Lack of Low-Level Jobs Will Test Effectiveness of Welfare Reforms
The largest overhaul of the federal welfare system in 30 years, now moving through Congress, could founder on a lack of entry-level jobs in the American economy.
That, at least, is the concern of many welfare experts, who see the availability of jobs as a key to determining if the new welfare-reform proposals will eventually work.
Last week the House passed a broad package of reforms. The Senate is scheduled to vote on its version of the bill tomorrow.
While the White House objects to a few provisions, the atmosphere is congenial for a compromise on the third overhaul to be tried in the past 20 months. After vetoing the earlier two, President Clinton appears eager to sign a bill and remove an arrow from Bob Dole's election quiver.
But the reforms on the table impose a heavy burden that many, if not all, states could have trouble bearing over time. The bills in Congress emphasize immediate work rather than job training and education.
They would end a 61-year-old guarantee of federal assistance to the nation's poorest families and instead require able-bodied parents to work as a condition of receiving benefits. The reforms include cash rewards for states that move recipients into jobs, but slap penalties on those states that don't.
Social-policy analysts worry that employment quotas in the bills and the penalties for not meeting them will force states to focus on moving unskilled people quickly into a labor market that is often unstable and already saturated. While nationwide unemployment is at a six-year low, they point out, there is a surplus of entry-level job applicants. That problem is most acute in the inner cities, where the welfare population is highest.
Finding jobs for some 2 million welfare recipients will be a difficult, these experts argue, and the consequences of cutting off aid to those who cannot find work will be costly, and perhaps, disastrous.
"Work requirements are nothing new," says Evelyn Brodkin, a welfare expert at the University of Chicago. "What is new is the notion that work requirements are coupled without any assurance that work will be available. That's the key to understanding what's dangerous about the current proposals. States have a limited capacity to help people find work or see that the jobs that are available pay sufficiently."
The reforms set two clocks in motion. First, they require all able-bodied adults to find work after two years on the dole or their benefits are terminated. Second, people may receive welfare benefits for a life-time maximum of five years. The two time limits are apt to exert different influences, observers say. But both will put a premium on moving people into the work force quickly.
Recipients may be more motivated by the lifetime cap. For state agencies, the two-year clock could be the greater impetus. Under the House bill, four separate welfare programs are melded together into one lump-sum payment to the states. These block grants provide states will greater flexibility to design their own programs, but also impose employment requirements.
When the reforms kick in - by 1997 at the latest - states must have 20 percent of their caseloads involved in "work activities," narrowly defined as work, job search, or vocational training. By 2002, that requirement climbs to 50 percent. The bill provides a few exemptions for special-case recipients.
States that maintain the required employment levels receive cash bonuses; states that don't face reductions of up to 5 percent in their block grants. Further, states face unknown costs down the road if people - especially children - lose their welfare benefits and don't have other means of buying basic food and shelter. They will end up receiving other public assistance. "The risks to the state agencies are greater under the two-year limit because the bill drops the social-safety net," says Demetra Nightingale, a welfare expert at the Urban Institute in Washington. "There's no emphasis on training and education. It's just get them out into the labor market."
Easier said than done. Work-based welfare reforms, through tried in various forms for almost 30 years, have shown little success in moving people permanently into the work force. Part of that is because many recipients lack either the skills or education to find or keep jobs. But the labor market is also to blame. The low end of the employment scale is notoriously unstable. Hours are often intermittent, turnover is high, and benefits such as child care almost nonexistent. It is also stagnant. While the labor market as a whole as been growing, low-end jobs remain scarce. One study in Harlem last year found 14 applicants for every entry-level position.
How states will cope with that is unclear even in the best of economic times. "It's going to be a struggle," says Gary Burtless, an analyst at the Brookings Institution in Washington. "There are 2 million people out there. States will either have a hard time finding employment for them or impose hardship on them. This will be extremely costly under higher unemployment."