Last year, when the editor of another magazine asked me to write about the progress of welfare reform in America, I called around to see which state was leading the way. I ended up in Wisconsin. Under the direction of Republican Governor Tommy Thompson, Wisconsin had begun cutting its rolls earlier than most other states and had pared them far more sharply. During my visit there, almost everyone I met embraced the idea of welfare reform. Even longtime advocates for the poor said they had become convinced that too many people had become too dependent on welfare and that reform had given them a needed push.
But I also heard many complaints about how welfare reform was being carried out. Thousands of people who were unable to work were being pushed off the rolls; hunger and homelessness had increased. Even those who had found jobs were having trouble retaining them, and their average wage was falling. Welfare reform was getting many people off the dole, I was told; it was not getting them out of poverty.
Increasingly, this is the national story. Since 1996, when President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, the nation's welfare rolls have declined 43 percent. Most of those who have left have found jobs and, in this robust economy, most work has paid above minimum wage. But not by much. Many welfare leavers have become trapped in the death valley of the job market, working as janitors and clerks, child care workers and nursing home assistants. A study issued last year by the Urban Institute found that people leaving welfare were experiencing the same low wages and job insecurity as low-income mothers who had not been on welfare. This, the institute stated, "suggests that policies to encourage and support work might usefully be focused more generally on low-income families with children rather than directing services specifically to former welfare recipients."
Belatedly, the policy discussion has moved in this direction--not simply how to get people into work, but how to get workers out of poverty. By now, we have a good idea of how to boost the prospect of low-income workers. First, they need generous support services that don't vanish when welfare expires--notably health insurance and child care. At the state level, workers need healthy "earned-income disregards"--formulas that allow them to retain part of their benefits even as their paychecks grow [see Gordon L. Berlin, "Welfare that Works," page 68]. At the federal level, workers need an increase in the minimum wage and an expansion in the Earned Income Tax Credit (EITC), to help push more workers over the poverty line. Workers also need access to more training and education, to help them advance individually, and stronger unions, to help them advance collectively.
But in most of the country, officials are only beginning to think about things like wage progression and job retention. Few states have provided anything beyond the most rudimentary training courses. Worse, many welfare leavers have been denied basic support services. Nationwide, more than a million people have lost their Medicaid. And only 10 to 15 percent of families eligible for federal child care subsidies get them [see Jonathan Cohn, "Child's Play," page 46].
While some of this is due to ignorance or naïveté on the part of workers, much reflects the ongoing determination of welfare offices to save money [see Marcia Meyers, "How Welfare Offices Undermine Welfare Reform," page 40]. According to a recent study by the National Campaign for Jobs and Income, 45 states are sitting on $7 billion in unspent Temporary Assistance for Needy Families (TANF) funds--money specifically earmarked by Washington to help ease the transition to work.
New York City exemplifies these trends. Under Mayor Rudolph Giuliani, the city's welfare offices have been converted into job centers, but customers have been provided little beyond instruction in writing résumés and attending interviews. Those unable to find work in the private sector have been assigned "make work" jobs offering no prospect of advancement. Only now, in his seventh year as mayor, has Giuliani gotten around to lining up job placement agencies to help prepare people for work. But characteristically, those agencies are all profit-making institutions, and the bidding process has become bogged down in charges of nepotism and corruption.
Calling around again, amid all the gloomy reports, I did find a few bright spots. Wisconsin, draconian in other respects, had a good child care program. Oregon was very conscientious about job placement. Vermont had no time limits for welfare aid [see Jon Margolis, "Vermont: The Greening of Welfare, " page 34].
But the state I kept hearing about was Washington. Its governor, Gary Locke, is a Democrat whose Chinese-immigrant parents barely eked out a living running a restaurant and a grocery store--an experience that left him sensitive to the struggles of the working poor. From the start, Locke has talked about the importance of doing more than simply putting people to work. The motto of WorkFirst, as his program is called, is "a job, a better job, a career." WorkFirst, Locke has written, "is designed to give people the supports they need to get a job, learn new skills, and move up a career ladder so that they will be self-supporting for life. And WorkFirst is designed to offer the same supports to every low-wage worker who yearns for a better life--not just those who've been on the welfare rolls."
