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The L'Oréal Group

Source: Wikipedia
The L'Oréal Group is the world's largest cosmetics and beauty company.[2] With its registered office in Paris and head office in the Paris suburb of Clichy, Hauts-de-Seine, France,[3] it has developed activities in the field of cosmetics. Concentrating on hair colour, skin care, sun protection, make-up, perfumes and hair care, the company is active in the dermatological and pharmaceutical fields and is the top nanotechnology patent-holder in the United States.
L'Oréal is a listed company, but the founder's daughter Liliane Bettencourt and the Swiss food company Nestlé each control over a quarter of the shares and voting rights.

History

In 1907, Eugène Schueller, a young French chemist, developed a hair dye formula called Auréole. Schueller formulated and manufactured his own products, which he then sold to Parisian hairdressers.
In 1909, Schueller registered his company, the Société Française de Teintures Inoffensives pour Cheveux ("Safe Hair Dye Company of France" literally "French Society of Inoffensive Hair Dyes"), the original L’Oréal. The guiding principles of the company, which eventually became L’Oréal, were research and innovation in the field of beauty.
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In 1920, the small company employed three chemists. By 1950, the research teams were 100 strong; that number reached 1,000 by 1984 and is nearly 2,000 today.
L’Oréal got its start in the hair-color business, but the company soon branched out into other cleansing and beauty products. L’Oréal currently markets over 500 brands and many thousands of individual products in all sectors of the beauty business: hair color, permanents, hair styling, body and skin care, cleansers, makeup and fragrances. The company's products are found in a wide variety of distribution channels, from hair salons and perfumeries to hyper - and supermarkets, health/beauty outlets, pharmacies and direct mail.
L’Oréal has five worldwide research and development centers: two in France: Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one in Japan: Kawasaki, Kanagawa Prefecture; and in 2005, one was established in Shanghai, China. A future facility in the US will be in Berkeley Heights, New Jersey.
From 1988 to 1989, L'Oréal controlled the film company Paravision, whose properties included the Filmation and De Laurentiis libraries. StudioCanal acquired the Paravision properties in 1994.
L’Oréal purchased Synthélabo in 1973 to pursue its ambitions in the pharmaceutical field. Synthélabo merged with Sanofi in 1999 to become Sanofi-Synthélabo. Sanofi-Synthélabo merged with Aventis in 2004 to become Sanofi-Aventis.
On 17 March 2006, L'Oréal purchased cosmetics company The Body Shop for £652 million.
The company has recently faced discrimination lawsuits in France related to the hiring of spokesmodels and Institutional racism. In the UK, L'Oréal has faced widespread condemnation from OFCOM regarding truth in their advertising and marketing campaigns concerning the product performance of one of their mascara brands.
A book by Monica Waitzfelder, published in French as L'Oréal a pris ma maison and in English as L'Oréal stole my house!, details how L'Oréal, a company claimed to be anti-Semitic by the author, took over the Waitzfelder home in the German city of Karlsruhe (after the Nazis had engineered the removal of the family) to make it its German headquarters.[citation needed]
L'Oréal's famous advertising slogan is "Because I'm worth it". In the mid 2000s, this was replaced by "Because you're worth it". In late 2009, the slogan was changed again to "Because we're worth it" following motivation analysis and work into consumer psychology of Dr. Maxim Titorenko. The shift to "we" was made to create stronger consumer involvement in L'Oréal philosophy and lifestyle and provide more consumer satisfaction with L'Oréal products. L'Oréal also owns a Hair and Body products line for kids called L'Oréal Kids, the slogan for which is "Because we're worth it too".
Protest group Naturewatch states that L'Oréal continues to test new ingredients on animals.[4] The company states that no animal testing for finished products has taken place since 1989 and that L'Oreal has invested significantly in alternative methods for chemical safety testing, [5], though they implicitly acknowledge that they continue to perform animal testing of ingredients.[6]
Following L'Oréal's purchase of The Body Shop, who continue to be against animal testing, The Body Shop founder Dame Anita Roddick was forced to defend herself against allegations of abandoning her principles over L'Oréal's track record on animal testing. She declared that her belief in the power of cosmetics to enhance female beauty was greater than any concern over animal testing. As a result, calls were made for shoppers to boycott The Body Shop.[7]
In 1987, L'Oréal and 3 Suisses founded Le Club des Créateurs de Beauté specializing in mail order sales of cosmetic products.

Business

Corporate governance

Board of directors

Current members of the board of directors of L’Oréal are: Jean-Paul Agon, Francisco Basco, Werner Bauer, Liliane Bettencourt, Françoise Bettencourt Meyers, Peter Brabeck-Letmathe, Charles-Henri Filippi, Xavier Fontanet, Bernard Kasriel, Marc Lacharrière, Jean-Pierre Meyers, Lindsay Owen-Jones, Franck Riboud, Annette Roux and Louis Schweitzer.

