a preeminently predictable "pickle"
Source Jim Devine
Date 09/06/01/18:04
The Safety Net: Slumping Economy Tests Aid System Tied to Jobs

WASHINGTON — For nearly two decades, Americans have built a safety net
that is tough on those who fail to work and rewards those who do.

Insisting that the poor should work and agreeing that work should pay,
policy makers spent the 1990s cutting welfare rolls while pouring
billions of dollars into programs like wage and child care subsidies
aimed at the working poor.

But joblessness, not welfare dependency, is now the national scourge.
And as a poverty conference convened here last week, custodians of the
safety net confronted an obvious question: If aid is reserved for
people with jobs, what happens when the jobs go away?

“We have a work-based safety net without work,” said Timothy M.
Smeeding, an economist at the University of Wisconsin. “We’re really
in a pickle.”

The economic crisis is the toughest test yet of a safety net
refashioned 13 years ago when President Bill Clinton kept a pledge to
“end welfare as we know it” and joined a Republican-led Congress in
sharply restricting cash aid. In the boom years that followed,
millions of people left welfare for work and poverty rates plunged,
though skeptics warned that needy families would be left with nothing
when the economy faltered.

Few people thought the faltering would prove so swift and severe.
Within weeks of taking office, President Obama had signed off on
measures to spend more than $100 billion to shore up the safety net.

Some of the money goes to programs reserved for people who work (like
unemployment insurance and wage subsidies). Even more bolsters
programs that include the nonworking poor (like food stamps and

While that might suggest a desire for a broader safety net than the
one that has emerged in recent years, aides say the package was as
much an effort to jump-start the economy as an expression of aid

“We’re not at the moment narrowly focused on, Is there a work-based
safety net?” said Martha Coven, a White House official who spoke at
the poverty conference. “We’re focused on, Is there work?”

A crisis this large would challenge any safety net. Nearly 14 million
Americans are unemployed, and more than 100,000 people join their
ranks each week. Eight states have double-digit unemployment rates;
California and Michigan have counties where the rate reaches
Depression-era levels of 25 percent.

Still, the challenges seem especially stark when set against the
assumption on which the modern safety net was built: that low-wage
jobs, however onerous, were at least easy to get. Urging the needy to
take them, policy makers expanded wage subsidies (which now top $5,000
a year in some states), while putting time limits on cash benefits,
cutting access to training and giving states wide discretion to turn
aid-seekers away.

The new welfare program, Temporary Assistance for Needy Families, also
gave states financial incentives to cut the rolls, and critics warned
that the program would fail to grow in tough times to meet rising
need. Now millions of jobs have disappeared, and caseloads have
scarcely budged.

In many places they have continued to fall, including Mr. Obama’s home
state, Illinois, which trimmed the rolls 8 percent last year as
joblessness surged. Nationally, the rolls are down about 70 percent
from the 1990s highs.

To encourage states to expand the welfare rolls, the recovery package
Mr. Obama signed includes $5 billion of subsidies for programs with
caseload growth.

Another essential safety net program, unemployment insurance, reaches
just 44 percent of the unemployed, with the lowest-paid workers most
often left out. The recovery package offers $7 billion for states that
broaden coverage, though several Republican governors have spurned it,
saying the costs would lead to higher business taxes.

The program that responded most readily to the recession, food stamps,
has done so in large part because it serves the working poor and
jobless alike. In the 12 months ending this February, the rolls grew
17 percent. One in 9 Americans now gets food stamps, and the recovery
package temporarily raised the average benefit about 19 percent, to
about $500 a month for a family of four.

All in all, “that’s a remarkable boost to the safety net, and it’s all
been under the radar,” said Sheldon H. Danziger, a University of
Michigan economist who spoke at last week’s gathering of researchers,
advocates and government officials.

Much of the recovery act spending expires in two years. What happens then?

No one envisions a return to the time of unconditional aid. Even
critics of the tougher welfare system credit it for raising employment
rates; and poverty, though on the rise, is lower than in the early

“It worked better than, I think, a lot of people anticipated,” Mr.
Obama said at a campaign event last year. “One of the things that I am
absolutely convinced of is that we have to have work as a centerpiece
of any social policy.”

But progress had stalled even before the recession began, and two sets
of problems had emerged. One is that the neediest people — the
addicted, disabled or mentally ill — often fell through the cracks,
finding neither welfare nor work. Another is that most low-wage
workers were failing to advance.

Last week’s conference was filled with calls to knit more training
opportunities into the safety net, a theme Mr. Obama often repeats.
Still, as the conferees recognized, past training programs have often

Beyond the recession, several big poverty challenges remain. Wage
inequality has continued to rise. So has the share of children born to
unmarried mothers, which increases their odds of growing up poor.

And huge deficits have made the long-term budget outlook bleak, as
Robert Greenstein of the Center on Budget and Policy Priorities warned
fellow conferees in Washington. Even as the meeting got under way,
California was mulling its governor’s cost-saving plan to outright
abolish programs of cash welfare and children’s health insurance.

Mr. Greenstein called for scrapping marginal programs to save the most

“A budget tsunami is coming,” he said. “That threat should be taken a
hell of a lot more seriously than it is now.”

Copyright 2009 The New York Times Company

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