Felix Salmon

The “success” of workfare when jobs are scarce

This year marks the 15th anniversary of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the Bill-Clinton- and Newt-Gingrich-led overhaul of cash assistance to poor families with children.* One of the major changes of that law was adding work requirements so that most cash assistance applicants (generally single mothers) couldn’t receive help without heading into the world of market-based work.** When the bill passed, and unemployment was below 5%, there was some concern about what would happen when the economy slowed and jobs weren’t as easy to come by.

We are now finding out. As this graph from the Center for Budget and Policy Priorities shows, as unemployment has sky-rocketed, and other social safety net program like SNAP (a.k.a. food stamps) have seen a surge in participation, Temporary Assistance for Needy Families (TANF) has barely budged.

Some policymakers see this as a sign of “success.” At least that was the word Robert Doar, the commissioner of New York City’s Human Resources Administration, used on Wednesday at this New York University event. Between December 2007 and December 2009, as the number of unemployed people in the state of New York increased by 91%, TANF cases increased by just 4%. Doar is proud of this.

Now, if we’d somehow solved the problem of poor children—the people for whom cash assistance is ultimately intended—then I might agree. But that’s hardly the case. According to the Census Bureau, in 2010, 22.0% of Americans under the age of 18 lived in poverty. In New York City, the figure is 30%.

That works against Doar’s hypothesis that one of the reasons TANF cases haven’t risen is that would-be recipients are getting along by tapping other social welfare programs, such as unemployment insurance. It also illustrates a major misconception about unemployment insurance, which only half of all unemployed workers get, and those coming from low-wage jobs—like the ones cash assistance recipients tend to move into—typically don’t.

A more likely explanation is that eligible people aren’t joining the program. In fact, that’s what the data shows, both in New York and nationally. Before PRWORA, more than 80% of eligible families participated. Today, about 40% do. In many states, benefits have become much stingier, which might help account for the decreased interest—except that the same drop is also seen in states like New York, where the dollar-value of benefits has remained essentially the same since 1996.

What has changed considerably is the process for applying for cash assistance. As policy analyst and TANF expert Bich Ha Pham detailed at the NYU event, an applicant in New York City must now attend 45 days of a 9-to-5 job-search workshop before having an application considered. Aside from the fact that the best way to look for a job is probably not to sit in a room with a bunch of other unemployed people for a month-and-a-half, this structure completely ignores the chaotic reality of being a single mother in financial crisis. (As the Community Service Society has shown, it also ignores the needs of high-school drop-outs, who would probably get a lot more out of a GED program than resume advice.) Indeed, a large proportion of applicants wind up being “non-compliant” during this initial 45-day job search.

The point here is not to bash Doar or his agency.*** The point is to illustrate that we can’t really have a conversation about whether or not linking cash assistance to market-based employment is problematic in a time of high unemployment, because program structure itself is distorting the behavior of would-be cash assistance recipients.

Although, in a way, maybe that is an answer to the question. As sociologist Kathryn Edin and social anthropologist Laura Lein illustrated in their 1997 book Making Ends Meet (and in this shorter paper), the problem never really was that cash assistance recipients didn’t want to work. Indeed, interviews with hundreds of women showed that, depending on the city, between a third and half were working, just not in the formal economy. (Other data show that many cash-assistance recipients face problems that make mainstream employment difficult—more than a quarter have work-limiting physical, mental, or emotional problems, compared with less than 5% of the general population.)

So maybe what we’re learning—should we be able to put aside the overly simplified view of the “deserving” and “undeserving” poor—is that it’s time for another round of welfare reform. But this time what needs to be reformed is how the system goes about understanding the needs and limitations of single working mothers. As Edin and Lein documented, barriers to formal employment include not just balancing work schedules with lone parenting and the added costs of having a job outside of the home (such as day care), but also the realities of low-wage work. Those realities include income volatility, the lack of unemployment insurance should a job be lost, and the lack of benefits that middle-class parents often depend on—such as sick days and the ability to make phone calls from work to check on children.

At the NYU event, even political scientist and PRWORA booster Larry Mead agreed that there is a lot of room for improvement in how work requirements are implemented. Much low-wage work is high-turnover and dead-end. The system, he said, would be much better if it focused not just on job placement, but also on job retention and job progression.

In other words, on reality.

*We typically call this law “welfare reform,” although that’s a bit misleading, since it didn’t address other social welfare programs, such as disability and unemployment insurance, workers’ compensation, Medicare, food stamps, and disaster relief.

**This is a fantastic bit of historical turnabout, since, as Theda Skocpol documents in this book, cash assistance to single mothers originally required women to stay at home to raise their children and not work outside of the home.

***While Doar-bashing isn’t the point, it is tough to avoid, especially when he says things like he finds it “troubling” that an increasing number of food-stamp recipients are working. Troubling, that is, because it indicates people are bilking the system, not because it reflects fundamental breakdowns in the labor market such as the decoupling of productivity gains from wage growth and rampant underemployment.