Management committee

The management committee includes:
  • Jean-Paul Agon, Chief Executive Officer
  • Frederic Roze, Chief Executive Officer, L’Oréal USA
  • Béatrice Dautresme, EVP of Corporate Communications
  • Jean-François Grollier, EVP of Research and Development
  • Christian Mulliez, EVP of Finances
  • Jean-Jacques Lebel, President of Consumer Products
  • Nicolas Hieronimus, President of Professional Products
  • Geoff Skingsley, EVP of Human Resources
  • Marc Menesguen, President of Luxury Products

Stockholders

As at year end 2009:[1]
  • Breakdown of share ownership: 31.0% by the Bettencourt family, 29.8% by Nestlé, 2.4% treasury shares, and the remaining 36.8% is publicly traded.

Sales, profits, etc.

In 2003, L’Oréal announced its 19th consecutive year of double-digit growth. Its consolidated sales was €14.029 bn and net profit was €1.653 bn. 96.7% of sales derived from cosmetic activities and 2.5% from dermatological activities. L’Oréal has operations in over 130 countries, employing 50,500 people, 24% of which work in France. 3.3% of consolidated sales is invested in research and development, which accounts for 2,900 of its employees. In 2003, it applied for 515 patents. It operates 42 manufacturing plants throughout the world, which employ 14,000 people.
  • Cosmetics sales by division breakdown: 54.8% from consumer products at €7.506 bn, 25.1% from luxury products at €3.441 bn, 13.9% from professional products at €1.9 bn, and 5.5% from active cosmetics at €0.749 bn.
  • Cosmetic sales by geographic zone breakdown: 52.7% from Western Europe at €7.221 bn, 27.6% from North America at €3.784 bn, 19.7% from rest of the world at €2.699 bn.
In 2007, L’Oréal was ranked 353 in the Fortune Global 500.[8] The company had earned $2,585 million on sales of $19,811 million. There were 60,850 employees.[8]

Joint ventures and minority interests

L’Oréal holds 10.41% of the shares of Sanofi-Aventis, the world's number 3 and Europe's number 1 pharmaceutical company. The Laboratoires Innéov is a joint venture in nutritional cosmetics between L’Oréal and Nestlé; they draw on L’Oréal's knowledge in the fields of nutrition and food safety. Galderma is another joint venture in dermatology between L'Oréal and Nestlé.

Community involvement and awards

In 2008, L'Oréal was named Europe's top business employer by The European Student Barometer,[9] a survey conducted by Trendence that covers 20 European countries and incorporates the responses of over 91,000 students.
The L'Oréal-UNESCO Awards for Women in Science was established to improve the position of women in science by recognizing outstanding women researchers who have contributed to scientific progress.
The awards are a result of a partnership between the French cosmetics company L'Oréal and the United Nations Educational, Scientific and Cultural Organization (UNESCO) and carry a grant of $100,000 USD for each laureate. [1]
The same partnership awards the UNESCO-L'Oréal International Fellowships, providing up to $40,000 USD in funding over two years to fifteen young women scientists engaged in exemplary and promising research projects.[10]

Claims of racial discrimination in advertising, and other litigation

On August 11, 2005, the Supreme Court of California ruled that former L'Oréal sales manager Elyse Yanowitz had adequately pleaded a cause of action for retaliatory termination under the California Fair Employment and Housing Act, and remanded the case for trial.[11] The case arose out of a 1997 incident in which Jack Wiswall, then the general manager for designer fragrances, allegedly told Yanowitz to fire a dark-skinned sales associate despite the associate's good performance. When Yanowitz refused, Wiswall pointed to a "sexy" blonde-haired woman and said, "God damn it, get me one that looks like that." Wiswall retired as president of the luxury products division of L'Oréal USA at the end of 2006.
In May 2007, L'Oréal was one of several cosmetic manufacturers ordered by the Therapeutic Goods Administration in Australia to withdraw advertising regarding the wrinkle removal capabilities of their products.[12]
In July 2007, the Garnier division and an external employment agency were fined €30,000 for recruitment practices that intentionally excluded non-white women from promoting its shampoo, "Fructis Style".[13] L'Oréal is reported as saying the decision was "incomprehensible",[14] and would challenge the measure in court.
In July 2007, the British Advertising Standards Authority attacked L'Oréal for a television advert on its “Telescopic” mascara, featuring Penélope Cruz, stating "it will make your eyelashes 60% longer." In fact, it only made the lashes look 60% bigger, by separating and thickening at the roots and by thickening the tips of the lashes. They also failed to state that the model was wearing false eyelashes.[15]

Brands

Brands are generally categorized by their targeted markets, such as the mass, professional, luxury, and active cosmetics markets.

