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Wisconsin Leads Welfare Reform

Regulations cleared in record time increase work incentives and reduce child payments

THE first state in a new wave of welfare-system reforms has cleared regulatory hurdles in record speed as the Bush administration approved innovations in Wisconsin.

The changes in Wisconsin are intended to make it easier to move off welfare and into work by allowing recipients to keep more of their wages while still getting state aid. The reforms also remove benefits to recipients for having additional children while on welfare.

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This move, and other plans in states from New Jersey to California, is in response to a growing consensus that welfare systems are not working.

Both Democrats and Republicans, liberals and conservatives, are increasingly in accord that many state welfare systems contain perverse incentives that discourage moving into the work force and marrying.

President Bush strongly encouraged states to embark on such reforms in his State of the Union speech in January, saying that "welfare was never meant to be a lifestyle."

On Friday, Wisconsin was granted the federal waiver it needed to change its system in less than a month, drawing heavy praise from the president.

More than philosophy is behind these moves, however. Most states revamping their welfare systems are under severe pressure to cut their budgets. Most of Gov. Pete Wilson's proposals in California, for example, reduce benefit levels.

The Wisconsin changes will raise the amount of wages that welfare recipients can keep from $30 and one-sixth of earnings to $200 and one-half of earnings. The purpose is to make it more economically attractive and practical to take a job.

An irony is that it took an innovative Republican governor, Tommy Thompson, to raise these work-incentive levels. They were cut down nationally under the Reagan administration.

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Unless states invest in job training and creating some workfare jobs, notes Prof. Sheldon Danziger of the University of Michigan, these incentives can only get people to search for jobs. They cannot make them employable.

"It can be a move in the right direction," he says. But he notes that, nationally, states are leaving some of their federal matching funds for job training untapped.

States have only committed enough money for training and education to cover about one in nine welfare families, according to the Center for Law and Social Policy.

Wisconsin is also attempting to remove any incentive in the system for bearing additional children while on welfare. Since the major welfare program is Aid for Dependent Children (AFDC), the size of the grant to each family grows with the number of children. Wisconsin is sharply curtailing that link.

Currently, a single parent with one child in Wisconsin receives a maximum $440 monthly AFDC grant. A second child adds $77 to the grant. A third adds another $100 to the grant.

Under the new system, a second child only adds $39 to the basic $440 grant. A third child, and any that follow thereafter, draws no additional grant at all. So a three-child family would receive at most $479, instead of the current $617.

However, the question of welfare benefits encouraging, or at least supporting, larger families does not appear to be a very significant one in practice. Most women on welfare do not have many children.

According to the 1991 Green Book, a statistical volume published by the House Ways and Means Committee every year, the average size of welfare families has declined from four persons in 1969 to 2.9 persons in 1989. Since at least one of those family members is an adult, the average welfare household has fewer than two children.

The Wisconsin innovations will be put into effect in four counties, including Milwaukee.

They will apply to AFDC recipients under 20 and continue to apply to them until they leave the welfare rolls.

"We must try new ways to get welfare to yield to work," President Bush said in a formal statement on Friday. "I am renewing my call to states to come forward with reforms which, like Wisconsin's, replace the assumptions of our current welfare system."

A Democratic policy scholar, William Galston of the Progressive Policy Institute, noted, "I do think there has been a public judgment that welfare isn't working."

The public conceives of the system as a bridge from hard times into independence. Instead, the system appears to foster long-term dependence.

The difference between liberals and conservatives on this issue is often more one of emphasis, and distrusting each other's motives, than content. Conservatives stress the need for changes in behavior by welfare parents, and seek to change the incentives in the system to favor work and marriage.

Liberals stress the investment required to support such a move into the work place - training, workfare jobs for those without experience, and day care.

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