As the economy worsened in early autumn, Rodney Carroll found himself fielding calls every day from reporters "wanting a bad-news story."
"They were looking for something along the lines of, 'Surely we're at the point where welfare recipients are going to be laid off and homeless,' " says Carroll, the president and chief executive officer of the Welfare to Work Partnership, a voluntary association of more than 20,000 companies committed to hiring welfare recipients.
Carroll quickly had his staff survey about 400 of the group's members to find out if the situation was as grim as the reporters expected. The answer? It's not.
Fifty-seven percent of the firms, representing 40 states and a national cross-section of industries, said they still needed entry-level workers in mid-October 2001. Of the firms that did not, 18 percent said they would need such workers by the year's end. Even more telling, 87 percent of all the companies surveyed said that during the prior two months they did not have to lay off any workers hired from the welfare rolls.
"So, we excitedly told the reporters, 'This is what we found,'" says Carroll. "I'm sure you read all about it in the papers," he adds with gentle sarcasm. No? That's because the national media took a pass on the "good-news" story.
With the economy shrinking and joblessness rising, it might stand to reason that welfare recipients new to the workforce will suffer disproportionately under the "last hired, first fired" principle. And there is genuine cause for concern, especially given the economic aftershocks of the Sept. 11 terrorist attacks. Nationally, unemployment surged from 4.9 percent in September to 5.4 percent in October, putting some 700,000 Americans out of work. It was the biggest one-month gain in the jobless rate in more than 20 years. In New York City, which suffered especially hard from the terrorist attacks, business groups issued a report in mid November estimating that by 2003 the city will have experienced a net loss of 57,000 jobs due to the World Trade Center disaster. Many of the unemployed will come from low-wage industries such as restaurants, hotels, retailing, and transportation that often are the first step on the path to self-sufficiency for those leaving welfare for work.
A severe and prolonged economic downturn almost certainly would set back countless families that have moved from welfare to work. And we won't know the downturn's exact effects on welfare caseloads until sometime in early 2002, when a clearer picture is available from the lagging data. Still, there's reason for hope. As of March 2001, the number of Americans receiving welfare had been cut by more than half -- 57 percent -- since former President Bill Clinton signed historic legislation in 1996 "ending welfare as we know it." The national poverty rate of 11.3 percent in 2000 virtually matched the record low set in 1973. As Peter Cove of the for-profit welfare-to-work agency America Works notes, "The jobs are out there."
"The economy's not as good as it was, but it was awful hot there for a long time," he says. "We have always been able to place people."
While welfare caseloads have stopped declining dramatically, trends remained positive through the first quarter of 2001, the most recent period for which national data are available. The number of individuals nationally receiving cash aid under the Temporary Assistance for Needy Families (TANF) program fell 4.4 percent, from 5.7 million to 5.4 million, between September 2000 and March 2001. Caseloads continued to decline even as the nation's unemployment rate began to rise, from a 30-year low of 3.9 percent in September 2000 to 4.3 percent in March 2001.
Four of the five states (California, New York, Texas, Pennsylvania, and Michigan) that together account for roughly half of the nation's welfare recipients continued to experience declining caseloads between September 2000 and March 2001. Only Michigan saw an increase, of 3.1 percent, and even with that rise its welfare population is still roughly a third of what it was at its peak in the 1980s.
Perhaps more importantly, state and local welfare officials and others helping recipients get and keep jobs say that reform's work requirements and expectations of personal responsibility have changed the culture of welfare for the better and have made recipients more resilient.
State and local agencies say they are working more urgently and strategically than in the pre-reform era to help families achieve self-sufficiency. In California, for example, state officials took a hard look at the post-Sept. 11 economic landscape and began channeling recipients toward growing economic sectors such as medical and security services. Meanwhile in Silicon Valley, welfare officials are aggressively reaching out to newly unemployed "alumni" and providing them with a range of job search and skills-upgrade services in hopes of preventing their return to poverty.
Nationally, thousands of former welfare recipients now have job histories that will enhance their prospects of finding new work should they be laid off, welfare officials say. And in a positive sign, at least some who have made the transition to work have decided not to sit by helplessly waiting for the axe to fall; they are taking the initiative to guard their own economic well-being.
