Dubious Benefits

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If most Americans know anything about federal welfare reform, round two, it’s that President George W. Bush wants to spend $300 million to encourage single moms to get married. Families headed by a married couple–one man and one woman, of course–earn more money and have fewer problems, the president says, so it’s smart public policy to try and convince single adults who head poor families to exchange rings and get legal.

The reaction was instant and loud. There was praise from the usual corners, like religious groups, but most voices were furious. Liberals, of course, were apoplectic, pointing out that poor women often stay single for compelling reasons, like the fathers of their children can’t get jobs or bring trouble or violence into their family’s households.

Lost in the marriage hullabaloo was the fact that, really, the president’s proposal was a relatively insignificant fraction of what is a massive federal welfare spending package. In fact, Bush’s bill reauthorizing Temporary Assistance for Needy Families (TANF) calls for spending $82.5 billion over the next five years–money for everything from cash for poor families to child care to soup kitchens. The president’s $200 million marriage proposal (the other $100 million would come from the states) is actually less than one-quarter of 1 percent of what the feds will spend on TANF between 2002 and 2007.

What’s welfare really about then, anyway? It used to provide money for poor families–government subsidies that acknowledged that there are times when a family just can’t cover its own expenses. That’s changed. Welfare, 2002-style, has little to do with helping poor families who don’t work. Instead, it’s become a program that supports families who have jobs, even as many of them actually come to earn too much to qualify for welfare’s cash benefits.

But of course, welfare as we knew it hasn’t ceased to exist. States continue to issue $11 billion in public assistance cash each year to millions of recipients. The heated debates over reauthorization of federal welfare law have been virtually silent about these benefits. That’s not because there’s nothing to say about them. The welfare checks these families receive are tiny, wholly inadequate to take care of a family’s basic needs. Adjusted for inflation, in New York they are lower now than at any point since the Great Society began. This is the hard fact of welfare, buried underneath acres of rhetoric about marriage and whether recipients cheat and how hard they should work for their money.

Want proof? Look at the numbers. What governments spend on welfare used to be almost exclusively the actual checks they gave families, like the $279 that a family of three in New York City received in 1970. If that basic welfare grant had kept pace with inflation, it would be worth $1,289 today. But it’s not: a family of three today, receives a maximum of $577–56 percent less than in 1970. The slide in the adequacy of the welfare grant has been both steady and steep.

That’s the real price of welfare reform that’s not being reckoned with. As the system has shifted to support families who go to work, it’s doing less and less for those who don’t or can’t or try but fail. Yet millions of families across the country, and nearly 640,000 in New York State, depend on those measly checks to survive.

Seated in his lower Manhattan office during a day trip from his Albany headquarters, New York State’s welfare chief says he’s enormously pleased with the changes that welfare reform has brought. Before the feds changed the rules in 1996, according to Office of Temporary and Disability Assistance Commissioner Brian Wing, New York’s welfare system was filled with incentives that convinced recipients to avoid seeking work. “Now, we give people a clear message,” the commissioner says proudly. “When you leave welfare, you make more money. And we’ve got a whole series of supports to help make you self-sufficient.”

He’s right. In a way that has surprised welfare reform’s original critics, who warned that government was in effect forcing poor people to try and survive on minimum wages alone, the last five years have seen a significant increase in government programs that use TANF dollars to support low-wage working families. The best example is the earned income tax credit, which has become a massive wage supplement for low-income workers with children.

Consider a mother with two children who earns the minimum wage, $5.15 an hour, for full-time work, which works out to an annual salary of $10,712. In 1995, that worker would have earned $13,430, consisting of the salary, a federal tax credit of $2,528 and a state tax credit of $190. By 2001, that same worker’s income grew to $15,722, with her federal tax credit now at $4,008 and her state tax credit at $1,002. That jump of $2,922 in yearly income for a minimum wage worker since welfare reform began is equivalent to raising the worker’s wage by $1.40 an hour, and it actually brings that family above the federal poverty line of $15,020.

That same worker can also take advantage of expanded child care programs for working families. Since 1995, the number of child care subsidies statewide has more than doubled, from 72,000 funded slots to 174,000, according to OTDA.

Also expanded is health insurance for low-income children via the state’s Child Health Plus program, designed for families who make too much money to qualify for Medicaid. That plan has grown from an enrollment of 90,000 in 1995 to 530,000 in 2001.

Exact numbers on who benefits from TANF spending are impossible to pin down–nine separate state agencies make grants to local social service departments, which themselves fund dozens of other facilities, projects and nonprofits–but Wing says that “almost certainly” more New Yorkers get welfare-funded benefits today than did in 1995. Any low-income adult might take advantage of multiple TANF-funded services, whether it be a computer class at a community center, a basket of food from a local church’s pantry or a slot for her child at an after-school program.

