Reforming welfare reform: Clinton signed the bill; now conservatives and liberals alike have work to do if we want it to succeed.

With his signing of the welfare bill, President Clinton may have deflated a political football, but he set off a flurry of fortune telling. The bill's proponents are predicting a sunny future with discontented, parasitic welfare moms transformed into a thrifty working class with renewed self-respect. Its outraged opponents prophesy that the new system will give rise to bands of children roaming the streets and enclaves of homeless huddling together in tent cities.

Regardless of which group you fall into, at this stage, most of us agree that the current system has to change. After years of dumping money into entitlement programs that act as a trap as much as a safety net. a message needs to be sent about what our society owes its members and what it expects from them--a message not just for those caught in the system, but also for people like "Gwenn Jackson," a young working mother I met in 1992.

Gwenn was in an English class I was teaching at a community college in Vicksburg, Mississippi. Around 25 years old, with two kids, no husband, and at least one job, Gwenn was taking my class for one reason only: to complete her degree so she could find a better job. Every morning she would drag into class and collapse into a chair, clearly exhausted. She occasionally arrived late or missed class because of a sick child. But she made up the work and often asked for additional help. Gwenn clearly wanted to do well, but reading even a simple sentence was difficult for her. Grading her homework was a chore, and at the end of the term, I put off looking at her final paper until last. Four years later, hers is the only essay I recall.

Asked to address a topic of personal importance, Gwenn chose to write about the welfare system. Now, this woman had grown up poor, black, and essentially uneducated in rural Mississippi. She had no interest in eligibility requirements, state matching funds, or benefit levels. She herself wasn't on welfare. Gwenn's concerns were about the "fairness" of a system that let her neighbors sit home waiting for their benefit checks while she split her time between work and school. At one point, she asked straight out: Why should I work hard when the other women I know sit home all day with their kids? I don't get to spend time with my kids, and I have to pay someone to stay with them.

Truth be told, only a small percentage of welfare recipients are out to cheat the system. (Only 30 percent stay on the rolls for more than two consecutive years.) Most recipients honestly believe they can't find a job that will let them support their families. But while a tragic few cannot survive on their own, many more simply don't like the jobs they can find or are unwilling to endure the frustrations of the workplace. Of course, none of this meant a thing to Gwenn. She had no special skills or connections that made it easier for her to find decent employment, nor was she immune to abusive or patronizing employers. Still, she had chosen work over welfare because she believed providing for her family was her responsibility. Sadly, she was getting just the opposite message from a government she thought rewarded those who opted not to work. Whatever the essay's grammatical flaws, Gwenn's response was clear: She was confused, she was angry, and she was discouraged.

For people like Gwenn, the welfare reform bill sends the long-awaited signal that--while it may be tough--working for your livelihood is the right thing to do. It's also a signal to Gwenn's neighbors that waiting at home for your monthly check is no longer an option. Now, having said all that, I want to clarify something: The bill itself is a dangerously flawed vehicle for delivering this message. It contains a handful of provisions that are downright nasty, and many more that will help or harm depending on how they're administered. (I cringe to hear pundits rave about the "radical experimentation" now possible with states designing their own programs. The phrase should be applied to laboratory chemicals, not people's lives.) The stakes are high, and although the bill contains several loopholes that will limit its impact for a few years, some of our society's most vulnerable members stand to get hurt if significant contradictions within the law aren't addressed now.

Money's the Problem

First off, we need to decide: Is this bill intended to help balance the budget or to develop a more effective welfare program? (Right now, no one even knows what to call the thing. The two popular titles for H.R. 3734 are the Budget Reconciliation bill and the Welfare Reform bill.) The law's supporters insist these goals are not mutually exclusive, but a look at some of the major provisions suggests we will have to choose between having our cake and eating it.

Two of the legislation's harshest measures, and the ones that provide most of its $54 billion in savings, have little to do with constructive reform: a $24 billion cut in food stamps over the next six years and the slashing of benefits to legal immigrants. The food stamp restrictions are tight, and poor families without dependent children will find their benefits cut off after just three months unless they are working at least 20 hours a week. The decision to cut benefits to legal immigrants already settled in the United States is equally ugly. Making sure future immigrants don't arrive expecting handouts is one thing, but how do you explain the new policy to an elderly widow who, although her husband worked in this country for more than 30 years, just lost her Supplemental Security benefits?

