For politicians and policy geeks alike, work has become the holy grail. Poor people don’t just need money, goes the thinking. They need structure, self-respect and discipline–and only a job can provide that. By this measure, the true goal of welfare reform isn’t helping people out of poverty. It’s about putting as many people to work as quickly as possible, no matter how lousy, poorly paid, unstable or boring these jobs are.
But there’s one big problem. Most of the bottom-drawer jobs in the American economy simply don’t pay enough to keep body and soul together. Just over seven million Americans have left the welfare rolls, but they’re not exactly flying high: A comprehensive survey found that the average yearly income of newly employed families works out to be about $11,640.
The subsidies and programs that are supposed to help poor people have yet to catch up with this reality. Many of them are reserved expressly for welfare recipients, even though it’s getting harder and harder to draw a distinct line between working people and those on the dole. But instead of bumping up the official poverty level (now $13,880 a year for a family of three), which would be politically nightmarish, most government benefits programs simply cook the poverty books to suit their needs. Depending on the program, poor enough to qualify for help can mean 130 percent of the poverty line, 200 percent of the poverty line, or 80 percent of “area median income.”
It’s confusing, which is one of the reasons that benefits like food stamps are underused. But programs that help working people tend to be like that: uneven, contradictory, and hard to find out about. Many of them also stop far short of the boost that a family needs to live decently.
“We would never design a ‘safety net’ that looks anything like this one, whether you were ideologically left or right,” points out welfare maven Liz Krueger of the Community Food Resource Center. “But this is what we got. It was the politics of the moment.” And the politics of this moment say that work makes you free, as city welfare boss Jason Turner infamously pointed out.
City Limits has tried to make sense of this working world that so many Americans are getting pushed into, and analyze just what kind of options people have. In the first segment, we look at how government has let working Americans down with a crazy quilt of assistance programs that often miss the very people that need help the most. And we’ve excerpted a handful of stories from Ron Howell and Ozier Muhammad’s new book, One Hundred Jobs. Their project takes a broad look at working in America, but the stories we’ve selected are about people struggling to get by–working long hours at dangerous or monotonous jobs, often without pensions, health insurance or benefits. Their labor helps New York work. So why can’t the system work for them?
Stranded between Medicaid and the private market, working families get stuck with the bill.
By Kemba Johnson
When it comes to health care, if you’re not dirt poor or well off, then generally, you’re out of luck. Moderately poor people are actually less likely to have insurance than people that are truly destitute. One-third of New York’s working poor (here measured as people who earn between 100 and 200 percent of the poverty level) have no health insurance. A United Hospital Fund study slices it a different way: Nearly three-quarters of the uninsured are employed, and 41 percent of them are actually employed full-time.
In fact, having a job can actually be a liability when it comes to health insurance. Medicaid has done a great job of protecting the unemployed–to the point where poor workers are twice as likely as the jobless to lack health insurance. But a parent with two kids and a net income of only $700 a month still can’t get Medicaid for herself in New York.
Poor workers also don’t have much luck with their bosses. Fewer than half of working poor New Yorkers get insured through their job. But in the next bracket up (between 200 and 300 percent of poverty), nearly three-fourths of workers are privately insured. In addition, many employers are passing on rising insurance premiums to their workers. And increasingly, they must pay higher deductibles.
But when they want to be, New York legislators can be downright adventurous on health care. Since 1991, the state’s Child Health Plus program has been insuring the children of poor families where Medicaid leaves off–six years before Congress established a similar national program. Together, Medicaid and Child Health Plus covered 1.7 million New York children in 1999.
Enter Family Health Plus, a new plan to spread this success to 500,000 working poor people. But even this smart step leaves many poor workers behind. The state Assembly hoped to cover parents making up to 200 percent of the poverty level and childless adults up to 120 percent, but the final compromise left only parents making up to 150 percent of the poverty line eligible. And childless adults making $8,200 or more can’t participate. For anyone earning more, the state will kick in about 10 percent toward individual coverage, costing a staggering $300 or $400 a month.