To help make that a reality, Locke has set up a special work force subcabinet headed by his former budget director. Twice a month, the governor receives a report on case load levels, wage averages, and job retention, and he is quick to intervene when the numbers go sour. And to ensure maximum flexibility, Locke has secured the authority to allocate the money saved from case load reduction as he sees fit, without having to receive the approval of the state legislature. In the coming year, his administration plans to spend $129 million on job placement and training--$100 million more than in 1997, when WorkFirst was introduced.
In another respect, too, Washington provides a good laboratory. Much has been written about the rise of the "new economy" and the gulf it has created between haves and have-nots, between those with master's degrees and software skills and those without. Few areas embody these trends more than Washington, especially the Seattle area. In the land of Microsoft, Amazon.com, and Boeing, the harsh realities of the global economy are on raw display, and I went to see what might be done to help its castoffs.
The Pioneer Square area of Seattle, where I stayed, is the city's oldest section, and now one of its most vital. Sandwiched between the waterfront and the downtown business district, it is filled with imposing red brick buildings that, after a long period of neglect, have been restored to their turn-ofthe-century elegance. Today, these buildings house art galleries, antique shops, design studios, high-tech start-ups, and, of course, hip coffee shops. Nearby is Safeco Field, the new home of the Seattle Mariners, and the majestic girders that span its roof seem to embody the city's soaring economic fortunes. The unemployment rate in Seattle is a meager 3.3 percent.
As plentiful as jobs are, though, many don't pay that well. In most downtown hotels, for instance, the housekeepers make about $6.50 an hour; sales clerks in the area's stores earn about $8 an hour. Across Lake Washington, in Redmond, the janitors at Microsoft start at $7.60 an hour. According to a "Job Gap" report published by the Northwest Policy Center at the University of Washington, the state's living wage, defined as the amount that allows a family to meet basic needs without resorting to public assistance, is $11.07 an hour for a single adult and $14.75 for a single adult with two children. According to the Northwest Policy Center, 37 percent of the jobs in the state pay less than the former, and 73 percent pay less than the latter. And the gap increases as welfare reform pushes more and more people into the workplace.
In its initial phase, welfare reform in Washington looked much as it does now in the rest of the country. The emphasis was on reducing case loads, and no matter how many kids a mother had or how limited her job experience was, she was usually deemed fit to work. Referred to a job search center, she would be put through a five-day workshop-- concentrating on how to write a résumé--followed by an 11-week search for a job. Beyond that, no training was provided, and clients were expected to take the first available job, however dead-end it was.
In terms of getting people off welfare, WorkFirst was certainly successful: Between January 1997 and March 2000, the state's case load dropped from 96,000 to 58,000, a 40 percent decline. In the Locke administration's first survey of leavers, the median wage of earners was $7.40 an hour, which was significantly higher than the state's minimum wage of $6.50 an hour. As the months passed, however, the median wage--far from increasing, as the state had anticipated--began slipping. The number of people returning to welfare also began rising, and that fed an increase in the overall case load. To make matters worse, many families were routinely denied benefits to which they were entitled. In the most egregious case, 100,000 families were abruptly terminated from Medicaid, a result of the state's failure to reprogram its computers.
Seeing the gap between the governor's rhetoric and WorkFirst's actual performance, the state's poverty advocates began to mobilize. Washington's community-based groups are very vocal, and in the early days of WorkFirst, about 75 of them came together to form the Washington Welfare Reform Coalition. And as the coalition became aware of the troubles families were having, it plotted ways to publicize them. At the end of WorkFirst's first year, for instance, as the state prepared to issue a rosy survey of how leavers had fared, the coalition released its own "Reality Check," highlighting the difficulties mothers were having paying the rent and feeding their kids. And the press gave it ample coverage. "WorkFirst Gets Mixed Reviews in Early Years," ran a typical headline in the Tacoma News Tribune.
