Clinton floats welfare subsidy plan

November 28, 1993|By Jason DeParle | Jason DeParle,New York Times News Service

WASHINGTON -- As part of its plan to revamp the welfare system, the Clinton administration is considering giving new federal subsidies to companies that hire or find jobs for welfare recipients.

One option is to have the government pay employers directly to subsidize the wages of welfare recipients. Another is for the government to hire personnel firms that would receive a fee for each person placed in a job.

Previous efforts to use corporate subsidies have generally failed, and the discussion remains in a preliminary stage. But a confidential working paper circulated among administration officials last month proposed giving corporations up to $5,000 for each welfare recipient they hire.

The options are under consideration by a 32-member working group of federal officials appointed by President Clinton to help overhaul the welfare system. The subsidy proposal is among a dizzying array of choices that the group is trying to refine in the next few weeks, before presenting Mr. Clinton with a menu of options.

The issues range from what kind of computer system might enhance the collection of child-support payments, to whether Mr. Clinton should embark on a national crusade against teen-age pregnancy. Mr. Clinton, who prides himself on his grasp of welfare issues, is expected to immerse himself in many of the details.

Mr. Clinton campaigned on a pledge to "end welfare as we know it," by imposing a two-year limit on benefits. After that, he said, welfare recipients will have to work or perform community service.

But he has not yet answered a paramount question: Where will the jobs come from? The discussion of subsidies gives new clues to the possible answer.

A record 5 million families receive Aid to Families with Dependent Children, the main cash welfare program. A disproportionate number of them are headed by single women with few skills who live in areas of high unemployment.

Some welfare experts have argued that the only way to enforce a strict work requirement is for the government to create many public jobs or part-time community-service positions.

But members of the group working on the president's proposal have called a large public-jobs plan costly and politically unpopular, especially among unionized public employees who fear losing jobs.

"The most important thing is to build bridges to the private sector," said one member of the working group, speaking on condition of anonymity. "We view public sector jobs only as a last resort."

Subsidies tried before

The subsidies have been tried in experiments that date back as far as the presidency of Lyndon B. Johnson, and some remain in effect. But they have largely been unsuccessful. Working-group members are debating whether the subsidies need to be expanded, or simply marketed more aggressively.

The potential problems with subsidies have been flagged in a background paper prepared for the working group. One problem, according to the confidential document, is that subsidies can "stigmatize" welfare recipients seeking jobs and actually "hurt their long-term employment prospects."

Another potential problem is that subsidies "could be a windfall to employers for hiring the exact same people they were going to hire anyway." A third problem, the paper said, is that the policy "could simply result in the displacement of equally disadvantaged persons."

Administration officials acknowledge these problems and say that the subsidies are only one potential part of a multipronged strategy. It would also include training programs, child care benefits and exhortations to social workers to change what workinggroup members call "the culture of the welfare office" from one that writes checks to one that places people in jobs.

Nonetheless, the talk of subsidies has prompted some skepticism from Congress. "I hope they're not assuming that a lot of people will find jobs with that," said one welfare expert on Capitol Hill, calling the subsidy efforts "one of the most outstanding failures of modern welfare policy."

Members of the working group concede that they will have to create some public jobs or community service positions for people unable to find private work. But it is unclear how many of those positions they will propose or what they will pay.

Presidents Richard Nixon and Jimmy Carter also tried to overhaul welfare policy, only to bog down in the political swamp surrounding race, class and even sexual morality.

Welfare rolls, which were stable for more than a decade, have grown by 25 percent in the past three years. The cost of the AFDC program has risen to about $23 billion a year, split by the states and federal government, and related expenses of food stamps and Medicaid for welfare families adds about $40 billion.

Republicans have plan

Congressional Republicans have already put forward their own time-limit plan and are threatening to accuse Mr. Clinton of backpedaling from his campaign promises if his is less stringent.

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