A welcome surprise in welfare that works

A qualified success: Critical adjustments are needed, but new welfare system has promising start.

September 13, 1999

WELFARE as we knew it is gone. In its place comes the Family Investment Program, a brave new world of jobs for those once thought to be unemployable. The new program appears to have promise -- with some critically important caveats.

A network of community groups, under contract with state welfare departments, is having remarkable success at linking former welfare recipients with eager employers. The economy gets much of the credit, to be sure. And the new system will only have a full test when asked to operate in leaner times. But the system is exceeding expectations.

Since the welfare reform law was passed in August of 1996, members of the national Welfare To Work Partnership report 410,000 hires. President Clinton's challenge for employers to "step up" has been accepted by at least 12,000. That decision is said to be as good for productivity and the bottom line as it was for the social conscience.

Eighty percent of the new jobs are "promotion track" positions with training and opportunities for advancement, the Partnership reports. These are jobs that average $17,000 a year, no princely sum to be sure but about 40 percent above the federal poverty line for a family of three.

The first caveat comes here. Despite the appearance that poor families are doing better financially, federal income data shows that many -- including those with proud new workers -- have less income than before reform. Some of them are caught in a tax system that penalizes them, in effect, for making money. The higher their salaries, the lower their benefits.

Perhaps because the atmosphere of reform can be forbidding, many families haven't taken advantage of the food stamps and medical care for which they remain eligible.

"It's the bully pulpit effect where we have made caseload reduction the primary way we measure this program," says Wendell E. Primus, of the Center for Budget Priorities in Washington.

The new workers' quality of life must be of just as much concern, he says -- as all the reformers insisted it would be.

The second caveat is strictly pragmatic: Without support from existing programs, welfare recipients won't succeed in what has to be a fragile economic condition at the start.

Employers, of course, take advantage of every incentive offered to them by the government.

Significant subsidies and tax incentives are available; workers' health care need not be provided because the government is obligated pick it up for at least the first year; and the companies don't pay for work readiness training.

The Partnership says 67 percent of its employer-members still need workers and many say they will hire a welfare recipient this year.

They've got a strong incentive to do so. Surveys show former welfare mothers stay on the job longer than employees drawn from the general workforce. Why? Partly because they see promise of a better life and partly because they have little choice.

Federal law gave welfare recipients two years to find a job or take a community service placement. Employees drawn from the general workforce don't labor under the same prod, so they're somewhat freer to shop about.

A third caveat lies here: It is likely that the first wave of workers were the cream of the welfare crop, the most able to work in every way -- physically, emotionally and in terms of family circumstances. The next group will have more problems, including drug dependency, a criminal record and disabilities of other sorts. Even the tough cases, though, are not hopeless, according to Partnership officials. But they will require different preparation and follow-up.

Even Mr. Primus, who resigned from the Clinton Administration to protest the reforms, concedes the program is working better than he had expected. And he is encouraged that at least two presidential candidates -- Bill Bradley and George W. Bush -- have shown an understanding of the difficulties faced by these new workers.

Mr. Bradley wants to focus on child poverty, a condition certain to be exacerbated if parents don't get food stamps and medical care.

Mr. Bush is simply following the money. Mr. Primus explains: A working mom who makes $12,000 a year would increase her take home pay by almost nothing if she gets a $4-an-hour raise. That's true because higher wages mean a reduction in daycare benefits, cuts in earned income tax credits and reduced food stamp allowances.

Maryland should become a leader in making these adjustments -- by re-directing welfare savings of $151 million or so to increased child care and training. Taxpayers should know that state and federal policymakers anticipated high early stages costs for supportive services.

Maryland and other states should husband resources when possible against less prosperous times when pressure on the safety net will return. And all sides must measure the system's performance carefully, sustaining the current momentum but making certain that poor families are given a chance to succeed. Important tests lie ahead.

The record so far, though, suggests it's unlikely that anyone misses the system as we knew it.

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