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Is The American Welfare State Unusually Small

A 40 years ago, the distinguished social scientist Harold Wilensky declared the United States a “reluctant welfare state” (1965, xii). In the decades since, many observers have reached essentially the same conclusion: the United States has been called a semi-welfare state, a welfare state laggard, a residual welfare state, an incomplete welfare state, and similar terms denoting inadequacy (e.g., Jansson 2001; Katz 1986; Kudrle and Marmor 1981; Sainsbury 1996; Skocpol 1995). For their part, contemporary studies of American exceptionalism routinely note the shortcomings of the American welfare state when highlighting the limited reach of American government (Kingdon 1999; Lipset 1996; Wilson 1998). Introductory textbooks about American government often convey the same message (Greenberg and Page 1999; Wilson and DiIulio 2001). Consensus on this point has become so complete that few people have stopped to question its accuracy. The more common pattern has been to assert the existence of an underdeveloped welfare state and then move on quickly to explain why the U.S. is so different, or to call for a more generous welfare state. In this article, I challenge the most commonly made claim about the exceptional nature of the American welfare state—that it is unusually small (e.g., Gilens 1999; Jansson 2001; Kudrle and Marmor 1981; Wilson 1998). This judgment, in my view, is misleading. It is based on an overstatement of the social benefits received in other nations and an underestimate of the social benefits distributed by the United States. The latter results from a narrow focus on just two tools of government action, social insurance and grants, and from a misleading measure of welfare state effort. In fact, the American welfare state is bigger than most people think. The prevailing wisdom is easy to summarize. The size of welfare states is measured in the literature by the share of gross domestic product (GDP) devoted to public social spending, which is sometimes referred to as a nation’s welfare state effort. The United States devoted 15.8% of its GDP to public social expenditure in 1997 (Adema 2001). This figure includes spending by all levels of government on retirement and survivors’ pensions, disability, sickness, occupational injury and disease, public health, family allowances, a wide range of social services, housing, unemployment, job training, and aid to the poor. While that may seem like a lot of effort, Denmark, Sweden, and Finland devoted 33% or more of their GDP to public social spending. Several other European nations spent 25–30%. The obvious conclusion, and the one conveyed in much of the cross-national literature, is that many affluent democracies are putting almost twice as much effort into their welfare states as the United States. Even among nations such as Canada (20.7%) and the United Kingdom (23.8%) that are often categorized as low spenders, it seems clear that the American welfare state is unusually small.