Chicago's Project Match, a nonprofit group that helps poor people get jobs and move up the career ladder, experienced a jump in its enrollment in the late summer and early fall of 2001. "Instead of 10 new people coming in a month we're now seeing 20," says Toby Herr, the group's director and a senior research associate at Chicago's Erikson Institute. "What's significant is that these are people who aren't connected to any sort of mandatory work program. A lot are former TANF recipients. And there's been a significant increase in men that we just hadn't seen before. People are saying the economy is putting pressure on them to keep their job. We're seeing more and more people consciously reaching out to get help finding and keeping work."
In the five states with the largest caseloads, welfare officials are watching economic trends closely. Yet overall they remain optimistic about long-term prospects for helping more welfare families achieve and maintain self-sufficiency.
In California, which has the nation's largest welfare population, the rolls declined by 52 percent between 1996 and 2000 and stood at roughly 1.25 million recipients in March 2001. But according to Andrew Roth, a spokesman for the state department of social services, the state's caseload stopped falling in early 2001.
"Obviously, the dot-com bust showed us that the economy wasn't going to be great forever, and so we began preparing for leaner economic times," Roth says. Those preparations included getting the county offices that administer the state's Calworks welfare program "to hold job fairs and engage current and former clients in retraining and otherwise work with them."
The preparations also included thinking strategically about changes in the state's economy. "Here in California, the service industry has always been a big partner in our welfare-to-work effort," Roth says. "It's easily the largest employer of folks making the transition to work and it will continue to provide a number of jobs."
But with airlines, Hollywood studios, amusement parks, and the like suffering from the effects of Sept. 11, "we need to shift that focus," Roth continues. "We're trying to move people toward hospital and security services. There's always a demand for health care, and in the post-Sept. 11 environment we expect higher demand for workers in security."
In Santa Clara County, Calif., the home of Silicon Valley, the unemployment rate leaped from 1.8 percent to 6.2 percent between July and November 2001. Yet the county's welfare caseload has remained relatively stable. Alette Lundeberg, manager of the county Calworks program, explains that "because we had such a robust economy many of our clients have been working for a long time and therefore qualify for unemployment."
"Our caseload hasn't gone up yet," she says, "but we expect it to begin rising in early 2002 as their unemployment benefits run out." Forty-four percent of the county's welfare job placements have been in the high-tech sector, followed by the retail, medical, and electronics sectors.
The county's welfare caseload in October 2001 was at an all-time low of just under 10,000 families, down from a peak of about 34,000 families in 1994. Of those families still on the rolls, about 3,000 have heads of households who are working full time. Of that group, half have earnings low enough to continue to qualify them for cash assistance; the other half is off cash assistance but still qualifies for support services.
Lundeberg says her office is increasingly hearing from "alumni" of the welfare-to-work program who have either lost or are concerned about their jobs. "We're returning their calls and telling them to come in," she notes. "We are choosing to serve them with reemployment assistance and access to skills upgrading rather than wait for them to sink back into poverty."
"Long-term post-employment service," she says, "is important if TANF is going to be about beginning to eliminate poverty."
In New York State, which is still recovering from Sept. 11, "it is still too early to tell if we are experiencing or will experience" significantly higher welfare caseloads due to the combined effects of the economic downturn and the terrorist attacks, says Jack Madden, a spokesman for the state office of temporary and disability assistance.
The state's welfare caseload declined from just over 1.6 million recipients in January 1995 to 669,974 in August 2001 -- a 59 percent reduction. The short-term trend has been more mixed, however, with the caseload falling from 673,033 recipients in September 2000 to 617,737 in March 2001 and then creeping back to just under 670,000 on the eve of the World Trade Center disaster. "Our economy was fairly strong before Sept. 11, and we really hadn't seen an effect on our caseload before then," Madden says.
Madden notes that there are "a number of emergency assistance programs out there" for current and former welfare recipients who lost their jobs due to the attacks. They include disaster unemployment assistance for those who have not worked long enough to qualify for regular unemployment insurance and a disaster food stamp program.