Head office


Centre Eugène Schueller, L'Oréal head office, in Clichy, France

L'Oréal Group has its head office in the Centre Eugène Schueller in Clichy, Hauts-de-Seine, near Paris.[16] The building, constructed in the 1970s from brick and steel, replaced the former Monsavon factory, and employees moved into the facility in 1978. 1,400 employees work in the building.[17] The building is often referred to as the "Beauty Factory" by the public. In 2005 Nils Klawitter of Der Spiegel said "the building, with its brown glazed façade of windows, is every bit as ugly as its neighborhood." Klawitter added that the facility "gives the impression of a high-security zone" due to the CCTV cameras and security equipment. The world's largest hair salon is located inside the head office building. As of 2005, 90 hairdressers served 300 women, including retirees, students, and unemployed people, per day; the customers are used as test subjects for new hair colours.[18]
L'Oréal USA has its headquarters in New York City,[19] its New Jersey headquarters is in Berkeley Heights.[citation needed]

See also


References

  1. ^ a b c d e "Annual Report 2009". L'Oréal. http://www.loreal-finance.com/_docs/us/rapport-2009/LOreal_Rapport_Annuel-Tome_2_va.pdf. Retrieved 7 November 2010. 
  2. ^ Jones, David (26 January 2010). "Nestle waits for market pressures to soften Hershey". Reuters. http://www.reuters.com/article/idUSTRE60P31A20100126. Retrieved 31 January 2010. 
  3. ^ "Statuts." L'Oréal. 16 April 2009. Retrieved on 3 May 2010.
  4. ^ 'Naturewatch Compassionate Shopping - L'Oreal fact file. Retrieved August 9, 2008. Archived June 2, 2008 at the Wayback Machine.
  5. ^ "L'Oréal Sustainable Development - Research and Development - Our commitments". Loreal.com. 2009-12-08. http://www.loreal.com/_en/_ww/html/sustainable-development/loreals-commitments/research-development/alternative-methods.aspx?&. Retrieved 2010-07-31. 
  6. ^ 'In Close Up: Alternative Methods - L'Oreal Sustainability Report 2009 Retrieved December 15 2010.
  7. ^ "Anita's £652m sell-out", The Independent Published 18 March 2006. Accessed 8 May 2008.
  8. ^ a b "FORTUNE Global 500 2007: L'Oréal". Money.cnn.com. 2007-07-23. http://money.cnn.com/magazines/fortune/global500/2007/snapshots/6801.html. Retrieved 2010-07-31. 
  9. ^ "The European Student Barometer 2008". http://www.trendence.de/fileadmin/pdf/ESB_2008.pdf. 
  10. ^ UNESCO/L’ORÉAL Co-Sponsored Fellowships for Young Women in Life Sciences
  11. ^ Yanowitz v. L'Oréal USA, Inc., 36 Cal. 4th 1028 (2005).
  12. ^ "Wrinkle creams are a rip-off". The Daily Telegraph (Australia). 2007-05-07. http://www.news.com.au/entertainment/story/0,23663,21682971-36557,00.html. Retrieved 2007-07-20. 
  13. ^ "L'Oreal found guilty of racism". Sox First. http://www.soxfirst.com/50226711/loreal_found_guilty_of_racism.php. Retrieved 2010-07-31. 
  14. ^ "L'Oreal Tells Women of Color to Take a Hike - AfricaResource: The Place for Africa on the Net". AfricaResource. 2007-08-30. http://www.africaresource.com/index.php?option=com_content&view=article&id=425:loreal-tells-women-of-color-to-take-a-hike&catid=136:race&Itemid=351. Retrieved 2010-07-31. 
  15. ^ "L'Oréal (UK) Ltd". Asa.org.uk. 2007-07-25. http://www.asa.org.uk/asa/adjudications/Public/TF_ADJ_42910.htm. Retrieved 2010-07-31. 
  16. ^ "World Presence." L'Oréal. Retrieved on 14 July 2010.
  17. ^ "2.000 salariés de L'Oréal à Clichy." Le Journal du Net. Retrieved on 7 July 2010. "Construit à la fin des années 1970 en briques et acier, le Centre Eugène Schueller se dresse à l'emplacement de l'ancienne usine Monsavon, à Clichy-la-Garenne dans les Hauts-de-Seine. Les salariés du siège de l'Oréal y ont emménagé à partir de 1978. Aujourd'hui, ils sont 1.400 à y travailler."
  18. ^ Klawitter, Nils. "L'Oréal's Great Bluff." Der Spiegel. 7 March 2005. 1. Retrieved on 27 November 2009.
  19. ^ Contact Us, L’Oréal USA corporate heaquarters .

What is fiscal welfare ?

Welfare or Welfare Work consists of actions or procedures — especially on the part of governments and institutions — striving to promote the basic well-being of individuals or the society. Welfare can take many forms in various countries or contexts. It may be organized for example by charities, informal social groups, by religious groups or by local or national governments or inter-governmental organizations such as the United Nations.
In the United States, Welfare has a special meaning in politics, referring to financial aid for the poor. In Europe, welfare services tend to be regarded as universal, available to rich and poor alike, thus guaranteeing a minimal level of well being and social support for all citizens without the stigma of charity. This is termed "social solidarity".
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Forms
Welfare can take a variety of forms, such as monetary payments, subsidies and vouchers, health services, or housing. Welfare can be provided by governments, non-governmental organizations, or a combination of the two. Welfare schemes may be funded directly by governments, or in social insurance models, by the members of the welfare scheme.

