preservation of the southern racial order” (Katznelson et al. 1993: 284). This encompassing racial order—also referred to as the system of Jim Crow (a pejorative term for Blacks, dating back to the early nineteenth century)—had a social, political as well as an economic part, each heavily relying on the repression of African-Americans (Alston and Ferrie 1993; Fox 2012; Katznelson 2005). Socially, the apartheid-like regime of the South was represented by such openly racist policies as separate housing, schools, and restaurants, which constituted the daily visible separation of African and White Americans. Supported by a great deal of judicial and administrative repression—and often by pure violence—this system of racial separation touched every aspect of daily life. Politically, the dominance of Southern Democrats greatly relied on the exclusion of Black voters from elections. While African-Americans had been granted the active and passive right to vote by the 15th constitutional Amendment of 1870, in the South, a system of formal and informal voting restrictions guaranteed the political insignificance of Black votes. These regulations turned out to be “extremely effective” (Fox 2012: 26) and were reflected in the very low turn-out rates among African-Americans (Quadagno 1994). While the political suppression of African-Americans was crucial for guaranteeing the dominance of the Southern Democrats, their economic repression was essential to guarantee the functioning of the economic system of Page 17 of 45

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Racial Diversity, Immigration, and Social Spending in the US Southern agriculture, as African-American men made up its main source of labor. Wages were very low and often benefits in kind were part of the working contract. Dependence on the landowner was high and indebtedness and police repression were an integral part of this. In short, in the 1930s the working conditions of African-Americans in the rural South “differed little from the paternalistic social relations of slavery” (Lieberman 2003: 30). Southern landowners and Southern Democrats were afraid that the upcoming social security programs would threaten and ultimately abolish the political economy of the South. Before the New Deal legislation, Blacks were virtually excluded from any kind of welfare benefits offered on the (p.53) county- and state level in the South, due to the same strategies that kept African-Americans away from the ballot box (Katznelson 2005). The Social Security Act of 1935 severely threatened this exclusion and was seen as a problem for the economic system because even the low social benefits might outperform the notoriously poor wages of Black rural and domestic workers (Fox 2012: 195). However, formal legal exclusion of African-Americans from social assistance was not an option as this would have been an open infringement of the constitution. The political strategy of the Southern Democrats therefore aimed at the institutional design of the New Deal social security programs, including OAI and AFDC (Katznelson 2005; Quadagno 1988; Skocpol 1988). For the contributory OAI program, they called for the program to exclude both the agricultural and the domestic labor force. For AFDC, they insisted on the decentralization of the program, leaving the decisions about the adjustment of welfare benefits as well as eligibility rules to the individual states and not the federal government (Lieberman 2003). Given their enormous political influence, especially in the Senate and on the most important committees, they succeeded in both cases (Davies and Derthick 1997). By the time of its establishment in 1935, OAI excluded rural and domestic occupations, leaving 18.6 million workers without cover. In relative terms, 38 percent of all workers and at least 55 percent of all Black workers were not eligible according to Lieberman’s calculation (2001: 82). Due to the regional concentration of rural and domestic workers in the South, these numbers were significantly higher there. Katznelson et al. (1993) estimate that at least 60 percent of all Black workers were excluded from OAI. Occupational exclusions may have been a viable political option within OAI but they were not for the means-tested AFDC program that was designed to support widowed or single mothers so that women could stay at home and raise their children. The AFDC benefits were deliberately very low yet AFDC was the only program available to Blacks since they were mainly excluded from both OAI and unemployment insurance because of their occupations. In addition, the share entitlement of single mothers among Blacks was significantly higher than among Page 18 of 45

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Racial Diversity, Immigration, and Social Spending in the US Whites and the same pattern occurred with regard to the number of children and poverty rates (Lieberman 2003: 50). Because of these differences, from the start AFDC promised to turn out to be a program disproportionally benefiting African-Americans. Southern Democrats therefore turned their efforts towards the decentralization of the AFDC program and focused on two issues. The first was to restrict as much as possible the role of the federal government in the program’s administration and oversight and the second was to ensure that any decision on the eligibility level of AFDC benefits should be left to the individual states (Lieberman 2003: 52). As with OAI, the final compromise concerning AFDC in 1935 found (p.54) in favor of the South. While funded by both federal and state taxes, AFDC was established as an essentially local program giving local authorities great influence on the determination of benefit levels, allowing the introduction of several eligibility rules and leaving the program’s administration completely to the states. From the start, AFDC was therefore a highly decentralized program, and welfare benefits differed significantly between the North and the South, where they were significantly lower, especially in cotton counties with low electoral turnout (Fox 2012: 279). In fact, although they were highly disadvantaged economically, Blacks were not overrepresented among the program’s population in the early years of AFDC, which was solely due to discrimination via the administration in the South (see Lieberman 2003; Fox 2012).

