The Best Policy

Welfare Scare

Is the new welfare law really as cruel as they say?

You have a reasonably soft heart. You wouldn’t feel comfortable seeing little kids begging in the streets, or stepping over the bodies of old folks gasping in the gutters. Maybe you read the Atlantic Monthly article by Peter Edelman, a former Clinton-administration official, who called the welfare-reform law signed last fall by his former boss “terrible legislation.” Edelman says the result will be “more malnutrition and more crime, increased infant mortality, and increased drug and alcohol abuse.” You don’t defend the previous welfare system–who could?–but you wonder: Are the scaremongers right?

How worried should you be? Here’s a quick review of what is–and isn’t–likely to be truly troublesome as the great welfare-reform experiment begins.

1 States that are too “kind.” Some folks’ worries are the opposite of Edelman’s. They fear that the welfare system won’t change enough.

The new welfare law abolishes the current federal welfare-entitlement program, Aid to Families With Dependent Children, and replaces it with block grants to the states. States have to create replacement programs that set limits (five years) on how long most (four out of five) families can get welfare, and ensure that half the families still on the rolls in 2002 have at least one (part- or full-time) working member. States also have to contribute 75 percent of the money that they used to spend on AFDC to the new Temporary Assistance to Needy Families (TANF) program–the so-called Maintenance of Effort (MOE) requirement.

Beyond that (and a bunch of other eye-glazing rules and exceptions to exceptions that will keep federal regulation writers off the dole), states are basically free to offer whatever combination of cash and services they think is best.

So what are states likely to do? One option is–nothing much. If a state really wants to maintain the status quo, it can probably get away with it. Welfare law has long been loaded with requirements that states must cut fraud on the rolls, move recipients into jobs, provide necessary service, blah, blah, blah. The requirements go unmet. The governor makes a few calls to the White House or Capitol Hill. Eyes are averted.

Moreover, the new law, for all its seeming toughness, allows states plenty of leeway if they want to be generous. And welfare consultants are already showing the way. States are free, for example, to redirect the money that they used to spend on matching federal AFDC grants (about 45 percent of the total) to provide help for families who have lost their “temporary assistance” coverage. The new law also provides an incentive for states to use their own money to continue grants to families that exhaust their five-year eligibility.

Not so long ago, states like New York, Massachusetts, and California might have brazened it out. But times have changed. Most states have already toughened their welfare programs under waivers granted under the old pre-reform rules. Some of these waivers are for more generous programs, but others are just as tough as the new law.

2 States that are too mean. So how nasty might states get? Some were pretty mean already. People tend to forget that under the old rules, states got to set the key parameter–the benefit level. AFDC payments ranged from 11 percent of the official poverty line in Mississippi to about 65 percent in New York’s Suffolk County. (This doesn’t count food stamps, Medicaid, the Earned Income Tax Credit, and federal aid for housing, home heating, child care, and so forth, which will still be available.) At least in theory, Mississippi now could replace even its small cash contribution with the proverbial “bus ticket North.” Not likely, perhaps, but worth watching out for.

3 A shortage of money. Under the old rules, the federal government would match the money states spent, according to a formula that took account of state need and benefit levels. The new rules cap federal welfare payments at the 1995 level (with some allowances for rising unemployment and other contingencies). For now that’s a windfall for all but a couple of states, since welfare caseloads have dropped by almost 10 percent nationally since 1995. But what if times get tough and caps start to pinch? Well, the Food Stamp program has long been capped–supposedly–yet Congress has never failed to provide extra funds when governors needed them.

4 A lack of “suitable” jobs. Welfare advocates are already complaining that recipients will be pushed into “dead-end” jobs. But successful job-program operators have learned a key lesson since the last time we had this argument (back in Jimmy Carter’s day): Most jobs in this economy are “dead end.” People who work hard and build a good record move on to better jobs. And the labor-market success of millions of unskilled immigrants in recent years makes it hard to sustain the case that only highly trained or educated workers are in demand–at least for the moment.

5 Incapable workers. What about welfare parents who, in practice, just cannot hold jobs (or perform other “work activities”) as the new law requires they do after two years on the rolls? Maybe they have low mental or physical abilities. Maybe they are drug or alcohol addicts or have multiple family or behavioral problems–or maybe they simply have a bad attitude. Nobody really knows how big a problem this is, and the extent will surely differ from area to area. But we won’t know till we push the limits.

Many states are already finding that a simple shove can have surprising results. Wisconsin’s ambitious (and relatively expensive) welfare reform has cut its caseload by more than half. Massachusetts put in a tough program in November 1995 and has seen its welfare rolls drop to the lowest level in 23 years. Oklahoma’s welfare rolls have dropped by 17 percent over the last year, even though it has only talked about tougher rules.

Healthy job markets surely helped, but the economy has boomed at other times with little effect on welfare. State officials think many potential recipients simply got the message that times have changed, and found jobs on their own. Moreover, credible studies have shown that many families have hidden income. A recent study from California’s Public Policy Institute, for example, found that nine out of 10 teen-age welfare mothers in the state have income sources other than AFDC. Reporters across the country who have set out looking for early horror stories have returned with articles that are, on the whole, remarkably upbeat.

6 Not enough training and supportive services. The new law is pretty tough on training. Only short-term job-readiness or search assistance, on-the-job training, or a maximum of 12 months of vocational training count as “work activities”–though recipients who are working part time can take other classes in their spare hours. But training programs have a dismal record. Some have even been shown to impede movement into jobs. Los Angeles County, for example, was having no luck with its basic-education GAIN (Greater Avenues for Independence) program until, two years ago, it shifted the focus to getting jobs. The result: a 160 percent increase in job placements and big benefit savings.

As for “supportive services,” in Massachusetts, at least, most of the special jobs set aside for welfare recipients have gone unfilled, and there has been no increased demand for medical help or child-care assistance.

Two things you really should be alarmed about (both of which President Clinton now proposes to remedy):

People between the ages of 18 and 50 who have no kids lose food stamps after six months if they aren’t working or in training. That might not sound so tough. Street-level trafficking in food stamps has got out of hand, and it’s time for another round of cleanup and streamlining. And many of the people in question are real deadbeats–drunks, addicts, and the like. But that’s just the point. Food stamps are the last resort, the pittance that a rich country doles out to even its least “deserving” citizens. Of course, this new requirement, like many others, is “waivable,” and many big cities have already got–or applied for–dispensation.

Legal immigrants who are not yet naturalized (unless they are refugees, seeking asylum, have worked here 10 years, or are veterans or in the military) lose both food stamps and benefits they might be receiving from the Supplemental Security Income (SSI) program for the aged and disabled. Most immigrants are supposed to have sponsors who stand ready to make sure they do not become public dependents. Yet the number on SSI, especially, has soared. Putting some teeth into sponsorship requirements for future entrants, as the new law will do, is reasonable. But pulling the rug out from under people who may have no practical recourse is unfair. And unlike the cutoff for childless food stampers, this requirement can’t be “waived” away.