Welfare systems differ from country to country, but welfare is commonly provided to those who are unemployed, those with illness or disability, those of old age, those with dependent children and to veterans. A person's eligibility for welfare may also be constrained by means testing or other conditions.

In a more general sense, welfare also means the well-being of individuals or a group, in other words their health, happiness, safety, prosperity, and fortunes.

Provision and funding

Welfare may be provided directly by governments or their agencies, by private organizations, or by a combination of both in a mixed economy model. The term welfare state is used to describe a state in which the government provides the majority of welfare services, or to describe those services collectively.

Welfare may be funded by governments out of general revenue, typically by way of redistributive taxation. Social insurance type welfare schemes are funded on a contributory basis by the members of the scheme. Contributions may be pooled to fund the scheme as a whole, or reserved for the benefit of the particular member. Participation in such schemes is either compulsory or the program is subsidized sufficiently heavily that most eligible individuals choose to participate.

Examples of social insurance programs include the Social Security (United States), and Medicare programs in the United States.[1]

States also may support the welfare of its citizens, such as the non-working poor, through direct cash transfers.

History

In the Roman Empire, social welfare to help the poor was enlarged by the Caesar Trajan.[2] Trajan's program brought acclaim from many including Pliny the Younger.[3]

In the Jewish tradition, charity represented by tzedakah, justice, and the poor are entitled to charity as a matter of right rather than benevolence. Contemporary charity is regarded as a continuation of the Biblical Maaser Ani, or poor-tithe, as well as Biblical practices including permitting the poor to glean the corners of a field, harvest during the Shmita (Sabbatical year), and other practices. Voluntary charity, along with prayer and repentance, is regarded as ameliorating the consequences of bad acts.

The medieval Roman Catholic Church operated a far- reaching and comprehensive welfare system for the poor.[4] The 12th century witnessed a significant expansion of support for the needy, particularly in the form of hospices, hostels, and hospitals in towns and along pilgrim routes.[5]

The concepts of welfare and pension were put into practice in the early Islamic law[6][not in citation given] of the Caliphate as forms of Zakat (charity), one of the Five Pillars of Islam, since the time of the Rashidun caliph Umar in the 7th century. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058–1111), the government was also expected to store up food supplies in every region in case a disaster or famine occurs.[6][7] (See Bayt al-mal for further information.)

There is relatively little statistical data on welfare transfer payments until at least the High Middle Ages. In the medieval period and until the Industrial Revolution, the function of welfare payments in Europe was principally achieved through private giving or charity. In those early times there was a much broader group considered in poverty compared to the 21st century.

Early welfare programs in Europe included the English Poor Law of 1601, which gave parishes the responsibility for providing welfare payments to the poor.[8] This system was substantially modified by the 19th-century Poor Law Amendment Act, which introduced the system of workhouses.

It was predominantly in the late 19th and early 20th centuries that an organized system of state welfare provision was introduced in many countries. Otto von Bismarck, Chancellor of Germany, introduced one of the first welfare systems for the working classes. In Great Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George introduced the National Insurance system in 1911,[9] a system later expanded by Clement Attlee. The United States did not have an organized welfare system until the Great Depression, when emergency relief measures were introduced under President Franklin D. Roosevelt. Even then, Roosevelt's New Deal focused predominantly on a program of providing work and stimulating the economy through public spending on projects, rather than on cash payments.

Welfare systems

France

Solidarity is a strong value of the French Social Protection system. The first article of the French Code of Social Security describes the principle of solidarity. Solidarity is commonly comprehended in relations of similar work, shared responsibility and common risks. Existing solidarities in France caused the expansion of health and social security.

Germany

The welfare-state has a long tradition in Germany dating back to the industrial revolution. Due to the pressure of the workers movement in the late 19th century, Reichskanzler Otto von Bismarck introduced the first rudimentary state social insurance scheme. Today, the social protection of all its citizens is considered a central pillar of German national policy. 27.6 percent of Germany's GDP are channeled into an all-embracing system of health, pension, accident, longterm care and unemployment insurance, compared to 16.2 percent in the US. In addition there are tax financed services such as child benefits (Kindergeld, beginning at €184 per month for the first and second children, €190 for the third and €215 for each child thereafter, until they attain 25 years or receive their first professional qualification)[10] and basic provisions for those unable to work or anyone with an income below the poverty line.[11]
Since 2005, reception of full unemployment pay (60-67% of the previous net salary), has been restricted to 12 months in general and 18 months for over 55 year-olds. This is now followed by (usually much lower) Arbeitslosengeld II (ALG II) or Sozialhilfe which is independent of previous employment.
Under ALG II, a single person receives €359 per month plus the cost of 'adequate' housing, a pension scheme and health insurance. ALG II can also be paid partially to supplement a low work income.