Expansionist Phase: the Establishment of OAI and the Racialization of AFDC As the last pages have shown, the racial divide between Blacks and Whites made a marked impact on the New Deal programs of social assistance. But while both OAI and AFDC were motivated by racial concerns in the initial phase, the former program soon developed into a nearly universal program with high levels of public support as well as sharply increasing benefit levels. In contrast, the latter would soon become very unpopular and associated with the failure of US welfare policy in general (Murray 1984), thereby setting the foundation for severe cutbacks in the 1980s and its final abolition in 1996. How can we explain these different fortunes? To start with OAI, the history of the program reads like a lesson in what Pierson (1994) has described as a “policy feedback process,” meaning a process in which programs of social assistance build up their own constituencies and thereby generate the foundation for their own future expansion (Kumlin and Stadelmann-Steffen 2014). This is somehow surprising as OAI “was built on a shaky foundation in 1935” (Lieberman 2003: 67). Not only were nearly a third of the US population not covered by OAI but the program also met severe resistance from both the business community and the Republican Party (Derthick 1979, ch. 6). The most important point of critique focused on the way OAI was financed: a payroll tax Page 19 of 45

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Racial Diversity, Immigration, and Social Spending in the US via contributions of both employees and employers in a ratio of 1:1, together equaling 2 percent of a worker’s pre-tax wage. To qualify for OAI pensions, a worker had to work in a covered occupation, spend the required number of years in employment, and reach the appropriate age. The major problem of OAI was obvious from the start: the 2 percent tax was simply insufficient to guarantee an appropriate level of pension (Myles 1998: 272). Therefore, the OAI payroll tax was expected to rise to 6 percent until (p. 55) 1949, which meant higher costs for both employees and employers. However, while its shaky financial foundation was severely criticized, it would soon turn out to be the main force behind its further expansion. As a third of all US workers were not covered by OAI, estimates showed that their inclusion would allow OAI payroll taxes to increase much more slowly (Lieberman 2003). Soon after its start, both US unions and the staff of the newly founded Social Security Administration therefore supported political efforts to increase the number of workers covered. Therefore, African-Americans working in the rural sector found themselves part of a broad political coalition of the organized industrial working-class and the Northern part of the Democratic Party, both of which supported the inclusion of rural workers to guarantee the program’s sustainability (Quadagno 1988; Skocpol 1988). Needless to say, this met serious resistance from Southern Democrats who managed to ensure agricultural workers were excluded from OAI amendments in 1939 and 1946 (Lieberman 2003: 102). However, OAI expansion never disappeared from the political agenda and had its first victory in 1950 when President Truman and the (Northern) Democratic majority in Congress not only expanded cover to the category of the self-employed (about 5 million people, nearly all of them White) but at the same time increased the OAI benefit levels significantly. The political message was clear: covering more workers would allow additional benefits for all OAI pensioners. The eventual inclusion of agricultural as well as domestic workers occurred in 1954, this time under Republican president Eisenhower, backed up by a Republican majority in Congress, and supported by the votes of Northern Democrats although there was still severe opposition from the Southern section of the party. This pro-OAI coalition showed how popular the program had become only two decades after its introduction (see Derthick 1979, ch. 15). Not only was it supported by US unions and the Northern part of the Democratic Party, but the Republicans—although still closely affiliated with US business— had turned from opponents to protagonists. In 1954, more than 6 million US workers received monthly OAI payments (more than twice the number of 1950) and these payments made up a seventh of total federal government spending. As Eisenhower himself described the situation to the Republican Party, only “a tiny splinter group” still lobbied against OAI altogether, “but their number is negligible and they are stupid” (cited in Lieberman 2003: 115). The 1954 Page 20 of 45

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Racial Diversity, Immigration, and Social Spending in the US amendments made clear that both political parties had fully accepted that social security was a proper concern of the federal government. This acceptance would not lose its relevance until Reagan’s first electoral term in 1980. By then, OAI provided nearly universal cover and under both Democratic and Republican administrations pension levels had steadily increased to 66 percent of wages—a level very like Western European standards (Derthick 1979; Myles 1998: 273–4; Quadagno 1994; Weir et al. 1988). (p.56) While OAI developed into a nearly universal program covering the American working- and middle-classes, the history of the AFDC program could not differ more. Of course, the means-tested AFDC program designed for the very poor lacked comparable processes of policy feedback as described for OAI, because there were no incentives to increase the number of qualifying single mothers and children. This said, in its first two decades the program went on relatively unhindered as the two most anti-welfare groups in the US—the Southern Democrats and the Northern business community—did not seriously attack it (Lieberman 2003). In the South, the program’s local administration guaranteed that welfare benefits were largely redistributed towards Whites, leaving the Southern labor market for cheap African-American rural and domestic workers unaffected (Alston and Ferrie 1985). At the same time—and in contrast to the OAI payroll tax—AFDC was financed via general tax revenues so that it barely affected employers’ finances. Until the late 1950s, neither Democrats nor Republicans made any effort to change the program and there are no reports that the public considered AFDC as a serious problem (Lieberman 2003). All of this changed during the 1960s and the reasons have been identified in several of the most crucial developments in the twentieth-century US history (Katznelson 2005; Quadagno 1994). First was the widening gap between the economic well-being of the White majority and the African-American minority. Improvements in job security, house ownership, and educational attainment soon after the Second World War favored the establishment of a White suburban middle class. Blacks were not able to benefit from this development and their relative distance from the new middle class actually widened (Katznelson 2005: 17). This changed the picture of the poor in public awareness: while in times of the New Deal a significant part of it was White, in the 1960s the vast majority was Black. Second, the period from 1940 to 1960 saw one of the greatest intracountry migration movements in US history: the movement of millions of African-Americans out of the rural South into the metropolitan areas of the North (Skocpol 1988). While 73 percent of all Blacks lived in the Southern part of the country in 1940, only 53 percent did so in 1970 (Quadagno 1994: 24). These new demographics made the problem of racial inequality much more salient as it moved from the periphery of national politics to the center. Innercity ghettos populated mainly by African-Americans could be found in any large US city and soon became associated with unemployment, crime—and welfare Page 21 of 45

