HOW THE RECESSION HIJACKED WELFARE REFORM
BY JULIANNE MALVEAUX
When welfare reform was signed into law five years ago, those who had worked
with the nation’s public assistance system were understandably nervous.
Though the economy was booming, most knew that it wouldn’t always grow as
quickly as it was in the late 1990s. The five-year lifetime eligibility for
public assistance seemed fine, given a boom economy, but parsimonious if
there were economic downturns. Though objections were spoken, the flawed
welfare reform legislation was passed with promises that it would be fixed.
Now those who warned that reform measure wouldn’t work during recession are
in the uncomfortable position of finding themselves right and that former
welfare recipients are placed in dire financial risk in this period of
economic downturn.
According to Heather Boushey of the Washington, DC based Economic Policy
Institute, the majority of former welfare recipients – about 60 percent of
them – found jobs as they left the welfare rolls. But they found jobs in
industries that are now suffering the effects of recession. Say Boushey,
“Four of the top nine industries hiring former welfare recipients—personnel
supply, child care, education, and hotels and lodging—grew faster than total
employment between August 1996 and October 2001. But when unemployment rose
dramatically in October 2001 to 5.4%—up from 3.9% just a year earlier— these
once-thriving industries were hit the hardest.” Some will blame this on the
events of September 11, but though 911 exacerbated the layoff condition,
especially in hotels and lodging, layoffs predated that date.
Many former welfare recipients cobble together a set of temporary and
part-time jobs. They got some transitional assistance when they first left
the welfare rolls – a year’s worth of health insurance and assistance for
childcare. But those who have worked longer have lost government assistance.
And they don’t have the same safety net that other workers have, since their
part-time status makes them ineligible for unemployment insurance and other
programs.
The flawed welfare reform legislation was supposed to be fixed in 1997, after
legislation was passed. But somehow neither Congress nor President Clinton
got around to making sure that those who left the welfare rolls would have
another safety net. Further, we failed to include postsecondary school
attendance as an activity that could be supported with cash assistance.
Thus, millions of women who could decrease their dependency and improve their
ability to earn a living wage have had an opportunity denied them. Welfare
reform legislation comes up for reauthorization in 2002. Hopefully, some of
those issues will be addressed then.
Meanwhile, many of those who once received public assistance can’t go back to
get help even though the economy is tanking. And even if they could, the
states are ill-equipped to provide help. States receive a block grant for
TANF (Temporary Aid for Needy Families) assistance, but are allowed to use
the block grant for a range of things, including cash assistance. According
to Wendell Primus and Ed Lazare, of the Center for Budget and Policy
Priorities, just 43 percent of TANF money is used for cash assistance. While
the need is greater than it was a year ago, the states have less to offer
former recipients who need welfare again. And since states, unlike the
federal government, can’t run deficits, grants for the needy are likely to be
smaller than they have been in the past. If the federal government wanted to
help, it could provide the states with countercyclical grants, earmarked for
former TANF recipients who have lost their jobs. Instead, Congress is
entertaining a stimulus package that provides significant tax breaks to
corporations.
Many feel that one way the federal government can stimulate the economy is
through a public works program of some sort. But most of the women who once
received public assistance aren’t likely to be employed in public works
programs. Unfortunately the nature of “welfare reform” ahs been that women
have been shunted into the same low-paying, typically female jobs that are a
dead end to poverty. Five years of “welfare reform” have shown that most
former welfare recipients don’t mind working, but the data show that they
jobs they hold have them on an economic precipice, vulnerable to any
circumstance. They don’t have fare to fall, given the wages they earn, and
recession will push thousands of families back into poverty.
Many have been crowing that welfare reform is a success, and until the
economy started its downward spiral it was easy to conclude that the status
of some former recipients had improved. But so-called welfare reform seems
to work only when the economy is working. And the vulnerable have been left
unprotected by flawed legislation that has pulled the safety net out from
under them.