Poverty & Oregon’s Welfare Reform

Johanna Brenner

LAUDED AS A national model, Oregon’s welfare reform has emphasized “job attachment” as a goal, pressuring recipients to take jobs in the private sector, and, in an expanding regional economy, cutting welfare caseloads almost in half. Although anyone with a lick of sense, including the people who run the welfare system, knows that reducing caseloads and ending poverty are two very different things, the political discourse of welfare reform and the popular imagery that accompanies it, assumes that poverty is a problem of unemployment and that putting welfare recipients to work will improve their lives and their children’s lives.

We have now lived through almost two decades of a conservative drumbeat glorifying the private sector and attacking government, public workers, and public services. What is the result?

In a booming U.S. economy, the gap between rich and poor is the highest among the industrialized countries in the world. And, contrary to the claim that employment will end poverty, the majority of poor families are working families. Yes, stable well paid employment for everyone is an important public policy goal. But the current economy, dominated by low-wage jobs, will not provide that kind of employment for most of the people now dependent on assistance. Rather than subsidizing private employers who pay low-wages, public policy should be directed at creating more private sector living-wage jobs with good benefits. And instead of reinforcing denigrating myths, we need to face up to the realities of single mothers’ lives.

Public policy has to end almost two decades of private enrichment at the expense of public impoverishment. Public goods, like quality childcare and after-school programs, expanded family leave and senior services, are crucial supports for working parents. Expanded public services that help us create stable families and livable communities would be within our reach if Oregon had a progressive tax system that shifted the burden upward to the wealthiest households, to hugely profitable corporations, and to the largest commercial property holders, all of whom have benefitted so much from the tax cuts of past decades.

Employment No Cure for Poverty

Seventeen percent of Oregon children are poor. Contrary to those who argue that the cause of their poverty lies in their parents’ failure to work, the vast majority of poor families with children (70%) have an adult who worked at some point during the year and fully one in five poor families are supported by an adult who holds a full-time, year round job. The majority of poor families that receive public assistance in Oregon have a parent who worked for at least part of the year.

Economic growth in Oregon and in the nation has increased the number of low-paid, part-time, seasonal and temporary jobs. One national survey found that 25% of working parents in poor families with children worked part-time because they could not get full-time work. Another 33% were permanently or temporarily laid off at some point during the year. The scarcity of full-time work is illustrated by the growth of “temp” agencies. In Oregon, between 1979 and 1991, employment in temp agencies increased by 500%—from 3,000 to 18,000.

Between 1982 and 1995 Oregon’s fastest growing industries (with the exception of construction) were those with the lowest average wages: retail sales and services. An Oregon Employment Division study showed that jobs paying below poverty for a family of three grew 79% in the 1980s, while middle-wage jobs grew 40% and high-wage jobs declined. The fastest growing jobs in the state do not pay a wage sufficient to allow a single mother to support herself and her children above the federal poverty line.

Let’s take the example of one of the many “success stories” that welfare reform proponents have used: Linda, a widow with four children, was placed in a clerical job at an architectural firm paying $6.50 an hour —which translates to an annual salary of $13,520. But, the federal poverty level for a family of five is $19,491. So Linda’s annual income was far below what she needed to get out of poverty. In fact, if her family had to rely on her income alone, they would be extremely poor (70% of the poverty level). If Linda were a more typical welfare recipient, a single mother with two children, her annual salary would put her just barely over the federal poverty line (which many analysts believe is unrealistically low).

National studies of women who leave welfare for work have demonstrated time and time again that most do not find jobs to take them out of poverty. For example, a 1996 study of single mothers who were working four years after leaving AFDC found they earned an average of just $8,000 annually, 33% below poverty for a family of three.

Oregon has cut the welfare caseload by 41% in three years. But neither the federal nor the state government is investing in research about the consequences of this cut. What’s happened to the 20,000 families no longer on TANF? How many have been homeless? Have they moved back in with an abusive man? Are they living in unsafe housing? Have the kids been sent to live with other relatives or put into foster care? Are they receiving adequate medical care? How many times have they had to move because they got evicted and couldn’t make the rent? How many different schools have the kids attended over the last year? How well nourished are the kids? (One national study has shown that although women who leave welfare for low-wage work are still eligible for food stamps, many have difficulty getting the assistance.) Is the stress of survival taking a toll on their parenting?

We do know that all is not well with Oregon’s families. At the same time that the welfare rolls are shrinking, the number of children living in poverty is going up, and caseloads in children’s services are skyrocketing as families without adequate incomes fall apart. Since Oregon’s program continues “transitional benefits” (childcare and health care) for a year after a single mother finds employment, we can expect that as time goes by, more and more families who have left welfare will find themselves in trouble.