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Racial Diversity, Immigration, and Social Spending in the US (Murray 1984; Quadagno 1994; Reese 2005). AFDC, which had begun as a program mainly for White recipients, because of the discrimination against African-Americans in the South, now increasingly favored Black as discrimination in the North was much lower. In 1961, 43 percent of all families receiving AFDC were Blacks, four times higher than the 10.5 percent of AfricanAmericans among the US (p.57) population (Lieberman 2003: 129; Katznelson 2005: 45). Third, both Black political awareness and power increased sharply and found its most prominent expression in the Civil Rights movement, making the question of racial discrimination and inequality the most important political issue of the 1960s—more important than even the war in Vietnam (Converse et al. 1969). It is necessary to look at the interaction of these three developments as the migration of African-Americans from South to North made the problem of Black economic misery and welfare dependency much more visible. Now it could no longer be neglected as something limited to the Southern political periphery. At the same time, Blacks—still politically excluded in the South as they had always been—constituted a major part of the electorate in the Northern metropolises and became especially relevant for the northern part of the Democratic Party (Quadagno 1994: 26). Increasing in both numbers and political influence, African-Americans now demanded, with great emphasis, the end of political and economic discrimination. The stirrings occurred first in the Southern part of the country, where racial discrimination was most obvious. These developments formed the political context for President Lyndon B. Johnson’s Civil Rights agenda in the mid-1960s. In a short sequence and against the harsh resistance of the Southern section of its own party, Johnson and the majority of Northern Democrats and Republicans in Congress passed the Civil Rights Act (1964), the Voting Rights Act (1965), and the Open Housing Act (1968), thereby legally ending African-American political discrimination. While these reforms were adopted in a very polarized public climate—including neverbefore-seen mass demonstrations, the use of the National Guard to enforce the attendance of Black children in schools, and the assassination of Martin Luther King, they were nonetheless supported by an overwhelming majority of NonSouthern Whites (Hamilton and Hamilton 1992; Katznelson 2005). This guaranteed Johnson a landslide victory in the election of 1964 when he received a notable 61.1 percent of the popular vote (the highest share to date for a presidential candidate). However, the Johnson government also realized that the disadvantaged status of Blacks in US society was due not only to their political exclusion but also to their unfavorable economic status and therefore the “war on poverty” was an integral part of the Civil Rights legislation (McDonagh 1993). While the attempt to nationalize the decentralized AFDC program failed in 1967, the Economic Opportunity Act (1964) introduced additional programs of social assistance Page 22 of 45