Canada

The Canadian social safety net covers a broad spectrums of programs, and because Canada is a federation, many are run by the provinces. Canada has a wide range of government transfer payments to individuals, which totaled $145 billion in 2006.[12] Only social programs that direct funds to individuals are included in that cost; programs such as medicare and public education are additional costs.
Generally speaking before the Great Depression most social services were provided by religious charities and other private groups. Changing government policy between the 1930s and 1960s saw the emergence of a welfare state, similar to many Western European countries. Most programs from that era are still in use, although many were scaled back during the 1990s as government priorities shifted towards reducing debt and deficit.

Italy

The Italian welfare state's foundations were laid along the lines of the corporatist-conservative model, or of its Mediterranean variant. Later, in the 1960s and 1970s, increases in public spending and a major focus on universality brought it on the same path as social-democratic systems. These policies proved to be financially unsustainable, as public debt and inflation grew alarmingly, not allowing the welfare state to develop completely. In the 1990s, efforts moving towards decentralisation and privatisation were used in an attempt to cope with European pressures for economic stability, which were finally reached by 2001.

Sweden

Sweden has been categorised by some observers[who?] as a middle way between a capitalist economy and a socialist economy[citation needed]. Supporters of this system assert that Sweden has found a way of achieving high levels of social equality, without stifling entrepreneurialism. The perspective has been questioned by supporters of economic liberalization in Sweden.
Government pension payments are financed through an 18.5% pension tax on all taxed incomes in the country, which comes partly from a tax category called a public pension fee (7% on gross income), and 30% of a tax category called employer fees on salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two parts, 16% goes to current payments. And 2.5% goes into individual retirement accounts, which was introduced in 2001. Money saved and invested in government funds and IRAs for future pension costs are roughly 5 times annual government pension expenses (725/150).

Japan

In Japan, the Oita district has ruled on October 18, 2010, that foreigners with permanent residency have no rights to welfare benefits. [13]

United States


Overall decline in welfare monthly benefits (in 2006 dollars) [14]

