The Right to Work and to Welfare

NATIONAL JOBS FOR ALL COALITION Special Report 2 © February 2002

by Gertrude Schaffner Goldberg, Professor of Social Policy, Adelphi University School of Social Work and Chair, NJFAC and Sheila D. Collins, Professor and Chair, Political Science Department, William Paterson University, and member, NJFAC Executive Committee.

Welfare reform — really, welfare repeal — got underway in 1996 as the economy was beginning to take off. Politicians on both sides of the aisle have now proclaimed it a success. But what is the basis for this claim? A welfare official from Connecticut was only more candid than most of his fellows: “We have to remember that the goal of welfare reform was not to get people out of poverty, but to achieve financial independence, to get off welfare.” With the current law about to expire and a re-authorization debate about to begin, now is the time to review what has been accomplished and what needs to be done.

The welfare rolls have been very substantially pared, or, some would argue, purged. However, in an economic boom like the one that is now over, they would have been reduced substantially even without welfare reform. And, on close examination, the statistics on jobs, wages, and income security, during the prosperous times of the late 1990s, are not encouraging.

The 1996 law sought to reduce dependence on welfare. However, to most Americans, financial independence means something beyond simply not collecting welfare; it means being able to meet the basic needs of oneself and one’s family at some minimally adequate level. When asked in surveys how much a family of four would need to live at such a level, most Americans give an average figure that is at least twice the income that the Federal government designates as the official poverty level.

Recent research, including that of the Washington-based Economic Policy Institute (EPI), confirms the validity of this common-sense perception of what it really costs to achieve a minimally-decent standard of living. For example, nationally, the median cost of EPI’s basic family budget, one that includes the minimum necessary costs for safe and decent housing, food, health care, child care, transportation and other household necessities, and accounts for all taxes, is $33,511 for a two- parent, two-child family. This is nearly twice that of the official federal poverty line of $17,463 for a family that size, and substantially more than the earnings of the typical low-wage worker. The cost of the EPI budget, lower in some communities, is roughly 40 to 55 percent higher in others, including many with large welfare populations, such as New York City.

Surveys show that most of those who leave the welfare rolls for work are not achieving this common-sense definition of financial independence. Those who do find work are making just slightly above the minimum wage. One of the most recent nation-wide studies, for example, shows that the median wage for workers whose families left the welfare rolls between 1997 and 1999 was $7.15 an hour, only slightly above the Federal poverty level for a family of three. Even with the Earned Income Tax Credit and food stamps, their median annual earnings were only $17,388 in 1999, far below EPI’s Basic Family Budget. Further, many of these welfare leavers have not found full-time, year-round work. The Center on Budget and Policy Priorities (Washington) reports that, in nearly every state, a majority of poor families have one or more adults who are employed. These poor families are thus experiencing “poverty despite work.” With or without full-time work, many families have to depend on food pantries and homeless shelters. Indeed, reports from the U.S. Conference of Mayors and many others show that demands on these services have increased yearly since 1996-despite the economic boom.

The real test of welfare reform, a period of slower growth or recession, is now upon us. Unemployment was already on the rise, almost at the five percent level, when the economy was shaken by the tragic events of September 11. With a country distracted by the fear of terrorism and the fever of war, the needs of poor families, never high on the agenda, are at risk of further eclipse. And the debate over reauthorization of the welfare law looms. In our recently-published book, Washington’s New Poor Law: Welfare “Reform” and the Roads Not Taken, 1935 to the Present, we detail the chronic unemployment and underemployment for both men and women that is at the root of the welfare problem. Even in the boom year of 1999, 30 million people were jobless, forced to work part-time, or worked year-round for less than the four-person, Federal poverty level. Thus, a wide range of policies is needed, ones that will serve a much broader constituency than simply the welfare population.

Welfare “reformers,” seeking to change “welfare as we know it,” succeeded in repealing the welfare entitlement for single-mother families. What these facts say to us is that we must change “work as we know it.” Real welfare reform requires not only an adequate package of safety net measures, but reform of the labor market. It means, above all, an entitlement to work, a guarantee of living-wage jobs for all who want to work, an opportunity for all not occupied in the home with vital care of young or frail family members to practice the work ethic. It means full employment.

What is full employment? Full employment is a qualitative as well as quantitative concept. It not only means that there should be more available jobs than job seekers. It calls for a living-wage job, benefits such as universal child care and health care, and income support for those providing vital care at home. Sustained tight labor markets, moreover, give workers the power to gain more humane working environments and education and training opportunities conducive to upgrading.

