The Welfare Reform Initiative – Has it Worked?
...ilities, food and other daily necessities. Where states like Michigan and Oregon have invested heavily in job placement, intensified casework and other job-related services for the poor, New York has turned over much of the responsibilities for establishing such programs to its 62 counties. Nevertheless, the state’s poor will face new changes under the plan that the Legislature enacted more than two months ago. They include five-year limits on federal cash assistance for families, a ban on benefits for certain immigrants and more freedom for localities to force more hundreads of household to do a variety of jobs to earn their benefits. But the Legislature was forced to enact those and other changes to bring the state’s system into compliance with the new national law, lest the state face Federal sanctions. In my opinion New York’s law essentially satisfies the demands of the new Federal law, but it doesn’t represent a real change in the current system. The fracas is erupting as welfare's new work rules meet the minimum-wage law head-on. Under the reform bill, workfare participants from single-parent families must work a minimum of 20 hours a week- -and 30 hours by 2002. In return, most of those in public-sector assignments receive the same monthly checks for state Temporary Assistance for Needy Families (TANF), which has replaced the old Aid to Families with Dependent Children, plus Food Stamps, Medicaid, and other benefits, that they got before working. At the same time, states face a Labor Dept. ruling, handed down on May 22, that workfare participants are protected by the Fair Labor Standards Act of 1938 and thus are entitled to the federal minimum wage (currently $4.75 an hour). This poses no immediate problem for rich states such as California and New York, which receive relatively large block grants. In California, for example, the average monthly TANF benefit is $538 for a family of three--enough to cover 25 hours of work at the minimum wage. The White House, supporting labor unions, believes that diluting the minimum wage including more benefits will exacerbate a two-tier labor market and accelerate the displacement of large numbers of existing employees from permanent jobs. New York City, for example, has promised that workfare people won't take the place of union employees. Yet it has reduced its Parks Dept. payroll by thousands over several years, and it recently added thousands of workfare employees to fill similar roles. A municipal union is seeking a temporary restraining order to prevent hiring workfare participants into positions once held by unionized painters. Even at the minimum wage, Washington's Economic Policy Institute estimates that the influx of welfare workers into jobs will depress pay by at least 11% for those already at the bottom rung. Wages will fall even more, these experts say, as states start subsidizing more private-sector jobs. Oregon has already reduced its welfare caseload by 40% in the past two years, in part by subsidizing $5.50 of the $6.32-an-hour average pay for 2,700 workers in hundreds of companies around the state. Eventually, say critics, such discounting will force nonwelfare workers to accept artificially low pay. ...