Commentary: Welfare Reform: Tougher Times AheadRichard A. Melcher
In early April, the National City Bank of Cleveland began looking for as many as 300 entry-level recruits from a new source--local welfare bureaus. Hotelier Marriott International Inc. is expanding its six-week job-training program for welfare recipients from 16 sites to 22 this year. And on Apr. 10, President Clinton pledged that the federal government will hire 10,000 people off welfare rolls over four years, including six for the White House.
It seems so easy. Four months after an overhaul of the welfare system became law, growing numbers of former welfare moms are becoming machine operators, bookkeepers, and maids. Indeed, most states will have little trouble meeting the federal mandate that 25% of their welfare recipients be employed for at least 20 hours a week by yearend.
Problem solved? Not quite. The 25% target, for one thing, is illusory: A host of exemptions and exclusions make the real mandate much lower. And the robust economy, producing an unemployment rate of 5.2%, has made the rest of the job simple. With labor markets in most regions drum-tight, "employers are crying for help," says Doug Rothwell, CEO of the state-run Michigan Jobs Commission. "The time for welfare reform...couldn't be better."
In other words, as we celebrate early success, let's not forget some very real problems that still make reform difficult. Not surprisingly, those moving off the welfare rolls first are the easiest to place: They typically have some secondary education and work experience. Even those workers, welfare officials and activists worry, could be trapped in dead-end jobs paying less-than-subsistence wages. Indeed, the mass influx of former welfare recipients almost surely will keep wages of all low-skill jobs from rising, predicts Brookings Institute economist Gary Burtless.
STRIVE/Chicago Employment Service, a placement outfit, has tracked welfare recipients for three years after they left the rolls--and the findings aren't encouraging. Typical cases moved through at least three jobs during that time, ending up with pay of just $6.70 an hour, or $1 an hour above where they started. Moral: "Ending welfare doesn't end poverty," warns Mary Ann Cook, of the Dane County (Wis.) welfare agency.
Theresa I. Jones, for one, still struggles to make ends meet. On and off welfare for 23 years, Jones, 49, says she "couldn't be happier getting up in the morning and going to work" at Hanky Panky Ltd., the New York City lingerie factory where she's a seamstress. But at $7 an hour, the job forces some fiscal gymnastics. "Every week, I've got to put money away for rent and lights, and I don't have much left to buy food and clothing."
Millions of welfare clients will find the going even tougher. By 2002, states must prove that 50% of their recipients, or roughly 2 million people, are working, or lose big chunks of federal funds. The next wave, say welfare experts, will comprise more of the chronically unemployed, disabled, and those with family problems--straining potential employers.
FLURRY. For now, many companies are, admirably, moving to ease the transition. Manpower Inc. has set up an inner-city office in Milwaukee to train and find jobs for welfare recipients. In the Kansas City (Mo.) area, Sprint Corp. works with community colleges and such companies as AT&T and Gateway 2000 Inc. to develop training and job leads for the area's telemarketing industry. "You'd be amazed at how seriously the business community is taking this," says Pacific Telesis CEO Philip J. Quigley.
The flurry of activity is an encouraging start to a bold gamble. But the true test will come when tougher economic times and stricter federal mandates converge. As labor markets loosen, companies aren't likely to hire millions of low-skilled workers out of altruism--nor should they. Rather, states must keep up investments in critical training, child care, and transportation, even through the bad times. In the long run, that's what will produce the better workers that business truly wants to employ.