What about the entitlement to welfare? Aid to Families with Dependent Children, which operated from 1935 until its repeal in 1996, was deficient in a number of respects. Nonetheless, AFDC provided an alternative to hunger. And it meant that many poor mothers were not forced to take any job at any wage in order to clothe, feed and shelter their families. It was a refuge for minority families rendered economically dependent by discrimination, low wages, and chronic unemployment and underemployment. However, not the least of its deficiencies was that AFDC benefits failed to meet the standard originally proposed by the New Dealers who planned the Social Security Act and initially stipulated that benefits provide “a reasonable subsistence compatible with decency and health.” Further, AFDC benefits were largely confined to single-parent families, leaving nearly all families with two able-bodied parents without support. Since it is unlikely that we will achieve full employment at decent wages in the short term, such an entitlement to welfare should be extended to all needy individuals and families, not simply to one category of the poor.

What kind of a social welfare system would fit an entitlement to work? First, child care must be guaranteed to all families. Second, work itself should be redefined to include pay for vital family care of the very young, the frail elderly, and the disabled. And need we mention universal health care?

Some social welfare programs, it should be noted, are fertile sources of employment and contribute to the achievement of jobs for all. Clearly, public assistance or what is usually called “welfare” — as contrasted with the full range of social welfare programs we are suggesting here — would be residual in a full-employment economy. Yet, even where near-full-employment reigned, as in several of the Nordic countries, public assistance has been a consistent, though distinctly residual, component of a broad social welfare repertoire.

Thus, an entitlement both to work and to welfare is necessary for true welfare reform. We advocate the following principles for a program of “welfare repair”:

1. Provide public assistance to anyone unable to find a job that is accessible, roughly matches their qualifications, and pays a living wage.

2. Strengthen the unemployment insurance system by raising wage-replacement rates and greatly increasing the proportion of the unemployed who are eligible. Create jobs for the unemployed at wages comparable to those paid for similar private-sector work.

3. Make work pay by raising the minimum wage to at least $7.50 an hour, equivalent to its peak value in 1968, and index it to average wages.

4. Support and extend “living wage” ordinances to the national level. (Living Wage Ordinances require firms doing business with governments to pay all their employees at least a decent or living wage.

5. Guarantee affordable quality child care to all parents regardless of their welfare or income status, who need it in order to be employed or participate in education and training, and prohibit states from requiring welfare recipients to take work assignments in the absence of quality licensed care for their children.

6. Provide opportunities for education and training for all people unable to get jobs due to lack of preparation for work–regardless of their welfare status.

7. Restructure benefits as care allowances to recognize work done in the home caring for the young and the frail of any age.

8. Raise benefit levels to a standard commensurate with health and a decent standard of living.

9. Institute a universal health insurance system–one covering the whole population.

10. Create a national housing program to guarantee decent, affordable housing for all people and to create socially useful jobs for the unemployed.

The requirements of real welfare reform have not been changed by terrorism and war, and they may not necessarily be more difficult to achieve. One consequence of the changed political climate may be a renewed faith in the ability of government to address people’s problems, and, notwithstanding how slowly the House of Representatives seems to be getting the message, it may even have put the “free market” in its place. Job creation programs, now even more important than in the past decade, have wider political support when the jobs and incomes of the non-poor are also threatened, as they are now. The unemployed need an adequate system of unemployment benefits but they need more than that: a work benefit, a chance to rebuild what has been destroyed, and an opportunity to help meet vital neglected needs for housing, child care, health, education, etc. A standby job creation program is a sound economic as well as social policy, expanding when unemployment increases and contracting when the economy picks up.

In the final analysis, the obstacles to full employment and jobs at livable wages are not primarily economic or technical. Economic and technical rationales are the excuses political and economic elites use to avoid facing what is at heart a moral and spiritual issue–their inability to share more equitably the common wealth of the nation. As the United States enters the twenty-first century, richer than ever before in its history, it has the opportunity to provide to all its people that source of dignity and security so essential to democracy and international peace–and so long avoided by American policymakers–a socially useful job at a living wage. It could fulfill the dream of an “Economic Bill of Rights” that Franklin Roosevelt proposed more than a half century ago, when this country was very much less wealthy, and which began with the essential guarantees: “the right to a useful and remunerative job” and “the right to earn enough to provide adequate food and clothing and recreation.” And also included the right to decent housing, adequate medical care, and a good education. The Economic Bill of Rights recognized that “true individual freedom cannot exist without economic security and independence.” The realization of these economic rights would make it easier to solve most of the serious social problems that continue to plague us. The paramount question is, then, do we have the political will?

Professors Goldberg and Collins are authors of Washington’s New Poor Law: Welfare “Reform” and the Roads Not Taken, 1935 to the Present, New York: Apex Press, 2001.

For further reading on full employment and related issues, visit the website of the National Jobs for All Coalition: http://www.njfac.org

Editors: Helen Ginsburg, Economics (Emer.) Brooklyn College, CUNY and June Zaccone, Economics (Emer.), Hofstra University