Of all the New Democrat reforms launched during the last decade, none
was bolder or more far-reaching than replacing welfare with work. To complete
this unfinished revolution in social policy, the new administration must
intensify efforts to help people move off the welfare rolls and out of
poverty. The president should challenge Congress to make a simple but
powerful proposition the touchstone of our 21st century social policy:
No American family with a full-time worker will live in poverty.
In the 1990s, President Clinton crystallized public disenchantment with
public assistance by vowing to "end welfare as we know it."
In the 2000s, the organizing principle of U.S. social policy should be
"making work pay" ensuring that through a combination of private
wages and public supports all families can lift themselves out of poverty.
Beginning with a major 1993 expansion of federal support for the working
poor and culminating in the landmark 1996 law ending the 61-year-old entitlement
to cash welfare, the Clinton administration led the way in fundamentally
revising the terms of the compact between society and the poor. By conditioning
public assistance on work, it replaced the old ideology of "welfare
rights" with a new social bargain based on mutual responsibility.
Now that work has become a universal obligation, it's time for society
to hold up its end of the bargain by making work pay. The problem is simple:
Many of the bottom-rung jobs available to welfare mothers and low-skill
workers don't pay enough to provide even a minimally decent standard of
living for their families. The solution is to strengthen work incentives
and rewards by supplementing the income of families with low-wage workers.
This formula is already working. According to social analysts Doug Besharov
and Peter Germanis, total aid to the working poor increased by $25 billion
a year between 1993 and 1999. Thanks to a strong economy and the big boost
in public aid to working families, poverty fell sharply over the last
decade, from 15 percent in 1993 to 11.8 percent last year. Child poverty
likewise declined, from 21.8 percent in 1994 to 16.9 percent last year.
The new president should commit the nation to bringing both the overall
poverty rate and the child poverty rate below 10 percent in four years.
Driving poverty down is not simply a matter of spending more money, although
that will indeed be necessary to raise the living standards of low-income
working families. We also need to modernize the rest of America's anti-poverty
policies and programs. That means subjecting the whole array of federal
needs-based social programs to hard scrutiny. No less than welfare itself,
these programs -- food stamps, Medicaid, child care, housing and transportation
assistance, and others -- need to be reinvented and reoriented around the
twin goals of finishing the job of welfare reform and helping working
families lift themselves out of poverty. This will not be easy: Each of
these programs constitutes its own bureaucratic fiefdom with vocal, well-organized
constituencies who can be counted upon to resist change. The administration
must summon the political will to overcome bureaucratic inertia and resistance
from groups deeply invested in the status quo, including public sector
unions and self-styled advocates for the poor who opposed welfare reform.
In 2002, the welfare block grant created in 1996 (called Temporary Assistance
for Needy Families, or TANF) comes up for reauthorization, along with
the main federal child care subsidy and the food stamp program. The president
should block attempts to cut TANF funding and urge Congress to redefine
its purpose to include providing supports to the working poor. Specific
targets for moving children and families out of poverty should be written
into the grant, with special rewards going to states that meet or exceed
their goals. By launching a searching re-examination of federal social
programs next year, the administration can begin laying the groundwork
for merging TANF into a comprehensive income security and work support
system for all low-income families.
Specifically, the president should take the following steps to begin
creating a "seamless web" of aid both for families leaving welfare
and for those who are working hard but are still poor:
1) Press the states to plow unused federal welfare dollars into the emerging
support system for poor families. States should invest these idle dollars
now, both in efforts to help hard-core recipients get on the job ladder
and to make work pay for those stuck on the bottom rungs. As the welfare
caseload has plummeted so has federal spending, which peaked at $23 billion
in 1994. With the federal contribution now fixed at $17 billion a year,
the states have been piling up unspent funds exceeding $8 billion.