The limits of low-wage work
For a governor who had so forcefully stated his commitment to helping the working poor, such clips were embarrassing. But to Locke's credit, he has responded. In late 1998, as WorkFirst was entering its second year, his administration began shifting the focus away from case load reduction and toward poverty reduction. Though the program's policies are still evolving, Washington's experience since then provides a look at where other states and national policy could head in the future.
To begin, the state has sought to improve its delivery of support services. After long negotiations with the Welfare Reform Coalition, it has agreed to reinstate most of those who lost their Medicaid. It has also mounted media campaigns to publicize the availability of child care and to encourage workers to take advantage of the EITC. In addition the state has set up a network of call centers to provide workers with information about benefit programs, tuition credits, and job referrals.
Washington's most creative efforts, however, have come in the area of job training. Community groups have been particularly outspoken on this point, arguing that low-income workers will never advance unless provided the opportunity to learn new skills. And the state has come to agree. Rather than insist that welfare recipients take the first available job, it now allows them to enroll in Pre-Employment Training (PET), an intensive 12-week preparatory course. Offered at community colleges, PET provides instruction in "soft skills"--punctuality, grooming, workplace relations--as well as training in a specific field, like computers or bookkeeping. It's open not only to people on welfare but also to other workers who feel stuck in their jobs. And those with enough determination can take added instruction that will lead them up a career ladder to better-paying jobs [see Joan Fitzgerald and Virginia Carlson, "Ladders to a Better Life," page 54].
Can courses like PET make a difference? Sitting in on a PET class at Shoreline College, I was struck by the enthusiasm the students brought to it. "This part of WorkFirst is much better than when it first started," said a middle-aged woman with streaks of gray in her hair. "Before, you did a résumé, and that was it. Now, you're learning something."
"I could go get a job working at McDonald's," said another woman. "But I want to do better for myself." Having recently gotten a divorce after 19 years of marriage, she said, she felt "sheer terror" at the prospect of entering the work force, but the program was offering her some skills as well as the selfconfidence she needed to go out and get a good job.
The early returns on the program have been encouraging; the average placement wage for graduates is $9.22 an hour, about $2 more than for WorkFirst clients not enrolled in PET. Yet, in a troubling sign, the wages have begun to decline as the enrollees grow more hard-core. "We're getting people with larger skills gaps and with multiple barriers to employment," said John Lederer, director of the program. Based on their preparation, Lederer said, these students could use up to 26 weeks of training. Unfortunately, state rules have limited them to 12. Clearly, if PET is to have any effect, the state needs to be more flexible about its duration.
But Pre-Employment Training is just the beginning of sound policy, as I learned in an interview with Kay Hirai. One of Seattle's most visible, and unusual, entrepreneurs, Hirai owns Studio 904, an upscale hair salon with two sites, one of them in Pioneer Square. She also sits on the governor's Small Business Improvement Council. Over coffee, Hirai told me of her salon's unique no-tipping policy. Customers are charged a fee agreed upon in advance, and hair stylists receive a straight hourly wage (plus benefits). That wage begins at $8 to $9 an hour, but an employee can move up quickly to become a color specialist or business administrator and, after three years, can make close to $30,000.
Hirai is also unusual for her willingness to hire unskilled workers, including WorkFirst participants. "Let me tell you what it's like to hire a person from welfare," Hirai sighed. "The first six months are a big training time. You have to teach them so many things. And they have so many problems. They have problems with their children. They have problems getting to work on time. Eighty percent have English as a second language. And they are very angry because they have so much to deal with. So you have to do a lot of hand-holding."
Hirai recalls a 23-year-old woman from Vietnam. She was good at cutting hair, but she had a child who demanded constant attention, and her English was very poor. Hirai hired her a personal tutor at $35 an hour. But it was all too much for the woman to juggle, and she eventually quit. Overall, of the 14 welfare leavers that Hirai has hired and trained, only two have worked out. In some ways, she added, people not on welfare have it even harder because there are fewer supports available to them. Whether people are on welfare or off, she continued, "you have to keep training them." Short-term programs like PET are not enough, she said, adding, "there needs to be constant coaching. They need to be encouraged on a daily basis." The government, she went on, "needs to provide support for bringing these people along, and not just drop them off at the door."
