The most striking feature of this economic downturn has been the reappearance of those relics of the Depression era--the bread line and the makeshift shelters of the homeless. While most people have weathered the recession reasonably well-- and the better-off have flourished--many of the unemployed appear to have suffered far more severely than in other post-war recessions. Why is that so?
The fact that the current slump has been both prolonged and deep accounts for much of the hardship. But, as the Brookings Institution's annual budget study suggests, another major factor has been that the government has provided far less help for the unemployed than in the last severe recession. In 1976, almost two-thirds of the 7.6 million people unemployed in an average week received regular or extended unemployment benefits. In 1982, with an average of 10 million unemployed, only slightly more than one-third got benefits.
Other sources of help were similarly diminished. If you lump together all forms of direct help for the down-and-out--unemployment benefits, welfare (including aid for the aged and disabled) and food assistance--you will find a striking reduction in the purchasing power of such help. Adjusting for inflation, federal aid for these programs was $10 billion lower in 1982 than in 1976 while the number of unemployed people was almost one-third higher. No wonder there are food lines.
Unsurprisingly, the welfare caseload has been growing again despite the strict rules introduced by the Reagan administration. That's too bad, and not only because welfare is unpopular with taxpayers and recipients alike. It also means that more people have been forced down into the ranks of the long-term dependent. Many of the unemployed can't get even this kind of help, however, because they don't have young children or because they aren't willing to do the unpleasant things that welfare now requires--sell off almost all assets, relinquish low-paying jobs held by family members or, in many states, desert their family.
More emergency help will soon be on the way. The federal government is starting to distribute the relatively small amount of money ($100 million out of $4.65 billion) earmarked for humanitarian aid in the recently passed "jobs" bill. Localities may also be able to direct some of the $1 billion in community development funds to projects that will help the hardest hit of the unemployed. But with unemployment remaining stubbornly high, the food and shelter lines may be part of the urban scene for many months to come.