Reform of "Welfare Reform"

Reform of "Welfare Reform"

"Work first" is the cornerstone of the "welfare reform" that was carried out in the last decade. By "welfare reform" we mean waivers on welfare regulations given by the federal government to the states in the early 1990s and the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The 1996 federal legislation created block grants that virtually delegated to the states responsibility for creating a new system. In signing the legislation in 1996, the President quoted Robert F. Kennedy: "Work is the meaning of what this country is all about. We need it as individuals. We need it in our fellow citizens. And we need it as a society and as a people." However, as Peter Edelman has written, the President "highjacked" and "twisted" Robert Kennedy's words and meaning. Kennedy's vision was a national investment to insure that the poor got sufficient education, training and jobs to provide for themselves and especially for their children. Instead, the 1996 legislation, in Edelman's words, "invited states to order people to work or else, even if there are no jobs, and with no regard for what happens to them and their children."¹

In the wake of this disregard, we need to:

Measure Success in Terms of Less Child Poverty

Recognize the limitations of State-Based "Reform"

Understand That There Are Proven Job Training Models

Scrap the 1996 Legislation and Start Over

Measure Success is Terms of Less Child Poverty

Many evaluations are underway that assess the impact of the waivers to states in the early1990s and the impact of the 1996 federal legislation. What are the main findings to date? There is little unequivocal proof that "welfare reform" has had a great impact, compared to the impact of the booming economy. How do you measure success? Proponents of "welfare reform" claim that the measure of success is reduction in welfare rolls. And in fact welfare case loads were cut in half between 1994 and 1999. However, the current consensus is that only between about fifteen to thirty percent of the drop is attributable to "welfare reform." Most of the drop is attributable to the booming economy, according to the studies.² The robust economy of the 1990s was set in motion by the tax increase in 1993 -- bitterly opposed by supply side advocates of tax cuts for the rich.

"Welfare" originally was designed as a strategy against child poverty. So the real measure of success is less child poverty, not reduced welfare rolls. The rate of child poverty has dropped in recent years. However, there is no evaluation consensus that "welfare reform," rather than the booming economy, is primarily responsible.³

The official poverty rate for children five and under is eighteen percent. For children of color, one of three is poor, based on the official definition of poverty. These poverty rates are higher today than in all of the 1970s. The official rates are much higher than for all other industrialized nations.⁴

Yet the official rates underestimate poverty. Since the official poverty line was established in the 1960s, the cost of living for the poor has risen much faster than the rate of inflation, especially for housing. As the Economic Policy Institute has documented, the current poverty definition insufficiently measures the basic income needs of a working family. More accurate measures are needed -- like those recommended by the Panel on Poverty and Family Assistance of the National Research Council. For example, except when one parent stays home with a child, the Panel concludes that minimally acceptable budgets for working families must incorporate child care costs. "Given the variation and importance of quality care for child development, the amount budgeted for child care must be high enough to ensure that working families can afford reliable care of decent quality." The Economic Policy Institute estimates that, just to meet basic needs and achieve a safe and decent standard of living, a family of four in Baltimore requires an annual income of $34,732.⁵

Recognize the Limitations of State-Based Reform

The 1996 "welfare reform" legislation fell far short of ensuring such standards. The legislation did little to provide poor people with child care, job training, education, health care and transportation to and from work -- the kinds of support services that are essential to people leaving welfare for the job market. The 1996 legislation also restricted the availability of food stamps and reduced benefits for legal immigrants.⁶

Because of the latitude given by the 1996 state block grants, many states have adopted harsh policies -- including short time limits to remain on welfare, as well as extensive terminations. As many as forty percent of women who left welfare have not found jobs, according to studies conducted by many states and by research organizations like the Urban Institute and the Center on Budget and Policy Priorities. Many women secured dead-ended jobs and are still living below the poverty line. Many found jobs -- but part time jobs, not the full time jobs they needed to support their families. Some who have found jobs have not been given access to health care. Many who found jobs have children who do not receive adequate day care. The restrictions on food stamp eligibility have caused many hardships. The profit making companies that received lucrative contracts to find jobs for former welfare recipients have not performed particularly well, yet there is very little discussion of their shortcomings by apologists for the 1996 legislation, politicians and the media.⁷

Today, about 2.5 million people still are on the welfare rolls. They are in especially difficult circumstances. They tend to have less education, fewer job skills, less work experience and more personal problems than those who have gotten jobs. It is these people who will be hurt, in particular, when they face the five year lifetime limit on federally funded assistance imposed by the 1996 legislation. It is these people who will be hurt all the more if and when the nation experiences a recession.⁸

Under the 1996 legislation, if a welfare recipient gets a job and then loses it, many states deny further support. They simply tell the individual to find another job. As a result, there now are many women who are neither working nor on welfare. The number is about one million -- plus their two million children. These three million people have "disappeared" -- they are not identified as former welfare recipients in record keeping by the states. The only way these people really "appear" is when we look at poverty statistics. While overall poverty has gone down (not, as we have seen, necessarily because of "welfare reform"), the people left behind in poverty are even more poor. Some of these are the disappeared mothers and their children. Many of the mothers have incomes below half the official poverty line -- $6,750 for a family of three. These mothers are more poor than before because they have lost welfare payments, lost food stamps and do not have jobs. ⁹

The U. S. Conference of Mayors has found that requests for emergency food increased by seventeen percent in 2000. Two-thirds of the people requesting assistance were families with children. Demand for emergency shelter increased fifteen percent in 2000, and of those thirty-six percent were families with children. The leading causes of these increases were low-paying jobs, lack of affordable housing, unemployment, other employment-related issues and poverty.¹⁰

