No Worker Left Behind

By / 9.8.2011

TANFAs President Obama puts the finishing touches on his jobs package, let’s hope it includes a helping hand for Americans on the lowest rungs of the job ladder—those struggling to make the transition from welfare to work.

President Clinton’s landmark 1996 welfare reform ended the old entitlement to public assistance, limiting the time people can remain on the rolls. That law reconceived welfare as a way station to jobs and self-sufficiency. Strongly reinforced by a booming economy, tight labor markets and expanded subsidies for low-wage work, the new policy sparked a dramatic exodus from the welfare rolls.

Now, with unemployment nearly twice as high and job growth sluggish at best—the economy generated no net new jobs in August—the picture is very different. At a time when everyone is having trouble finding work, it hardly seems fair to expect welfare administers to sustain previous levels of job placement for people with little education and other disadvantages.

Some liberals believe the answer is to suspend the 1996 reform and allow welfare rolls to start swelling again. There’s a better way: Give employers incentives to hire welfare recipients. Until recently, many states were doing precisely that, with excellent results.

In fact, one of the most successful job-creating programs in recent years was the little-known TANF Emergency Fund included in the 2009 stimulus package. The fund provided states $5 billion over two years for basic assistance, short-term benefits, and subsidized employment. According to a joint report by the Center for Law and Social Policy (CLASP) and the Center on Budget and Policy Priorities (CBPP), 37 states used about $1.3 billion of the fund to subsidize employment. This led to the creation of over 260,000 jobs.

According to the CBPP, the emergency fund was a “‘win-win-win,’ helping unemployed families find work, businesses expand capacity in a difficult economic environment, and local economies cope with the recession.” Illinois, at first intending to only place 15,000 people, placed more than 30,000 and had 60,000 apply. Since pay far surpassed welfare or unemployment benefits, families were able to pay their bills and participants gained valuable work experience. Some were even hired into unsubsidized positions. These jobs often replaced cash assistance—South Carolina’s previously rising welfare caseloads dropped after the state introduced its subsidized jobs program.

The jobs programs were also popular with businesses. Hiring subsidized employees helped many small businesses expand and avoid layoffs. The programs were efficient too—according to CLASP and CBPP, “administrators of EF-funded subsidized jobs programs regularly reported that businesses were eager to participate because it was easy to do so.”

All in all, it was an immensely popular program that enjoyed bipartisan support. Even Mississippi’s arch conservative Governor Haley Barbour, who rejected billions in federal stimulus dollars, praised the program, said that it would “provide much-needed aid during this recession by enabling businesses to hire new workers, thus enhancing the economic engines of our local communities.”

Unfortunately, the Emergency Fund expired last September after Senate Republicans blocked a last-minute push by Sen. Dick Durbin (D-Ill.) for a three-month extension. Most states were forced to end or scale down successful jobs programs.

In voting to kill the program, Sen. Mike Enzi (R-Wyo.) charged that it rewarded states for increasing welfare spending. States either have to show a caseload increase or higher spending to qualify for the Emergency Fund. It seems odd to criticize the states for drawing down the Emergency Fund during an economic emergency—and the last several years certainly qualify as an emergency. To many Republicans, apparently, welfare reform simply means booting people off the rolls, not helping them find work.

With TANF set to expire next month, progressives in Congress should make replenishing the Emergency Fund a top priority for reauthorization. Better still, lawmakers should adopt a proposal by Gordon Berlin, president of MDRC, for “a permanent emergency fund that would only be triggered by high poverty and unemployment indicators.”

The word is that the President Obama is also eyeing a similar approach to job creation—a program called Georgia Work$. Popular with both parties in that state, the program matches unemployed people with local businesses for eight weeks of workplace training. Workers continue to get unemployment checks as well as a weekly stipend, and businesses essentially get free labor with the option to hire the worker when the program ends.

Georgia Work$ is not without its share of problems—its massive popularity nearly bankrupted the program—but it provides further evidence that, with a little help from the government, employers will step up and hire those struggling through the downturn.

It will cost money to put unemployed people into real-world jobs that help them earn income and acquire work skills. But subsidizing work sure beats expanding either the welfare or the unemployment rolls.

Photo credit: janinsanfran