Now, the hard part of welfare reform

Douglas McWilliams is homeless and on welfare. He hasn't had a job for "eight or 10 years." He's been in and out of jail, his scarred hands have a slight shake, and he says he can't work right now because he broke two ribs during a fight.

"But I would like to work, if they get me a job," he says.

Mr. McWilliams, whose cash benefits have been cut back for failure to work, is one of hundreds of thousands of people caught up in New York City's controversial welfare-reform experiment. Conservatives praise it as one of the bolder efforts to transform a culture of dependency into one of self-reliance. To critics, the program here is a destructive bureaucratic exercise designed to cut welfare rolls - even at the expense of the most vulnerable poor people.

But both sides agree on one thing: The success or failure of New York City's program could help determine the direction welfare reform will take around the country.

"We've come a long distance, but we still have a long distance to go," says Barbara Blum of the Research Forum on Children, Families, and the New Federalism at Columbia University here. "We really haven't tackled the tougher cases, and that's when it's going to get complicated," she adds, referring to chronically dependent people like McWilliams.

So far, reform efforts have helped cut welfare rolls by almost 40 percent nationally during the past three years. Yet demand for emergency food services is up - dramatically in some cities - along with the need for shelters.

The national statistics also hide a wide variation in success rates among the states, according to a study by the Heritage Foundation, a conservative think tank in Washington. Wisconsin, with some of the toughest sanctions and work requirements, has seen its rolls plummet more than 80 percent. Alaska, with one of the most liberal work policies, has culled its rolls by less than 10 percent. Such disparities are fueling an ideological battle about the next step welfare reform must take, or whether in some cases, as critics say in New York, it has already gone too far.

At the heart of the dispute is whether the discomfort some people are experiencing is acceptable. Conservatives see it as a necessary short-term adjustment as the old culture of dependency is transformed into one of self-reliance. To liberals, it is the first step toward the creation of a permanent underclass.

New York City falls in the middle of the debate in several ways. Its rolls have dropped 35 percent in the past three years, and it has one of the toughest work requirements in the country. But it also has fairly weak sanctions for people who fail to fulfill work and job-hunting requirements.

Mayor Rudolph Giuliani is hoping to emulate Wisconsin's success, so much so that last year he made Jason Turner, architect of the Wisconsin Works program, his chief of the Human Resources Administration. "You have to say there are two options: One is to work for the government in a public job [in return for temporary assistance], or work for yourself in a private job and make more money," says Mr. Turner.

In Wisconsin, this "must work" theory helped reduce the rolls dramatically. But the disputed question is whether people who left are now better off. A recent study there found that 62 percent of former welfare recipients had jobs. But two-thirds of them had incomes below the poverty level. And most say they are now worse off financially.

Then there are Wisconsin's 38 percent who are simply unemployed. "What's happened to those people who've left and are still not working? We still don't know," says Sheila Zedlewski of the Income Benefits Policy Center at the Urban Institute, a liberal think tank in Washington.

But many former welfare recipients are also proud they're working and don't want to go back to public assistance. Robert Rector of the Heritage Foundation says the issue isn't whether someone suffers from material poverty. He's more concerned about what he calls "behavioral poverty," which he defines as "an eroded worth ethic, welfare dependence, marital disintegration, and a whole host of problems that go along with that."

He adds: "What we need to combat is out-of-wedlock births, weak relationships between men and women, and dependency."

Many advocates of the poor question such assumptions, and they're also more worried about the immediate health and welfare of vulnerable people, particularly children. "Anyone can have a lower caseload, it's not very hard. All you do is a variation on locking the front door, pulling down the shades, and not answering the phone," says Liz Krueger of the Community Food Resource Center in New York. "That's what we're doing here in New York."

The city has been criticized for making it difficult for people to qualify for benefits. Besides enduring a rigorous application process, people must meet several times with a financial planner and go through a 30-day job search, during which they must show up on time every day.

Advocates for the poor say this puts many applicants in an impossible situation. For the month-long job search, they receive no benefits yet have to pay for child care. They also say applicants are routinely given wrong information, penalized unfairly, and turned away without cause. The Legal Aid Society and others have challenged the new system in court, and a federal judge has issued a temporary restraining order prohibiting the city from turning any more of its welfare offices into "job centers."

McWilliams in many ways represents the program's successes and drawbacks. He's eager to work. But he has not found a job, and he missed an appointment with a social worker to start his job search. As a result, his benefits check has been reduced.

But it won't be taken away all together. The state decided that was too punitive. Yet in Wisconsin, people who fail to meet the work requirements can lose their checks completely. And that, says the Heritage Foundation's Mr. Rector, is one of the keys to Wisconsin's success.

But for many people who work with the poor, including those who supported welfare reform such as former New York Human Resources Commissioner Lilliam Barrios-Paoli, that's pushing reform too far.

"There clearly were abuses, but now we've gone to the other extreme," says Ms. Barrios-Paoli. "Most people get into welfare because they don't see any other way."

That's true of New Yorker James Ham. With only a 10-hour-a-month job to support his family, he has applied for temporary aid. "If I didn't need the short-term help, I wouldn't be asking for it," says Mr. Ham, who was told he probably won't qualify. "If things don't get better, I might have to go into a shelter and allow the system take care of my wife and the kids."