Housing programs, once a lifeline for the working poor, are now mostly for the middle class or the destitute.
By Kathleen McGowan
Nobody in New York City needs to be told that it’s practically impossible to afford rent on a place fit for a family, but this fact seems to have escaped the people who hand out housing money. These days, housing subsidies are mostly devoted to the poorest of the poor or to people approaching middle class. There’s a big hole where housing help for working poor people used to be.
As an analysis from the National Low Income Housing Coalition proves, the single biggest pot of federal housing money is for mortgage tax breaks, worth $82 billion in 1999. About two-thirds of all government housing money winds up in the hands of the richest fifth this way. The next biggest chunk goes to the poorest fifth. Meanwhile, people who make between $22,000 and $30,000 get the shaft, with only 3 percent of total subsidies.
Much of the money left in federal housing budgets has been routed into programs that help the very poorest. When the U.S. Department of Housing and Urban Development finally issued new housing vouchers in 1998, they were all reserved for people in the process of leaving welfare. Tax credits, the biggest source of federal subsidies for new urban construction, are designed for people who make less than about $24,000. But a General Accounting Office study found the average income of a renter in housing built with tax credits is actually only $13,300.
Locally, the story is no different. Since the 1950s, state Mitchell-Lama subsidies have built 125,000 cheap apartment units (the average income of a Mitchell-Lama resident in 1998 was around $26,000). But these mid-priced apartments are vanishing: As with federal programs, many landlords are deciding to out of the program and charge market rents.
And with city funds, about two-thirds of the new units built recently were for low-income or homeless people (see chart). At the same time, there are many smaller-scale city programs that help the middle class, primarily with homeownership programs that are out of reach for most New Yorkers. The New York City Partnership’s New Homes project allows people making up to $70,950 to buy new two- and three-family houses. Prices hover around $200,000; homeowners’ average income is $38,000. With the city’s Homeworks and Cityhomes programs, buyers must make at least $27,000 or $30,000.
Of course, homeownership isn’t practical for a lot of families: About 85 percent of the city’s poor people rent. But there’s just not much help available for families getting by on $18,000 a year. The city Housing Development Corporation, which builds housing by selling tax-exempt bonds, is constructing nearly 1,200 new apartments. Many of the rents, however, approach market rate, and family incomes range between $60,000 and $80,000.
There is one silver lining. Public housing provides low-cost homes for 439,000 people in the city. For a three-person family, the upper limit is $35,300; for federally subsidized private housing under Section 8, it’s $22,050.
The problem with these programs is that the waiting lists range from outrageous to unendurable. But under federal public housing reform law, working families now get special preference. Homeless people and victims of domestic violence have always been able to leapfrog the waitlists; now, working families can do the same. The idea is to bring up the average rent rolls in the projects. “A working family still may earn below the poverty level, but the assumption is that working families will have higher incomes,” explains Community Service Society housing policy expert Vic Bach.
While families on the dole get guaranteed day care, working families wait in a 37,000-kid line.
By Alyssa Katz
Welfare reform has given states a golden opportunity to make child care affordable for more working parents, but New York State has largely left them to fend for themselves. The poorest families get free care, but fees for everyone else range from $1 to $90 or more a week. While working families have to wait in line for help, parents who are receiving welfare benefits or who’ve left the rolls in the last year are guaranteed subsidized care. All in all, about 37,000 children are on city day care waiting lists, more than twice as many as in 1997, in a system with about 84,000 public slots.
Meanwhile, many families with modest incomes can’t get any assistance at all. It doesn’t take much to become totally ineligible for child care subsidies: $29,880 for a family of three. “The reality is there’s not enough child care to go around,” says Gail Nayowith, executive director of the Citizens’ Committee for Children. “We’re pitting people on welfare against low-income working people who are one step away from welfare.”