Because these various income supports have grown, welfare spending in New York has undergone a huge shift. The state is obligated to spend nearly as much money now as it did before welfare reform, thanks to a federal “maintenance-of-effort” requirement. But while much more money is being spent on supports for working families, much less is going to direct cash benefits.

With a drop in its welfare caseload from 1.7 million in 1995 to 638,253 by this past March, New York State went from spending $3 billion on cash assistance in 1995 down to $1.8 billion five years later, according to data collected by Congress’ investigative wing, the General Accounting Office.

New York can do virtually anything it wants with all the extra welfare money from the federal government block grants. And the Pataki administration has–except for one thing. New York State has spent absolutely nothing to increase the tiny amount of money families on welfare actually get.

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There’s a national near-consensus that welfare reform has been a huge success, primarily because it has taken place during an era characterized by significant drops in poverty. That’s definitely true locally. Roughly 2 million New York City residents were living below the poverty line in 1996; by 2000, that number had dropped to about 1.6 million.

That broad picture of success has been the dominant theme in this year’s TANF reauthorization debate. Although legislative action wasn’t complete at press time, the broad strokes of TANF, the sequel, were becoming clear: tighten and increase work requirements, slightly expand supports for working families, add some token grants for marriage projects.

As for funding, it is expected to remain level. President Bush proposed maintaining the TANF block grant at $16.5 billion a year for the next five years (although by 2007, that funding will be equal to a 20 percent cut from the same amount in 1997, because of inflation).

Guess what’s not in the President’s bill–or in any of the other pieces of welfare reform legislation that have significant support. Not only is there no language that addresses the basic welfare grant; there’s no mention of how much money a family actually gets. Or whether it’s adequate.

On the national level, the priorities are clear, even for liberals: Since any one family can receive federal benefits for no more than five years, long-term prospects for work are critical. Any financial hardship arising from inadequate benefits is by definition temporary, overshadowed by the threat of being stuck in low-wage employment in the long term.

But New York has no choice but to deal with the people who remain on welfare for extended periods of time. It is one of five states (the others are Massachusetts, Michigan, Vermont and Rhode Island) that pay public assistance to recipients who’ve reached the federal five-year lifetime limit on welfare benefits. In 1997, the state legislature fought the governor and created a state- and locally funded welfare benefit program. Called Safety Net, it began last winter and already supports 145,566 households.

New York’s welfare grant last increased in 1990, when it rose to $577 for a family of three in New York City. (In fact, that was the fourth time that benefits rose during then-Governor Cuomo’s two terms.) Governor Pataki has been less than interested in raising it. His initial proposal to implement the 1996 federal law sought to cut benefits gradually as a recipient stayed on the rolls, so that by the end of four years, cash benefits would be reduced by 45 percent.

That $577 isn’t actually one single grant. It consists of a grant for basic household expenses plus a $286 shelter allowance for a family’s rent. (Food stamps are also a typical part of the benefit package, amounting to about $350 a month for a family of three.) In 1987, Legal Aid attorneys went to court challenging the shelter allowance as not nearly enough money to pay for rent in the five boroughs. Several years later, the courts, not surprisingly, agreed, and in what’s called the Jiggetts decision, ordered the state to pay the difference between the shelter allowance and the actual rent for families on public assistance facing eviction.

In the past decade, Jiggetts has become a substantial addition to the welfare grant. For at least 17,000 city families, it helps pays their rent, up to $650 a month for a family of three. However, it becomes available for a family only if they’re actually facing eviction. Add in the fact that applying for Jiggetts is complex–“Even experienced advocates have to be trained to fill out a Jiggetts form,” says Bob Bacigalupi, an attorney who specializes in public assistance law for Legal Services for New York City–and the result is that the 17,000 families who receive Jiggetts are just 7 percent of the welfare recipient families in the city.

The rest try to survive on $577–or less. One hallmark of the Giuliani administration welfare policy was a dizzying array of paperwork and face-to-face appointments. If a recipient misses an appointment or a deadline, she is “sanctioned,” and her grant is slashed. At least 7 percent of the city’s entire caseload is sanctioned at any given time, according to figures compiled by the Independent Budget Office. Those sanctions cut monthly grants for a family of three down to $450 or less.

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How do families survive on such tiny amounts of money? The short answer is that many don’t. The grant is just not sufficient to pay all the monthly expenses–rent, food, electric, telephone, clothing, MetroCards, laundry and everything else that comes up in any given month.

