Making Welfare Work

Policy Backgrounders | Welfare

No. 143
Thursday, December 04, 1997
by Dr. Merrill Matthews & Kristin A. Becker

Obstacles to Making Welfare Reform Work

While the states discussed above are making welfare work, many states are not. And some are actually impeding reform. While failure to achieve significant caseload reductions is often a result of legislative inaction, there are a number of other obstacles that can limit or stop even serious welfare reform attempts. The following are some examples:

"The number of teenage mothers in Vermont is down 25 percent, compared to 12 percent nationally."

(1) Elected officials who refuse to pass strong welfare-to-work policies. Even though a few states are celebrating welfare roll reductions of 50 percent and more, many elected officials remain unconvinced that welfare-to-work policies are effective. They argue that caseloads are dropping due to the good economy or to states' simply dumping welfare recipients from the rolls.19 Further, some elected officials are reluctant to move welfare-to-work legislation for fear of being attacked as enemies of the poor. Welfare reform usually has a political cost that diminishes only after caseloads plunge and state savings soar.

Some elected officials also complain that too few jobs are available for all their welfare recipients. For example, a recent report released by the U.S. Conference of Mayors predicted a shortfall of 194,000 jobs in nine major cities between 1997 and 1998.20 Not surprisingly, the paper claimed more federal money would help solve the problem.

For these and other reasons, many elected officials remain uninterested in implementing federal welfare legislation or passing state legislation. They may comply with federal law - by November 1997 all states, Washington, D.C., and the territories had submitted approved HHS reform plans21 - but they are not interested in ensuring that the reforms work.

(2) State welfare bureaucracies that are unwilling to implement legislated welfare reforms. One of the biggest hindrances to effective welfare reform is the recalcitrance of government employees charged with implementing the reforms. Since they deal with welfare cases daily, they can impede any reform legislation. Wisconsin has helped solve this problem by providing incentives for them to decrease the caseload.

"Public employee unions fear that dramatic declines in welfare caseloads will lead to job losses by their members."

(3) Public employee and other labor unions that fight welfare-to-work legislation or try to burden employers who hire welfare workers. Public employee unions are concerned that dramatic declines in welfare caseloads will lead to job losses by their members. Of course, the fear of government downsizing is exaggerated. Even though caseloads are declining dramatically in some states, clients who remain on welfare often need significant help to become job-ready. For example, they may have substance abuse problems, physical abuse histories or learning impediments. Social workers with fewer clients are able to focus on those who need more assistance.22

Figure V - Welfare Recipients Who Found Work Under the JOBS Program

In addition, labor unions have expressed concern that employers will substitute lower-paid welfare recipients for higher-paid union workers. The way to allay this concern is to ensure that employers do not replace union workers with welfare recipients. This is a fundamental principle of the Full Employment Program used in Oregon and six other states.

Unions can also undermine welfare reform by demanding that firms hiring welfare recipients abide by all existing labor rules, including the minimum wage law.23 In response to union concerns, Congress recently passed legislation that could hamper states' efforts to deal with some difficult welfare cases.24

(4) Failing to emphasize the need to go to work immediately. While federal reform legislation requires states to move welfare recipients into work, the legislation still permits recipients two years of benefits. About 20 states have passed legislation reducing the maximum time limit, with 11 of those requiring recipients to go to work immediately. However, others have made little attempt to tighten the time frame and are experiencing a slower decline as a result.

(5) Willingness to provide education and training without requiring work. Successful states know that the best training occurs on the job. Yet the federal government and many states provide expensive, time-consuming training programs or pay college tuition for courses that seldom lead to a job.

The worst example is the federal Job Opportunities and Basic Skills Training (JOBS) program. This program, created in 1988, requires states to provide education, training and support services for welfare recipients. Because the goals of the legislation are broadly defined, states have some flexibility in meeting the specific needs of their residents. But a recent report by the General Accounting Office (GAO) shows the JOBS program is a failure. According to the GAO, about $8 billion was spent on JOBS between 1989 and 1994, but "HHS does not know whether JOBS is reducing welfare dependency because it does not gather enough information on critical program outcomes, such as the number of participants entering employment and leaving AFDC annually."25

In an effort to assess of the cost-benefit ratio of JOBS, the GAO visited five locations reputed to place a strong emphasis on job placement. The agency found that:

  • At one location, training programs cost $6,000 to $7,000 per person over a six-month period, and another program cost $6,600 per participant - with welfare benefits additional in each case.
  • Nationwide, in mid-1994 about 10 percent of JOBS participants were placed in work-experience positions and about 1 percent were in subsidized jobs. The rest were never employed. [See Figure V, and compare it with Figure II.]

"Only 11 percent of JOBS participants found jobs."

Most JOBS participants apparently make the minimum effort necessary to stay in the program and continue collecting benefits. Thus they make little or no progress toward getting back into the workforce. State-based education programs exhibit the same pattern of failure.

(6) Paying extremely high benefits. People on welfare often face a choice between taking a low-paying job with few or no benefits and collecting welfare. The higher the welfare compensation package (i.e., cash plus benefits such as Medicaid, housing subsidies, etc.), the harder it is for social workers and employers to move recipients from welfare to work. As Figure VI shows, many states offer welfare compensation packages two to three times higher than the minimum wage. While no one advocates reducing benefits to zero, providing excessively high benefits deters people from accepting perfectly decent jobs.

Each of the obstacles listed can undermine a state's welfare reform attempts - and often has. For example, Texas sought to privatize the delivery of welfare services, which would have cost a number of public employees their jobs. Unions strongly opposed this approach, and the Clinton administration vetoed the state's waiver request to privatize.

In addition, the federal government can be a hindrance. Federal bureaucrats who interpret PRWORA very narrowly have limited state flexibility, as have congressional revisions to the legislation. As a result of all of these obstacles, the future success of welfare reform is uncertain.

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