In spite of the needs of poorer families still on welfare and the needs of the families that have "disappeared," many state governments are not spending the federal funds intended to help them transition into work or take care of their children. Forty-six states and the District of Columbia have failed to use more than $8 billion authorized by Congress for child care, transportation, education, job training and other efforts to help support low-wage workers and struggling families, according to a report by the National Campaign for Jobs and Income Support issued in February, 2001. Fourteen states actually have increased their surplus of unspent "welfare reform" funds since 1999. Some states -- Connecticut, Virginia, Texas, Wisconsin and Michigan in particular -- are abusing the flexibility of their "welfare reform" funds to pay for tax cuts and shortfalls in other areas of their budgets.¹¹

Understand That There Are Proven Job Training Models

Given that lack of real job training is one of the failures of the 1996 legislation, it is important to be clear that there are a number of already proven job training and retention models. They can be replicated -- for welfare clients as well as for out-of-school youth (with many persons in both categories). Just a few examples of job training and retention models that work, based on careful evaluations, include the Argus Community in the South Bronx (where some trainees learn to be drug counselors), Capital Commitment in Washington, DC (where trainees learn to repair telecommunications equipment), the Job Corps nationally (which was most recently evaluated positively by Mathematica Policy Research, Inc.) and YouthBuild USA (which trains drop outs to rehabilitate inner city housing and has been evaluated as successful by a team from the Kennedy School at Harvard University.)¹²

However, in spite of the availability of proven job training models, there is, incomprehensibly, no national system for replicating them and providing technical assistance. As Paul Grogan and Tony Proscio point out in Comeback Cities:¹³

The American system of local job-training programs operated by the public sector and nonprofit organizations is largely a disgrace -- resembling today what the community development system looked like twenty years ago. There is a sprinkling of exemplary local programs in a desert of waste and ineffectuality. Across broad swaths of the urban landscape, local employment and training systems are operated as political fiefdoms or social-service programs. There are no organized mechanisms for large-scale private capital or employer involvement, or for elevating and spreading the best approaches, or for driving out the purely political operations.

The Eisenhower Foundation has proposed nonprofit intermediaries that supply high quality technical assistance to local job training for the poor, leverage public against private job training funds, replicate proven models and link poverty reduction to economic development (a link that, astoundingly, the federal government does not currently make).¹⁴ Grogan and Proscio appear to endorse this strategy.

Scrap the 1996 Legislation and Start Over

In light of existing evaluations and current knowledge, what is the best course in 2002, when the 1996 "welfare reform" legislation is up for reauthorization?

Scrap the old legislation and start over. Instead of political spin that claims to measure success in terms of reduced caseloads, we need to be honest -- and measure success in terms of the original goal: reduction in child poverty. Poverty should be defined following the recommendations of the National Research Panel (above). Local "welfare reform" programs that reduce poverty, so defined, should be rewarded. We ought to require local "welfare reform" programs to combine job training, quality job creation, job placement, job retention, health insurance, high quality child care and high quality transportation services. We should encourage replication of "welfare reform" and job training models that work, based on scientific evaluations, and explicitly link these investments to replication of successful inner city public school reforms. Federal "welfare reform" dollars should not be channeled to localities via the states, but via national and regional nonprofit intermediaries. We need to create national nonprofit intermediary organizations that co-target existing federal job training and economic development initiatives to places of great need; expand the number and quality of grassroots, nonprofit community development corporations that create jobs; and fund these priorities from the federal budget surplus and the state "welfare reform" surpluses.

The nation must acknowledge how conventional macroeconomic policy does not target structural unemployment and does not create enough jobs to eliminate the current gap of over four million urban and rural jobs needed. We ought to build in economic stabilizers that provide buffers in times of economic recession. We need to define a baseline of support below which a local "welfare reform" program cannot fall and allow more flexibility in time limits. We must create more local accountability and abolish the most punitive present state "welfare reform" policies.¹⁵

A majority in Congress and the Administration are unlikely to accept our plan. The Secretary of Health and Human Services has been criticized for focusing on caseload reduction rather than child poverty reduction when he was a governor, and for creating massive caseload reductions "by simply losing track of former recipients or dissolving them in a sea of working poor."¹⁶ In addition:¹⁷

The number of children placed in foster care has risen rapidly in Wisconsin, by 32 percent in the past decade, and by 51 percent in Milwaukee, where the welfare population is concentrated. Reports of child abuse and neglect are rising, and so are the reported incidents of domestic violence and juvenile arrests. But by far the most Dickensian development is the rise in infant deaths. The national downward trend in mortality rates for Black and Hispanic infants has been reversed in Wisconsin. The mortality rate of black newborns, once lower than other Midwestern states, is now the highest in the region. The bottom line is that Wisconsin's welfare cutbacks have left people working more but poorer, and substantial numbers of these people are desperately poor.

However, the Secretary of Health and Human Services has argued, "You can't expect welfare mothers to go to work unless they have child care. They've got to have health insurance, transportation and training. All costs money."¹⁸ We agree. This position is supported in a recent evaluation by the Manpower Development Research Corporation (MDRC). In six states with a total of eleven programs, MDRC found that school performance by children in welfare families improved when family income increased through mandatory work combined with extra money or benefits like child care subsidies. Importantly, the evaluation concluded what many have argued for years -- that "increasing employment alone does not appear sufficient to foster healthy development of children."¹⁹

Notes and Sources

Peter Edelman, Searching for America's Heart (Boston and New York: Houghton Mifflin Company, 2001, pp. 1-2).