Print Article
>> Back to the article
June 30, 2007
Helping the poor: It's not all about money
By Lydia Lim
POLICYMAKERS and legislators here have devoted much time to crafting and dissecting policies to help low-income families.

But equal attention does not seem to have been given to poor people's behaviour, in particular how they respond to changes in wage levels.

Until now, that is.

In a lecture at the Civil Service College last week, a leading scholar of welfare reforms in the United States sparked debate with his views on the psychology of the poor.

Professor Lawrence Mead, 64, of New York University, is best known for his study of the politics and implementation of anti-poverty policies.

Among American academics, he stands out for the unequivocal stance he has taken on making work a must for welfare recipients.

Decades of specialising in such issues have left him with very clear ideas on why the poor are poor.

He describes them as 'dutiful but defeated'. The poor in America, he believes, have the same values as middle-class folk. They too believe in hard work and want to achieve.

The difference is that they lack the discipline and organisational skills to get their lives in order and stay employed. In other words, their behaviour does not match up to their values.

When it comes to anti-poverty policies, Prof Mead's view is that what matters most is making work compulsory for all those on government aid, and building an administration that can enforce such a requirement effectively.

On wage incentives as a way to entice the poor to enter the job market, his startling conclusion is that the poor people do not respond to such changes in wage levels and may not even notice them.

That assessment could have implications for Singapore if the psychology of poor people here is anything like that of their American counterparts.

One of the aims of the Workfare Income Supplement launched this year is to make work pay for less-skilled workers, whose wages have been depressed by global competition.

So one measure of its effectiveness will be whether it makes workers more willing to take up such low-paying jobs and stay in them, until they manage to upgrade their skills and move to higher-paying posts.

Prof Mead cited studies in the US which found that among the poor, the supply curve for labour was vertical with regard to wage changes, meaning that a rise in pay did not lead to more non-working poor seeking jobs.

This was also borne out by close-up studies of how poor families behaved, he added.

'The ethnographic studies make very clear that for those who aren't working among the poor, it isn't because they're calculating that it's not worth their while. They don't talk like trade unionists about how I need a higher wage in order to make work worthwhile.

'In fact their personal lives are in confusion and they're simply not organised for work, that's why they're not working. It's not that they reject it as not worth their while. So in making that assumption, you're projecting on them a middle-class psychology which is inaccurate for their predicament.'

That assertion prompted a sharp rejoinder from Singapore Management University economist Hoon Hian Teck, who said there were crucial differences between the poor in America and those in Singapore.

The poor in America were used to fairly generous welfare entitlements and did not feel the need to work, until the welfare reforms of the 1990s. By contrast, the poor in Singapore had never known the largesse of a Western welfare state. They were used to working and possessed a strong work ethic, Dr Hoon said.

As for the problem now afflicting Singapore's working poor, he said it was precisely a matter of incentives.

Competition from unskilled labour in low-wage countries had caused their wages to fall to such an extent that it had become difficult for them to support themselves and their families.

Prof Mead's response was that there was no reason a priori why low wage levels should cause workers to stop work. It could well have the opposite effect of causing them to work more in order to meet their needs.

Civil servants and academics also queried the effectiveness of policies that mandated work. A Finance Ministry officer asked if that meant vulnerable workers would be left in a lurch during an economic downturn, when many would be thrown out of work.

Prof Mead maintained his stance that economic conditions mattered less than work requirements in determining whether poor people worked or not.

As for those retrenched because of a cyclical downturn, he said they could fall back on unemployment insurance, which is a part of the American social safety net, though not yet of Singapore's.

A Nanyang Technological University don observed that in the years immediately after the US welfare reforms which made work a condition of aid, a large number of single mothers did indeed join the workforce. But after a few years, many of them again stopped work.

Prof Mead acknowledged that once such poor folk left welfare, government aid officers lost leverage to persuade them to remain gainfully employed. He said that was why he was now advocating the setting up of a case management structure to provide long-term follow-up for these families.

He acknowledged that many wondered if 'paternalism' of this sort should have a time limit. He also noted the discomfort he sensed among Singapore government officers over long-term case management as that would raise costs.

On the Workfare scheme, he later said that as a way to supplement incomes and achieve greater social equity, it was a perfectly good policy. The question was whether it would affect other behaviours in ways the Government wanted.

'Do you want the scheme to operate for savings? Do you want it to operate as a regular supplement to earnings? It's a different thing.

'Or do you want it to promote hiring? Do employers say that they're deterred from hiring by the high cost of the CPF?' he asked.

He recommended that research on these questions start now so the policy could be refined to better meet the goals.

One useful comparison that researchers might want to make is between the psychology of Singapore's working poor, that is, the Workfare recipients, and the non-working poor.

The latter group would be those being helped under the Comcare schemes administered by the Ministry of Community, Youth and Sports, the closest equivalent that Singapore has to welfare.

Its Work Support programme hand-holds poor families whose adult members find it difficult to secure or keep jobs. It may well be that the psychology of this second group of poor Singaporeans differs from that of low-wage earners on Workfare.

Another issue that Prof Mead raised was the possibility of affluence undermining the work ethic among the poor.

He said what they had found in the US was that poor families had many non-work sources of income, including family, friends and charities.

So even after new laws were passed in 1995 to make work compulsory for those on government aid, there were poor families who chose not to work and yet managed to survive.

Prof Mead calls this a 'cultural contradiction' inherent in capitalism.

'To me, as a society gets more affluent, social discipline will decline somewhat and there will be less dutifulness and less discipline and organisation...that's a reflection of the fact that now discipline is less necessary to survive,' he said in an interview with The Straits Times.

These are certainly trends to watch as Singapore grapples with how best to help its most vulnerable citizens keep up with the rest of society.

lydia@sph.com.sg

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access