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Racial Diversity, Immigration, and Social Spending in the US designed especially for the very poor (Lieberman 2003: 170). Eligibility for these means-tested programs—Medicaid, food stamps, federal subsidized housing, and job-training programs being the most important examples—was linked to the dominant AFDC program and would soon triple the caseloads between 1960 and 1974 (Fording 2003). In addition, the (p.58) Johnson government addressed the labor-market integration of African-Americans who were by then strongly discriminated against by trade unions. This shift of the Civil Rights agenda from political rights, which touched nearly exclusively the South, to the task of economic equality between races, which concerned the whole country, soon led to a disastrous decline in Whites’ public support for the movement, which culminated in the watershed national election of 1968 (Converse et al. 1969). The reasons for the growing opposition among Whites to Johnson’s so-called Great Society agenda were manifold (Orfield 1988; Quadagno 1994). First, there was the impression that the newly enfranchised Blacks would now be able to obtain economic integration on their own and many Whites saw no reason why programs especially targeted at Blacks should be financed by the taxes of the White middle class (Gilens 1999). Second, the end of legal racial discrimination soon became very visible as African-Americans entered predominantly White neighborhoods. There was strong opposition among Whites, who either tried to prevent public housing programs or simply moved to newly founded suburbs which “remained lily-white” (Quadagno 1994: 106; see also Slessarev 1988). Third, the labor-market integration of Blacks led to a harsh conflict with the US trade unions—the strongholds of the Northern Democrats—which were not willing to accept Blacks as union members (Quadagno 1994: 61–2). Taken together, while the political aspects of the Civil Rights agenda alienated Southern Whites from the Democratic Party, its social and economic content soon alienated working- and middle-class Northern Whites from the Democrats (Alesina and Glaeser 2004: ch. 6). Within a period of less than two years, between 1966 and 1968, these processes culminated in what has since become known as White Backlash: an underlying critique of the Civil Rights agenda in general and especially of its social part, including the means-tested programs of the US welfare state (see Orfield 1988). The political consequences of this backlash set the political framework for the years of welfare state retrenchment starting in the 1980s. As Lieberman puts it: “the cruel irony of the Great Society is that these policies fueled growing racial resentment and widened a burgeoning split in American welfare politics that divided White from Black, middle- and working-class Americans from the poor, cities from suburbs, leaving African-Americans increasingly isolated politically, socially, economically, and geographically from the main currents of the American political economy” (2003: 24).

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Racial Diversity, Immigration, and Social Spending in the US Let us illustrate the political consequences of the Civic Rights era in terms of alignment and re-alignment of US voters with the two major parties. On the one hand, African-Americans continued to rally behind the Democratic Party, continuing a development that had already started at the time of the New Deal. While Roosevelt had been supported by 70 percent of (Northern) Black votes, an impressive 95 percent of African-Americans voted for Johnson in (p.59) 1964, and 90 percent voted for the Democratic candidate Humphrey in 1968. As Black voters lived in and moved to many potential swing states (Quadagno 1994: 26), their new electoral force became a key support group for the Democrats— ironically the same party that stood for decades of racial discrimination in the South. On the other hand, the Civil Rights era turned out to be electorally disastrous for the Southern part of the Democratic Party (Katznelson 2005; Katznelson et al. 1993; Quadagno 1994). Within a period of only four years, starting with the presidential election of Johnson in 1964 and culminating in the election of Richard Nixon in 1968, the former Solid South was lost to the Democrats. Lyndon B. Johnson, a Texan himself, was not able to win a majority in six Southern states in 1964 and the Democrats faced an electoral disaster in the 1968 election (Converse et al. 1969). Not only was this election won by the Republican candidate Richard Nixon, but it also saw the rare example of a successful third party candidate in US presidential election history: George Wallace. Wallace, the former governor of Alabama, won a majority in five states, all Southern (Alabama, Mississippi, Arkansas, Georgia and Louisiana), by committing himself to end federal intervention in Southern affairs and promising to reintroduce racial segregation in public schools if elected (Ross et al. 1976). This remarkable success of an openly racist, third party candidate—without any chance of winning the presidential office—not only ended the Democratic century-long dominance in the South but also visibly introduced race as “the most fundamental cleavage in American history” (Orfield 1988: 313). What the Democrats won among Black voters was lost among their former core constituency of (mainly Southern) Whites, a development that would continue in the following decades (Hajnal and Rivera 2014) and set the political stage for the retrenchment phase of the US welfare state starting in the 1980s.

Retrenchment Phase: the Resiliency of OAI and the Abolition of AFDC While both the coverage and benefits offered by OAI and AFDC expanded during the 1960s and early 1970s, economic conditions started to worsen. From the mid-1970s, the US economy entered a phase of stagnation and occasional recession that would last well into the mid-1980s. Combined with the impression of a decline in the competitiveness of the US economy, these developments paved the way for the first election of Ronald Reagan in 1980. As contemporary commentators realized (Bawden and Palmer 1984; Glazer 1984), this election would affect the US welfare state as the Reagan administration was seen as