Whenever President Clinton talks about "fixing" the bill, he points to these two measures. But any significant reversal or abatement will require restoring tens of billions in spending cuts, sending the bill's "budget resolution" pretensions right out the window.

More budget problems will emerge as states scramble to move welfare recipients into the workforce. The new law requires that states use the federal block grants that replace the Aid to Families with Dependent Children entitlements to place 25 percent of their adult welfare recipients into jobs or job-training programs by next year, and 50 percent by 2002. It also cuts benefits to adults who do not find work after two years and places a five-year cap on lifetime assistance. But moving people into jobs costs money--money not appropriated, predictably enough, in a bill geared to help balance the budget. The Congressional Budget Office estimates that by 2002, when half of states' welfare recipients must be working, a minimum outlay of $6,000 per job slot will be needed just to cover things like locating work, providing for child care, and arranging for transportation. (Most job creation is occurring in the suburbs, not the traditional stomping grounds of welfare recipients.) Multiply these figures by 2 million--50 percent of the adults currently on welfare--and you have yourself a budget crunch. By CBO estimates, the legislation provides $13 billion less than states will need over the next six years to meet their work requirements--excluding child care costs.

The obvious next question is, "Where will all these jobs come from?" Not having provided for a public works program, Congress and the administration presumably expect the natural job creation process to absorb the additional workers. At the bill's signing ceremony, President Clinton issued a national challenge, calling on businesses, nonprofits, and government agencies to accept their "responsibility" and make a place for welfare recipients: "Now that we are saying with this bill we expect work, we have to make sure the people have a chance to go to work"

But in an age where corporations are sending jobs overseas as fast as they can and stock value is the name of the game, should we expect corporate America to embrace the welfare masses, many of whom are unskilled, uneducated, and unprepared for the work world? Michigan Governor John Engler expected just that in 1991 when he cut general assistance (aid to childless adults living below the poverty line) to 80,000 people. A University of Michigan study of the program reveals that, by 1993, only 20 percent of former recipients had found steady employment, with another 17 percent relying on odd jobs for survival. Many turned to other assistance programs, friends, or relatives, says the study's lead author, Sandra Danziger. "And about one in eight told us they had none of these things--no job, no disability payments, no family support, nothing" "Making a place" for welfare recipients, it seems, is not business's top priority. As Robert Jones, president and CEO of the National Alliance of Business, stated in a September 1 interview with The New York Times "Business is not in the business of providing jobs for welfare recipients." (Incidentally, how accommodating do you think companies will be when the Federal Reserve Board gets antsy about the efforts to slash unemployment and ups interest rates?)

To sweeten the idea of social responsibility, the administration is considering financial incentives to the tune of $3.4 billion for businesses that employ welfare recipients. One proposal would give companies a $5,000 tax credit for hiring a recipient with significant "barriers to employment" (e.g., drug problems, depression, illiteracy). Studies of previous wage-subsidy efforts, however, reveal that such incentives often serve as a warning flag to employers who may be disinclined to hire welfare recipients.

Even with the government dangling financial carrots in front of companies, in many cases the jobs just aren't there. An August 25 article by New York Times reporter Alan Finder illustrates this point in terms of New York City's welfare population: "There are 3.3 million jobs in New York City, and since the city's recession ended late in 1992 there has been a net gain of 88,000 jobs. At that slow rate of growth, if every job gained by the local economy were given to a New Yorker now on welfare, it would take 21 years for all 470,000 adults to be absorbed into the economy" Toss into this mix the hundreds of thousands of job-hunters not on welfare, and the small percentage of emerging jobs for which welfare recipients are qualified, and you begin to see the scope of the challenge.

The obvious answer to the shortage seems to be a public works program for those who cannot find employment elsewhere. "If this new system is to work, you have to be talking about some state public-job creation," asserts Wendell Primus, a former Clinton welfare policy official who recently resigned over the new law. (Primus's office had published an analysis that concluded the legislation does not provide states with enough resources to meet work requirements.) "The private sector is not going to be able to absorb these welfare recipients in any great magnitude"

But a public jobs program comes with all of the same funding challenges as a regular placement program, plus you have to come up with the cash to pay participants' salaries. At a September 10 speech to the Southern Governors Association, President Clinton announced, "[T]here's not enough money around to create enough public jobs to solve this welfare problem" Well, not exactly. AmeriCorps estimates that its costs for putting an individual to work in a community service job are around $15,000. At this rate, we're looking at a cost of $15 billion to put 25 percent of current welfare recipients to work; $30 billion to handle 50 percent. The costs aren't prohibitive; we've just decided to use the money for other things.

