The social floor : essays on minimum income protection

TLDR: In this article, the level of the minimum income guarantee for out-of-work ablebodied persons at working age and assesses benefit trends since the 1990s, covering 25 EU countries (EU27 except Cyprus and Malta), 3 American States (Nebraska, New Jersey and Texas) and Norway).

Abstract: This chapter looks at the level of the minimum income guarantees for out-of-work ablebodied persons at working age and assesses benefit trends since the 1990s, covering 25 EU countries (EU27 except Cyprus and Malta), 3 American States (Nebraska, New Jersey and Texas) and Norway. We assess net disposable income of families relying on social assistance, taking account of the impact of additional non-discretionary benefits such as child benefits and housing allowances. The degree of welfare erosion is measured by three indicators: real benefit trends, benefit trends relative to the development of average wages and benefit trends relative to changes in median equivalent income. A central question in this paper is the extent to which trends in social assistance benefit packages are linked to the statutory mechanism that is being used to adjust benefit levels. We find that most legal systems are insufficient to keep benefit levels in line with the general living standard. The broad picture that emerges is indeed one of eroding benefit levels relative to the general living standard, although the trend is less uniformly negative from 2001 onwards. In the 1990s we see the comparative level of welfare of social assistance recipients decline almost everywhere. In many countries social assistance payments have continued to decrease relative to average wages after 2001, although less uniformly so. In the countries where benefits did keep pace with average wages or median equivalent income, this was generally because governments purposefully increased benefits over and above the evolution of the average living standard, either by a one-time reform, or through subsequent ad hoc raises.