Helping long-term and hard-to-employ welfare recipients will cost more,
because it will engage a wider array of social services. In addition,
states may need to create public jobs as stepping stones to full-time
work in the private sector. The best model here is not "workfare,"
in which welfare recipients work off their grants, but "wage-paying
community service jobs," which give workers a paycheck for the actual
hours they work. A good model is Washington state's Community Jobs program,
which gives mothers a chance to work 20 hours a week for a real paycheck,
often in settings where they also get occupational training. Two-thirds
of participants find full-time jobs after leaving the project. Also promising
is the public-private Transitional Work project in Philadelphia, which
places long-term welfare recipients in full-time community service jobs.
2) Break down bureaucratic barriers. Welfare rolls are shrinking, but
thus far there are few signs the welfare bureaucracy is following suit.
Moreover, state welfare agencies sometimes work at cross-purposes with
state employment agencies which have actual experience in job placement.
Separate federal funding streams contribute to the bureaucratic compartmentalization
and the fragmentation of public resources that should be serving the same
mission.
States need to trim their own payrolls, force separate bureaucracies
to cooperate and retrain welfare workers whose jobs have changed from
determining eligibility and handing out checks to helping prepare people
for the world of work, match them to jobs and get other supports they
need to keep working. Increasingly, their jobs entail more intensive case
management to help parents overcome multiple barriers to work and to help
working families get the support they need to exit poverty.
Getting multiple services now means running a bureaucratic gauntlet of
programs, each with separate funding streams, eligibility rules, and reporting
requirements. The administration should urge Congress to consolidate as
many federal programs as possible into broad, performance-based grants
that offer the states resources and flexibility in return for concrete
results.
We also need to inject more choice and competition in welfare-to-work
and other social services. Instead of trying to monopolize service delivery,
government should do more to enlist the energies and talents of private
actors, including businesses and nonprofit voluntary and faith-based institutions.
For example, private companies such as America Works in New York and Maximus
in Milwaukee have contracted with local authorities to prepare welfare
recipients for work, find them jobs and, most important, keep them working.
Through pay for performance contracts, government can stimulate a competitive
market for welfare-to-work services while minimizing the risks of failure,
since firms that don't produce don't get paid. Nonprofit civic and religious
organizations such as Goodwill Industries play an important and growing
role; the 1996 law included a "charitable choice" provision
that allows states to contract with faith-based groups to help families
leave welfare for work.
3) Expand the Earned Income Tax Credit (EITC). The welfare revolution
began in 1993 when Congress approved President Clinton's call for a major
expansion of the EITC, a refundable tax credit for low-wage workers. EITC
spending more than doubled, from $18 billion to $30 billion, making it
our largest and most effective anti-poverty program. The White House reported
that the EITC lifted 4.3 million people out of poverty in 1998, more than
twice as many as in 1993. The only blemish on the credit's remarkable
success is a high error rate (25 percent) which must be brought down if
the program is to sustain political support.
The new president also should ask Congress to expand the minimum credit
for families with three or more children and reduce the "marriage
penalty" that occurs when two low-wage workers marry, pushing their
combined incomes over a threshold that triggers reductions in EITC payments.
As David Riemer argues elsewhere in this magazine, we need to revamp our
tax system to reduce the steep marginal tax rates working families face
as their incomes rise and EITC payments and other public subsidies begin
to phase out.
4) Invest more in child care. For single mothers trying to move from
welfare to work, the toughest challenge often is finding safe and affordable
day care for their children. Although federal and state child care spending
rose by 50 percent from 1993 to 1999 (from $8 billion to $12 billion),
millions of working poor households still receive little or no help in
paying for child care.
Following the lead of Wisconsin, Illinois, and Minnesota, the states
should boost their own child care spending. For its part, Washington should
increase the Child Care Development Block Grant and earmark the new money
for child care vouchers. Vouchers expand choices for parents, who are
best suited to judge whether informal arrangements or formal, center-based
child care best suits their needs. It is also time to increase the child
and dependent care tax credit and make it refundable, so that it helps
families that don't earn enough to pay taxes.