Having recipients perform community service work in exchange for their benefits is a slightly less expensive option and could help people adjust to a work environment. But with this type of program in particular, questions arise about what sorts of jobs to create. Putting people into make-work positions does little to increase their self-worth or prepare them for life in the private sector. The Comprehensive Employment Training Act of the 1970s was frequently criticized for hiring people into titular positions such as "Community Development Aide."

On the flip side, the creation of meaningful community service work--paid or unpaid--raises the specter of labor union protests. The threat of a large pool of unskilled workers driving wage levels down makes unions nervous, as does the thought of massive job displacement. Union backlash has already surfaced in response to New York City's workfare system, which requires welfare recipients to work for their benefits in state-provided positions until they find other employment. But because many of the workfare tasks (assisting the Parks Department with maintenance, doing clerical work, cleaning public buildings) have traditionally been performed by union employees, many labor leaders have denounced the program as "a union-busting tactic," and a wedge to initiate "the destruction of the labor movement" This September, a plan to have workfare participants clean city buses and subways (with the equivalent union positions eliminated by attrition) prompted the head of the city's largest municipal union to call for a moratorium on further expansion of workfare. As unions organize to confront such perceived threats, states planning similar workfare programs will need to prepare for conflict--and compromise.

In New York's case, many labor leaders are calling for the city to expand the training element of workfare, then hire more participants into unionized positions. (Otherwise, union members argue, workfare participants will remain a permanent, unskilled, exploited underclass--that takes away union jobs.) Other union leaders have requested that workfare participants be allowed to count time spent in the program toward the official point system used to determine who's hired for civil service jobs.

Of course, the training aspects of works programs are important in their own right. In addition to helping participants gain job-specific skills, training can provide people with a basic grasp of "the soft skills"--how to deal with office politics, customer service, workplace etiquette--that help them survive the daily work frustrations and retain their positions. As New York's workfare experiment has shown, keeping people on the job is often tougher than getting them there. The New York Times reports that, since the program was launched in 1994, more than 60 percent of its 123,000 participants have dropped out. Fewer than 10 percent of them reportedly made the leap into private-sector employment; the city does not know if the remainder found legitimate work, obtained under-the-table jobs, turned to other assistance programs, started dealing drugs, or simply left the area.

Welfare-to-work programs in Florida, Missouri, and other states report similar difficulties keeping welfare recipients at work, whether the jobs are state-provided or in the private sector. Well over 50 percent of the participants hired through a Kansas City, Mo., placement program left their jobs within 16 months. Recipients' inability to perform their duties is not the problem, say employers, so much as is their unfamiliarity with workplace culture and protocol. The head of one Kansas City welfare reform agency told The New York Times that increasingly employers are saying: Forget wage subsidies, "send us people who get to work on time, can read and follow instructions, and want to stay on the job" Or as Peter Cove, founder of a private New York placement firm for welfare recipients, told The Washington Post: "People do not lose jobs because of what they don't know, but because they don't fit in"

Who Makes the Call?

For welfare agency workers, the reform bill represents a significant increase in workloads. Under the new system, states will be allowed to exempt 20 percent of their welfare recipients from work requirements. So in addition to screening applicants and calculating benefits, caseworkers will now be making delicate decisions about which applicants have extenuating family circumstances, which are trying "hard enough" to find jobs, which are downright unemployable. This means more counseling, monitoring, and analysis of individual clients. Caseworkers will also need to track cases more closely to determine if recipients are complying with the provision requiring them to be working or involved in a jobs-training program within two years of going on welfare. Many of the provisions, such as requiring teenage mothers to attend school and live at home with their parents to receive benefits, will require a high degree of both discretion and leg work. Welfare agencies will not only need to confirm that teen mothers are complying with these requirements, but also make decisions about which teens have extenuating circumstances (such as abusive parents) and should be excused from them. University of California at Los Angeles Professor Joel Handler, author of The Poverty of Welfare Reform, worries that some of the requirements are simply unenforceable: "One provision requires single mothers to identify their children's fathers before they can receive benefits. If the mother says she doesn't know, how do you prove that? Or what if she doesn't want to say because she's trying to get an abusive man out of her life--how do you verify that?"

