Making Welfare Work

Policy Backgrounders | Welfare

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

States that Have Failed at Welfare Reform

Figure VI - Pretax Value of Welfare Package by State

Like the states that have succeeded in reforming welfare, the states that have failed have much in common. Most have encountered one or more of the obstacles mentioned above. Unless they make concerted efforts to overcome the obstacles, the federal welfare-to-work requirement will have little impact.

"Hawaii's liberal welfare rules permit eligible persons to recieve benefits in the first day they enter a welfare office."

Welfare-to-Work Failure: Hawaii. Hawaii's 36 percent increase in welfare cases since 1993 is an anomaly. State representatives blame the economy, but Hawaii's 5.9 percent unemployment rate is only slightly above the national rate of 4.7 percent.

The real reason for Hawaii's growing caseload is that state officials remain largely unconvinced of the need for welfare reform. According to the state's welfare program administrator, "People say we're too generous, we're too nice. But a lot of people here feel welfare reform is too punitive. We do not want to mirror that."26

As a result:

  • Hawaii's liberal welfare rules permit eligible persons to receive benefits the first day they enter a welfare office.27
  • According to Michael Tanner of the Cato Institute, welfare recipients in Hawaii receive the largest welfare compensation package in the country, with an annual pretax wage equivalent of $36,650, or $17.62 per hour (1995).28

With Hawaii's inviting climate, generous welfare package and official willingness to make welfare easily available, is it any wonder that Hawaii's caseload is growing rapidly?

"Many states offer welfare compensation packages two to three times higher than the minimum wage."

Welfare-to-Work Failure: Alaska. One could not imagine a greater contrast between Hawaii and Alaska. Besides the climatic differences, Hawaii is a liberal state run by Democrats, while Alaska is conservative and controlled by Republicans - whose party has driven most successful states' welfare reforms. Yet Alaska has experienced only a 4 percent decline in caseload.

Part of the reason has to do with its indigenous population. There are some 200 villages inhabited primarily by Alaska's native population. Some of these villages are wealthy due to oil revenues. But many of them live at subsistence levels, continuing their traditional lifestyles of hunting and fishing.29 Some of these villages approach a 50 percent unemployment rate. However, since they enjoy their traditional ways, welfare-to-work reform is probably not appropriate.

Another factor is that welfare recipients in Alaska receive an annual compensation of $32,150, or $15.48 per hour, which is the second highest welfare compensation package in the country.30 [See Figure VI.] Even though both Hawaii and Alaska are high cost-of-living states, such high benefits make it very difficult for employers to compete.

Welfare-to-Work Failure: California. While California is home to 12 percent of the U.S. population, it has 19 percent of the nation's AFDC caseload and accounts for almost 30 percent of the nation's total AFDC expenditures.31 Over the same 10 years in which Wisconsin cut its welfare caseload by 54 percent, California posted an increase of 63 percent.

One reason for California's failure is the state's initial delay of welfare reform. California was able to implement a very limited welfare reform program, known as Greater Avenues for Independence (GAIN), prior to the passage of federal reform. However, critics contended the program was too limited and expensive. The state also had difficulty getting its federal waivers approved. As a result, it could not require work as a condition of receiving aid, impose time limits or provide financial work incentives for welfare recipients.32

Even so, the state might have implemented effective reform, as Gov. Pete Wilson hoped, when it responded to the federal welfare law. However, opponents watered down the legislation, and a state in dire need of reform is seeing little change.

Welfare-to-Work Failure: New York. New York faces a number of problems in attempting to implement welfare reform, especially in New York City, which has often been considered a welfare mecca. While New York City has been implementing welfare reform, its stress on workfare rather a program that would put welfare recipients in real jobs has limited its accomplishments.

"New York has 320,000 fewer people on its welfare rolls, but 200,000 of them are in the nation's largest workfare project, not in real, private-sector jobs."

Four years ago New York Mayor Rudolph Giuliani took action to move New York City's then 1.1 million welfare recipients off the rolls. In part relying on four-week programs known as "job clubs" to help welfare recipients find jobs, the city now has some 320,000 fewer people on its welfare rolls.33 However 200,000 of these have been relegated to the nation's largest workfare project. Critics argue that until recently the city focused primarily on placing recipients in six-month workfare jobs with continued benefits rather than on helping them find real, private-sector jobs.34

The movement into workfare has also aroused unions that want to ensure that welfare recipients are receiving protections and benefits and are not replacing union workers.35

In addition, two of New York City's most important welfare components, housing and child services, have experienced very little reform. While Giuliani created a new Administration for Children's Services to help with the city's endangered children, a recent analysis determined that the program had severe organizational problems.

The mayor's position is that he has taken the city a major step in the right direction - a fair assessment considering how far New York City had to come and the obstacles it still has to conquer. But he also concedes the city has a long way to go to reach the success that other cities and states have achieved.36

"Washington D.C., actually has undermined efforts to get its welfare recipients off welfare and into jobs."

Welfare-to-Work Failure: Washington, D.C. While the neighboring Virginia counties of Arlington and Fairfax are aggressively implementing welfare reform, Washington, D.C., has actually undermined efforts to get its 70,000 welfare recipients - about 25,000 households - off welfare and into jobs. The District did create a task force in the fall of 1996 to make recommendations about how the city should comply with federal welfare reform requirements. And the task force made a number of recommendations similar to those of many of the successful states. However, Mayor Marion Barry was reluctant to act on those reforms. "We're going to do this in a way that does not harm or hurt those it is designed to help," the mayor said. "We cannot give up on those people, even if they have given up on themselves."

While the District did pass a reform plan in December that received HHS approval in March, the city has already fallen behind in implementing the plan. The District had designated the Department of Employment Services (DOES) to train those going to work, but then removed $7 million from the department's training budget to cover other expenses. However, considering DOES's failing track record, it is not clear that preserving the money would have made the program successful.

As a result of these negative efforts from elected officials and bureaucrats, the District has had little success moving people off welfare. In addition, when it appeared it would be out of compliance with federal targets, and would thus lose some of its federal welfare dollars, the city sought a federal waiver to exempt it from complying with the law - a law whose requirements many other states have easily surpassed.

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