The welfare system in the United States began in the 1930s, during the Great Depression. The government was concerned with the growing public uprising against Capitalism so it established the system to assist families with little or no income. After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government.[15] This could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers, and federal and state housing benefits.[15] In 1968, 4.1% of families were headed by a woman on welfare; by 1980, this increased to 10%.[15] In the 1970s, California was the U.S. state with the most generous welfare system.[16] Virtually all food stamp costs are paid by the federal government.[17] In 2008, 28.7 percent of the households headed by single women were considered poor. <http://www.npc.umich.edu/poverty/>
Before the Welfare Reform Act of 1996, welfare was "once considered an open-ended right," but welfare reform converted it "into a finite program built to provide short-term cash assistance and steer people quickly into jobs."[18] Prior to reform, states were given "limitless"[18] money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program.[19] This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare (the state lost federal money when someone left the system).[20] One child in seven nationwide received AFDC funds,[19] which mostly went to single mothers.[17]
In 1996, under the Bill Clinton administration, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act gave control of the welfare system back to the states. Because welfare is no longer under the control of the federal government, there are basic requirements the states need to meet with regards to welfare services. Still, most states offer basic assistance, such as health care, food stamps, child care assistance, unemployment, cash aid, and housing assistance. After reforms, which President Bill Clinton said would "end welfare as we know it,"[17] amounts from the federal government were given out in a flat rate per state based on population.[20] Each state must meet certain criteria to ensure recipients are being encouraged to work themselves out of welfare. The new program is called Temporary Assistance to Needy Families (TANF).[19] It also encourages states to require some sort of employment search in exchange for providing funds to individuals and imposes a five-year time limit on cash assistance.[17][19][21] The bill restricts welfare from most legal immigrants and increased financial assistance for child care.[21] The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.[19]
Millions of people left the welfare rolls (a 60% drop overall),[21] employment rose, and the child poverty rate was reduced.[17] A 2007 Congressional Budget Office study found that incomes in affected families rose by 35%.[21] The reforms were "widely applauded"[22] after "bitter protest."[17] The Times called the reform "one of the few undisputed triumphs of American government in the past 20 years."[23] Critics of the reforms sometimes point out that the reason for the massive decrease of people on the welfare rolls in the United States in the 1990s wasn't due to a rise in actual gainful employment in this population, but rather, due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient. The late 1990s were also considered an unusually strong economic time, and critics voiced their concern about what would happen in an economic downturn.[17]
Aspects of the program vary in different states; Michigan, for example, requires a month in a job search program before benefits can begin.[17]
The National Review editorialized that the Economic Stimulus Act of 2009 will reverse the welfare-to-work provisions that Bill Clinton signed in the 1990s and again base federal grants to states on the number of people signed up for welfare rather than at a flat rate.[20] One of the experts who worked on the 1996 bill said that the provisions would lead to the largest one-year increase in welfare spending in American history.[23] The House bill provides $4 billion to pay 80% of states' welfare caseloads.[19] Although each state received $16.5 billion annually from the federal government as welfare rolls dropped, they spent the rest of the block grant on other types of assistance rather than saving it for worse economic times.[18]
Eligibility for welfare depends on a variety of factors, including gross and net income, family size, and other circumstances like pregnancy, homelessness, unemployment, and medical conditions.
Welfare as a Capability
Welfare is a form of social protection, as it is concerned with overcoming adverse situations that affect needy individuals. Although social protection was establish to assist the working classes and to address transient poverty, it has come to encompass a greater variety of issues surrounding poverty.
The purpose of welfare is to assist individuals in need. The ultimate goal is to lift the welfare recipients out of poverty and make them self-sufficient. Séverine Deneulin and Lila Shahani [24] terms this mode of development as the human development and capability approach. The capability approach focuses on people and not simply on economic growth. While this approach still considers economic growth and macroeconomic stability, the aim is to “expand what people are able to do and be” [25]. This people-centered focus is “one that enables people to enjoy a healthy life, a good education, a meaningful job, physical safety, democratic debate and so on” [26].
Amartya Sen argues that enhancing an individual’s capabilities results in the greater likelihood for individual success and society success[27]. Enhancing freedoms is one means for development. Sen discusses “unfreedoms,” [28] which can include famine, lack of healthcare, and gender discrimination. In this regard, welfare provides individuals with the basic needs necessary to live a healthy life with the capability to enjoy the freedoms that are inherently available to all. Therefore, it is essential to note the importance of welfare for underprivileged individuals who need governmental assistance in the form of welfare.
Welfare Misperceptions
Welfare has come to be associated with poverty. More importantly, though, blacks have overwhelmingly dominated images of poverty over the last few decades [29]. This is problematic because this exaggerated view creates unnecessary, and even damaging, opposition to welfare. As Martin Gilens, assistant professor of Political Science at Yale University, states, “white Americans with the most exaggerated misunderstandings of the racial composition of the poor are the most likely to oppose welfare” [30]. This perception perpetuates negative racial stereotypes and increases Americans’ opposition and racialization of welfare policies.
Welfare Disparities in Welfare Reform
Much research has shown that “whites are leaving welfare faster than blacks; among those leaving, blacks are more likely to be forced off welfare; blacks are more likely to exhaust their time allowed on welfare; and blacks are more likely to cycle back onto welfare after having left" [31]. Since the implementation of TANF, the percentages of black and Hispanic families have increased, while the percentage of white families has decreased. In 1992, blacks represented 37 percent of those on welfare; by 2002, this number increased slightly to 38 percent. In that same time period, the percentage of Hispanics rose from 18 percent to 25 percent. On the other hand, the percentage of whites on welfare decreased from 39 percent to 32 percent in that same time frame [32].
Additionally, because TANF gave individual states full control of their welfare policies, the reforms implemented vary by state. Recent policy studies have found a statistically significant relationship between the racial makeup of a state’s welfare population and whether the state adopts tougher welfare policies. Aggressive get-tough reforms include full-family sanctions, short time limits, and family cap policies. Essentially, as the percentage of blacks in the welfare populatio~ rises, the probability that the state will adopt full-family sanctions increases from 54 to 97 percent, the probability that the state will adopt a family cap increases from 5 purcent to 96 percent, and the probability that the state will adopt a shorter time limit (than five years) increases from 10 to 88 percent. Moreover, nonwhites are the ones more likely to live in states with tougher policies [33].
These changes since the implementation of TANF reinforce the belief that welfare is a “black program,” as minorities are overrepresented and, in a way, punished for being on welfare.
Timeline
1880’s-1890’s: Attempts were made to move poor from work yards to poor houses if they were in search of relief funds.
1893-1894: Attempts were made at the first unemployment payments, but were unsuccessful due to the 1893-1894 recession.
1932: The Great Depression had gotten worse and the first attempts to fund relief failed. The “Emergency Relief Act”, which gave local governments $300 million, was passed into law.
1933: In March 1933, President Franklin D. Roosevelt pushed congress to establish the Civilian Conservation Corps.
1935: The Social Security Bill was passed on June 17, 1935. The bill included direct relief (cash, food stamps, etc.) and changes for unemployment insurance.
1940: Aid to Families With Dependent Children (AFDC) was established.
1964: Johnson’s War on Poverty is underway, and the Economic Opportunity Act was passed. Commonly known as “the Great Society”
1996: Passed under Clinton; “The Personal Responsibility and Work Opportunity Reconciliation Act of 1996” becomes law.
[34]