Pat Martak, a lead caseworker with the Silver Spring welfare office in Montgomery County, Md., worries about the burden the new system will place on agency workers. On the morning of October 1, the day the new regulations officially go into effect, Martak sits in her tiny cubicle, surrounded by case files. She motions to a tall stack of green transmittals from Maryland's Department of Human Resources outlining the new system. "There are drastic changes coming, and caseworkers will have to do a lot more intensive case management," she says. "Nobody really knows how things will turn out"

What Martak does know is that the state and county have no plans to expand the Silver Spring staff. "In fact," she says, "they've been seriously talking about downsizing around here" Currently, Silver Spring's 30 caseworkers handle the cash assistance (AFDC and general assistance), food stamps, and medical assistance requests of close to 400 families apiece, processing 65 to 70 new files each month. They are primarily responsible for what Martak calls the "technical" aspects of case management, helping applicants fill out forms and navigating the various computer programs used to process and track cases. Under the new system, a segment of Silver Spring caseworkers will team up with social workers and representatives from other agencies to help "manage [cash assistance] recipients to success," making sure they understand and comply with the new work and lifestyle requirements. The remainder of caseworkers will take over management of all food stamp and medical assistance requests. Martak says agency administrators realize that workers will "have their hands full" dealing with the increased responsibilities. "But the states are all on block grants now," she says with a smile, "and they're all trying to save money."

The situation is even grimmer in the District of Columbia, where the computer systems are antiquated and workers handle up to 500 cases each, processing up to 30 new applicants every week. "There are not enough hours in the day to deal with all the work we already have," says caseworker Deborah Farrior, who's been with the District's East Capitol office for five years. "We see clients all day long, one behind the other, interviewing, writing down the interviews almost verbatim, signing 5,000 forms, inputting all of the information into the computer. This is an endless task, and it is a thankless task," says Farrior, noting that all too often she and her co-workers are on the receiving end of clients' frustrations. "People are in here screaming and yelling all day. All of our centers have metal detectors and security guards. It is not a safe environment" While Farrior expects the new system to increase caseworkers' responsibilities (and client hostility), she has little hope of the department investing more in either staff or equipment. "There's no money for it. We haven't even had raises in five years."

With the new role states expect caseworkers to assume, piling work onto the shoulders of already overloaded employees is a step in exactly the wrong direction. Before adding to workers' responsibilities, states must make certain that agencies are adequately staffed with workers who are prepared--and qualified--to handle the job. While an advanced degree in social work isn't requisite, agencies need to attract more capable, concerned people to these positions, not drive out the ones they already have. Unfortunately, widespread reports of incompetence in agencies that use social workers and case managers--such as the recent child welfare department scandals in Washington state and New York--suggest the government has trouble finding enough good people to administer existing programs. Changing this situation will require an aggressive recruitment strategy and taking concrete steps to reverse the image--and the too-common reality--of public servants as underpaid and unappreciated.

Seeing opportunity amid the chaos, the business community is offering to shoulder the burden for states. Privatization of welfare management has emerged as the solution du jour, with players of all shapes, sizes, and industries jockeying for a piece of this potentially multi-billion dollar market. Lockheed Martin, IBM, and Electronic Data Systems are just a few of the companies bidding to oversee state programs. In theory, companies would be able to handle caseloads more efficiently and offer employees bonuses for placing welfare clients in jobs. But one Lockheed executive's remark that the company is "approaching this marketplace the way [it] approach[es] all other marketplaces" raises the question of whether businesses can stay focused on poor families' best-interests when profits are directly linked to cutting costs. After all, some of these same companies helped boost the unemployment rate with massive layoffs in the name of share holder value--or at the very least cheered as their executive colleagues made "the tough cuts" With financial incentives and fewer bureaucratic hurdles, private-sector companies could almost certainly help states reduce welfare rolls, but at what cost to the poor?

Who's Watching the Kids?

