Monday, June 01, 2009

The welfare system in the U.S.: rewarding work when jobs are cut

The revamping of the welfare system in the 1990s has been by most accounts a success. The changes rewarded those who work, under the assumption that low-skill, low wage jobs were easy to find.

The global recession is challenging the changes made to the welfare reform in the 90s. As jobs are cut at drastic rates, how does the welfare system continue to "make work pay"? A recent conference in Washington tried to answer this welfare question. From this New York Times story that we found at Blue Ridge, writer Jason DeParle attended the conference.

“We have a work-based safety net without work,” said Timothy M. Smeeding, an economist at the University of Wisconsin. “We’re really in a pickle.”

The economic crisis is the toughest test yet of a safety net refashioned 13 years ago when President Bill Clinton kept a pledge to “end welfare as we know it” and joined a Republican-led Congress in sharply restricting cash aid. In the boom years that followed, millions of people left welfare for work and poverty rates plunged, though skeptics warned that needy families would be left with nothing when the economy faltered.

Few people thought the faltering would prove so swift and severe. Within weeks of taking office, President Obama had signed off on measures to spend more than $100 billion to shore up the safety net.

Some of the money goes to programs reserved for people who work (like unemployment insurance and wage subsidies). Even more bolsters programs that include the nonworking poor (like food stamps and Medicaid).

While that might suggest a desire for a broader safety net than the one that has emerged in recent years, aides say the package was as much an effort to jump-start the economy as an expression of aid philosophy.

“We’re not at the moment narrowly focused on, Is there a work-based safety net?” said Martha Coven, a White House official who spoke at the poverty conference. “We’re focused on, Is there work?”

A crisis this large would challenge any safety net. Nearly 14 million Americans are unemployed, and more than 100,000 people join their ranks each week. Eight states have double-digit unemployment rates; California and Michigan have counties where the rate reaches Depression-era levels of 25 percent.

Still, the challenges seem especially stark when set against the assumption on which the modern safety net was built: that low-wage jobs, however onerous, were at least easy to get. Urging the needy to take them, policy makers expanded wage subsidies (which now top $5,000 a year in some states), while putting time limits on cash benefits, cutting access to training and giving states wide discretion to turn aid-seekers away.

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