Poor families are adaptable and creative. They figure out ways to make every dollar stretch and every food stamp count, but something has to give. And it inevitably does. Conversations with recipients and social workers and attorneys who work with them turn up endless examples of the day-to-day consequences of trying to survive on so little money. Mom waters down milk for her toddler. A teenager doesn’t go on a school field trip to a museum because he can’t afford the $5 fee. A 6-year-old girl refuses to go to school because her clothes are so shabby. Mom gets back together with an old boyfriend–even though he beats her–because he throws the occasional $20 her way.

One obvious outcome of the inadequate grant is that families turn elsewhere for support. Emergency food providers have reported a sharp increase in demand in recent years for meals at soup kitchens and bags at food pantries. The city’s largest provider of emergency food, Food for Survival, distributed 27 million pounds of food between July of 1995 and June of 1996. Four years later, the agency gave away nearly double that quantity: 53 million pounds.

Similarly, there’s been a pronounced rise in the number of families seeking emergency housing. While many of those on the rolls live in federally subsidized housing, where their rent is set at a fixed portion of their income, the rest must brave the private housing market, or live illegally doubled up. In 1996, the city’s shelter system housed roughly 25,000 people each day. By this March, that figure had risen to 32,397–an increase of nearly 30 percent.

Unstable housing is just one way that woefully low welfare grants actually hinder a recipient from seeking and securing employment. Living on $577 a month is a time-consuming preoccupation, filled with hunts for clothing giveaways and hours spent going from store to store comparing prices. Getting a job itself costs money. Says BichHa Pham, public policy coordinator for Hunger Action Network of New York State, “You wouldn’t believe how many times I’ve talked to welfare recipients who talk about how hard it is to afford shoes for a job interview.”

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In New York, it’s up to the state legislature and the Governor to raise the basic grant. Capitol observers say they almost can’t imagine a time when a hike has been less likely–and not just because Governor Pataki has been so historically hostile to welfare. Money is truly tight in Albany. The budget passed in May employed every trick known to law to avoid huge deficits.

Welfare funds themselves became part of those ploys. Throughout the late 1990s, the state treasury contained billions in extra welfare money. Even after paying for all the new programs like child care and the tax credit, the state gradually put nearly a billion dollars more in a contingency account called the “rainy day fund.” That’s gone now. The governor and legislature agreed to drain the entire rainy day account to plug the general budget shortfall for programs like college aid and universal pre-kindergarten classes.

Next year is expected to be much worse. Thanks not just to the recession and the terrorist attacks, but to Albany policymakers’ unwillingness to either raise taxes or cut spending in an election year, multi-billion dollar deficits are a given for 2003.

Even so, some advocates for the poor say there’s no better time than the present to at least bring the grant back to its 1990 levels, bumping $577 up to $791. They reason that the very success of welfare reform at getting hordes of people off the rolls has made it less expensive to raise benefits for those who remain on them. Welfare rolls statewide are the lowest they’ve been in 37 years, at 638,253, down from nearly 1.7 million in 1995. “You should have less fear in the welfare reform environment in making the argument that the grant is inadequate,” says Russell Sykes, vice president of the Schuyler Center for Analysis and Advocacy. “If welfare is supposed to be temporary and just preparatory for work, why not make that system more adequate?”

Here’s why, state officials say: The welfare grant has to be painfully low, or there won’t be any incentive pushing people to go get a job. “There’s supposed to be a reward for working,” argues OTDA Commissioner Wing, explaining why he doesn’t think the grant should be raised.

Wing is being modest about his program’s force; the reward is already there. Even with a significant raise in the grant, welfare has fallen so far behind work that work always pays better. Even if the monthly grant were raised to $791, it would still be way less than what even a full-time minimum wage worker makes–$1,310, thanks to the earned income tax credit.

Some recent research has shown that raising welfare grants can actually encourage families to move off the roles. Minnesota officials have created a well-regarded welfare-to-work program that allows recipients to collect full benefits while earning income from jobs. The program’s recipients are not only more likely to get higher-wage jobs, but many see marked improvements in family well-being.

If the evidence is on their side, why aren’t advocates for the poor making noise in Albany about the insufficiency of welfare benefits? Some are willing to admit that rocking the boat could capsize it. The legislature and the governor could agree to raise the basic grant by $50 or $100, but they might then also restructure the grant to eliminate the separate accounting for a shelter allowance–destroying the legal basis for Jiggetts in the process. It’s a real fear: Each year, the Governor proposes doing away with the concept of the shelter allowance, and then the Democratic Assembly blocks his action.

“We’ve kept tens of thousands of families from being homeless with Jiggetts,” argues Shelly Nortz, deputy director for policy at the New York Coalition for the Homeless. “You wouldn’t want to see the law that forced them to make that happen disappear for $100 more in the basic grant.”

