Welfare cases are economic indicator, study shows

February 15, 1991|By Ted Shelsby

The welfare rolls can be a good economic indicator of what's ahead for the state's economy, according to a study released yesterday by the University of Baltimore's Center for Business and Economic Studies.

Referring to the number of people receiving Aid to Families with Dependent Children benefits, Michael Conte said, "It is probably a better leading economic indicator than a number of other things we look at," including newspaper help-wanted ads, new-car sales and building permits.

Dr. Conte is director of the university's division that provides information and analysis to help promote the economic development of the Baltimore area and the state.

Based on the results of a study commissioned by the Maryland Department of Human Resources, Dr. Conte concluded that a jump in the AFDC caseload is a clear indication that an economic downturn, maybe even a recession, is likely within six months to a year.

In remarks prepared for a news conference, Dr. Conte said, "This goes a long way to explaining why the caseload turned up before the unemployment rate began to rise."

He said that many of those added to the welfare roles are marginal employees who usually are the first to be fired and the last to be hired.

When plenty of jobs are available, such people are a part of the work force, Dr. Conte said, but companies tend to stop hiring when they first sense tough times ahead and months before they start firings.

The University of Baltimore study showed that Maryland's unemployment rate rose to 4.1 percent in January 1990 but was declining in March, when the AFDC caseload jumped 2.1 percent.

The study released yesterday is one of three to be performed by the university analyzing the state's AFDC caseloads and to develop a forecasting model to project caseloads.

The AFDC caseload in Maryland increased by 15 percent, or 9,186 families, from July 1989 to January 1991, adding $40 million of unexpected expenditures to the state's budget.

Joseph Raymond, director of the Department of Human Resources' income-maintenance administration, said there is a need for more cooperation between the state welfare agency and the business community to create an environment in which people with marginal employment skills can be trained to fill better-paying jobs, some of which go unfilled even during times of rising employment.

"Persons with families can't survive on jobs paying $4.50 to $4.75 an hour," he said. "If we can move them into higher-paying jobs, we'll have a more stable work force."

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