Report on So-Called Welfare Reform
|February 17, 2002||Posted by Staff under Archive, Progress Report, The Progress Report|
New Report on So-Called Welfare Reform
WELFARE REFORM LEAVES MOST FAMILIES IN POVERTY — NEW STRATEGIES PROPOSED
As you probably know, welfare payments to corporations cost taxpayers far more than welfare payments to poor individuals. When welfare programs for poor individuals were dismantled in 1996, welfare payments to corporations continued to grow. Here is a report about the results of the so-called welfare reform effort which was applied to poor individuals only.
The Cage of Poverty released by the Economic Roundtable
Today the Economic Roundtable released a report, called The Cage of Poverty, challenging the “work-first” premise that has guided past efforts at welfare reform in Los Angeles and throughout much of the United States. According to “work-first,” an immediate and continuing effort to work will enable welfare parents to become economically self-sufficient. Based on studying the earnings of 100,000 welfare parents in Los Angeles over an 8-year period, the report concludes that the work-first approach is valuable for reconnecting welfare recipients with employment, but that by itself it is completely insufficient to enable most welfare workers to rise above poverty.
The title of the report is taken from Martin Luther King, Jr.’s 1963 letter from the Birmingham jail in which he described the despair of people “smothering in an airtight cage of poverty in the midst of an affluent society.” The report finds that this image of entrapment describes the wage-earning lives of three-quarters of welfare parents who are now trying to support their families as part of the army of the working poor. After a jump in earnings when they move from not having a job to having a job with low pay, most reach an income ceiling within three years, and remain far below the poverty threshold.
“We are seeing evidence that it is possible to dramatically increase employment rates among welfare recipients. However, we are not seeing long-term growth in earnings for most welfare workers,” stated Daniel Flaming, one of the authors. “This is a very important issue for Los Angeles County because we have more people below the poverty level than any other county in the nation, and more than all but four states.”
“The image of stable employment and progressive advancement suggested by the work-first motto ‘a job, a better job, a career’ needs to be reconsidered in light of this information about job turnover and low earnings among welfare workers,” said Mark Drayse, another of the authors. The report says most working welfare parents have:
- Persistent low earnings, that combined with the Earned Income Tax Credit average about two-thirds of the poverty threshold for experienced workers.
- Frequent job turnover and a high level of instability in earnings. Jobs typically lasted 2 to 3 quarters, and only 17 percent of workers remaining employed 10 or more quarters with one employer over a three-year period.
- Widespread underemployment, with almost half of workers having no quarters with full-time earnings over a three-year period. Welfare workers averaged 27 hours of work a week when employed.
The report identifies a link between the jobs available to low-wage workers and the skills those workers develop and are able to offer future employers. It states that this interplay between labor supply and demand influences the course of the regional economy. An abundance of low-skilled workers attracts low-wage industries. To the extent that these industries grow and are the primary employers available to welfare workers, they remain trapped in insecure, low-wage jobs.
The report recommends a stronger focus on economic growth that creates living-wage jobs for the working poor. Although average earnings for all Los Angeles workers grew by 4 percent over the past decade, most welfare workers did not share these wage increases. Higher levels of employment enabled welfare parents in Los Angeles to earn an additional $240 million a year. The estimated net effect on the regional economy was to create over 7,000 jobs through their increased consumer expenditures, increase regional economic output by $493 million, and generate $13.8 million in additional taxes paid to local government. If the average earnings of welfare workers had increased to reach the poverty threshold, these benefits to the economy would have been 142 percent greater.
Data in the report suggests that more workers have the potential to escape poverty if given adequate support. This conclusion is based on the presence of many workers who:
- Obtain high-wage jobs after entering the work force, but then are unable to sustain this success and have irregular employment and plummeting earnings;
- Have above-poverty earnings before going on welfare, but sub-poverty earnings after they return to work; and
- Have levels of education, language skills and achievement test scores comparable to workers with above-poverty earnings, but remain in poverty.
Differences in earnings among working welfare parents were analyzed based on their skills, work histories, and industry wage levels. The report concludes that Los Angeles’ welfare-to-work program needs to:
- Provide education and training for more parents in order to strengthen their skills and employment competencies;
- Provide employment experience that builds on skill development programs and provides entry to industries that pay living wages;
- Provide supportive services, particularly childcare, to help parents stabilize their lives and meet the needs of both their children and their employers; and
- Increase the availability of jobs that provide above-poverty earnings.
Supervisor Yvonne Brathwaite Burke, who helped the authors gain access to data used for the study, said, “It is sobering that so many working welfare parents have been unable to rise out of poverty. I agree with the recommendations to increase the success rate for welfare-to-work programs. We need to expand the availability of high-quality childcare. We also need to provide more parents with work experience in jobs that pay living wages, and to make sure that at the same time we help them acquire the skills needed to keep those jobs.”
The Economic Roundtable is a Los Angeles-based non-profit, public-policy research organization. The complete report can be downloaded from the internet at: www.economicrt.org
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