States that Have Made Welfare Reform Work

States that have incorporated most or all of the elements listed above are enjoying success at reforming welfare. A closer look at the most successful states shows why.

Welfare-to-Work Success: Wisconsin. Gov. Tommy Thompson has long promoted aggressive reform of the welfare system. He campaigned on a reform platform and rallied widespread support for his program. While many states have implemented welfare-to-work efforts only recently, Wisconsin committed to reform a decade ago, and the state's subsequent success has strengthened its political commitment.

• From January 1987 to January 1997, Wisconsin reduced its welfare caseload by 53,147, a net reduction of 54.1 percent - compared to a 9.6 percent increase in the caseload nationally over the same period.⁹

• In 1987 the state sent out welfare checks totaling $46 million each month; this year the figure is $21 million a month, a saving of some $300 million in 1997 alone.¹⁰

• Since September 1997, with the implementation of the Wisconsin Works (W-2) program, welfare caseloads have decreased by one-third and state officials estimate that by March 1998 the remaining two-thirds of welfare recipients will be working - every one of them will be doing something in return for a check.

Wisconsin's experience answers one of the most frequent criticisms of current welfare reform: that declining caseloads can occur only in a good economy. As Figure I shows, even during the economic slowdown of 1990 to 1993, when welfare rolls for the nation as a whole rose dramatically, Wisconsin's caseload remained level or declined slightly.

"Welfare reform in Wisconsin began with one simple premise," according to Thompson. "Every person is capable of doing something."¹¹ This philosophy was implemented in several phases, beginning with the Work First program, and expanded in 1995 by adopting the more comprehensive welfare reform legislation known as Wisconsin Works. In this legislation the state adopted a four-part plan for moving welfare recipients to work:

• Those who are job-ready immediately are placed in an appropriate, unsubsidized job, usually in the private sector.

• Those without a work history are placed in a subsidized job for a limited time - usually six to nine months.

• Those with few skills and poor work habits are placed in community service jobs for six to nine months to learn needed skills and work habits before being placed in the private sector.

• Those incapable of even community service work are placed in the state's W-2 Transitions program and required to participate in activities consistent with their abilities.

To centralize its efforts, Wisconsin established Job Centers that provide one-stop employment and job training.

Wisconsin complements its welfare-to-work program with several other reforms. For example, Learn Fare requires families to keep their school-age children in classes in order to receive a welfare check. Children First has increased child support payments significantly by giving fathers a choice: either pay child support or go to jail. Further:

• In January 1994, the state passed legislation deemphasizing the role of additional education, which is costly and often has little impact on getting people back to work.

• In December 1995, Wisconsin passed legislation that created incentives for state bureaucrats to help recipients leave the welfare rolls - or stay off them in the first place.

• In March 1996, Wisconsin began diverting potential welfare recipients into Pay for Performance, a program in which applicants first meet with financial and employment specialists who identify the alternatives to welfare, the services available to help them find employment and child care options.

As a result of Wisconsin's strong commitment to work for anyone receiving a welfare check and its willingness to try new and innovative programs, it has demonstrated that welfare reform can work, even in slower economic times.

Welfare-to-Work Success: Oregon. Welfare reforms being implemented in Oregon, Mississippi and six other states are based on the premise that most welfare recipients can go to work immediately and that most training should take place on the job. The vision underlying the Full Employment Program is that able-bodied welfare recipients should get a paycheck, not a welfare check. While this program varies slightly from state to state, in Oregon it includes:

• Subsidized jobs at the minimum wage or higher. Federal and state money that was used to fund food stamps and AFDC is used instead to subsidize mainly private-sector jobs. Employers must pay participating workers at least the minimum wage and as much as they pay like-trained employees. The program guarantees that participants receive more spendable income (when the Earned Income Tax Credit is included) than they would get from a welfare check. The average pay is more than $6.45 an hour.

• Incentives for employers. The program subsidizes employers in an amount equal to the minimum wage plus FICA taxes, unemployment insurance and workers' compensation insurance premiums.

• Opportunities for advancement. If the employer has not offered the participant an unsubsidized job after four months, the participant is paid for eight hours of job-search time every week for the next two months. If the participant does not find an unsubsidized job, at the end of the period he or she may switch to another subsidized job with another employer.

• Temporary continuation of noncash benefits. Those who would normally qualify for Medicaid retain their eligibility and receive child care if they need it.

• Educational opportunities. Participants in a subsidized job may receive guidance and counseling, including life skills classes. They may also enroll in classes to earn a General Education Development (GED) diploma. However, they learn job skills primarily on the job, not in a classroom.

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