A Triple Whammy For The Poor
The Combined Impact of Welfare Reform, The Recession, and The World Trade Center Attack
By Mimi Abramovitz, DSW, Professor of Social Policy, Hunter College School of Social Work
Advocates of the poor around the nation are demanding that Congress "End poverty, not welfare" when it reconsiders federal funding for Temporary Aid To Needy Families (TANF).in 2002. The New York City Chapter of the NASW has called for an end to the five-year welfare time limits, which on December 1, 2001 cost thousands of New York State recipients their federal welfare benefits. As will be seen below, the sagging economy, and the aftermath of the attack on the World Trade Center have compounded the adverse impact of welfare reform on the lives of the poor.
What Has Welfare Reform Wrought?
The 1996 federal welfare law, popularly known as welfare reform ended the 60-year federal guarantee of cash benefits for the poor. It limited welfare to five years, imposed strict work requirements, regulated family life, and offered the states powerful financial incentives to reduce their welfare rolls. If shrinking the welfare rolls, supplying employers with cheap labor, and stigmatizing single motherhood equals success than the "reformers" can rightly celebrate victory. Since 1993 the welfare caseload fell more than 55 percent, 47 percent in New York City and 39 percent in New York State.
However, if Congress wanted to improve the well being of poor women and children, welfare reform has failed. TANF ended welfare, but not poverty, added to "welfare racism" and interfered with the effective delivery of human services by non-profit agencies. The recession and World Trade Center disaster have exacerbated these pre-9/11 trends.
Ended Welfare, Not Poverty.
While overall poverty rate fell slightly in 2000, almost 24.7 percent of families headed by a woman lived in poverty. Even with one or more workers, 21.4 percent of people in female-headed families remained poor, more than in 1993. This is especially true in New York whose low-income community did not benefit from the overall economic boom of the 1990s. Although low-wage workers nationally saw their wages rise by 5.6 percent during the decade, the pay for low-wage workers dropped by 5.4 percent in New York State and 9.5 percent in the Big Apple, In 1999, the Empire State ranked first among 10 northern industrial states for its high poverty and unemployment rates.
Not surprisingly, former recipients with jobs in New York and around the nation report that they cannot pay for food, rent, and medicine, that they skip meals because the cupboards are bare. Yet they tell us that welfare workers do not inform them that their below-poverty wages, leave them eligible for Food Stamps and Medicaid. The rolls of both programs have plummeted. Food pantries and homeless shelters report that the demand for service is great that they have to turn people away.Meanwhile the average incomes of the richest 20% were 20 times greater than that of the poorest 20% in New York City and 14% time greater in the State.
"Welfare Racism"
The racial unevenness of welfare's caseload decline has exposed what some now call "welfare racism." An Associated Press survey found that white women exited welfare faster than women of color in 14 out of 16 states and that in 33 out of 42 states, white recipients exited welfare in greater numbers than their Black and Latino counterparts. From 1994 to 1999, while the proportion of white families on welfare nationwide fell from 37.4 to 30.5 percent the blacks and Latina proportions rose respectively from 36.9 to 38.3 percent and from 20.1 to 24.4 percent. Gooden and other researchers attribute the changed composition of the welfare rolls to the apparent racial bias of welfare department caseworkers and the discriminatory hiring practices of local employers. Both groups treated recipients with similar welfare and employment backgrounds differently. Interestingly, the same discriminatory operated in the early 1940s; leaving more blacks than white on the Depression-era WPA work relief rolls.
Non-Profit Agency Services to the Poor: In Jeopardy.
A rarely acknowledged impact of welfare is its impact of the human service delivery system A NASW study, funded by the United Way and directed by Mimi Abramovitz, recently found that welfare has seriously limited the capacity of non-profit human services agencies to do their best for low-income communities. Welfare reform's harsh sanctions and stiff work mandates have thrown agency clients into more severe financial and emotional crises. Faced with TANF requirements and performance-based contracts non-profit agency workers have had to speed- up, do more with less, and deal with troublesome ethical dilemmas. At the same time, agencies struggle to sustain their focus, their programs, and their mission. Instead of helping agencies to provide the housing, mental health, employment, and other services that might increase the employability and well being of distressed clients, welfare reform has effectively limited the capacity of agencies to serve low-income individuals and families.