Do Single Mothers On Welfare Lack Job Attachment?

Welfare reform denigrates single mothers on welfare, claiming that punitive rules like time limits are necessary to push them into work (they’re lazy) and assuming that they lack basic work skills and experience (they’re ignorant). In fact, most single mothers who rely on welfare are working women. They cycle on and off welfare as they get and lose employment.

Longitudinal research on single mothers leaving welfare for work has found that most are forced to return to the rolls within two years. A medical emergency, a car that breaks down, a relative’s illness, an eviction, a layoff, lead to job loss and a return to welfare.

Welfare has been the safety net that tided single-mothers over until they could stabilize their situation and find work once again. A study by Oregon AFS published in 1989 found that about two-thirds of applicants for benefits at any given time are women who previously received welfare. These women don’t need workfare—a four- to six-month “work experience” placement in Oregon’s Jobs Plus program. They don’t need training on how to do job search or interviews; they’ve had plenty of experience finding and getting jobs. Their problem is being able to keep the jobs they get and to live on what they earn.

Yes, there are single mothers (about one in five of all single mothers who utilize the welfare system) who stay on welfare for longer periods. Some of them are disabled or have children with disabilities. Those without disabilities need much more than a little work experience to access a job that will lift them out of poverty.

In a national study of welfare recipients, the Washington, D.C. based Institute for Women’s Policy Research researched why some single mothers access wage work at least part of the time, while others rely entirely on welfare to support their families. They found that the most important factors were whether or not the mothers have a high school education and how many children they have. Remember, childcare costs money and childcare for very young children costs a lot of money.

Years of work experience had a statistically significant but less dramatic effect and participation in job training had no statistically significant impact—probably because most of the jobs for which women on welfare have been trained are paid so low. In the end, however, none of these mothers were able to use paid work alone to stay permanently off welfare or to get out of poverty.

Use Public Money for Communities

Oregon’s workfare program, Jobs Plus, places welfare recipients in private sector jobs for up to six months at minimum wage . The state gives employers money to cover the wage. Employers get virtually free labor with no requirement that they will provide substantial new job skills or hire the employee, if she does well. When the six months are over, the single mother moves on to the next workfare job, while the employer gets another free worker.

Oregon’s glorification of paid work in the private sector as a cure-all for poverty, ignores working parents’ family responsibilities. Both one- and two-parent families find it difficult to manage the double burden of care-giving and employment. As more and more women leave communities and homes for paid work, the important unpaid caregiving and community-building work they used to doing the schools, in their communities, in their backyards, on their street isn’t being replaced.

In fact, community services are being cut back instead of expanded. Flooding the labor market with single mothers desperate to work will certainly help employers keep wages low, but will not do anything to rebuild the community infrastructure that is so crucial to everyone’s well-being.

Public money ought to be used for public goods. Instead of subsidizing low-paying private sector jobs, Oregon should be investing in families and communities by creating public jobs with living wages and health benefits in community-based services: quality childcare, before- and after-school programs, tutoring and classroom aids, summer recreation programs, senior programs, home health aids, etc.

How might we pay for these services?

First, we could implement government policies that lead to a high-wage, rather than a low-wage economy. If Oregon’s workers earned higher wages, fewer families would be poor and state income taxes would generate more revenue.

Second, we could raise income tax rates on the very rich who currently pay the same proportion of their income in taxes (income, excise and property taxes) as the very poor; eliminate the corporate kicker (a $167 million gift to business in 1995) and roll back property tax rates on non-residential property to the rates before Measure 5 (a $328.2 million windfall to landlords and commercial property owners).

Ending poverty requires redistributing income through higher wages, progressive taxes, and other government income transfers (such as a state Earned Income Tax Credit for low-wage workers, family allowances for single mothers and unemployment benefits). Poverty in Oregon will continue to grow as long as citizens allow business to profit by paying low wages rather than by improving productivity and sharing the benefits of improved productivity with their employees.

Sources: The Poverty Despite Work Handbook, Center on Budget and Policy Priorities, Washington, D.C. April 1997; Combining Work and Welfare, Institute for Women’s Policy Research Washington, D.C. April, 1992; Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Citizens for Tax Justice and the Institute on Taxation & Economic Policy, Washington, D.C. June 1996; Labor Education and Research Center Report, Eugene, Oregon, July 1993.

ATC 73, March-April 1998