Learning for the Long Term
Hirai's observations are borne out by the research on job training: Pre-employment courses, it shows, rarely produce lasting results. Training and guidance must continue long after the individual enters the workplace. Exactly how to provide this, though, has long eluded policy makers.
On a visit to Olympia, the Washington State capital, however, I found that the Locke administration is about to begin its own highly original experiment. Its mastermind is Ken Miller, the governor's policy adviser on welfare. A tough-minded, no-nonsense veteran of state government, Miller helped design WorkFirst, and he is, not surprisingly, a big booster of it. Nonetheless, he freely admitted to me that, during the program's first two years, "we had an extremely rigid system. It looked like we were trying to run the same type of narrow, mean-spirited program as in New York City, with success measured solely by case loads going down."
As the number of people returning to welfare inched upward, Miller told me, the governor began pushing for changes. One was the introduction of PET. Quickly, however, it became clear that this was not enough, and so Miller and his team came up with a new idea: job coaches. When the program is introduced next fall, each participant will be assigned a coach to help her advance in the workplace. For each, a target wage will be set, and training courses will be arranged to help meet it. If the worker runs into problems at work, the coaches will be there to intervene. "We'll be trying to move people in the Puget Sound area to $11 to $13 an hour over three years," Miller said. The coaches will be paid according to their success in moving clients toward that goal. The objective, Miller said, "is to ensure that everybody in the state has an opportunity to work in some fashion and move ahead as far as they can." The key, he added, "is to get people into job training while they're working."
Initially, the state plans to allocate $10 million for the program, with participation limited to people who are, or have been, on welfare. Eventually, though, it intends to open the program to all low-income workers.
As described by Miller, the job-coach idea seemed to me highly innovative--radical, even. Having not come across it in the welfare-to-work literature, I was eager to hear what others had to say about it. Most of the advocates and analysts I spoke with reacted positively. If the program actually succeeded in boosting workers' wages to the $11-to-$13 range, they said, it would be an impressive feat.
The main dissent, interestingly, came from a union leader. Marc Earls is the president of Local 6 of the Service Employees International Union (SEIU). Earls, a tall, poker-faced man with neatly cut sand-colored hair, quickly calculated that each coach would cost the state $50,000 a year in salary and benefits. An outlay of $10 million would translate into 200 coaches--a fraction of what was needed. "If the state hired the number really needed to get the job done," he observed, "job coaches would be the fastest-growing industry in the state." Workers, he added, "don't need coaches; they need unions."
Workers do of course need unions. The current resur-gence of American labor, and the growing success of unions like the SEIU in organizing low-skilled workers, offers real hope for boosting living standards. But unionization is not a panacea. Seattle's janitors already are organized, yet they remain in poverty. Wages are kept down by the large pool of cheap labor in the area, fed by immigration and by welfare reform itself. Against this backdrop, any program that could raise workers' wages to $11 to $13 an hour would seem heaven-sent.
But is such a program practical? As Earls noted, hiring enough job coaches and providing all the training courses would be costly. And unless case loads were kept very low, the whole venture would probably fizzle. But Ken Miller brushes aside such concerns. The state, he said, can draw on the $250 million it is saving every year in welfare expenditures, plus the $200 million it has accumulated in TANF funds. "What's limiting us right now isn't money, but how rapidly we can change our own culture and our systems," he noted. "If we can get two-year schools to create a curriculum and make it available to working families--a curriculum that business really wants to buy and that really helps working people get a better job--colleges would be flooded by the demand."
Even if the program is offered broadly, however, it would run into two other problems: the persistence of lots of low-wage jobs and the mismatch between available jobs seeking workers and the skills that low-wage workers currently possess. The former requires stronger unions and minimum wage laws. The latter is addressed by another cutting-edge part of the Washington State program--its emphasis on career ladders.