Since the World Trade Center Attack
It is often heard that September 11th "changed everything." But few link this to the lives of the poor whose access to welfare benefits, jobs and social service has been seriously compromised by developments since 9/11. If we are not careful, the poor could easily become what Jack Rosenthal, president of The New York Times Foundation recently termed, "the latest victims of the terrorists."
Welfare Reform.
On December 1, 2001 New York State ended benefits for the first 38,000 welfare families to reach their five-year welfare time limit. Of these, 30,000 live in New York City. Even if the recipients qualify for the state's highly restrictive and virtually cashless Safety Net Assistance (SNA) program, its work rules will add them to an unwelcoming labor market. During the first half of 2000, the state's unemployment rose to 6.0 percent, higher than the overall state (4.8%) and national (4.2%) levels. The City's pre 9/11 rate jumped from 5.8 percent in August 2001 to 6.3 percent in September 2001. Economists now predict that the World Trade Center disaster will cost New York City a staggering 105, 000 jobs in the fourth quarter of 2001 due to layoffs (79.500) and firms leaving the city (25,500). This does not include the ongoing loss of jobs to the current economic slump. The new welfare system has not faced a recession since the 1996 overhaul. Critics warned that true test of welfare reform would be what happened during the first economic downturn following its implementation. The welfare rolls have already risen in California, Texas, Florida, Michigan, Pennsylvania, and Ohio. Those who end up back on the welfare rolls because they could not find work will be blamed for failing to make it on their own.
Social Service Funding at Risk
Welfare's Time Limits, the recession, and the World Trade Center increase the need for effective human services Paradoxically, at exactly the moment of increased need, a funding crunch has hit the social services. The welfare block grants, state and local dollars, and private donations all face shortfalls.
Welfare block grant at risk
The 1996 welfare law funded TANF with a five-year block grant to the states and requirements that the states maintain 75%-80% of their pre-welfare reform spending levels. The current TANF allocation of $16.5 billion a year (compared the $15 billion airline bail out) expires in September 2002 and must be reauthorized. Advocates for the poor worry that needed welfare spending will fall victim to temporarily reduced welfare rolls, to a $1.35 trillion tax cut (over ten years), and unanticipated spending for emergency relief, corporate bailouts, and a military build-up.
Purchase of service contracts, shaky
The 1996 welfare law generated surplus welfare funds for the states. The dramatic caseload declines, combined with federal funding pegged to the higher pre-welfare reform (1994) caseloads, and no benefit increases left New York State with a $6.7 billion "TANF surplus." During the last five years, the State and the City have used these "extra" dollars to underwrite the earned income tax credit (EITC) as well child care, child welfare, employment, pregnancy prevention and other services provided by non-profit human service agencies. Prior to the TANF windfall, state and/or local revenues funded these programs. If Congress does not fully reauthorize TANF funding and if the welfare rolls rise, the state and city will have to find other funds for private social service program, (not that likely), raise taxes (not popular), or cut public assistance and social services. The bare bones state budget and the 15 percent cut ordered for City agencies suggests the route the public funders will take. The non-profit sector has already begun to cut programs and lay off staff. Once again, services for the poor will be hardest hit.
Private donations for non-profits dropping.
Private funding for social services may also dwindle. Along with government cutbacks, private funders shocked by shrunken stock market portfolios have also pulled back. At the same time, the World Trade Center disaster unwittingly diverted important dollars from the charities that typically fund non-profit service agencies to disaster relief efforts. With enormous generosity individuals, firms, and foundations, poured huge sums into a wide range of 9/11 funds targeted largely to those with a direct connection to the World Trade Center attack. The $43 million received by The New York Times 9/11 fund was more than five times the record $8 million raised last year by its 90-year old Neediest Cases Fund. In sharp contrast, virtually overnight, donations to charities that fund non-profit service agencies have slowed to a trickle. Both in and outside of New York, direct mail campaigns and fund-raising events have brought in less than expected. Some major givers have reneged on their pledges, sending contributions to disaster relief instead. Things may change, but for now many non-profits-especially those serving the poor-are feeling the pinch.
A Louder Voice
The human service community must raise it voice louder and become even more active participants in the debates about welfare reform, disaster relief, and terrorism for they will shape anti-poverty policy for years to come.