As our elected representatives in Washington and Augusta tackle the complex issues of welfare reform, it is important that they keep things in perspective. When most of us think about welfare, we mean Aid to Families with Dependent Children.
AFDC is the largest and most expensive program providing income for the basic daily needs of poor children and their families. AFDC, however, is hardly the budget buster one might expect from listening to the current debate on welfare reform. Expenditures for AFDC actually comprise only 1 percent of the federal budget and just over 2 percent of Maine’s state budget. In Maine, AFDC payments today add up to a smaller percentage of the state budget than they did in 1981.
While welfare reform is often cast as a dismal quagmire, there are common sense steps which can be taken to improve current programs, to support the efforts of parents to become more self-reliant, and to improve the lives of children who live in poverty. Several important improvements have already begun. The 1993 expansion of the Earned Income Tax Credit provides an important supplement for people working in low-age jobs. Changes in Medicaid enacted in the 1980s extended health care coverage to more poor children who do not receive AFDC, though many remain without coverage.
Current proposals for further changes fall into three main groups.
The first group involves block grants under which responsibility for designing and managing welfare programs would be shifted from the federal government to the states. Block grants would end the “entitlement” nature of AFDC. Under a block grant, the federal government would allot a limited amount of money to each state; most states would have to decide whether to reduce benefit levels, turn families away by tightening eligibility levels, or to raise more mney by increasing state taxes.
The second approach to welfare reform seeks to limit benefits and to provide penalties and bonuses for poor families which engage in specified behaviors. Proposals include time limits (such as the Maine Republican proposed cutoff after six months), workfare, humilition (picking up checks in person at town or city halls), learnfare (penalties if children miss a certain number of days of school), bridfare (extra money if recipients marry), and family caps) excluding benefits for additional children born while the parent is receiving welfare).
A third approach provides poor families with training and support to improve earning capacity, provides support when they are unable to work, and continues assistance to employed poor families. Such programs include job training and support, job creation, wage increases, health care, child support enforcement and assurance, and improvements in programs such as child care.
Public interest in welfare reform has created an opportunity to help millions of low-income families move up and out of poverty. Real anti-poverty welfare reform should adhere to the following principles:
Recognition of the difficulties faced by low-income single parents who are providers and primary caregivers. The resentment against parents who receive public assistance and stay home rather than work for wages is understandable. Still, we must not underestimate the demands on low-income single parents. Juggling the demands of job and home is difficult enough for two-parent families with middle incomes. When the mother has few job skills, the net financial gain from outside employment is often very small. Child care and other work expenses, especially health care, can leave a family with little additional income from the mother’s outside work. If a mother responds to this situation by working longer hours, her children may join the ranks of latchkey kids lacking adult supervision and interaction. If we are going to require work by single parents, we must take into account the demands of single parenting on a shoestring.
Measures to address labor market conditions in which jobs are scarce, low-paying and insecure. A common goal of welfare reform is to increase the reliance of low-income families on earned wages. But job market conditions for low-skilled workers have worsened over the past 20 years, with wages falling behind inflation. Substantial governmental assistance will be required to improve the job skills and wage-earning capacities of these families, increase the availability of jobs, and increase the net income of working families. Great care must also be taken to avoid displacing or harming existing workers. If people leaving public assistance for work merely bump othre struggling workers from their jobs, there is no net gain. Equally important, we must ensure that the movement of a large number of families from assistance to employment does not bring down the pay of those low-wage workers who are already struggling to make ends meet.
Making work pay so that people are better off financially when they are employed. The principle that paid employment should be encourage for welfare recipients, and that those who are employed should be rewarded with a higher standard of living, is frustrateted by our current welfare programs. When a family moves from assistance to employment, its assistance is quickly reduced or cut off entirely. Often the family is little, if any, better off than it was on assistance, particularly since employment often makes the family ineligible for Medicaid. Few entry-level jobs include health care coverage. One way of accomplishing the goal of making work pay is to reduce the rate at which assistance is taken away when a family becomes employed.
Given the profound chances in the United States since the 1930s, we should not be surprised that welfare programs designed 50 years ago frustrated all those who participate in the system as taxpayers, as service providers, as recipients. Many of the proposals before us hold real promise. They provide access to education, training and child care, and to ongoing income supoprt thorugh the earned income tax credit, child support assurance, an adequate minimum wage, and job creation. They help families in crisis before they exhaust all their resources, and continue assistance until the family is financially secure and established in employment. Teresa Amott is a professor of economics at Bucknell University and Willia Whitaker is a professor of social work at the University of Maine.