It doesn’t have to be this way. In 1996, Congress bulked up child care spending from $2.3 to $2.9 billion a year, and gave states unprecedented flexibility. States are now allowed to allocate nearly a third of their total federal welfare grant to help poor families pay for child care.
New York hasn’t taken Congress up on it. The state sits on a $1.4 billion welfare surplus and has yet to pay out $200 million from a child care reserve fund. And much of the child care money the state has spent is tied to welfare reform. Last year, the state released $64 million in child care funds. About 40 percent of that will go to parents receiving welfare or recently off the rolls. The rest will fund about 5,300 new slots and vouchers, which the city can decide to reserve for welfare recipients or make available to all kinds of poor working families.
Even this subsidy is skewed, since the number of working families who need help with day care dwarfs the number that are on welfare. As of last summer, there were about 123,800 children whose parents need child care in order to do workfare jobs. But there are nearly twice as many poor New York City kids with working parents, and they get no guarantees.
Federal rules call for public child care to be available to families making up to 275 percent of the current poverty line, or $35,771. But while the poverty line is continually adjusted upward for inflation, New York hasn’t raised the income cut-off for child care subsidies since 1990. Nayowith’s organization estimates that nearly 150,000 city children whose parents want affordable day care are not getting it. For about one out of every 11, it’s because their parents make too much to qualify.
This drastic shortfall has developed largely unnoticed. One vocal exception has been unions, which through lobbying and grassroots campaigns have been calling for fairer access to affordable child care for low- and moderate-income families. This winter, the New York Union Child Care Coalition will have parents around the city fill out application forms for child care, even if they make too much to be eligible. Organizers are hoping that a flood of paper will show elected officials the profound hidden need for child care. “We’re going to take these forms to the City Council and say, look, this is your voting constituency, and these people are not eligible for child care,” says Sonté DuCote, the campaign’s field organizer. “We need more child care. Right now, working families are last in line.”
A new plan for job training may get lost in the national obsession with welfare-to-work.
By Liza Featherstone
Starting this July, states will be given a new chance to offer job training and placement help to nearly anybody who needs it. Unfortunately, that
doesn’t mean they’re going to take advantage of the opportunity. Especially in New York City, the preoccupation with moving people off the welfare rolls is likely to overwhelm, if not destroy outright, the chances for workers to get the training that could help them move out of poverty.
The federal Workforce Investment Act (WIA), which goes into effect this summer, puts a lot of the responsibility for job training and placement into the hands of state and local governments. By establishing “One-Stop” career centers to serve all sorts of job seekers, the law will greatly expand a system that used to be available only to welfare recipients and certain “displaced” workers.
Under WIA, states can use the cash to fund everything from resume workshops to commercial truck driving classes. It will also provide more job assistance for the working poor, loosening income restrictions so that anybody looking for a job can enroll in a federally funded class. “The federal government wants to offer [job training] to everyone and anyone who needs it,” says Andrew Gehr of New York State’s Office of Workforce Development and Training.
But the federal law might play out very differently on the state level, given the new “work-first” mandate. For one thing, community colleges, which historically have provided vocational training to anyone regardless of income, are the natural sites for the One-Stops. But under WIA, actual training takes a back seat to putting people to work as quickly as possible, something community colleges aren’t necessarily prepared to do.
According to a recent report from the American Association of Community Colleges, “under WIA…training has become the service of last resort.” As a result, traditional job counselors will have to transform the way they do business, trading in training programs that teach complex skills for boot-camp style job placement workshops.
Also, by handing over the reins to localities and states, WIA has given them the authority to favor welfare-to-work programs over those for the working poor. The legislation gives states the right to put nearly all these new resources into getting people off the dole, and there are already strong indications that New York City will do just that. The city’s welfare agency has a $1.5 million grant from the state to administer the city’s One-Stops. And last summer, the city’s job training contracts were abruptly shifted from the Department of Employment to the Human Resources Administration, essentially putting welfare officials in control of most of the city’s work programs.
