Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

Breaking The Ties To Welfare

Economic Trends


Many single mothers try--and fail

If America's efforts to turn welfare-dependent single mothers into self-sufficient wage-earners are to bear fruit, reformers will need to understand the actual circumstances of such women. A new study, by Kathryn J. Edin of Rutgers University and Laura Lein of the University of Texas at Austin, to be published by the Russell Sage Foundation provides just such details.

The study--based on six years of close observation and multiple interviews with some 400 representative low-income single mothers in Massachusetts, Texas, Illinois, and South Carolina--upsets a number of popular views. Rather than being passively dependent on welfare checks and averse to work, for example, almost half of the welfare recipients in the group supplemented welfare with covert work--usually legitimate jobs off the books. And nearly 9 of 10 received some help from family, friends, boyfriends, and absent fathers.

Such strategies, the researchers found, are essential for economic survival, since benefits have fallen sharply in real terms in recent decades (chart). The welfare families surveyed had average monthly expenses of $876 in 1991, of which 70% went for necessities such as food, shelter, clothing, medical care, and transportation. Yet their welfare incomes, via Aid to Families with Dependent Children and food stamps, averaged just $565.

What's more, Edin calculates that in order to leave the welfare rolls without lowering their living standards, the mothers studied would need an extra $190 a month for work-related costs (including transportation, child care, and clothing), plus $128 for higher rents (lower housing subsidies). That comes to some $16,000 a year--far above the $10,000 or so low-wage year-round workers could expect to earn in 1991.

Such numbers explain why most welfare recipients who leave welfare for work return to welfare for another spell. While 65% of the welfare moms interviewed had worked in the past five years, many said that they were simply unable to make it financially in the low-wage, dead-end jobs available to them.

Indeed, a majority of the women studied had repeatedly tried to leave welfare for work. And most (86%) voiced intentions to do so permanently if they could obtain child care and adequate training to improve their economic positions. The bad news, say Edin and Lein, is that the current labor market and the training programs available to them seem woefully inadequate to provide the decent-paying jobs they need to become self-sufficient.BY GENE KORETZReturn to top

Return to top


Outside chairmen are no panacea

When General Motors Corp. appointed an outside director as board chairman and an insider as chief executive in 1992, the move gave a big boost to advocates of such steps as a way to improve corporate performance. But a new study by James A. Brickley and Gregg Jarrell of the University of Rochester and Jeffrey L. Coles of Arizona State University finds that the prevalence and advantages of independent chairmen are highly exaggerated.

Only 93 of 737 large publicly held corporations surveyed in 1988, for example, had different people as CEO and chairman, and in most of these cases the split titles appeared to be used as part of a regular succession process for top executives within the corporation. Just 17 companies had chairmen who were not current or former officers.

Whatever the benefits, the authors note that splitting the CEO and chairman titles can also entail problems--including the potential for rivalry and the dilution of power needed for effective leadership. Moreover, the study finds that dual leadership structures actually appear to be associated with lower cash flows and stock values.

The researchers conclude that though split titles may be useful in a crisis or as part of a regular succession procedure, most big companies have combined titles precisely because the practice benefits the bottom line. The fact that GM dumped its dual structure after things simmered down proves the point.BY GENE KORETZReturn to top

blog comments powered by Disqus