Page 24 of 45

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Racial Diversity, Immigration, and Social Spending in the US “being the first administration since the expansion (p.60) of the US welfare system to ask for explicit cuts in programs” (O’Connor 1998: 52). From the start, Reagan’s economic and social program received considerable attention, and would soon become known as Reaganomics: reduced government spending in all areas other than defense, reduced taxation on income as well as capital gains, and economic liberalization (Glazer 1984). These measures were actively promoted during Reagan’s electoral campaign and they were definitely ambitious. For the period from 1981 to 1988, federal spending on non-defense programs was to be reduced by 47 percent, non-social programs by 30 percent, and social security cash benefits for the aged, survivors, and disabled—the main target population of the OAI program—by 25 percent. For new retirees, benefit cuts in OAI would be reduced by 40 percent (Glazer 1984). At the same time, Reagan declared that the “war on poverty” via welfare spending had failed and should therefore be ended immediately (Glazer 1984: 228). Programs designed for the very poor (primarily AFDC, subsidized housing, food stamps, and Medicaid) would therefore be significantly reduced in both scope and benefit levels, thereby ending the social engineering approach of the Johnson era (see Glazer 1984; O’Connor 1998). Reagan’s “war on welfare” was therefore an attack on both the social security part as well as on the welfare part of the US welfare regime (Fording 2003). Starting soon after its landslide victory—which was strongly driven by the re-alignment of Southern Whites from the Democrats to Reagan’s Republicans (see Reese 2005: 136)—the government introduced several acts to reduce federal social spending. The most important was the Omnibus Budget Reconciliation Act (OBRA) of 1981, which focused strongly on the reduction of means-tested welfare programs, and the Social Security Amendments of 1983, targeting OAI. However, it would soon turn out that cutting back social security was much harder than retrenching welfare. The initial version of the OBRA was prepared by the Reagan administration three weeks before Reagan’s inauguration and proposed a $40 billion budget cut in federal spending, with the biggest cuts to means-tested programs (Glazer 1984; Quadagno 1994). OBRA, which was finally adopted in July 1981 with the support of both Republicans and conservative Democrats in Congress, made an impact on expenditure as well as introducing profound programmatic changes. The final policy goal of Reagan was to return administrative control and especially funding responsibility to the individual states and at the same time to restrict the states’ ability to provide more generous welfare. As calculated by Bawden and Palmer (1984) as well as Glazer (1984), OBRA led to a reduction in federal spending for AFDC by about 15 percent, while affiliated means-tested programs were reduced as well, e.g., food stamps by 18.6 percent and lowincome energy assistance by 34.5 percent. Federally subsidized housing was almost entirely eliminated (Lieberman 2003: 114). (p.61) These reductions were for the most part not achieved by reducing cash benefit levels (which was the sole responsibility of the individual states) but by the introduction of stricter Page 25 of 45

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Racial Diversity, Immigration, and Social Spending in the US eligibility criteria and work-requirement conditions. Several other changes included the introduction of a maximum family income threshold for AFDC eligibility, the reduction of the maximum age for eligible children from twentyone to eighteen, and the possibility of counting food stamps or subsidized housing as part of the AFDC cash benefits. Giving states the ability to introduce their own “workfare” programs for able-bodied AFDC recipients, OBRA also signaled the government’s commitment to replacing welfare by workfare—an approach increasingly supported by Republicans as well as Democrats in the coming years (Piven and Cloward 1993). Altogether, these changes meant about 442,000 AFDC recipients dropped out of the program, thereby often collaterally ending their eligibility for Medicaid and other AFDC-affiliated programs of social assistance (see Reese 2005; O’Connor 1998: 43). These cuts in welfare were portrayed as “the most sweeping policy reversal […] since the New Deal” (Slessarev 1988: 377) and fell disproportionally on African-Americans, especially Black women and children (Orloff 2002). Besides its attack on welfare, the Reagan administration soon signaled that reducing the government’s deficit would necessarily involve the most expensive program of social security: OAI (Meyer 1984; Svahn and Ross 1983). Forecasts predicted looming deficits in OAI because of increased inflation and negative wage-growth in the years from 1978 to 1982 (Pierson 1994: 65) and so pressure either to swell the financial basis of the program by increasing pay-roll taxes or to significantly reduce the programs’ benefits was indeed high. Reducing benefits for early retirees and the children of retired workers, delaying and reducing cost-of-living adjustments, and significantly reducing benefits for those retiring in the next century (Svahn and Ross 1983), would address the programs’ financial imbalances. Altogether, these reforms were projected to save between $12 and $15 billion (O’Connor 1998: 44), a relatively small amount compared with the $40 billion savings in welfare, especially as OAI was the much larger program. However, in contrast to the widely accepted cuts in welfare, the retrenchment of social security would create much more dissent. The introduction of the OAI reform proposal in 1981 resulted in a “public outcry” (Pierson 1994: 66). Widespread campaigns financed by the powerful lobby organizations of US retirees (Quadagno 1994: 163; Glazer 1984) forced the Republican-controlled Senate to vote against their own President’s proposal. In fact, none of the US Senators supported the President’s 1981 proposal, which was proclaimed “unfair” and “precipitous” even by Republicans (Pierson 1994: 66). Acknowledging this massive and unified resistance in both the Senate and the public, the Reagan administration soon gave up formulating an OAI (p.62) reform on its own and appointed a bi-partisan reform commission that would not report before the 1982 mid-term elections. The report of this highly consensusoriented commission would then serve as the basis for the Social Security Amendments of 1983, which brought some long-term reductions in OAI benefits Page 26 of 45

