Unintended consequences BUILD campaign: Coalition fears working poor will be displaced by welfare recipients.

March 22, 1997

IS IT POSSIBLE that, despite safeguards in federal law, the real losers as welfare recipients go to work could be the working poor in minimum wage jobs?

Baltimoreans United in Leadership Development fears that's the case. The coalition of some 30 inner-city organizations says it has evidence that some companies, in order to gain tax credits or grants, are firing existing minimum-wage employees and filling the vacancies with persons who were on welfare.

"The idea of tax credits was to encourage the hiring of new people and not create musical chairs," says a BUILD organizer. "What is going on is a massive transfer of subsidies from former welfare recipients to large corporations."

BUILD is pushing legislation in the General Assembly that would proffer tax credits -- which can net a company up to $6,000 per a hire -- to companies only if they give work experience to former welfare recipients in newly created positions. A number of low-wage employers -- hotels and nursing homes to health and food services -- oppose the legislation.

"Our intention is to reach out to the welfare community," Nancy J. Gordon, vice president of APG, a Columbia personnel service, wrote to Del. Elizabeth Bobo. "But those hires will be to replace current positions. Under House Bill 1140, we would not qualify for the credit. Therefore, the extraordinary cost associated with hiring welfare recipients cannot be offset."

BUILD argues that companies seldom incur substantial expenses because most of the former welfare recipients receive public assistance during the two-year work experience period.

It is doubtful the pro-BUILD bills sponsored by Delegate Bobo and Sen. Nathaniel J. McFadden will go anywhere this year. Before injecting a government mandate into the process, the state legislature should assess whether the private sector can act on its own. BUILD, for example, won a victory when Johns Hopkins Health System, including the Bayview Medical Center, recently announced it "will not engage in the practice of displacing workers with trainees in Project Independence or any other welfare to work program."

Maryland's largest private employer is making it clear that it will follow federal law. Welfare reform is meaningless if it is conducted at the cost of existing low-paid workers.

Pub Date: 3/22/97

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