Right data.

UNDER the new welfare law, states must find work for at least 25 per cent of their welfare caseload next year. Within five years, half of all adults on welfare -- about 2.2 million people -- must be working at least 30 hours a week. Not surprisingly, many policymakers doubt that enough jobs can be created. Harvard sociologist William Julius Wilson has gone so far as to propose a new WPA for the nation's inner cities.

But are jobs the problem? In a recent book Wilson says that businesses began to leave the inner cities "in the early 1970s." He implies that urban decay followed shortly thereafter. But a close look at the data suggests his time line is wrong. Welfare dependency and its attendant pathologies were rising well before the jobs left.

From 1955 to 1965 black and white males participated in the labor force at similar rates, with blacks actually more likely to be working or looking for work. Then in 1965, amid the strongest economic expansion in U.S. history, the two groups parted company. Black males, especially young ones, lost interest in work. By the mid 1970s a 20-point gap had opened up between young blacks and young whites. In toto, about 900,000 black men dropped out of the labor force between 1965 and 1975.

What makes this trend so disturbing is how little affected it was by the 1980s, when employment boomed and the average Aid to Families with Dependent Children benefit fell in real terms; or by the 1990s, when many states resorted to workfare. In 1995, participation rates for both blacks and whites were slightly below levels reached five years earlier. Although the number of people receiving AFDC fell in 1995 (and is down again this year), this reflects increased employment of people already in the labor force. There's no sign of a renewed work ethic among the underclass.

The late Sixties, of course, saw a welfare boom under LBJ's Great Society. In just five years, 1965 to 1970, the number of AFDC beneficiaries doubled. Pat Moynihan, then a Harvard professor, expressed alarm over the fact that 25 per cent of black births were out of wedlock. Ten years later, in 1975, black illegitimacy was over 50 per cent. Today it is 70 per cent, and in inner cities the figure typically is 80 per cent.

The timing suggests that businesses began to flee the inner cities because of a declining pool of willing workers. And even today, urban employers have trouble finding entry-level personnel. Fast-food chains like McDonald's say they must offer several dollars above the minimum wage to attract workers.

With welfare no longer an open-ended entitlement, such "dead-end jobs" probably won't be sniffed at. But hitting the job targets still won't be easy. Manufacturing, the backbone of inner-city economies before the jobs "left," employs fewer U.S. workers today than it did thirty years ago. Three-quarters of the jobs created since 1989 are managerial and professional, most requiring special skills.

Job training? Upfront costs are prohibitively high. No publicly run program has produced a rate of return as high as 10 per cent, according to labor economist James Heckman. That means that getting a welfare mother off the rolls by raising her earnings $5,000 per year costs her state government at least $50,000. Privately run programs are more efficient. America Works, a New York company, charges governments $5,300 to get someone off the welfare rolls; the full fee isn't paid until the recipient has worked for seven months.

Welfare bureaucracies have had no incentive to get people off the rolls. Until now. The new law cuts a state's welfare allotment by 5 per cent if job targets aren't met. Don't be surprised if they are.

A SHORTAGE OF JOBS . . . OR JOB-SEEKERS?

                     Labor Force Participation Rates

          AFDC
        Recipients        Age 16 - 19         Age 20+
        (millions)        White    Black     White    Black

1960       3.0            55.9%     57.6%     86.0%    86.2%
1970       8.5            57.5      47.4      82.8     81.4
1980      10.8            63.7      43.2      79.8     75.1
1990      11.7            59.4      40.6      78.3     73.8
1994      14.1            57.7      40.8      77.3     72.5
1995      13.0            58.5      40.1      77.1     72.5

Source: Social Security Administration; BLS.