With single mothers composing 90 percent of all AFDC recipients, child care merits its own "problem" category. First, welfare agencies face many of the same discretionary questions that crop up in regard to basic benefits. The new law allows mothers with preschool children to be exempted from work requirements if it's proven that they cannot obtain adequate, accessible child care. Who will decide what is "adequate"? What if the mother disagrees? States certainly can't ask parents to go to work without making sure that quality child care will be available.

This brings us back to the money issue. "Child care is a market good like food or motor oil," says New York University professor Lawrence Mead, who published a case study of Wisconsin's highly touted welfare reforms. "If you spend the money, the providers are available" With this in mind, an additional $3.5 billion for day care is bundled in the new legislation, but it's questionable whether this will be enough to compensate for an influx of welfare mothers into the workforce. Even without the new work requirements in place, many agencies don't have the funds to meet existing demand. Maryland's Montgomery County has been experiencing "a crisis in child care subsidies" since 1992, says the county's director of child care services, Deborah Shephard. Unable to handle the growing need, the county closed its waiting list last year when the number of children awaiting subsidies reached 2,10Q Once the new requirements kick in, the additional working poor requesting aid will make the financial situation even tougher.

Shephard estimates that the agency's average costs for placing a child in day care run around $400 a month. (Parents also pay a portion of the expenses.) At this rate, the county would need an additional $370,000 a month to handle the demand created by putting a quarter of its 3,700 AFDC parents to work (assuming every recipient requested aid for only one child). Using this same criteria, just over $400 million a month would take care of 25 percent of the nationwide AFDC population. Granted, child care costs vary by region, and expenses may not run as high in Montgomery County, Alabama. But the Montgomery County, Md., department of child care services has the benefit of some of the best funding in the nation. Its financial problems bode ill for less affluent areas.

The child care issues surrounding welfare reform also highlight the need for our society to address the financial and emotional dilemmas faced by all working parents, not just those we're trying to move off government assistance. Our culture has no problem sending the conflicting messages to poor parents that 1.) you need to work for a living but that 2.) your children are suffering from a lack of parental time and attention. Where we fall short is in providing alternative work and day care opportunities to ease the burden on working--and especially single--parents.

The Hope

Proponents of the law dismiss all the financial nay-saying, arguing that shrinking caseloads will free up enough resources to handle the additional costs of work programs, child care, and so on. And this big reduction, conservatives predict, will take place as soon as people realize their free ride is ending. To support this theory, proponents point to caseload reductions in areas already experimenting with welfare-to-work. Virginia, which last year set eligibility requirements even tougher than the new federal mandates, reports a 14 percent drop in caseloads. Similarly, Maryland reports an 8 percent fall.

By far, the most celebrated instance of savings through declining caseloads is Wisconsin's welfare program, which focuses on moving people into private sector jobs, but provides state-created positions for those who cannot find employment elsewhere. Since reform efforts began in 1987, Wisconsin boasts a 47 percent decline in its rolls, which Mead estimates has resulted in a $68 million savings. Among conservatives, Wisconsin Republican Governor Tommy Thompson is lauded as The Man With The Plan. Unfortunately, Wisconsin is not New York or California or Tennessee. Mead admits that much of the $68 million is simply the result of the state's strong economy and low unemployment, which automatically make for smaller caseloads. He also points out that the initial money Wisconsin used to jump start its programs was available because the state was experiencing a significant economic recovery at that time. (Similarly, the Department of Health and Human Services's Michael Kharfen attributes Virginia's and Maryland's caseload declines to the states' strong economies and high rates of job growth.) Other states may not be in a position to replicate Wisconsin's efforts. In an October 1 interview with C-Span, Joel Sanders, the head of welfare reform for Alabama, said that his agencies simply cannot afford a jobs program like Wisconsin's. District of Columbia welfare officials have also expressed concern over how the reforms will affect their community, where the growth of lowskilled jobs is slow and the number of people on welfare remains high.

Even more importantly, unlike the federal government's plan, Wisconsin began by dramatically increasing welfare spending--something the budget reconciliation fans keep failing to mention. "Wisconsin is the best argument around for the liberals," says Paul Offner, a former welfare policy expert with Sen. Daniel Patrick Moynihan's staff and now commissioner of healthcare finance for the District of Columbia. "It shows what you can accomplish if you spend money on welfare programs. Tommy Thompson has always said welfare reform will cost more money--particularly up front" Mead's study supports Offner's argument, concluding that Wisconsin's program has worked largely because the state has invested in both the computer infrastructure and the personnel required to provide recipients with a high degree of individual attention--a luxury agencies with overwhelming caseloads or poor funding may not have.