Madden says the state expects that some welfare recipients new to the workforce will lose their jobs due to the recession. He notes, however, that they will be better able to weather the storm than those in past economic downturns. Under legislation signed by Gov. George E. Pataki last August, newly employed workers earning up to double the poverty level are eligible for transitional services such as education and job training, employment assistance and placement, child care, help collecting child support, and alcohol and drug abuse treatment. The New York Times also reported in November that New York City has begun offering municipal jobs to welfare recipients reaching their five-year lifetime limit on federal cash assistance. The worker's wages are being paid out of the state's $1.5 billion annual welfare windfall -- the federal money that states reap by reducing their caseloads below 1995 levels.
Welfare recipients who have entered the workforce "now have a work history, they understand the importance of work in their personal lives and they will be able to jump back into employment when the economy picks up steam again," Madden predicts. "You have to compare that with the old welfare system, which kept people in poverty regardless of the economy."
Texas's welfare caseload has declined 56 percent since 1995, the year reform began in the state, falling from a monthly average of 782,379 recipients six years ago to 345,282 recipients in August 2001. The number of recipients, however, remained essentially flat between August 2000 and 2001.
Mike Jones, a spokesman for the state department of human services, attributes the leveling off in part to the fact that the state is "now getting to its hardest to serve welfare population," and also to a new earned-income-disregard policy that is keeping people on the rolls longer. Under the terms of a 1999 state law that took effect in March 2001, 90 percent of a newly employed welfare recipient's earned income is not counted toward her eligibility for welfare for her first four months of employment.
According to Jones, the state's rising unemployment rate had not affected its welfare caseload as of October 2001, although it did seem to generate a small increase in applications for food stamps. "Fortunately, our economy is much more diverse than it was in the 1980s when we were heavily dependent on oil," he says. "Obviously, we're seeing layoffs in the high-tech sectors in Austin and Houston, and we've seen some impact in the airline industry. But so far, there's no sign of downward pressure on jobs held by entry-level workers."
Pennsylvania, which has experienced a 42 percent decline in welfare recipients since reform began in 1997, is in a similar situation. "We've seen a minimal increase in our caseload, on the order of points of a percent" between the summer and fall of 2001, says Jay Pagni, a spokesman for the state department of public welfare. "We're in a wait-and-see mode."
The state's caseload declined from 484,321 recipients in January 1997 to 203,849 in March 2001. As in Texas, Pagni attributes part of the leveling off to the economy and part to a policy change. In Pennsylvania's case, the state this summer suspended the five-year lifetime time limit on cash assistance for up to one year for recipients who are working between 30 and 40 hours a week. "We are seeing a number of individuals taking advantage of that change," Pagni says.
"Obviously, we're keeping a close watch on the economy," he continues. "Our hotel and travel industries certainly have taken a beating since Sept. 11, but the diversity of our workforce should help us weather any kind of storm."
Michigan alone among the five states with the biggest caseloads experienced a significant increase between September 2000 and March 2001, rising from 191,630 recipients to 197,480, or 3.1 percent. According to Doug Howard, director of the state family independence agency, applications for food stamps began rising "sometime in 2000, and we began seeing a slight upward shift in cash assistance in late 2000, early 2001."
Howard, who is also the president of the American Public Human Services Association, the professional group for state and local welfare administrators, attributes the rise in food stamp applications both to the economy and to enhanced outreach efforts. But the increase in cash welfare, he says, "is being driven much more by the economy."
"We started to see more applications coming in, and at the same time people weren't exiting as fast," he notes.
Last year Michigan had a monthly average of about 70,000 families receiving cash assistance, and this year budgeted for 75,000 a month. In mid-October Gov. John Engler sought supplemental funding from the state legislature to handle an average monthly caseload of up to 79,000 families.
Howard notes, however, that "even though the unemployment rate has picked up, our caseload is still only about a third" of what it was when it peaked in the 1980s at 230,000 families. And he remains very optimistic about long-term prospects for future reductions.
Welfare reform, he says, has had "a pretty dramatic effect" on the attitudes of recipients and the culture of the bureaucracy. "New entrants now come in with the expectation that welfare is temporary and transitional and that they need to move into employment and help their family. There's been a cultural change for our staff as well, a new attitude about moving families quicker."
"Opportunities may be scarce now," Howard continues, "but those changes in attitude and culture have helped a lot of families that have been on assistance in the past build a resume. When the next opportunity comes up, they will be a lot better served."
