The term welfare refers to any type of government-funded assistance to middle- and lower-income citizens to assist with basic day-to-day needs. Although governments that provide extensive welfare benefits may take on the title of a "welfare state," most governments offer some form of welfare to at least the poorest citizens. As noted by the Urban Institute, welfare reform is also a frequent topic of social and political debate.
Welfare systems vary from one municipality to another. According to the Welfare Information website, the biggest change in American welfare occurred in 1996 when President Bill Clinton signed a welfare reform bill that gave control of welfare programs to the states. Prior to 1996, the federal government controlled welfare since the 1930s when the Great Depression increased the need for government assistance throughout the country.
Welfare includes a number of public programs that all seek to provide assistance to those in need. Food stamps are a form of welfare, allowing those who qualify to buy grocery items with a special debit card. The unemployment benefits that states issue to workers who lose their jobs are another form of welfare that constitutes a sizeable portion of state budgets. The Medicaid program provides low-cost or free health care to low-income families and individuals.
Welfare has the benefit of providing much-needed food, medical care and money to citizens who qualify to receive it. Since taxes fund welfare, it redistributes wealth across the population. Welfare also prevents even further social problems by allowing some recipients to maintain their standard of living. For example, unemployed workers who receive an unemployment benefit may be able to keep their homes despite the loss of income, preventing a foreclosure and possible homelessness.
The biggest disadvantage of welfare is its cost to the local governments that administer it. Even with federal funding, states feel the burden of welfare in each annual budget. Welfare may encourage some recipients not to seek work, since a rise in income would disqualify them from receiving free benefits. It is also an opportunity for fraud, which occurs whenever someone supplies false information to receive welfare benefits without truly qualifying.
Instead of providing welfare directly to those in need, one alternative is funding programs that teach new skills or seek jobs for the unemployed. These programs take a different approach to the problem of unemployment but may take time to show results. Limits on welfare, such as the time limits for receiving unemployment benefits or a maximum monthly food stamp allowance, serve to limit the government's liability in a way that open-ended welfare does not.