Tuesday, May 13, 2008

PENNIES FOR THE POOR

In recognition of the difficult financial straits that many poor people face, some states have been providing modest cash assistance to help the working poor hold onto their jobs. The sums, reported in yesterday’s New York Times, are paltry. Arkansas leads the pack, providing $204 dollars a month extra to poor workers. California is talking about dishing up an extra $40 per month. Michigan, where the economy is tanking, provides a whopping $10 per month for six months. And Massachusetts—that bastion of liberal profligacy—-provides $7 per month as a supplement. Reports the Times: “Alison Goodwin, a spokeswoman for the human services department in Massachusetts, acknowledged that the benefit was ‘modest.’ But she said it would increase the work participation rate.” $7 per month. I doubt it.

It’s been a dozen years since President Bill Clinton signed the legislation that abolished Aid to Families with Dependent Children and replaced it with Temporary Assistance to Needy Families (TANF). At that time, many observers, myself among them, described TANF as an anti-welfare program, not an antipoverty program. Proponents of welfare reform bellyached about the dangers of “dependency.” The belief that dependency is a state to be avoided is peculiar sociologically. It rests on a very old but dubious American belief in the value of individual independence, one that resonates rhetorically but does not begin to describe the countless ways that we depend on our families, our neighbors, our communities, and, yes, even our government, whether we are rich or poor. To that end, welfare reformers fashioned policies that raised the barriers to welfare receipt, established cut-offs, and instituted work requirements. TANF would carve out paths to independence and self-sufficiency that would liberate poor women (the primary target of welfare reform) and their children from debilitating government handouts.

Well we now know that the barriers to entry and the cutoffs worked—-in dramatically reducing welfare rolls. But we also now know that TANF did nothing to reduce rates of poverty. Why? Because remunerative, entry-level jobs are scarce. The lack of affordable, accessible day care options is a big barrier to women who want or have to join the paid labor force. The sorts of unskilled jobs that attract most former or would-be welfare recipients are not known for their stability and security. Most of them do not provide a cushion for women who have to take a day off to care for a sick child or an unhealthy relative. You miss a day or two of work and you’re fired. But most problematically, most of these jobs simply do not pay enough to provide the basic resources necessary for subsistence.

Consider this hard fact. In 2004, the average yearly income for the poorest fifth of households in the country was a mere $14,700, in contrast to a remarkable and rising $155,200 for the richest fifth. Try living on $14,700 a year with or without children. It's not easy.

A recent Pennsylvania study makes clear the difficulty that working poor families face in achieving self sufficiency. Economist Diana Pierce calculated that a one-parent family with two children (one in preschool, one in elementary school) living in the Philadelphia metropolitan area would need a little more than $42,000 per year to live above the subsistence level. (That works out to a full-time job that pays a little over $20 per hour). Her figures are based on conservative assumptions about monthly expenditures: $1,053 a month for day care (that might seem high, but it only works out to a little more than $45 a day, pretty cheap really); $800 a month for housing (that doesn’t get you much these days); $503 per month in food (try feeding your two kids on that budget for a month, given skyrocketing prices for basic foodstuffs like eggs and milk); $290 a month for healthcare; and $70 a month for transportation (the study was conducted before the dramatic increase in fuel prices).

Even some of the better-paying entry-level jobs, assuming you get hired full-time and don't leave work for a family crisis, pay much less. In 2005, food prep workers in Pennsylvania made only $14,828 per year; retail salespeople earned only $18,783 per year, and janitors garnered a little over $20,000 per year (in part because some janitorial jobs have been unionized).

The old system of welfare was broken. But twelve years after TANF was signed into law, it’s time to admit that welfare reform is broken too. Michael Harrington once described America as a nation that offered socialism to the rich and the free market to the poor. His statement remains the most apt description of public policy in an era when we dole out $7 or $10 a month extra to the working poor, but offer huge tax breaks to wealthy people who invest in the stock market or who inherit minor or major fortunes.

2 comments:

Steven said...

Regarding Massachusetts, the $7 supplement you mention increases the work participation rate by allowing the state to count people who receive Food Stamps and are working to be counted in the mandatory work target rate for the state. It simply adds $7 to Food Stamp recipient checks each month, otherwise the state would lose many more millions of dollars for not meeting the federal requirements.

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