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Racial Diversity, Immigration, and Social Spending in the US (mainly by increasing the retirement age to sixty-seven, starting in the year 2000, and by taxing parts of the OAI benefits) although it also increased the revenue side of OAI by higher pay-roll taxes for the self-employed and by including federal government workers under OAI (O’Connor 1998). Taken together, the 1983 reform “did not alter the fundamental structure of the American pension system, and suggested that the Reagan administration had given up any radical plans for Social Security” (Pierson 1994: 67). While OAI turned out to be a program enjoying wide public and bi-partisan support and therefore politically very costly to cut back, the decimation of AFDC continued well after Reagan’s attack on welfare in the 1980s. As became clear in the 1990s, welfare was still seen as a problem and indeed as largely responsible for the high unemployment and worse economic conditions among minorities (Murray 1984). Blame was attached to African-American, and increasingly Latino immigrants, whose numbers had risen steadily since the 1980s (see Fox 2004; Brown 2013). Therefore, despite Reagan’s significant cutbacks in welfare spending, retrenchment was still up-front in national politics and was finally addressed by the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). PRWORA, initiated by the Republican congressional majority but ultimately backed by a bipartisan coalition and signed by Democratic president William J. Clinton, has been described as “the most comprehensive and far-reaching collection of public assistance reforms seen in decades” (Johnson 2003: 72). Actually, PRWORA not only abolished AFDC and replaced it with the TANF program but also imposed broad eligibility restrictions, including a sixty-months’ lifetime limit on the receipt of TANF benefits, much stricter work requirements, and sanctions for non-compliance (Caraley 2001; Weaver 2000: 328ff). A lesser known component of PRWORA made legal immigrants entering the US after 1996 ineligible for several welfare programs (TANF, Medicaid, food stamps and Supplemental Security Income, for example) for five years after their arrival (Hero and Preuhs 2007). This regulation—together with general cuts of these welfare programs for all recipients—was expected to make up the major part of the estimated $54 billion savings through the fiscal year 2002 (Weaver 2000: 335). However, many of the strict regulations stemming from the federal government were not binding, as PRWORA provided the individual states with far-reaching additional competencies for designing the new TANF program(s). State governments were now allowed not only to set their own benefit levels (as under AFDC), but also to decide about income limits, asset requirements, (p.63) and even the form of assistance in cash or in-kind benefits. Furthermore, states were free to decide if foreigners should be banned from the program for several years, or should still qualify for welfare—in this case, the state government would bear the costs of their own decision. In sum, PRWORA was “nothing short Page 27 of 45

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Racial Diversity, Immigration, and Social Spending in the US of a revolution in welfare policy” (Johnson 2003: 77) potentially leading to severe retrenchment for both native and immigrant welfare recipients—but at the discretion of individual state governments. This decentralization of welfare has been identified as the major driver for the Democrats’ strong support for the PRWORA act. According to Clinton, after the reform, any anti-welfare initiatives should be directly addressed to the individual state governments and “there would be no point in directing their venom to the federal government or, more specifically, to the president” (Caraley 2001: 542). This calculation was not without cause: Table 2.2 summarizes the electoral support bases of both major US parties, comparing them to the group of independent voters, i.e., voters reporting no party affiliation but whose support is crucial to win an electoral majority in the two-party system.

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Racial Diversity, Immigration, and Social Spending in the US

Table 2.2. Characteristics of Republicans, Independents, and Democrats Republicans Whites

Independents

Democrats

Blacks

Latinos

Whites

Blacks

Latinos

Whites

Blacks

Latinos

Race in % of 87.8 all identifiers

2.5

4.2

75.4

12.4

7.0

68.0

19.8

7.9

Identifiers 43.9 in % of all members of the same race

7.9

25.3

11.2

11.5

12.5

44.2

80.1

61.5

Income of identifiers on a scale from 1 (poorest) to 5 (richest group)

2.1

2.6

2.8

2.1

2.4

2.8

2.4

2.5

36.8%

42.0%

45.3%

31.4%

38.9%

39.7%

26.7%

37.9%

3.2

Identifiers 63.7% supporting welfare cuts

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Racial Diversity, Immigration, and Social Spending in the US

Republicans

Independents

Democrats

Whites

Blacks

Latinos

Whites

Blacks

Latinos

Whites

Blacks

Latinos

Identifiers supporting cuts in social security

7.8%

3.9%

3.6%

4.8%

2.8%

0.0%

2.9%

1.7%

2.5%

Identifiers opposing social and economic assistance for Blacks

67.8%

50.7%

48.6%

53.2%

37.8%

46.3%

44.2%

28.2%

35.8%

Identifiers 58.3% opposing immigration

42.2%

43.5%

59.5%

44.3%

51.1%

54.3%

50.7%

49.4%

Notes: Table 2.2 shows the mean values for several socio-demographic and attitudinal variables, for Republican and Democratic identifiers, and for the group of independent voters (voters reporting that they have no affiliation to one of the two major parties). For description of variables, see Tables 2.1A and 2.2A (Appendix 1). Source: American National Election Studies (ANES, Time Series Cumulative Data File 1948–2012. Reduced sample including the elections of 1992, 1996, and 2000.

