Jobs not enough to help families escape welfare

The creation of jobs is the only solution the current contenders for the Republican presidential nomination, as well as President Obama, have offered to help people escape welfare support.

It is obvious that they and their advisers have not paid attention to the body of research conducted by economists, sociologists and psychologists over the last 30 years about what is happening to people with a high school education or less, especially those clustered in big-city neighborhoods.

That research does not support the assumption that if people on welfare are given the chance to work in a private sector job, they will move off income support programs on their own initiative.

In his recent book Coming Apart, The State of White America 1960-2010, Charles Murray describes how social disorganization has grown in working-class neighborhoods, and how living in such disrupted communities has negatively affected work performance. There is much one can criticize about the way statistics were accumulated in Coming Apart, but Murray’s critics have chastised him not about his statistics, but because he did not conclude that providing people with jobs could fix their weakening work performance. That is a return to the discredited economic determinism of 40 years ago. I was involved in research back in 1970 that tested that theory and found that job opportunity alone was not sufficient to encourage people to leave income-support programs.

As early as 1960, research was showing that welfare programs such as Aid to Families with Dependent Children were creating a permanent welfare class. Economists thought the culprit was the sharp cutoff in welfare payments if a person got a job. Their solution was to continue to provide monetary assistance that was gradually reduced as work income increased until the earned income was well above the poverty line.

In 1970, The Department of Housing and Urban Development authorized the Urban Institute, a research organization newly formed by President Johnson, to experimentally test the effectiveness of the sliding scale concept. I was a member of the Institute staff at the time and was one of those given the responsibility for designing the study.

Four sliding scales were tested. While each had a different formula for gradually reducing monetary assistance as earned income increased, in all four, a person was always better off financially by increasing his or her work participation. Eight thousand seven hundred AFDC families were probabilistically selected from nine cities across the country and randomly assigned to the four test conditions. Extensive job-search assistance was provided.

The experiment was planned to run for seven years, but was stopped after five because of the dismal results. A majority of participants found jobs, but as soon as their income from work became high enough to decrease the amount provided by AFDC payments, male heads of households reduced their work hours per week by 9 percent, female heads of households by 20 percent, and single male members by 43 percent.

Some in Congress said it just showed these people were lazy. More thoughtful analysts, however, realized that losing reliable federal income was considered a greater risk to the participants than losing what seemed to them a less reliable income from a private-sector job. Obviously, something more was needed to encourage self-sufficiency than simply the opportunity to get private-sector employment.

Charles Murray published an earlier book in 1988, Losing Ground, which documented the Urban Institute results and other corroborating studies. His solution was to stop all federal-income support for any person capable of working. In 1998, President Bill Clinton and House Speaker Newt Gingrich took Murray’s advice and, in a rare bipartisan effort, convinced Congress to stop AFDC coverage for all those who could work. Most did find jobs and the solution was considered a success. But that was during times when unemployment rates were unusually low and before the Great Recession.

In today’s economic climate, and where low-technology jobs are disappearing because of automation and other efforts to increase productivity, simply stopping welfare payments for those able to work would be irresponsible.

Some sociologists and economists believe the best approach is to nudge income-support recipients into self-sufficiency by requiring them to accept training in new job skills, nutritional awareness, family income management and other coping behaviors. Whether such programs would help revive low-income family confidence is still to be experimentally determined. But before such measures can be tested, it will be necessary for the GOP presidential hopefuls and Obama to understand that proposals to stimulate economic growth and job creation, by themselves, will not benefit most families living on welfare the way they will the rest of the population.

Garth Buchanan holds a doctorate in applied science and has 35 years of experience in operations research. Reach him at gbuch@frontier.net.

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