Ending Welfare Reform as We Know It
The Cleveland Plain Dealer, September 19, 1997
October 1 is the deadline for states to comply with the first phase of the Orwellian-named "Personal Responsibility and Work Opportunity Reconciliation Act" of 1996-- otherwise known as "welfare reform." A number of states will be subject to severe financial penalties because they will fail to meet this year's requirement: placing 75% of two parent families, and 25% of all welfare families, in jobs.
This is not all that surprising. The act, which abolished the 62-year-old federal entitlement for poor families, is big on Personal Responsibility but rather short on Work Opportunity.
And the problem never was that too many people preferred to stay home and watch TV and collect welfare rather than work. The real problem was that there weren't enough jobs to go around, and the ones that were out there didn't pay enough to support a family. That's still as true as ever. Until these problems are addressed, "welfare reform" is just another kick in the face for poor people struggling to get by.
A full-time job at even the new minimum wage still pays only $10,700 a year. This is well below the poverty level for a family of three. You can add in food stamps and other federal assistance such as the Earned Income Tax Credit, and the picture looks a little better. But that's only until you subtract payroll taxes and child care costs, which pushes the low-wage earner right back into poverty. And then there is the loss of health insurance-- the Medicaid program for the poor-- that often accompanies a move from welfare to a low-wage job. That in itself can be devastating to a poor family.
It is a powerful testimony to the strength of the work ethic in America that the majority of welfare recipients have historically left the welfare rolls for work. For many of these folks it was actually a financial sacrifice to do so-- despite the fact that welfare benefits were not enough to lift a family out of poverty.
This by itself suggests that we need "employment reform" rather than "welfare reform." The historical record certainly bears this out. In 1969 the unemployment rate was 3.5%; in 1944 it was 1.4%. When the jobs are there, people tend to grab them.
So much has the debate over employment policy degenerated today that the current unemployment rate of 4.9% is often considered "too low." But studies of job vacancies find that there are millions more people seeking work than there are available jobs. This pretty much guarantees that most of the victims of welfare reform over the next five years will wind up unemployed.
Those fortunate enough to find work are not likely to earn very much. A recent study of former AFDC recipients found that they averaged about $6100 their first year out, and $9900 by their fifth year.
About 30% of people on the welfare rolls are women who are either disabled themselves or caring for disabled children. But welfare reform, in its majestic equality, will throw a lot of these women into the job market as well.
For the last 62 years, poor families with children were guaranteed assistance from the federal government under the AFDC program. Now that money, which was only about 1% of federal spending, is distributed to the states in block grants. But the federal guarantee, or entitlement, is gone. And the states will lose block grants if they don't remove enough people from the rolls-- whether the people find work or not.
Much has been made of the fact that a million people have left welfare since 1994, but most of that is due to the growing economy rather than any welfare reforms. There is an old proverb: "A leaky roof will fool the sun but not the rain." When the next recession hits, the states will deny benefits to hundreds of thousands of needy families. And the transitional health insurance or child care programs now offered by some states will be cut or eliminated.
Of course these latter programs constitute positive steps where they exist. But again, these are examples of health care and child care reform, not "welfare reform."
The primary victims of "ending welfare as we know it" will be millions of children. The United States already has the highest child poverty rate in the developed world, and we have reversed most of the progress we made in the war on poverty. In 1960 the poverty rate for children was 27%, and it fell to 14% in 1973. By 1993 it was back up to 23%.
The young casualties of "welfare reform" will suffer not for the sins of their parents, which would be injustice enough, but for the sins of shameless, unprincipled politicians like President Clinton and his allies on both sides of the aisle in Congress. There was no popular demand for what they did. They made a calculated decision to falsify and demagogue the issue, and to scapegoat the poor. They may have gotten away with it for now, but history will judge them harshly.
Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of the forthcoming book Failed: What the "Experts" Got Wrong About the Global Economy (Oxford University Press, 2015).