According to the Northwest Policy Center, there are 275,000 more households in the state of Washington than there are jobs that pay a living wage for a single adult, and at least one million more households than there are jobs that pay a living wage for a single adult with two children. "Despite strong economic growth in the regional economy," the center stated in a recent report, "the Northwest is not creating enough living wage jobs for all those who need them."
But at the same time, according to Mary Jean Ryan, director of Seattle's Office of Economic Development, "there are labor shortages in all sectors, from Jack in the Box to Microsoft." The most acute shortages, she said, are for mid-level jobs that require a two-year Associate of Arts degree in a technical field like infotech or biotech. "These are the jobs that companies are having the damnedest time recruiting for," she said. "The economy of 30 to 50 years ago was much more forgiving. You could go to high school and, if you had a reasonable work ethic, you could get a blue-collar job, work hard, and take care of what was needed. Right now, for a lot of people, that is not true." In the brave new world of the global marketplace, she added, "either you're on the road to prosperity, or you're not, and the key is whether you have a good education and marketable skills. If you don't, you're not going to advance."
Ready for Prime Time?
Realistically, how many low-wage workers can be expected to gain such skills? In Seattle I interviewed a number of low-income workers, and based on their backgrounds and abilities, they seemed to fall into three rough categories. A truly effective work force policy would have to take these differences into account.
The first category--call them the Ready-for-Prime-Time Workers--is typified by José Deloisa, a janitor I met on a visit to the SEIU. An articulate 42-year-old Mexican with short, curly red hair and green eyes, José had worked for American Building Maintenance (ABM) for five years, cleaning the offices of high-tech companies. His pay came to $8.60 an hour, which produced a take-home check of $600 every two weeks--far short of what he needed to support his wife and three kids. Three years earlier, José told me, he had worked two part-time jobs in addition to his janitorial one, earning a combined $4,000 a month. But he was exhausted all the time, and his back eventually gave out. Now he was limited to light duty at ABM. After falling six months behind on rent, he and his family had been evicted from their apartment, and they were now living with friends, moving from one to another each month. To feed his family, he had to borrow money. On top of it all, ABM was trying to dismiss him.
Despite his dire situation, José refused to go on welfare or even to visit food banks--it was too demeaning, he felt. What he really wanted was more training. In Mexico he had attended college, studying mechanical engineering, but had dropped out due to a lack of funds. He had been very good at technical drawing, a skill much in demand in today's computer world. But José knows little about computers, and to learn more, he discovered, would cost between $6,000 and $10,000--far beyond his means. "I can't stay as a janitor," he said plaintively. "I have the brains to do something else. But I need the training."
José represents that sector of the low-wage labor force that has a solid educational foundation but needs an additional year or two of training to advance. For most, the cost is beyond their reach, and since they're not on welfare, they do not qualify for government subsidies. If these workers had access to courses at community colleges, many would no doubt be able to fill the many semi-skilled jobs that are going begging in today's economy. One possibility would be a working Americans education bill, modeled on the GI Bill, offering tuition credits or subsidies to every American who has been working for a minimum period of, say, two years, and whose annual income falls below, say, 200 percent of the federal poverty level.
A second group--the Eager Beavers--is personified by Shanndoah Dowers, a 42-year-old mother of five living in north Seattle. Of Comanche, Cherokee, Eskimo, Irish, and Dutch heritage, Shanndoah dropped out of school after the ninth grade and, after moving through a series of low-paying jobs, ended up on welfare. Through WorkFirst, she enrolled in Pre-Employment Training at Shoreline Community College. During the week, Shanndoah works part time as an intern at the Welfare Rights Organizing Coalition in a community service job subsidized by the state. It was there that I met her.