Meanwhile, the shortfall in low-skill jobs is worse in New York City than anywhere else in the nation, according to a survey by the U.S. Conference of Mayors. And local unemployment is well above the nationwide average. The new law was originally written to boost worker training with government-funded training programs. But HRA’s specialty is getting people off the welfare rolls, not training them for careers or helping them find good jobs.
Another possible pitfall of the new law is in how it restructures funding for youth summer jobs programs. The old job training law specifically ordained a Summer Youth Employment Program, but WIA leaves it up to states and local governments. So far New York City–with a youth unemployment rate of 27 percent, almost twice the national average–has made no such plans for summer 2000. As a result, an estimated 23,000 summer jobs for young people stand to lose federal funding.
So far, WIA mostly seems poised to provide an unfortunate case study in unintended consequences. But the law’s impact on the working poor may not be entirely bleak. The Consortium for Worker Education, a nonprofit originally founded by labor unions to access federal funding for job training and re-training, does a great deal of this sort of work–such as training displaced Chinatown apparel industry workers in computerized sales and cab drivers in basic computer skills. That organization expects to be, according to one CWE official, in “a very good position” to get One-Stop funding.
Moving from welfare to a decent job is like running to stay in place: As economy grows, benefits evaporate.
By Alyssa Katz
In theory, there have been worse times to be poor. Adding up tax credits, food stamps, child care assistance and a small supplement of welfare benefits, a single parent working full-time at minimum wage can now earn $14,630 a year, according to one estimate, and in most states her children will still be insured under Medicaid. In 1986, that family would have taken home just $10,464 (in current dollars) from the same package of benefits, barely more than it would have earned on welfare.
But while the new policy emphasis on work–backed by more than $50 billion in federal spending last year–has made the initial jump from welfare to full-time work more alluring, the rewards for working taper off very quickly. In New York, where public benefits are relatively generous for people on welfare but extremely hard to get for those who are not, the financial trade-offs for moving from welfare to work, or from low-wage work to higher-wage work, are among the most extreme in the country.
Looking solely at New York’s welfare, food stamp and tax regulations, researchers from the Urban Institute, a Washington-based welfare policy research organization, calculated what a family of three would give up as it moved from welfare to a minimum wage job, and from there to a full-time job paying $9 an hour. When a family moves from welfare to a $9-an-hour job, it loses 84 cents of each new dollar in foregone food stamps, tax breaks and other benefits. Moving from minimum wage to $9 an hour, a 75 percent increase in cash earnings, the family would gain only 6 percent in total income.
Those figures, of course, assume that a family is actually receiving all the benefits that it can. Working people are eligible for food stamps if they earn less than 130 percent of the federal poverty line, or $8.53 an hour for a family of three (though because food stamp regulations compensate for high housing prices, many New Yorkers who make slightly more are still eligible).
But as both a federal court and an investigation from the U.S. Department of Agriculture have concluded, applicants who aren’t on welfare have a hard time getting food stamps in New York City. The number of city residents receiving food stamps has shrunk by 392,000 since September 1996, down to 950,000; during the same period, fewer people–330,333–left welfare. Nationwide, one Urban Institute survey found, two-thirds of the people who were no longer getting food stamps after they left welfare were still poor enough to qualify.
The biggest reason working New Yorkers lose so much even as they earn more, says Ellen Amstutz, director of the Community Service Society’s Public Benefits Resource Center, is that there are few ways to find out the details on benefit programs, and no coordination between income-support efforts. Nearly all benefits specialists, who do little else but help people connect to programs that can assist them, rely on CSS’ 550-page benefits manual to untangle the complex and contradictory eligibility requirements. Without a dedicated caseworker, “you’re lucky to get one or two,” says Amstutz, “but no one could get them all.” And when you’re working 35 hours a week at a low-wage job and trying to raise a family, navigating the complex bureaucracy is just one more time-consuming burden. Says Amstutz: “It would be a full-time job.”