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Racial Diversity, Immigration, and Social Spending in the US Table 2.2 presents the same main variables already known from the analysis of welfare-related attitudes presented in the first section of this chapter (Race, Racial Attitudes, and Welfare Support) (see Table 2.1). It therefore summarizes the electoral landscape for the presidential elections of 1992, 1996, and 2000, surrounding the PRWORA reform. The main message of Table 2.2 is that US voters’ racial categories, income, their welfare support, and their attitudes towards minorities are strongly correlated with party lines, leading to clear incentives for both major parties with regard to the reform of welfare and social security. Starting with the Republican Party, these incentives are obvious. As Republican identifiers are predominantly White (87.8 percent) and significantly richer than any other electoral group, they are also the most supportive group when it comes to the question of retrenchment: 63.7 percent of them support cuts in welfare. While African-Americans (2.5 percent) and Latinos (4.2 percent) make up only a very small group among Republican identities, White Republicans’ views with regard to both minority groups are the most negative of all groups. In addition, with regard to both their criticism of welfare and their negative attitudes towards minorities (especially Blacks) Republicans are much closer to the group of independent voters than those identified as Democrats. The Republicans’ strategy of welfare retrenchment is so in line with their supporters’ views, that the party does not fear losing minority votes—simply because those voters already do not vote for the Republicans, which is a more stable pattern for African-Americans than for Latinos (Abrajano et al. 2008; Collingwood et al. 2014; Hajnal and Rivera 2014). At the same time, neither Republicans, nor Democrats, nor independent voters support significant cuts in the social security part of the system, and (p.64) therefore any attempts to retrench this part of the US welfare state are politically very risky, as Reagan’s effort to reform OAI made clear. The picture emerging for the Democrats is more complicated. Those who identify with the Democratic Party are most supportive of welfare, even if they are far from demanding considerable increases. The main reason for this prowelfare attitude is the significant number of minority voters who are among the Democratic core clientele, most importantly, among African-Americans, who represent nearly 20 percent of all Democratic identifiers. Because of this strong support among minority groups and in sharp contrast to the Republicans, Whites made up only 68 percent of all Democratic voters, a share that has been in steady decline since the watershed election of 1968 (see Hajnal and Rivera 2014: 786). While Whites do still make up the majority of Democratic voters, their income is much higher than that of non-White Democrats, especially Blacks. Democrats are therefore divided with regard to their direct material interest in welfare benefits (see also Skocpol 1988: 303), even if this does not directly translate into vast differences with regard to welfare policy preferences between White and minority supporters. But this internal division between rich Page 31 of 45

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Racial Diversity, Immigration, and Social Spending in the US White and poor non-White supporters is only one part of the Democrats’ problem with regard to welfare. The other part is the difference between Democrats and the group of independent voters, especially with White Independents who constitute 75.4 percent of this group. Not only are they more welfare-critical than Democrats, but they are also much more unsympathetic to both AfricanAmericans and Latino immigrants,3 matching more the attitudes of Republican identifiers. In sum, this means that any policy disproportionally benefiting minorities can be expected to be highly unpopular among both Republicans and Independents and therefore cannot hope to find an electoral majority—and welfare is the prime example of this (Quadagno 1994). Clinton’s famous promise “to end welfare as we know it” during his electoral campaign in 1992 should be understood in this context (Hero and Preuhs 2007; Reese et al. 2013; Soss et al. 2001; Zylan and Soule 2000). The Democratic government in Washington was reluctant to appear as the main driver of welfare state retrenchment, knowing that any cuts in AFDC would hit African-Americans hardest, since 80.1 percent of them identified with the Democrats. Giving the individual states the power to decide on welfare benefits seemed the least conflictual way for Clinton, who hoped this would take welfare off the table for future national elections.

(p.65) The PRWORA Act of 1996 By transferring the main policy competencies to decide on welfare benefit levels and eligibility rules from Washington to the individual states, the PRWORA reform offers a unique setting to investigate the relationship between racial diversity, immigration, and welfare in the US (Hero and Preuhs 2007; Soss et al. 2001; Zylan and Soule 2000). In particular, it offers the possibility of testing whether states with larger minority groups offer lower welfare benefits than states with predominantly White populations, and to investigate the role played by the two political parties in these relationships. To analyze the potential impact of racial diversity on welfare (in contrast to social security) policy, this section presents a macro-analysis of the 1996 welfare reform that ended AFDC and replaced it with the highly decentralized TANF program. Consequently, the unit of analysis moves from the national level to the policies adopted by the fifty states immediately after the passage of PRWORA in 1996. As has already been discussed, under TANF, the states are reasonably free to decide how they wish to use the federal money they receive in the form of block grants: they may or may not spend it on welfare benefits. TANF cash benefits measured by the maximum cash benefit in dollars for a family of three and adjusted for the cost of living in each state (see Hero and Preuhs 2007) will therefore serve as the dependent variable. In 1997, the first year after the PRWORA reform, adjusted TANF cash benefits differed between $202.1 (Alabama) and $1421.8 (Florida).

