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Welfare As We Knew It

The Senate has once again begun to debate the reauthorization of the 1996 welfare reform bill (a reauthorization now two years overdue), and as Mickey Kaus gets predictably flibbety-gibbety about welfare reform, there is a key point that never seems to be made, or, if it is, I haven't heard it:

Welfare, as a government program, is almost irrelevant. President Clinton pledged to "end welfare as we know it," and he did. There are currently barely two million families receiving help under Temporary Assistance for Needy Families, most of them for a fairly short period. The argument that Kaus and others want to engage in is about whether these low caseloads, even through the recession, are a bad thing (too many needy/eligible people being cut off or discouraged from applying) or a good thing (formerly dependent families making it more or less on their own, with work, child support payments, other government programs, and help from other family members.) Statistics can support either position. But of one thing, there is no doubt: welfare is now a very small program. Compare those two million families currently receiving help under TANF -- less than 2% of all households -- with the four million people currently receiving Unemployment Insurance, plus another million whose benefits have run out but they remain unemployed. Or compare it to the 40 million people dependent on Medicaid. Or, more importantly, the 20 million households with income below $18,000, roughly the bottom 20% of the income distribution.

And yet, where are Congress, Kaus and the Heritage Foundation when it comes to "Unemployment Insurance Reform"? (The program is surely broken when only a quarter of female workers are eligible and the "extended benefits" promised in a recession never actually kick in.) Where are they on Medicaid reform, when that program is under profound stress, from state budget cuts and other factors? And where are they on the overall question of the conditions of life at the low end of the wage scale? Continuing to talk about poverty principally in terms of the tiny program called welfare is just a way of avoiding these questions. Welfare is convenient, it has a political and racial edge to it, but it's irrelevant to the facts of poverty in America.

I have no nostalgia for the old welfare system, and I'm willing to say that welfare reform "worked." It's always a good thing to get people out of the depression and alienation of welfare and into the job market. Even if one's only concern is the material well-being of poor families, everyone is better off with even a $6.00/hour job (as long as they have child care, Medicaid and the Earned Income Credit) than with benefits that averaged about $400 a month. But welfare reform worked mostly because for most of the five years after its passage we had the Clinton economy, which meant pretty steady job growth of 300,000 jobs a month, about the same level that is being called "remarkable" when it occurs just once in the Bush administration. The other effect of the good economy is that the block grant to states for welfare, which was based on their caseloads in 1993 -- the previous Bush recession -- stayed the same rather than decreasing, as the federal payments would have under the old system. That meant the states had more than twice as much money to spend on each remaining case in the system, which made it possible to concentrate a lot of resources on creating jobs and providing other support to those people who were able to work.

But the fact that the giant bet on the economy that was welfare reform "worked" doesn't make it good policy. If you borrow your kid's college fund and bet it on the New England Patriots to win the Super Bowl, and they win, your strategy may have "worked." But don't expect anyone to consider you a good parent.

But we're past that, welfare is reduced to a minor safety net, mostly temporary and, when not, pared down to those families where the adult just can't work for one reason or another. With just two million families on welfare, it's time to focus instead on the fact that life at the low end of the wage scale is a pretty hellish existence. You're least likely to have employer-provided health care, so that as your wages go up, you face the likelihood of losing Medicaid. You have the least job security, risk losing the job if you take a week off with a sick child, and if you do lose the job, there's nothing. No unemployment insurance, no welfare. Forget about pension coverage.
The category of people we call "former welfare recipients" is a tiny fraction of the people in the low-end job market.

Yes, Congress has a responsibility to reauthorize the legislation it passes -- although it is no more likely to reach agreement this year than last. But it is a real embarassment that we are still arguing about "welfare reform," while another million workers lose health insurance every year, while the minimum wage slips further and further behind reality, while basic economic security slips away. I'd take Mickey Kaus or the Bush Administration a lot more seriously if they showed an interest in any of these issues.


Posted by Mark Schmitt on April 1, 2004 | Permalink

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Comments

With just two million families on welfare, it's time to focus instead on the fact that life at the low end of the wage scale is a pretty hellish existence. You're least likely to have employer-provided health care, so that as your wages go up, you face the likelihood of losing Medicaid. You have the least job security, risk losing the job if you take a week off with a sick child, and if you do lose the job, there's nothing. No unemployment insurance, no welfare. Forget about pension coverage.

You might add, as the NYTimes just reported, that your employer is likely to be stealing the miserable wages you do get.

Posted by: SqueakyRat | Apr 4, 2004 11:11:24 AM

Good piece. I'm actually curious about the statistics on the direct general assistance burden that state and county governments have picked up following the 1996 welfare reform.

One can say that Federal welfare programs only support 2 million households, but I know anecdotally that state and county governments pick up more than that, through a variety of programs. and I'm curious about how much.

I'll do some of my own looking on this point, but any resources would be welcome.

Posted by: paperwight | Apr 4, 2004 12:07:22 PM

Mark,
I try to avoid "ditto" comments, but since only two others have left comments so far, I hope you won't mind if I say:
Yes. Excellent post. Spot on. I'm rather more skeptical about welfare reform's successes than you are - and we should still be outraged that Clinton gave states the Kaus-applauded authority to impose an unconscionable, strict 5-year lifetime limit, even if most states haven't yet gone to that extreme - but there are plenty of larger issues that Kaus and his GOP allies blithely ignore. Where, for instance, is the money for job creation? It's nice to see some bipartisan support for some additional child care funding, but I suspect that it won't be enough. I have clients who are being made to wait for four or five months for a child care subsidy to become available - while they toil in low-wage jobs that make it nearly impossible to afford child care on their own.

Posted by: The Navigator | Apr 5, 2004 2:11:26 PM

Patriots didn't cover the spread. Just sayin'.
(http://www.bodog.com/articles/2004/Covers-0202.jsp)

Great post.

Posted by: Issa | Apr 5, 2004 6:58:14 PM

The welfare debate has always been about one thing: the steam engine.

Two hundred years on, the economic consequences of Mr. Watt have yet to be squarely faced.

The effect of his lovely invention is that it no longer takes a thousand people's effort to support a thousand people. In other words, there isn't enough work to go round, and there never will be again.

"Welfare"--or "relief", or "the dole", or any of its other situational names--is one of several distinct approaches to palliating this problem without acknowledging it. Another is the creation of huge numbers of pseudo-jobs.

It would be preferable to face up to the problem and acknowledge that the invention of the steam engine (followed by many other inventions whose effect has been cumulative) demands a *complete* re-think of the definition of work, and of the relationships between work, human dignity, and memership-in-good-standing of society.

You may cross your fingers but I cannot recommend that you hold your breath.

Posted by: Frank Wilhoit | Apr 5, 2004 8:14:01 PM

It would be preferable to face up to the problem and acknowledge that the invention of the steam engine (followed by many other inventions whose effect has been cumulative) demands a *complete* re-think of the definition of work, and of the relationships between work, human dignity, and memership-in-good-standing of society.

How do you suggest that we re-think it? Are you suggesting a "citizen's dividend"? Do you just want us to scrap the whole thing altogether and say "oh well, if you're in you're in and if you're out you're out!"

Clarify, if you would.

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