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Welfare: Where Do We Go From Here?

Round One -- Response
Posted March 12, 1997


I would like to focus on some of Sheldon Danziger's comments.

Danziger opens by saying that real welfare reform and budget cuts are incompatible. He concludes these same remarks by saying that what is really needed are wage supplements for low-income families and jobs of last resort for those who cannot find private employment. Wait a minute! Both of Danziger's solutions have already been enacted into law. Where's the beef?

The earned-income tax credit, expanded once during the Bush Administration and again in the Clinton Administration, now stands at a maximum of more than $3,000 per qualified family. This credit, combined with income from a full-time minimum-wage job and food stamps, places a family of four above the poverty line. This is not to mention additional imputed income available to most of these families in the form of free health insurance and subsidized child care.

As for the need for some guaranteed jobs, especially for those with low skills, this is precisely the effect that the new welfare law will produce. The requirement that ever-increasing proportions of recipients work, in government-created jobs if necessary, is the central component of the new law (though no doubt Danziger would wish the jobs pay more).

So my question is, Why the hand wringing?

Danziger's argument that there are not enough low-skilled jobs just doesn't appear to be true. For example, in Wisconsin we have reduced the caseload by 24 percent over the past twelve months in central-city Milwaukee; surely with this sharp a decline in dependency we should have seen the city's labor market tighten in response. In fact there is no evidence that employers have enough entry-level workers. Employers continue to complain to the state that they cannot get enough applicants, nor keep them from job-hopping once they are hired. If a worker from the city is prepared to take a bus to the suburbs, fast-food restaurants everywhere are hiring people for more than the minimum wage, up to $9 per hour. Finally, it is not the actual number of advertised jobs at a point in time that is the true reflection of total available jobs. Milwaukee employers tell us that owing to the labor shortage they keep some of their expansion plans "on the shelf" until such time as they can prudently anticipate available labor.

What about needed skills? Danziger correctly points out that many employers require high-school diplomas, experience, and references. This is because they have been burned in the past by unreliable workers. After closely questioning many employers who require high-school diplomas, I have come to the conclusion that many or most are using the diploma as a proxy screening device for other qualities -- especially persistence and responsibility. The new law's community work-experience requirements will create work experience and references. This will be far more valuable than extra education, which is the primary component of most programs today.

Roundtable Overview

Introduction and opening questions by Jack Beatty

Round One -- Posted March 12, 1997

Round Two -- Posted March 25, 1997

Copyright © 1997 by The Atlantic Monthly Company. All rights reserved.
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