 History

The 1980s marked a change in the structure of Latin American social protection programs. Social protection embraces three major areas; social insurance, financed by workers and employers, social assistance to the population’s poorest, financed by the state, and labor market regulations to protect worker rights.[35] Although diverse, recent Latin American social policy has tended to concentrate on social assistance.
The 1980s had a significant effect on social protection policies. Prior to the 1980s, most Latin American countries focused on social insurance policies involving formal sector workers, assuming that the informal sector would disappear with economic development. The economic crisis of the 1980s and the liberalization of the labor market led to a growing informal sector and a rapid increase in poverty and inequality. Latin American countries did not have the institutions and funds to properly handle such a crisis, both due to the structure of the social security system, and to the previously implemented structural adjustment policies (SAPs) that had decreased the size of the state.
New welfare programs have integrated the multidimensional, social risk management, and capabilities approaches into poverty alleviation. They focus on income transfers and service provisions and aim at alleviating both long and short-term poverty through, among other things, education, health, security, and housing. Unlike previous programs that targeted the working class, new programs have successfully focused on locating and targeting the very poorest.
The impacts of social assistance programs vary between countries, and many programs have yet to be fully evaluated. According to Barrientos and Santibanez, the programs have been more successful in increasing investment in human capital than in bringing households above the poverty line. Challenges still exist. Some of these are the extreme inequality levels and the mass scale of poverty; locating a financial basis for programs; and deciding on exit strategies or on the long-term establishment of programs.[35]

Latin America’s most recent shift in social policies

The economic crisis of the 1980s led to a shift in social policies, as understandings of poverty and social programs evolved (24). New, mostly short-term programs emerged. These include:[36]
  • Mexico: Oportunidades (earlier known as Progresa)
  • Brazil: Bolsa Escola and Bolsa Familia
  • Chile: Chile Solidario
  • Ecuador: Bono de Desarollo Humano
  • Honduras: Red Solidaria
  • Argentina: Jefes y Jefas de Hogar
  • Panama: Red de Oportunidades
  • Bolivia: Bonosol

Major aspects of current social assistance programs

  • Conditional Cash Transfer (CCT) combined with service provisions. Transfer cash directly to households, most often through the women of the household, if certain conditions (e.g. children’s school attendance or doctor visits) are met (10). Providing free schooling or healthcare is often not sufficient, because there is an opportunity cost for the parents in, for example, sending children to school (lost labor power), or in paying for the transportation costs of getting to a health clinic.
  • Household. The household has been the focal point of social assistance programs.
  • Target the poorest. Recent programs have been more successful than past ones in targeting the poorest. Previous programs often targeted the working class.
  • Multidimensional. Programs have attempted to address many dimensions of poverty at once. Chile Solidario is the best example.

Critiques

Income transfers can be either conditional or unconditional. There is no substantial evidence that conditional transfers are more effective than unconditional ones. Conditionalities are sometimes critiqued for being paternalistic and unnecessary.

Current programs have been built as short term, rather than as permanent institutions and many of them have rather short time spans (~five years). Some programs have time frames that reflect available funding. One example of this is Bolivia’s Bonosol, which is financed by proceeds from the privatization of utilities—an unsustainable funding source.
Some see Latin America’s social assistance programs as a way to patch up high levels of poverty and inequalities, partly brought on by the current economic system. The effectiveness of the programs relies on the ability of mostly free-trade, neoliberally-oriented economic systems to address poverty. Latin America’s social assistance programs do not require a systemic change, but instead work within the current structures.

See also

References

"social insurance" by Stefania Albanesi. Abstract.
"social insurance and public policy" by Jonathan Gruber Abstract.
"welfare state" by Assar Lindbeck. Abstract.
  • Nadasen, Premilla, Jennifer Mittelstadt, and Marisa Chappell, Welfare in the United States: A History with Documents, 1935–1996. (New York: Routledge, 2009). 241 pp. isbn 978-0-415-98979-4

