UNCOMMON SENSE 15 © rev. March 2000
by Philip Harvey, Associate Professor of Law, Rutgers University School of Law (Camden), and Advisory Board, National Jobs for All Coalition.
Welfare reform legislation enacted by Congress in 1996 is supposed to end welfare dependency by forcing welfare recipients into the labor force. The new law has been hailed as an unqualified success by its supporters because of rapidly declining welfare rolls, but troubling doubts remain concerning the nature of this “success.”
First, it’s not clear that the labor market really is absorbing the former recipient population. One study found that only 61 percent of persons who left the welfare rolls in 1996 and 1997 were employed at the time they were surveyed. Fourteen percent were not working but had an employed spouse or partner. Twenty-five percent were not working and either had no spouse/partner or their spouse/partner was also not employed. [Pamela Loprest, Families Who Left Welfare: Who Are They and How Are They Doing, 9-10 (Urban Institute Discussion Paper 99-02, 1999)]. Given these facts, it is not surprising that the poorest cohorts of single-mother families have been growing poorer since welfare reform was enacted, despite the booming economy. [See Wendell Primus, et al., The Initial Impacts of Welfare Reform on the Incomes of Single-Mother Families (Center on Budget and Policies Priorities, 1999).]
Second, even if welfare reform is deemed a success under current economic conditions, it may not work when the economy is in recession or if unemployment rates rise above current levels.
Both of these concerns point to the same question. Does the economy produce enough jobs to make it reasonable to expect all able-bodied persons to be self-supporting? Conservatives assume that there are. Liberals disagree, although it’s not clear whether they think the problem is a lack of jobs in general, or just a lack of “good” jobs.
What are the facts? How many unfilled jobs are there in the economy at any time? Where are they located? Are the openings for full-time or part-time workers? What do they pay? What benefits do they offer? What qualifications must workers have to fill them? At present, we don’t know.
These are the questions that people should want answered, regardless of their political leanings, before deciding what kind of public assistance programs should be offered. Knowing the answers to these questions wouldn’t settle all disagreements, but it would increase the likelihood that reforms would be
designed for the real world rather than an imaginary one.
Unfortunately, neither Congress nor the President thought it necessary to answer these questions before adopting a “reform” strategy which assumes that jobs are available for welfare recipients.
Other Countries Collect Job Vacancy Data
Other countries do collect and report job vacancy data. In some, like Japan and Sweden, employers are required by law to list job vacancies with public employment services. The purpose of this requirement is to improve labor market efficiency by making it easier for employers to find appropriate job candidates and for job seekers to find appropriate job openings. In addition, however, the listings provide detailed information about the number, type and location of available job openings. In countries where employers are not required to list their job openings with a public employment service, equivalent data can be obtained from surveys of employers. Germany and Italy routinely collect job vacancy data using this method.
What Would A Job Vacancy Survey Require?
The federal government currently collects and reports detailed unemployment statistics by surveying a representative sample of households in every state as well as the District of Columbia each month. Based on this survey, we know a great deal about both the number and the personal characteristics of the nation’s job-seekers. No corresponding data are collected or reported concerning job openings. A job vacancy survey would collect such data from a representative sample of employers concerning the job openings they currently are seeking to fill. These data could tell us not only how many job openings employers need to fill but also whether those jobs are full or part-time, their occupational type, their location, the educational and job experience required to fill them, and the wages and benefits being offered.
In fact, employers already are surveyed to collect information about their current employees–how many people they employ, what kind of work they do, the hours they work, and how much they are paid. They simply are not asked about the number of job vacancies they are seeking to fill.
Job vacancy surveys covering portions of the United States labor market have occasionally been conducted. A vacancy survey covering the Milwaukee, Wisconsin region is conducted twice a year by the Employment and Training Institute of the University of Wisconsin/Milwaukee. The Department of Labor recently funded similar surveys, on a one-time basis, in seven other local labor markets around the country. More significantly, the Bureau of Labor Statistics is currently planning the possible inauguration of a national job vacancy and turnover survey. This proposed national survey would not provide local job vacancy data, but it would clarify the job availability picture on the national level.
Food Stamp Work Requirements Waived If Jobs Unavailable
In the portion of the 1996 welfare reform act pertaining to food stamps, Congress acknowledged that it does not make sense to require people to work for their benefits when the economy isn’t providing enough jobs. Section 824 of the law (PL 014-193) gives the federal government the authority to waive minimum work requirements for the Food Stamp program in certain areas if there aren’t enough jobs to provide work for everyone in the program who is expected to work. Waivers can be granted with respect to “any group of individuals” but only when states ask for them and only if the federal government determines that “the area in which the individuals reside–(i) has an unemployment rate of over 10 per-cent; or (ii) does not have a sufficient number of jobs to provide employment for the individuals.”
