The Five Borough Report
Real Welfare Reform: in Good Times and Bad, by Gertrude Schaffner Goldberg and Sheila D. Collins

Welfare reform — really, welfare repeal — got underway in 1996 as the economy was beginning to take off. Politicians on both sides of the aisle have now proclaimed it a success. But what is the basis for this claim?  A welfare official from Connecticut was only more candid than most of his fellows: “We have to remember that the goal of welfare reform was not to get people out of poverty, but to achieve financial independence, to get off welfare.”  With the current law about to expire and a re-authorization debate about to begin, now is the time to review what has been accomplished and what needs to be done.

The welfare rolls have been very substantially pared, or, some would argue, purged. However, in an economic boom like the one that is now over, they would have been reduced substantially without welfare reform.  And, on close examination, the statistics on jobs, wages, and income security, even during the prosperous times of the late 1990s, were not encouraging. 

The 1996 law sought to reduce dependence on welfare.  However, to most Americans, financial independence means something beyond simply not collecting welfare; it means being able to meet the basic needs of oneself and one’s family at some minimally adequate level. When asked in surveys how much a family of four would need to live at such a level, most Americans give an average figure that is at least twice the income that the Federal government designates as the official poverty level.  The recent work of sociologist Diana Pearce, Jennifer Brooks and others in creating “Self-Sufficiency” standards, as well as the work of the Economic Policy Institute in developing subsistence family budgets for different types of families in different locations, have given us a more accurate idea of how much families need to earn in order to meet their basic needs.  According to the Self-Sufficiency standard, a family of three — a mother with one pre-school and one school-age child — in the borough of Queens would have had to earn $45,836 in 2000 to meet its basic needs.  This is more than three times the federal poverty level of $13,874 for this size family and far more than what a full-time worker earning minimum wage and collecting the Earned Income Tax Credit could make — $16,478 in the year 2000.  Even the Basic Family Budget of EPI (a bare subsistence standard) is twice the official federal poverty level and substantially more than many low-wage workers earn.

Surveys show that most of those who leave the welfare rolls for work are not achieving this common sense definition of financial independence.  Those who do find work are making just slightly above the minimum wage.  One of the most recent nation-wide studies, for example, shows that the median wage for workers whose families left the welfare rolls between 1997 and 1999 was $7.15 an hour, only slightly above the Federal poverty level for a family of three.  Even with the Earned Income Tax Credit and food stamps, their median annual earnings were only $17,388 in 1999, far below both the Self-Sufficiency standard and EPI’s Basic Family Budget.  Further, many of these welfare leavers have not found full-time, year-round work.  The Center on Budget and Policy Priorities reports that, in nearly every state, the majority of poor families have one or more adults who are employed and are thus experiencing poverty despite work.  With or without full-time work, many families have to depend on food pantries and homeless shelters.  Indeed, reports from the U.S. Conference of Mayors and many others show that demands on these services have increased yearly since 1996.

The real test of welfare reform, a period of slower growth or recession, is now upon us. Unemployment was already on the rise, almost at the five percent level, when the economy was shaken by the tragic events of September 11. With a country distracted by the fear of terrorism and the fever of war, the needs of poor families, never high on the agenda, are at risk of further eclipse.  And the debate over reauthorization of the welfare law looms. In our recently-published book, Washington’s New Poor Law: Welfare “Reform” and the Roads Not Taken, 1935 to the Present, we detail the chronic unemployment and underemployment for both men and women that is at the root of the welfare problem. Even in the boom times of 1999, 30 million people were jobless, forced to work part-time, or worked year-round for less than the four-person Federal poverty level. 

Welfare “reformers,” seeking to change “welfare as we know it,” succeeded in repealing the welfare entitlement for single-mother families.  What these facts say to us is that we must change “work as we know it.”  Real welfare reform requires not only an adequate package of safety net measures, but reform of the labor market. It means, above all, an entitlement to work, a guarantee of living-wage jobs for all who want to work, an opportunity for all not occupied in the home with care of young or frail family members to practice the work ethic. 

Full employment is a qualitative as well as quantitative concept. It calls for a living-wage job, benefits such as child and health care, and income support for those providing vital care at home. Sustained tight labor markets, moreover, give workers the power to gain more humane working environments and education and training opportunities conducive to upgrading.

What about the entitlement to welfare?  Pre-1996 Aid to Families with Dependent Children, although deficient in a number of respects, provided an alternative to hunger and the need for many poor mothers to take any job at any wage.  It was a refuge for minority families rendered economically dependent by discrimination, low wages, and chronic unemployment and underemployment.  However, not the least of its deficiencies was that AFDC benefits failed to meet the standard proposed by the New Dealers who initially stipulated that benefits provide “a reasonable subsistence compatible with decency and health.” Further, AFDC benefits were largely confined to single-parent families, leaving nearly all families with two, able-bodied parents without support.  Since it is unlikely that we will achieve full employment at decent wages in the short term, such an entitlement to welfare should be extended to all needy individuals and families, not simply to one category of the poor.

What kind of a social welfare system would fit an entitlement to work?  First, universal child care must be guaranteed. Second, work itself should be redefined to include pay for vital family care of the very young, the frail elderly, and the disabled.  And need we mention universal health care? 

Some social welfare programs, it should be noted, are fertile sources of employment and contribute to the achievement of jobs for all.  Clearly, public assistance or what is usually called “welfare” — as contrasted with the full range of social welfare programs we are suggesting here — would be residual in a full-employment economy.  Yet, even where near-full-employment reigns, as in several of the Nordic countries, public assistance has been a consistent, though distinctly residual, component of a broad social welfare repertoire. 

Thus, an entitlement both to work and to welfare is necessary for true welfare reform.  We advocate the following principles for a program of “welfare repair”:
 1.  Provide public assistance to anyone unable to find a job that is accessible, roughly matches their qualifications, and pays a living wage. 
 2. Create jobs for the unemployed at wages comparable to those paid for similar private-sector work.
 3. Make work pay by raising the minimum wage to at least $7.50 an hour, equivalent to its peak value in 1968. 
 4. Support and extend “living wage” ordinances that require firms doing business with city governments to pay all their employees at least a decent or living wage.
 5. Guarantee affordable quality child care to all parents who need it in order to be employed or participate in education and training, and prohibit states from requiring welfare recipients to take work assignments in the absence of quality licensed care for their children.
 6. Provide opportunities for basic education and training for those people unable to get jobs due to lack of preparation for work.
 7. Restructure benefits as care allowances to recognize work done in the home for the young and the frail.
 8. Raise benefit levels to a standard commensurate with health and a decent standard of living.

The requirements of real welfare reform have not been changed by terrorism and war, and they may not necessarily be more difficulty to achieve.  One consequence of the changed political climate may be a renewed faith in the ability of government to address people’s problems, and, notwithstanding how slowly the House of Representatives seems to be getting the message, it may even have put the “free market” in its place.  Job creation programs, now even more important than in the past decade, have wider political support when the jobs and incomes of the non-poor are threatened, as they are now. The unemployed need a work benefit, a chance to rebuild what has been destroyed, and an opportunity to help meet vital neglected needs for housing, child care, health, education, etc.  A standby job creation program is a sound economic as well as social policy, expanding when unemployment increases and contracting when the economy picks up.

Gertrude Schaffner Goldberg is Professor of Social Policy and director of the doctoral program at Adelphi University School of Social Work and Chair of the National Jobs for All Coalition. Sheila D. Collins is Professor of Political Science at William Paterson University and co-founder of the National Jobs for All Coalition. 

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