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It’s not just the Jiggetts dilemma. The fact is that advocates for the poor haven’t had much to say lately about cash assistance. Indeed, programs like child care for working families and the earned income tax credit have become a rare common ground for activists and bureaucrats. These days, they’re even working together. Activist groups joined OTDA earlier this year to produce joint recommendations to the federal government on TANF reauthorization–“The only one in the country,” Wing says proudly of their collaboration–which focuses on how government can better help families who have recently moved into the workplace.

“I think it’s sensible social policy,” says Sykes of the Schuyler Center, one of dozens of groups that co-signed the document, about the expansion of work supports. “It’s government recognizing the limits of the market.”

Recipients organized in membership organizations have also focused the bulk of their recent activism lobbying for programs that help move families from welfare to work. Groups like Community Voices Heard demanded that the Giuliani administration fund public works initiatives to pay decent wages for work like cleaning parks. They have also lobbied the City Council and a succession of mayors to allow recipients to count training and education toward their work requirements, so that recipients can be better prepared to go out and job-hunt.

Even a position paper on TANF reauthorization from the city’s preeminent anti-poverty organization, the Community Service Society, focuses almost exclusively on employment. It discusses two challenges: helping working families “move up the ladder” and supporting parents currently on the rolls as they move to employment.

The choice to focus activist energy on work is clearly a strategic one. With benefits so low, advocacy groups may simply be doing what’s best for their clients by focusing on work supports, says Donna Rubens, the director of research and development at the Women’s Housing and Economic Development Corporation in the Bronx, which helps about 400 welfare-to-work clients in the Bronx each year. “A welfare check is a lousy substitute for a paycheck,” notes Rubens. “You can’t access the earned income tax credit. On workfare, there’s no protection for you as a worker. It’s just a bad deal.”

There’s also the desire to have influence on an ongoing state and national conversation that is focusing so intensively on how to support families who have made the transition from welfare to work. Although advocates for the poor don’t like to see themselves as insiders who will do anything for a seat at the table, many also acknowledge that they’re tired of bringing up an issue year after year that seemingly has no political future. Rather, they justifiably point out, the earned income tax credits and expanded child care they’ve won have helped out working families who themselves remain poor.

But not as poor as the more than 640,000 still on cash welfare in New York State. Some activists wonder if more than a few of their colleagues haven’t forgotten that day-to-day, the most important thing for these families on welfare is having enough money to do laundry and buy school clothes. Not how big the tax credit will be if they ever get to work. Not whether a college internship they’ll probably never have a chance to take will count toward their work requirements.

“There’s an animus towards welfare that’s not just in political culture but that has also seeped into advocacy culture,” says Tim Casey, a senior staff attorney with the NOW Legal Defense and Education Fund. “Sometimes people who should know better don’t talk enough about how little money families on welfare actually get.”

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On a warm May afternoon, nearly a hundred reporters, government officials, policy analysts and curious onlookers packed tightly into a Queens college classroom for what promised to be an interesting announcement: the first clear revelation of the Bloomberg administration’s welfare vision. Like every other state and municipality in the country, the city’s welfare agency and mayor would be presenting their recommendations on TANF reauthorization to the feds.

The city’s recommendations impressed critics of the previous administration’s often harsh welfare policies. Bloomberg urged the federal government to allow welfare money to pay for housing subsidies without counting against time limits–something long called for by advocates for the homeless. His plan also calls for increasing the amount of time that a welfare recipient is allowed to spend in training and education. And it urges the feds to count substance abuse treatment and domestic violence services towards work requirements.

All of those recommendations for improving TANF, plus others, were contained in the document that the city presented to the press that afternoon. But they weren’t what the mayor chose to highlight in his verbal remarks. Instead, Mayor Bloomberg emphasized again and again the need to maintain tough anti-fraud controls and strict work requirements for welfare recipients. Without them, he warned darkly and repeatedly, the city would return to the dismal days marked by a “culture of dependency.” As if you can call anyone dependent who lives on a check that covers a fraction of their family’s needs. As if recipients–even before welfare reform–hadn’t always worked, informally or formally, to supplement their meager public assistance wages.

Bloomberg’s reproachful rhetoric highlights the gaping hole at the center of the welfare reform debate. Peel away all the talk about dependency and self-sufficiency and learning how to work hard, and families on welfare are still left with that same tiny little payment. The one that leaves them with nothing left–and bills still left to be paid. That makes their kids ashamed, and their hopes for a future with more money and bigger dreams buried, beneath yards of worries about laundry and school clothes and a new pair of shoes.