Unfortunately, no similar provision allows either the states or the federal government to suspend work requirements in other federally-assisted public assistance programs. This is particularly regrettable in the case of family assistance benefits. The law should be amended to extend the Food Stamp waiver provision described above to all such programs.
What Does The Milwaukee Job Vacancy Survey Show?
Milwaukee’s job vacancy survey shows what we can learn from this kind of data. In May 1994, the Milwaukee economy had an unemployment rate of 4.1%, the same level enjoyed by the United States economy as a whole at the end of 1999. Were there enough jobs for everyone who wanted to work? The Milwaukee job vacancy survey provides strong evidence that there were not.
According to the survey, area employers were seeking to fill 16,970 full-time and 13,845 part-time jobs, a total of roughly 31 thousand, during the week of May 23, 1994. The wages for these jobs were relatively low. The median wage of the full-time openings was less than $7 per hour and that of the part-time openings close to $5 per hour. ($7 per hour amounted to an annual income of $14,560 per year for a full-time worker when the poverty standard for a family of four was $15,141 in 1994.) Jobs paying $12 per hour or more accounted for only 14 percent of the full-time openings and less than 3 percent of the part-time openings. Despite these wage levels, most of the jobs required some educational achievement and/or prior work experience. Job seekers who lacked a high school diploma or relevant prior work experience could qualify for only 24 percent of the full-time openings and 62 percent of the part-time openings.
Comparing numbers of available jobs with numbers of job-seekers in the region gives us a much better picture of the Milwaukee area labor market than unemployment data alone. At this time, about 32 thousand area residents were officially unemployed, most of whom were probably looking for full-time (rather than part-time) work. Based on national averages, there probably were also about 19 thousand involuntary part-time workers in the area (people who were working part-time not by choice but because they could not find full-time jobs) and perhaps another 18 hundred “discouraged” workers (people who wanted jobs, had looked for work in the past year, but had given up looking because of discouragement over their job prospects). Finally, if welfare recipients not already counted as unemployed were included, another 23 thousand people in the Milwaukee area needed jobs. Altogether, there were probably a total of 75 thousand people needing full-time or part-time jobs in the Milwaukee area in May 1994. Compare this with the 31 thousand available jobs. Simply stated, there weren’t half enough jobs, even low-paying jobs, to go around.
For residents of depressed neighborhoods, the job shortage was far worse. In the suburbs surrounding Milwaukee, there were more job vacancies than job seekers, if we include part-time jobs. Approximately 70 percent of all full-time vacancies and 81 percent of all part-time vacancies were in the suburbs, but only 44 percent of the area’s officially unemployed workers lived there. In the city of Milwaukee, where 18 thousand of the area’s officially unemployed workers lived (along with the vast majority of the 23 thousand welfare recipients not counted as unemployed), there were fewer than 5 thousand full-time and only about half that many part-time job vacancies.
Earlier job vacancy surveys confirm the picture presented by the Milwaukee data. In good times as well as bad, there aren’t enough jobs of any kind to provide work for those already seeking it, let alone for everyone the public thinks should be working. This does not mean that it is impossible for welfare
recipients to find work. With enough diligence, patience and help, most of them probably can. But it is foolish to think that the need for welfare would be ended even if all welfare recipients succeeded in this effort. Unless an equal number of new jobs were created, every newly employed welfare recipient would leave someone else without work but with more job seekers for a fixed number of jobs, wages are likely to fall. From these ranks of jobless individuals we could expect the nation’s welfare rolls to be replenished. Who do the supporters of current welfare reform initiatives think should go without work, so that welfare recipients can be employed?
Vacancy data are the kind of information the public needs to assess welfare proposals rationally. The nation’s welfare reform debate has relied for too long on vague assumptions about job availability when hard data could have been obtained. Support for the establishment of national and local job vacancy surveys capable of providing detailed information about the number, characteristics and location of available jobs on a regular basis should be a high priority for all participants in welfare reform policy debates.
Job vacancy data would provide information for a broad range of uses beyond welfare reform. Students could better plan their careers. Civil rights advocates could more easily track patterns of job availability in minority communities. Businesses making investment decisions and designing training programs would have more information about labor demand. So would community organizations and local governments planning economic development initiatives.
National economic policy could also benefit from job vacancy data. Current assumptions about job availability would be tested, and the effects of policy choices on job availability would be easier to track. Training programs could be better designed to match demand for skills. The vacancy rate may also be a better indicator of inflationary buildup than the unemployment rate [James Medoff and Andrew Harless, The Indebted Society, p. 60] In all these ways, job vacancy data could help efforts to expand job opportunities, enhance productivity, reduce inflationary pressures, and achieve genuine full employment.
*Thanks in part to the Coalition’s work, the Dept. of Labor now issues vacancy statistics. The series began in December 2000. See our monthly updates.
Editor: June Zaccone, Economics (Emer.), Hofstra University