The Silent Welfare Reforms

Many states are finding creative ways to cut the rolls

Peggy Davis, 34, manager of a Popeye's Famous Fried Chicken restaurant in Milwaukee, weaned herself from welfare after 16 years, so she figures that other moms can quit the dole too. "It's beautiful to be working," she says, before hefting a batch of chicken into the deep-fat fryer. "Some mothers don't want to do anything with their life. But it ain't worth lazying around."

Davis didn't make the transition from welfare to work unassisted, however. Wisconsin, which has been furiously experimenting with a range of pilot programs, provides Davis' company with monthly work subsidies of up to $400 for some employees for up to nine months. And although Davis has been working for four years, she still receives Medicaid for herself and her four children.

Now, Wisconsin is seeking approval in Washington for a radical new statewide move that would end the notion of limitless entitlement, forcing most recipients into jobs beginning in late 1997. The innovative program, called Wisconsin Works, or W-2, would provide subsidized employment, means-tested child care, and extended medical care to families to keep them working and off welfare rolls.

Wisconsin isn't the only state tinkering with the 60-year-old federal welfare system. While Democrats and Republicans in Washington have wrangled for two years over competing welfare legislation, a quiet revolution has taken place in state capitals. In the past three years, 37 states have sought and received 60 separate waivers from strict federal rules on Aid to Families with Dependent Children, which is funded by Washington but administered by the states. Waivers now cover 10 million welfare recipients--more than 75% of the total.

Conservative advocates of welfare reform are delighted with what's happening in local welfare offices. "Bill Clinton can justifiably claim that he has indeed ended welfare as we know it," says Douglas J. Besharov, a welfare expert at the American Enterprise Institute, a conservative think tank. Clinton twice vetoed GOP welfare overhauls last year after his own measure stalled in Congress. But thanks in part to the Administration's waiver program--and a strong economy--welfare caseloads are down 8.5% since 1992, compared with the 31% increase during the Bush Administration, according to Besharov.

Have any of the states found the key to ending welfare dependency? Critics point out that taxpayers aren't being saved any money, but allow that local experiments do demonstrate benefits. Many of the ideas may yet be applicable to federal legislation. But final results from independent audits aren't in, and the two most critical questions will take the longest to answer. What happens to the current successes when the economy goes south? And, what is the effect of all the tinkering on poor children?

CAPS? The ambiguities abound. Take Ohio's Learning, Earning, And Parenting program, or LEAP, which requires teens receiving AFDC to stay in school or face benefit reductions. Such "learnfare" programs have already spread to 27 states, and on May 4, Clinton announced that he was signing an executive order extending LEAP's provisions to all states. A recent study by Manpower Demonstration Research Corp., an independent auditor, concluded that those who stayed in school experienced a 40% increase in employment rates. But LEAP has had no effect on teens already out of school.

The controversial "family cap" also has produced mixed results. The idea, which 20 states are employing in some form, is to remove automatic support for bringing more children into a welfare family. Family cap proponents trumpeted an apparent 29% drop in illegitimacy among New Jersey welfare mothers after the state, in 1992, stopped extending AFDC payments for children conceived while the mothers were on welfare. But then Rutgers University researchers revised the illegitimate birth decline to 6.9%--and discovered a similar drop in a control group of mothers not on welfare.

The effect of time limits on AFDC families is also murky. The federal program places no limit on the number of years AFDC recipients can receive checks, but 27 states have been granted waivers to limit benefits. Florida limits most recipients to two years of AFDC in any five-year period, although Medicaid and food stamps aren't affected. But studies of Florida's program are inconclusive. In any case, 42% of welfare mothers historically have managed to find jobs within two years of signing up for AFDC, limiting the impact time limits can have.

"BRIDEFARE." Even if such programs succeed in getting people off the dole, they don't come cheap. Despite some claims that reform will reduce costs in the long run, savings mostly haven't materialized. True, Wisconsin's spending has dropped since 1987--but the state has budgeted $180 million for child-care costs alone in 1998, up from $53 million this year. More will go into elementary job training. Bells and whistles add more to the bill: Colorado allows AFDC recipients to receive the value of their food stamps in cash. Wisconsin, among 31 other states, allows parents to marry without an immediate cutoff of benefits--a program dubbed "bridefare."

For all the extra spending, states may not be able to shrink their rolls much further. They'll be hard-pressed, for one thing, to achieve any reduction in their hard-core welfare recipients, who make up as much as a third of the adult welfare population. This most-disadvantaged group consists of women needed to care for disabled children or elders in their homes, those who are addicted to drugs or alcohol, some with emotional disabilities, and some who have never worked and have no skills whatsoever. Given the intractability of this group, "the era of rapid caseload depletions is over," laments Edward L. Schilling, director of the department of social services in rural Fond du Lac County, Wis.

The restorative effects of a booming economy won't last, either. Strong growth has cut unemployment in many states, creating labor shortages in some areas that have absorbed welfare moms. With its booming economy, Iowa has managed a 35% caseload reduction, studies show. "Many states haven't had to even worry about creating public-sector jobs, but things get much more difficult when you shift the focus to rural areas in Utah or to older cities where jobs are scarce," warns LaDonna Pavetti, a welfare expert at the Urban Institute.

Most troubling of all, liberals and conservatives alike point to a failure to check illegitimacy, the stubborn problem at the core of welfare. Nearly a third of U.S. children are still born out of wedlock. They are seven times as likely to grow up poor than children born to couples who remain married. The challenge of reducing such births will be the ultimate test of any welfare reform. It's certainly worth trying to battle illegitimacy with family caps, benefit time limits, and stay-in-school schemes. But it will be years before anyone figures out if it has worked.

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