A cheery, strong-willed woman with dark eyes and full cheeks, Shanndoah has two of her children living with her. And just hearing her schedule left me exhausted. Every morning, she rises at 4:30 to get her youngest daughter (who is eight) ready for school. The school is on the opposite side of town, so they must board a bus at 7:00 in order to get there by 9:00. After dropping her daughter off, Shanndoah takes another bus into downtown Seattle, where she spends two hours paying bills, running errands, and doing homework. Then, at noon, she shows up at her job, where she remains for four hours. Then she hops on another bus to pick up her daughter, and together they take yet another bus home. There, she feeds her daughter, helps her with her homework, and does more of her own before turning in at 10:30. Her weekends are spent at Shoreline, where she's studying computers.
When WorkFirst was first introduced, Shanndoah said, "I thought, 'Oh my God, they want us off. We have no skills--what are we going to do?'" But her time at Shoreline has changed that. "I love the course and the high standards they set," she said. "Since I've been on the computer, I can't imagine doing anything else." When she finishes, Shanndoah expects to find a job paying $9 an hour. She thinks she needs $15 an hour to support her kids, however, and so, after getting settled in a job, she hopes to take advantage of another state program that will allow her to return to school part time. Through it, she hopes to get a GED and, eventually, a college degree.
Given her fierce determination, perhaps Shanndoah will be able to pull it all off. But with her limited education and responsibilities as a single mom, she will no doubt run into many problems. And a job coach might be just the thing to help her cope--along with quality day care. If Washington manages to get its new program up and running, it will provide an important test of this approach's ability to help workers on this middle rung.
Finally, there is the Willing-but-Unable contingent, typified by Heather Madera. A 26-year-old native of Rochester, New York, Heather dropped out of school in the 12th grade and moved to Nevada, where she got involved with a man with whom she eventually had two children. After he became abusive, however, she moved with her 18-month-old daughter and three-month-old son to Washington, where her parents were living. There, she enrolled in WorkFirst. Heather's life, as she described it to me over the phone, seemed a chaotic patchwork of make-work jobs, long bus rides, day care visits, apartment moves, and doctor's appointments for her children. At the time we spoke, she was suffering from strep throat and her son had an ear infection, and she was wondering how she would be able to afford medicine.
Heather told me she wanted to become a registered nurse. She struck me as bright and well-motivated, and, in another world, perhaps she would be able to accomplish that goal. But the many obstacles she faces as a single mother of two would seem to make that unlikely. For people like her, even job coaches might not be enough help to achieve an acceptable living standard. Such hard-to-serve individuals will probably require various forms of government assistance over an extended period, including cash payments. In return, recipients can fairly be expected to perform some form of community service. One way or another, as the five-year time limits imposed by the 1996 act approach, states are going to have to consider creating some kind of rump system to deal with the sizable population that--however many weeks of training they receive--will have a hard time making ends meet.
This, then, is what a manpower policy for the working poor might look like: a working American education bill for the top tier, job coaches and training for the middle, and a reconstituted (though much smaller) public-assistance system for the bottom. And needless to say, states will have to do a better job of providing parents with health care, child care, and the other support services they need.
Such a system will not come cheap, of course. But welfare reform has generated huge savings that can be invested in such initiatives. And the fact that these programs would help working Americans should make such expenditures politically palatable. As a result of welfare reform, politicians can no longer dismiss programs aimed at helping the poor on the grounds that recipients are lazy.
This will take political leadership. But the struggles of low-income workers have not gained much attention in the other Washington. Candidate Bill Clinton promised that if you worked hard and played by the rules, you wouldn't be poor. But President Clinton and a Republican Congress were more eager to "end welfare as we know it." When it comes to welfare reform, the president seems interested mainly in celebrating the reduction in case loads. How to help the diligent working poor improve their lives has simply not engaged him nor has it moved either of the two major candidates. With welfare reform, millions more Americans are playing by the rules, and most are still poor. With a full employment economy and huge budget surpluses, they needn't be. ¤
- Vermont: The Greening of Welfare, Jon Margolis
- Holding Out, Joshua Green
- The Welfare Shell Game, Joshua Green
- Tough Sanctions, Tough Luck, Joshua Green