Welfare reform: the return of indentured servitude

March 28, 1997|By Douglas Miles, Jerry Perez, Valerie Bell and Arnie Graf

IN THE WELFARE ''REFORM'' bill that Congress passed and President Clinton signed, Lockheed-Martin, the Marriott Corporation, etc. are the big winners. The poor and the working poor are the big losers.

The new law, requiring those who receive Aid to Famiies with Dependent Children to begin some work activity within 24 months, provides four opportunities for a corporation or a nonprofit to make profits. Here is what is happening.

At a Baltimore elementary school on October 31, 1996, a man we will call Mr. Smith handed his mop to a woman we will call Mrs. Wright. The contract company he worked for has lost the contract to clean the school. Mrs. Wright will clean the classrooms Mr. Smith used to clean.

So what? Contracts are won and lost all the time. But what neither Mr. Smith nor Mrs. Wright understood was that they had become pawns in a nationwide attack on low-wage workers and low-wage labor markets. Mrs. Wright is a welfare recipient required to perform ''work experience'' order to keep her benefits. She is being paid $1.50 an hour by the city ''in training'' for a job she already knows how to do, and she has replaced a worker who was scheduled to receive a ''living wage'' of $6.60 per hour.

Similar ''trainees'' had been placed at Johns Hopkins Bayview Hospital, but Hopkins announced this month that it will protect its low-wage employees from being displaced by welfare-to-work trainees.

A second way to profit by welfare ''reform'' is through ''grant diversion.'' The government sends a recipient's check directly to the employer, who then pays the recipient at minimum wage with the recipient's own money.

A third way is through the tax credit a business can take on the first $6,000 paid to a former welfare recipient. A bill has been introduced in Annapolis that would deny state tax credits to any company that did not create new jobs. The idea of a tax credit, after all, is to promote employment, not subsidize businesses.

A group of low-wage corporations called ''Work not Welfare'' testified against the bill. A member of the group wrote to a sponsor of the bill: ''While employers hire hundreds of people a year, most plan no growth in their employment base. This bill requires the employer to create jobs to take credits. . . . Our intention is to reach out to the welfare community. But these hires will be to replace current positions. Under House Bill 1140 we would not qualify for the credit.''

The fourth way to take advantage of welfare reform is to win a mega-million-dollar contract to run part of the system. Privatization will provide corporations like Lockheed-Martin and Marriott millions of dollars. When President Clinton talked about defense companies converting to civilian tasks, little did we know that he meant trading one massive subsidy, the defense budget, for another -- the welfare plums.

In the 1980s some conservative intellectuals and politicians coined the phrase ''permanent underclass.'' In a modern economy, they said, there would be large numbers of permanently poor people. They told us not to be alarmed by this.

In the 1990s, Alan Greenspan, chairman of the Federal Reserve Board, suggested that the American economy should not let unemployment fall below 6 percent and should keep a lid on wage increases to control inflation.

Welfare ''reform'' thus puts the permanent underclass to economic use by creating a never-ending supply of sub-minimum-wage workers for low-wage corporations. As $6.60-an-hour workers replace $1.50-an-hour workers, the cycle has been completed. We have created the rationale for a return to indentured servitude. A $1.50-an-hour worker is an indentured servant.

Needed steps

The following steps should be taken to break this vicious policy: The working poor should not be made to bear the brunt of welfare reform. No person who is already working should be displaced. No current job should be filled by a person on welfare. Current workers should not have their hours reduced so that employers can add sub-minimum-wage workers.

No business should receive tax credits unless it creates new jobs that pay a living wage.

The state should not institute any form of grant diversion.

A welfare recipient on work activity should be paid a living wage and should enjoy the full rights of any other U.S. citizen -- the rights to organize into a labor union, to receive workman's compensation, unemployment insurance, etc.

The state should stop the privatization of welfare.

No church, church agency or other non-profit corporation should hire a person on welfare or agree to become a third-party contractor unless for a new job at a living wage.

The state should create 5,000 living-wage public-works jobs. This would cost $90 million of the $450 million block grant that Maryland receives from the federal government. The new law gives the governor flexibility to do this.

Everyone agrees that the old welfare system had many flaws and needed to be changed. But you don't replace a flawed system with an evil system. The governor and the legislature, the mayor and the City Council, as well as the churches and all decent Marylanders should join together to stop this assault on the poor.

The Rev. Douglas Miles, Jerry Perez, Valerie Bell and Arnie Graf represent, respectively, Baltimoreans United in Leadership Development, the Interfaith Action Communities, the Solidarity Sponsoring Committee and the Industrial Areas Foundation.

Pub Date: 3/28/97

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