President Lyndon Johnson’s May 22, 1964 commencement address at the University of Michigan laid out a vision that has shaped U.S. politics and legislation for fifty years. This legislative agenda now known as the “Great Society” transformed American schools and higher education, launched Medicare and Medicaid, and expanded housing and urban development programs, employment and training programs, food stamps, and Social Security and welfare benefits. The Great Society included legislation to fight racial discrimination and end poverty, increase funding for arts and cultural institutions, and increase environmental and consumer protections. One legacy of the Great Society is a vigorous public debate over the efficacy of federal programs.
A new project, directed by University of Michigan Associate Professor of Economics Martha Bailey, compiles more systematic evidence on the long-term impact of the Great Society. Bailey notes, "My students and I are collecting new data and applying new methodologies to examine these programs’ lasting impacts on peoples’ lives. What we learn will provide our nation's policy-makers with evidence to inform important policy issues.” The project has received funding from the National Institutes of Health, the Ford Foundation, and the Russell Sage Foundation.
One of Bailey’s recent studies evaluates the health effects of Community Health Centers, which were introduced in the 1960s and recently expanded under both President George W. Bush and President Barack Obama’s Affordable Care Act. In work to appear in the American Economic Review, Bailey, together with UM Economics Ph.D. student Andrew Goodman-Bacon, shows that the introduction of this program in the 1960s reduced older adult mortality rates by 2 percent over 15 years. They conclude that increasing the provision of primary care to the elderly may be a cost-effective way of increasing life expectancy, even among those with health insurance.
Bailey's project provides a more nuanced assessment of Great Society programs’ successes and failures and challenges simplistic generalizations about the era. Bailey says, “The effects are more complicated than people think.”
Her recent co-edited volume features chapters by leading experts on other longer-term successes and failures of Great Society programs. For instance, the introduction of Medicare substantially decreased elderly mortality rates. Poor mothers with access to food stamps in the 1960s gave birth to infants with higher birth weights, and their infants experienced lower rates of obesity, high blood pressure, and diabetes later in life. Head Start programs significantly increased child health and improved educational attainment, and federal funding for public schools led to school desegregation. The desegregation of hospitals contributed to substantial decreases in African-American infant mortality rates and led to gains in later academic test scores.
But not all Great Society programs worked so well. The design of Medicare led to tremendous increases in the costs of medical care. Homeownership programs failed to lead to meaningful changes in homeownership. Job training programs had very modest benefits, especially relative to their tremendous costs. Federal spending on public schools failed to increase resources for to the poorest schools or the most disadvantaged students.
Bailey’s latest work evaluates the economic impacts of the 1966 minimum wage increase, which raised the minimum wage to its highest real level in the 20th century. The study’s findings should broaden the evidence basis for current policy issues and inform current policy decisions (like the President's "Raise the Minimum Wage" campaign).