Also, it bears mentioning that Wisconsin's 47 percent caseload drop is far from evenly distributed. While around half of the state's 72 counties have seen over a 70 percent drop since 1987, caseloads have declined only 21 percent in the Milwaukee area--where just over 50 percent of the state's welfare population lives.

Don't Panic--Yet

Fortunately, not all of these problems have to be dealt with this week--or even this year. The new legislation contains a number of loopholes that take most of the bite out of the reforms for the next few years. First are the numerous waivers that the administration has granted to 43 states. Allowing states extra time and flexibility in meeting federal mandates, the waivers have spurred accusations that President Clinton wants to "weaken welfare reform before it has a chance to begin" In reality, the extensions could help states overcome what Mead sees as a potentially fatal flaw in the bill: "It demands such high levels of actual employment [within such a short time frame] that the requirements could prove totally unadministratable"

Second, states receive credit for any drop in their caseloads not based solely on a tightening of eligibility requirements. In other words, these aren't "work participation" quotas so much as they're "getting people off the rolls" quotas. So if 15 percent of a state's welfare recipients simply drop out of the system--turning to other assistance programs, undocumented employment, or even crime--that leaves only 10 percent that the state must place. Also, with the economy holding strong, all but two states have already experienced caseload declines that can be applied to their 1997 targets.

Loophole No. 3. Although the new law places a five-year lifetime cap on cash benefits to any welfare family, the restrictions apply only to the money states receive in their federal block grants. Most programs are jointly funded by the federal and state governments, so once a welfare recipient reaches the five-year federal cut-off, a state can simply pay the person's benefits using state money, and apply federal funds to eligible, incoming recipients.

Eventually, however, these shell games will cease to work, either because of the progressive caseload reductions mandated or because of a downturn in the economy. Primus warns, "The full ramifications of this bill will come home to roost the next time we start going into a recession" At that point, the real bill for the reforms will come due.

The Challenge

This could be a historic moment for our society. We have the potential to change a system that encouraged dependence into one that emphasizes self-reliance. Neither liberals nor conservatives can argue with this goal. To succeed, however, will require both heart and money. While it's immoral to support a system that keeps millions of families dependent on handouts, it would be equally wrong to demand that millions of poor parents go to work without our making every effort to ensure that the necessary jobs, training, and support services are available. Helping people into jobs should be our first priority, not cutting caseloads. The idea that every person who drops off the rolls has overcome poverty is absurd. Just look at the South: With some of the nation's lowest benefit levels, Southern states have traditionally maintained smaller welfare rolls than other regions, as well as some of the nation's highest poverty rates.

While it may sound simplistic (and hopelessly liberal), the key to a successful welfare-to-work program is more, not less, investment. Just ask Governor Thompson. With the proper resources, states could retain an adequate number of caseworkers to match welfare recipients with jobs that allowed recipients to support their families. Agencies could have people available to coach recipients on the "soft skills" needed for job retention, and every eligible applicant could obtain safe, accessible child care. Perhaps most importantly, a public works program could be created for those unable to obtain regular employment. We've done it before: During the 1930s, the WPA put over 8.5 million people to work.

Of course, making all of this happen means we will need more and better-equipped welfare agents to help "manage recipients to success." Yes, this requires additional investment, but it also calls for more smart, talented people to get involved in public service. This magazine has long bemoaned the fact that America's best and brightest would rather slave away in the basement of some corporate law firm than be labeled a government bureaucrat. Obviously, money has a lot to do with this, but so does our society's disdain for public service. While we're asking welfare recipients to change their views on personal responsibility, most of us could stand to re-examine our views on public responsibility.

Above all, we need to focus on developing the most effective reform measures possible--on reworking this bill so it can help the people it's meant to help--then worry about making the programs as cost-effective as possible. Postponing our budget balancing for a couple of years seems a small price to pay for helping millions of poor Americans become self-sufficient. Besides, if conservatives are right, once we get the right kind of systems in place, we'll more than recoup our costs over the long haul.