Public Interest
Jun. 15, 2002
Living Wage
Forum Column - By Kenneth J. Theisen - In 1996, welfare reform became law. Since its passage, the number of families on welfare has declined. There were 4.4 million families on welfare at the time of enactment and 2.1 million in March 2001. Many supporters of welfare reform also hoped that welfare reform would help families escape the trap of poverty after they left the welfare rolls.
By Kenneth J. Theisen
In 1996, welfare reform became law. Since its passage, the number of families on welfare has declined. There were 4.4 million families on welfare at the time of enactment and 2.1 million in March 2001. Many supporters of welfare reform also hoped that welfare reform would help families escape the trap of poverty after they left the welfare rolls.
A recent study released by the California Budget Project found that 62 percent of "California voters believe that the principal goal of federal welfare law should be moving people out of poverty, instead of into a job where they will not earn enough to support their families."
But leaving the welfare rolls or obtaining a job has not resulted in escape from poverty for most families in California.
According to a report released last month by the Women's Foundation, single women with dependent children have a poverty rate of 37 percent in California. Many of these women and their children are receiving Temporary Assistance for Needy Families. As of December, there were 465,713 families receiving temporary assistance in California, according to the U.S. Department of Health and Human Services.
California ranked 41st in the rate of people living in poverty. In 2000, female-headed households represented 80 percent of those receiving food stamps in California. Seventy-one percent of those eligible for food stamps in 1999 were from working households. Less than half of those entitled to food stamps actually receive them.
A job does not necessarily keep a family out of poverty. In 2000, 41 percent of Californians living in poverty had at least one member working at least 1,500 hours per year. The minimum wage is $6.75 per hour in California. Many of those who have left welfare are employed in industries or jobs where even the minimum wage is not paid, such as the garment, farm or restaurant industries.
Many of the entry-level jobs available to former or current temporary assistance recipients do not offer benefits. An Urban Institute study indicated that 26 percent of the employers in the study who employed welfare recipients offered no benefits, less than half offered health insurance or paid vacations to entry-level employees and only 17 percent offered paid sick leave.
One study of working women leaving welfare in San Francisco and San Jose revealed that they had average earnings of $6.36 per hour.
"To live in any of the major metropolitan areas, such as Los Angeles, San Francisco, San Jose or San Diego, a woman with one child would have to earn a minimum hourly wage of $16.38 in order to be self-sufficient," the Women's Foundation reported.
The 1996 welfare-reform legislation expires this year and must be reauthorized before September. On May 16, the House of Representatives passed their version of reauthorization, based on President Bush's welfare proposal. The Senate is expected to act this month.
The reauthorization bill that becomes law has the potential to either reduce or increase poverty for millions of families. It also may have a dramatic effect on costs to California.
Bush's proposal will increase the work requirements for families receiving temporary assistance to 40 hours per week by 2007. The Legislative Analyst's Office, a nonpartisan state agency, estimates that the proposal would cost the state an additional $2.8 billion annually because of the more stringent work requirements. Seventy percent of the state's caseload would be required to work a 40-hour week. This is double the current percentage of the caseload working 30 hours or more per week.
The Legislative Analyst's Office has determined an additional need for child care, resulting in increased annual costs of $1.7 billion. The average annual cost of child care for an infant or toddler in California at a licensed child-care center is $8,521. These additional costs will come at a time when California is facing a massive budget deficit.
Why are there additional costs if the welfare rolls are being reduced? Researchers from the University of California, Berkeley, and three other major universities studied temporary assistance recipients. Their recently released report included 700 families from San Francisco and San Jose.
Among the study's findings was that two-thirds of working mothers in California on temporary assistance rely on wage supplements and health care assistance. The study's average recipient was working at a job that paid $9.20 an hour, but many of the jobs were only part time and were lacking job security, benefits and the opportunity for promotion.
The study further found that one-third of the mothers "had been forced to quit a job in the previous year due to lack of childcare, and an equal amount had been unable to take a job during that time" for the same reason.
The study also determined "that the overall material and emotional wellbeing of the women and children surveyed had not improved since welfare reform and that mother-child interactions actually significantly decreased."
It is important that the new law not deter recipients from pursuing postsecondary education programs that have been proved to increase earnings and reduce poverty. The increased work requirements and limitations on full-time education may do so.
A report from the Center for Law and Social Policy indicates that such education can be successful for women making the transition from welfare to work. In 2000, 28 percent of California's temporary assistance caseload attended at least one community college class. Women who finished their postsecondary educational program increased their earnings by 42 percent within one year and 88 percent within three years. Those who obtained an associate's degree increased their earnings 85 percent within the first year and 176 percent within three years. Students with vocational degrees increased earning the most.
The proposed federal welfare legislation will prohibit support for full-time education beyond four months during a three-year period or force recipients to complete their education in addition to completing a weekly 26 hours of work activities. The study found that it takes the average community college student 31/2 years to obtain an associate's degree.
"A college degree reduces the likelihood of poverty by 80 percent," the Women's Foundation said.
The proposed law will make it more difficult to obtain the very degree that could allow recipients to earn enough to escape poverty.
Poverty reduction, not caseload reduction, should be the goal of the next stage of welfare reform. Placement in jobs that pay an adequate wage and have promotional opportunities would be useful in alleviating poverty. Living wages, not minimum wages, should be a goal. States should be rewarded for placing recipients in higher paying jobs, not for just reducing their caseloads.
Temporary assistance should encourage postsecondary education rather than make it more difficult. Outreach efforts should be increased to inform people of their eligibility for food stamps. Health care, adequate child care and transportation subsidies are all critical to making the adjustment from welfare to the work until temporary assistance families can earn enough to escape poverty.
Programs that enable recipients to prevent domestic violence, obtain physical and mental health care and treat substance abuse also are critical to the success of any welfare-reform proposal. Current rates of domestic violence among welfare recipients are between 20 percent and 30 percent, based on various studies.
A General Accounting Office study indicates that 44 percent of adults receiving assistance have physical or mental impairments. Studies suggest that between 6 percent and 20 percent of adults receiving aid have substance abuse problems.
Child-support collection, assignment and distribution also are crucial for many former recipients. Child-support money should go to the family rather than to reimburse the state for past welfare disbursements. The Urban Institute reports that, when poor families receive child support, the support represents 26 percent of the family income.
It is important that welfare reform be adequately funded. The support needed to make welfare reform a tool in reducing poverty initially will require a monetary investment. But this investment can lead to increased savings as families become self-supporting and taxpayers. Failure to adequately invest in the more than 400,000 California families on welfare to assist them to escape poverty will cost us more as a society than we can afford.
Kenneth J. Theisen is the communication director of Bay Area Legal Aid. Justice for All is a monthly column written by BayLegal staff about public-interest law issues.
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