Proposals Won’t Make Welfare Work Here

Jane Campbell and Margy Waller
Margy Waller Visiting Fellow, Economic Studies and Metropolitan Policy, The Brookings Institution

March 24, 2002

There were two big surprises for state and local leaders in the Bush administration’s welfare reform proposal, and neither was pleasant.

First, the president proposed new work requirements that probably would be difficult to implement successfully and would significantly reduce state flexibility. Second, he barely mentioned the need to support low-income, working families that have managed to leave or avoid welfare but still are poor.

In 1995, when Congress and President Bill Clinton were debating how to end welfare as we knew it, then-Gov. George W. Bush made it clear that he thought states should be free to set welfare policy without federal interference. Just last year, Tommy Thompson, Secretary of Health and Human Services, asserted, “One of the lessons I learned during my years as governor of Wisconsin was that for people to move from dependency to success in the work force, you had to be willing to invest in programs that support working families.”

So, it was a shock to see this president and his secretary of human services propose state mandates and reduced flexibility that would lead to reduced funding for working families.

The president announced plans to increase significantly the work standards states must meet: Individuals would have to work additional hours at a more limited set of activities than current law permits, and states would have to significantly increase the percentage of welfare recipients participating in these activities.

These requirements might make sense if there were evidence that they would improve welfare outcomes. There isn’t.

Together, these changes would severely restrict state flexibility to design programs that emphasize getting and keeping a job, while recognizing the needs of a diverse caseload. The cost of meeting these new requirements would be significant. Even if Congress added some funds for the additional child care that would be necessary, these workfare mandates would likely force states to reduce their current investment in child care and other programs that help poor working families.

State and local governments have spent the last five years transforming check-writing welfare offices into employment and work support centers. Welfare rolls around the country dropped dramatically and millions of welfare recipients went to work. Most experts credit this success to some combination of three factors: new rules like the work requirement and time limits, the strong economy creating increased demand for entry-level workers, and new work supports like the expanded earned income tax credit designed to make work pay.

Despite the decline in caseloads, state and local officials face two major tasks.

First, they must ensure that low-income workers get the support they need to retain jobs and increase household income.

Second, they must pay particular attention to those families who have not left the rolls and often have multiple barriers to work.

To accomplish the first goal, officials need to be able to continue using block-grant funds to provide such work supports as child care, transportation and housing assistance. As state welfare caseloads declined, dollars needed for basic assistance dropped to less than half the grant money. Decision-makers used the savings to invest in these work supports. Some state and local governments created refundable earned-income credits modeled on the highly successful federal credit. Many officials developed outreach campaigns to ensure that eligible low-income families received food stamps and health insurance.

A statement from the National Governors’ Association, released on the day of the president’s announcement, asked for new flexibility in the list of activities that would count toward participation standards. Local officials surveyed by the Brookings Urban Center last year called for similar ability to tailor local programs.

The president’s proposal would make achieving these two major goals impossible.

There’s little question that maintaining a focus on work – both getting and keeping jobs – is the right thing to do. And a number of congressional proposals would strengthen the focus on work without severely limiting flexibility. But forcing states to respond to a federally imposed notion of the right work plan for those left on the rolls while simultaneously limiting their ability to finance needed work supports turns the notion of welfare reform on its head.

The debate should not be about who is toughest on work requirements for welfare recipients. That was the debate in 1996. Whatever one thought about the work requirements imposed then, there’s now broad agreement that they worked. This year’s reauthorization should be about the best ways to improve state and local governments’ ability to do what they’ve begun to do well.

The administration’s proposal is surprisingly retro.