Notes

  1. ^ "Social Insurance," Actuarial Standard of Practice No. 32, Actuarial Standards Board, January 1998
  2. ^ http://www.britannica.com/EBchecked/topic/602150/Trajan#tab=active~checked%2Citems~checked&title=Trajan%20--%20Britannica%20Online%20Encyclopedia
  3. ^ http://www.pbs.org/empires/romans/empire/nerva_trajan.html
  4. ^ Robert Henry Nelson (2001). "Economics as religión: from Samuelson to Chicago and beyond". Penn State Press. p.103. ISBN 0271020954
  5. ^ "Chapter1: Charity and Welfare", the American Academy of Research Historians of Medieval Spain.
  6. ^ a b Crone, Patricia (2005). Medieval Islamic Political Thought. Edinburgh University Press. pp. 308–9. ISBN 0748621946. 
  7. ^ Shadi Hamid (August 2003). "An Islamic Alternative? Equality, Redistributive Justice, and the Welfare State in the Caliphate of Umar". Renaissance: Monthly Islamic Journal 13 (8).  (see online)
  8. ^ The Poor Laws of England at EH.Net
  9. ^ Liberal Reforms at BBC Bitesize
  10. ^ "Federal Ministry of Family Affairs, Senior Citizens, Women and Youth". bmfsfj.de. http://www.bmfsfj.de/BMFSFJ/familie,did=31470.html. 
  11. ^ http://www.tatsachen-ueber-deutschland.de/en/society/main-content-08/social-security.html
  12. ^ Government transfer payments to persons, Statistics Canada, 8 November 2007, URL accessed 4 December 2007
  13. ^ Mainichi news
  14. ^ 2008 Indicators of Welfare Dependence Figure TANF 2.
  15. ^ a b c Frum, David (2000). How We Got Here: The '70s. New York, New York: Basic Books. p. 72. ISBN 0465041957. 
  16. ^ Frum, David (2000). How We Got Here: The '70s. New York, New York: Basic Books. p. 325. ISBN 0465041957. 
  17. ^ a b c d e f g h Deparle, Jason (2009-02-02). "Welfare Aid Isn’t Growing as Economy Drops Off". The New York Times. http://www.nytimes.com/2009/02/02/us/02welfare.html?partner=rss&emc=rss&pagewanted=all. Retrieved 2009-02-12. 
  18. ^ a b c "Welfare Rolls See First Climb in Years". The Washington Post. 2008-12-17. http://mobile.washingtonpost.com/detail.jsp?key=328930&rc=&p=1&all=1. Retrieved 2009-02-13. 
  19. ^ a b c d e f "Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending". Heritage Foundation. 2009-02-11. http://www.heritage.org/Research/Welfare/wm2287.cfm. Retrieved 2009-02-12. 
  20. ^ a b c "Ending Welfare Reform as We Knew It". The National Review. 2009-02-12. http://article.nationalreview.com/?q=NTY3NzZhNDBkNjU5MjAzZTE4YmQ4MmU5MTk2YTIxNTQ=n. Retrieved 2009-02-12. [dead link]
  21. ^ a b c d Goodman, Peter S. (2008-04-11). "From Welfare Shift in ’96, a Reminder for Clinton". The New York Times. http://www.nytimes.com/2008/04/11/us/politics/11welfare.html?fta=y. Retrieved 2009-02-12. 
  22. ^ "Change for the Worse". New York Post. 2009-01-30. http://www.nypost.com/php/pfriendly/print.php?url=http://www.nypost.com/seven/01302009/news/columnists/change_for_the_worse_152723.htm. Retrieved 2009-02-12. [dead link]
  23. ^ a b AllenMills, Tony (2009-02-15). "Obama warned over ‘welfare spendathon’". The Times (London). http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5733499.ece. Retrieved 2009-02-15. 
  24. ^ Deneulin, Séverine, and Lila Shahani (2009). An Introduction to the Human Development and Capability Approach: Freedom and Agency. Human Development and Capability Association. pp. 23.
  25. ^ Deneulin, Séverine, and Lila Shahani (2009). An Introduction to the Human Development and Capability Approach: Freedom and Agency. Human Development and Capability Association. pp. 23.
  26. ^ Deneulin, Séverine, and Lila Shahani (2009). An Introduction to the Human Development and Capability Approach: Freedom and Agency. Human Development and Capability Association. pp. 23.
  27. ^ Sen, Amartya (1999). "The Perspective of Freedom." In Development as Freedom, by Amartya Sen, 13-34. New York: Anchor Books.
  28. ^ Sen, Amartya (1999). "The Perspective of Freedom." In Development as Freedom, by Amartya Sen, 13-34. New York: Anchor Books.
  29. ^ Gilens, Martin (1996). “Race and Poverty in America: Public Misperceptions and the American News Media.” Public Opinion Quarterly 60, no. 4, pp. 515-541.
  30. ^ Gilens, Martin (1996). “Race and Poverty in America: Public Misperceptions and the American News Media.” Public Opinion Quarterly 60, no. 4, p. 516
  31. ^ Schram, Sanford F (2005). "Contextualizing Racial Disparities in American Welfare Reform: Toward a New Poverty Research." Perspectives on Politics 3, no. 2, pp. 253-268.
  32. ^ Schram, Sanford F (2005). "Contextualizing Racial Disparities in American Welfare Reform: Toward a New Poverty Research." Perspectives on Politics 3, no. 2, pp. 253-268.
  33. ^ Schram, Sanford F (2005). "Contextualizing Racial Disparities in American Welfare Reform: Toward a New Poverty Research." Perspectives on Politics 3, no. 2, pp. 253-268.
  34. ^ "Welfare Reform History Timeline - 1900s to current United States." SearchBeat. Web. 12 Oct. 2009. .
  35. ^ a b Barrientos, A. and Claudio Santibanez. (2009). “New Forms of Social Assistance and the Evolution of Social Protection in Latin America”. Journal of Latin American Studies. Cambridge University Press 41, 1–26
  36. ^ [Barrientos, A. and Holmes, R. (2007) Social Assistance in Developing Countries database, version 3.0, available from www.chronicpoverty.org]