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Racial Diversity, Immigration, and Social Spending in the US Up to this point, it might reasonably be argued that the unfortunate history of the AFDC and TANF programs has little to do with racial patterns. In this view, these highly stratifying and residual programs of social assistance would have failed anyway (including in more racially homogeneous societies), simply because of their design or because of gender-related questions of morality with regard to their main target population of single mothers (Skocpol 1995; Soule and Zylan 1997). To address these concerns, the two central independent variables will be the share of African-Americans and Latinos in the total state population. If differences in TANF cash benefits are not affected by race, we should find these variables are not related to the dependent variable. If racial considerations do play a role in welfare generosity, we should find these variables negatively related to cash benefits. We hypothesize: H1: States with larger African-American populations provide lower TANF benefits. H2: States with larger Latino populations provide lower TANF benefits. While the share of African-Americans in particular has been identified as the main cause of less generous welfare provisions under AFDC (Fox 2012; Hero 2000; Lieberman 2003), the precise mechanism linking the demographic (p.66) variables to welfare levels is not straightforward (Fording 2003; Johnson 2003). Considering the findings presented in the second step of analysis, we will here focus on the role of state-level governments and argue that the decision to be more generous with regard to welfare is strongly affected by the racial composition of the state’s population. States with higher shares of either African-Americans or Latinos will also have higher shares of these groups among the recipients of TANF, so governments in these states can expect to hit these groups hardest when being tough on welfare. As there is little reason to expect differences between Republican and Democrat-dominated state governments because of the harsh anti-welfare programs of the former and the internal problems with regard to welfare presented for the latter, Democratic majorities (i.e., where Democrats hold at least 50 percent of seats in the legislative assembly) should not be related to the dependent variable. H3: Compared with Republican-dominated states, Democrat-dominated states provide neither more nor less TANF benefits. However, in states with only a few African-Americans and Latinos, the TANF recipients can be expected to be predominantly White. In these cases, Democratdominated state governments might offer more generous welfare benefits than Republican-dominated ones, because they can be sure that redistribution is limited to rich and poor of the same race. As the Democratic Party has historically always shown much more inclination to redistribute, we might expect it to address potential voters via social benefits if the constituency Page 33 of 45

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Racial Diversity, Immigration, and Social Spending in the US consists mainly of Whites. We define predominantly White states as states with at least 90 percent of all residents being White and capture this by a dummy variable.4 H4: Compared with Republican dominated states, Democrat-dominated ones provide more TANF benefits if the state is predominately White. As the TANF program provides cash benefits to needy families, the main group targeted is unemployed single mothers and their children. Therefore, all models will control for the caseload (the number of TANF recipients per 10,000 residents), the unmarried birth rate (as a percentage of all births), and the unemployment rate in order to address the question of welfare demand among the states’ populations. In addition, the variable designated South captures whether the state has a history of slavery, applying the definition of South by Katznelson et al. (1993), covering thirteen states. Table 2.3 (Models 1–3) presents the results of several OLS regression models. A detailed description of all variables can be found in Table 2.3A (in Appendix 1). (p.67) As the dependent variable is measured in cash benefits, the interpretation of the coefficients is straightforward in the sense that a one-unit increase in the independent variables is accompanied by an increase/decrease of TANF benefits offered in dollars. Because of missing information for some variables, the analysis is restricted to only forty-seven of the fifty US states. Table 2.3. Regression Results for TANF Benefits after PRWORA M1

M2

M3

−20.75*

−

−

−7.45

2.40

3.35

(5.60)

(5.56)

(5.37)

−

299.14*

149.36

(122.13)

(138.51)

−160.44

−145.21

−245.31*

(94.53)

(95.66)

(104.27)

−

−

362.47*

Demographic Variables Black population

(7.75) Latino population

State is predominantly White

Political Variables Democratic majority

Democratic majority* State is predominantly White

(177.66)

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Racial Diversity, Immigration, and Social Spending in the US

M1

M2

M3

118.38**

115.52**

98.40*

(40.50)

(40.93)

(40.25)

15.69

12.71

11.53

(11.34)

(11.11)

(10.70)

−3.15

−33.84

−24.55

(48.58)

(51.59)

(49.82)

284.06

103.83

116.09

(150.70)

(121.79)

(117.28)

210.00

89.63

184.06

(298.56)

(331.98)

(322.63)

N

47

47

47

R-squared

0.28

0.26

0.33

Controls Caseload

Unmarried birth rate

Unemployment rate

South

Constant

Notes: The dependent variable maximum TANF cash benefit is calculated in $ for a family of three and adjusted for the cost of living in each state. All coefficients are non-standardized with standard errors reported in parentheses. OLS regression models with *p