5) Promote responsible fatherhood. Children who grow up without their
fathers are five times more likely to be poor than children who live with
both parents. While the first phase of welfare reform naturally enough
focused on breaking the cycle of dependency for mothers, the next phase
must demand more work and responsibility from fathers as well.
The Clinton-Gore Administration launched the most sweeping crackdown
on "deadbeat dads" in history. It streamlined rules for establishing
paternity and created a national directory to track delinquent parents
across state lines. These initiatives, coupled with more vigorous state
enforcement of court judgments, paid off handsomely: Child support collections
rose to nearly $16 billion in 1999 -- double the amount collected in 1992.
Nonetheless, some fathers are reluctant to pay up because the money goes
straight to government, which then gives a portion of what it collects
to the mother. The new administration should embrace Sen. Evan Bayh's
(D-Ind.) fatherhood initiative, which would increase the "pass-through"
to mothers as well as boost federal support for community-based groups
that engage fathers in their children's lives. Also critical is public
support for voluntary efforts to mentor the many poor children whose fathers
are in prison.
In addition to cracking down on "deadbeat dads," we need to
help "deadbroke dads" who can't pay child support because they
don't have jobs. Taking advantage of healthy welfare surpluses, the states
should build welfare-to-work systems that help fathers as well as mothers
find jobs and hold on to them.
6) Help people go where the jobs are. Getting to a job is often more
difficult for welfare recipients than finding one. Analysts Margy Waller
and Mark Alan Hughes have noted that work requirements entail the time
and financial costs of a daily commute, yet public transit too often fails
to meet the needs of low-income workers. In a 1999 report, they wrote:
"Public transit is geared mainly to accommodate 9-to-5 workers who
need to get from one high-density locale to another during the normal
work week. In contrast, the entry-level jobs most welfare recipients are
qualified for are often located in warehouses, plants, strip malls, and
office parks that sit astride suburban roads rather than city streets.
These new hires also often work 'on call' or on rotating shifts, or are
assigned to work at night or on weekends when public transit is infrequent
or simply not available."
What welfare mothers need to get to work and run daily errands is what
everyone else has -- a car. Public policy should make it easier for them
to buy one. The administration should urge states to allow welfare funds
to be used for purchasing a car, with a "copay" approach to
ensure that aid goes to those who are working and are prepared to manage
an asset like an automobile. It should also press for legislation that
would allow poor families to use individual development accounts -- tax-favored
savings accounts where the government matches contributions made by low-income
families -- to save for a car as well as for other purposes such as college
or home ownership.
7) Cover the uninsured. Studies show that most people who leave welfare
for jobs do not get health coverage from their employers. Yet Medicaid
use by the same group also has fallen. Just as it highlights flaws in
our child care and transportation policies, welfare reform adds urgency
to the case for universal health care coverage. Elsewhere in this issue,
David Kendall and others propose a non-bureaucratic way to dramatically
reduce the ranks of the uninsured.
8) Help working families buy homes. Housing policy can also be a powerful
tool for matching welfare recipients to jobs. Rental vouchers can help
low-income families move where the work is, while at the same time reducing
the concentration of poor people in inner city neighborhoods and housing
projects. The new administration should expand the U.S. Housing and Urban
Development Department's welfare-to-work vouchers and its initiative to
allow the use of Section 8 vouchers to help families buy their own homes.
It can also promote home ownership by expanding individual development
accounts, which help families save for down payments.
By realigning social policy with broadly shared values of work, family,
and parental responsibility, "ending welfare as we know it"
has gone a long way toward removing the stigma attached to public assistance.
Americans are more willing today to spend more to help working poor families,
as shown by polls as well as increased social spending in Washington and
the states. To paraphrase a famous slogan from the republic's early days,
the public's attitude seems to be: "Billions for work and self-sufficiency,
not one penny for dependence."
The new administration should tap this revived spirit of public generosity
and social responsibility to complete the welfare revolution and to set
a new and ambitious goal for the nation: enable all working families to
lift themselves from poverty.
Blueprint Keywords: Extra Welfare Reform
