REVIEW ESSAY: WILL WORK END POVERTY?

By Edith J. Barrett,
Brown University

President Clinton, picking up where his Republican predecessors left off, has vowed to "end welfare as we know it." The White House has proposed expanding the Earned Income Tax Credit (EITC), financing school-to-work apprenticeship programs, and creating a national service corps designed, essentially, to employ low-income teens. These proposals share one of the central goals of the 1988 Family Support Act: to get people off the welfare rolls and onto payrolls. National survey results indicate most Americans would prefer to see welfare recipients gainfully employed. Providing welfare recipients with the education and skills needed to find a job -- commonly termed workfare -- and creating new employment sites may reasonably be expected to reduce dependence on the welfare system. Three recently published books -- two of which are not even about workfare, per se -- sound an important warning, however. They make it clear that simply getting welfare recipients employed will not enable most to lift themselves out of poverty. Clinton's efforts to expand EITC may help if it is well-financed, but according to these books the effects of workfare will be extremely limited unless it is coupled with health care, child care, transportation allowances, and other forms of support.

The cornerstone of current welfare-reform measures is requiring recipients to seek the education, training, or job search skills they need to enter the workforce, or, if the job marketplace refuses them, to perform public service. Since its revival in the late 1970s, the concept of workfare has received strong public and legislative support, and there is no doubt it will remain a popular approach for some time to come. For anyone interested in understanding the effectiveness of workfare-type programs, for anyone involved in reforming a state welfare system, for anyone interested in the successes and failures of welfare-to-work programs, From Welfare to Work, by Judith Gueron and Edward Pauly, is an absolute must. Gueron, president of the Manpower Demonstration Research Corporation, and Pauly, a senior research associate at MDRC, have pulled together the results of evaluations of 45 work-incentive programs. Some of the studies they examine measured a program's overall effects, while others assessed specific aspects of a program. This two-tier design allows the authors to draw conclusions about which particular program aspects work and which don't, and to determine the economic environment most conducive, and the clientele most receptive, to welfare-to-work programs.

Gueron and Pauly provide an extensive, eye-opening overview of current workfare programs. On average, recipients most able to re-enter the labor market (e.g., those with recent job experience) benefitted least from workfare programs; they saw no improvement in their earnings from pre-welfare wages, and government outlays for social welfare were not greatly reduced. Programs targeting low-skilled, long-term recipients reaped welfare savings but left the recipients with no real economic advantage. Recipients with some skill but little recent experience enjoyed the greatest gains in their earnings, but, because the programs needed to help these people are expensive, these programs also offered few short-term savings in welfare costs. Gueron and Pauly's mission is not to determine the appropriate goals of workfare, yet they do an admirable job of highlighting the pros and cons of a focus on cost versus a focus on payoff in terms of both benefits to recipients and reductions in welfare spending. Their findings leave the authors -- and the reader -- to grapple with important questions: Should workfare programs be devised to get people off welfare, even if former recipients wind up no better off economically? Should programs strive to improve the economic well-being of welfare recipients, even if doing so costs more than welfare itself? At times the reader might wish Gueron and Pauly would take a political stand on these issues, and yet, by refraining from doing so, the authors make their book a credible tool for people on all sides of the workfare debate.

From Welfare to Work is not an easy book to read. At times the comparisons between programs become so detailed that it is hard to follow the authors' arguments. But the results presented in this book are essential ingredients for the debate on welfare reform and cannot be ignored by anyone wishing to enter the fray.

Advocates claim that welfare-to-work programs will not only reduce welfare dependence but poverty as well. The Forgotten Americans, by John Schwarz and Thomas Volgy, and Working But Poor, by Sar Levitan, Frank Gallo, and Isaac Shapiro, do not explicitly address the workfare debate, but their detailed examination of who the working poor are and why they are in their current predicament casts a harsh light on the latter premise. Schwarz and Volgy focus almost exclusively on full-time workers, while Levitan and his colleagues include all low-wage workers in their analyses. Both books make it clear that welfare-reform measures that force people into low-wage jobs (and policies that offer to create jobs through corporate tax credits or other enticements) will do little, if anything, to improve these people's quality of life. The American work ethic assumes employment is the ticket out of poverty; these books demonstrate that this is all too frequently not the case.

In one revealing chapter of The Forgotten Americans, Volgy, formerly the mayor of Tucson, elaborates on the economic development-programs that his city and other cities have adopted in an effort to boost the number of jobs paying better than minimum wage. While federal policy makers abstractly discuss ways of building "empowerment zones" and "enterprise communities" to enhance depressed local economies, Volgy presents a view from the trenches. He notes pessimistically that without federal assistance cities and even states can do little to improve their economic well-being. They can motivate industry to move from one depressed area of the country to another depressed area, but this merely sets up a revolving door that improves job conditions in one area only by worsening conditions in another. They can provide seed money to stimulate the formation of new business, but the vast majority of the newly created jobs offer only low wages. Volgy illustrates this reality with findings from Charlotte, Columbus, Fort Worth and Portland (Oregon). Despite economic development plans that Volgy and his administration deemed highly effective, only one of these four cities climbed above the national average in hourly wages. Unfortunately, Volgy concludes this stimulating essay without suggesting concrete ways in which the federal government or private sector can help, and the measures he and Schwarz propose in the next chapter as the solution to the overall problem of poverty among full-time workers do not address the institutional causes of low wages he delineates.

The solution that Schwarz and Volgy propose is a modification of EITC that goes far beyond the modification Clinton is seeking. It would make it possible for every family with a full-time wage earner to live not only above the poverty line but in true self-sufficiency. It would also allow one parent in a two-parent household to stay home with the children without sacrificing the family's financial well-being. Their program would provide higher benefits to a larger proportion of low-income workers than the current system and would almost guarantee that individuals who work will be better off than those who do not. The Forgotten Americans is an impassioned book. Personal stories of hard-working people barely making it breathe life into the many important economic indicators the authors provide. The engaging text is easily accessible to the general public and provides a good supplement for undergraduate courses on social welfare policy.

An even more detailed and comprehensive, if more academic, analysis of the working poor is offered by Levitan, Gallo, and Shapiro in Working But Poor. The authors outline some of the main reasons so many Americans remain in poverty even though they work -- single wage-earner households, larger family sizes among the poor -- but place their greatest emphasis on issues over which society has some control -- low wages, tax laws, education and training. One reason for poverty among workers, they write, is the failure of the minimum wage to keep up with inflation. (In one particularly poignant graph, the authors show how the minimum-wage earnings of a full-time worker have declined beneath the poverty line since 1980.) Although they admit that minimum-wage legislation is simply not enough, they argue that a minimum standard is essential to ensure workers are not taken advantage of and that work pays more than welfare.

Levitan and his coauthors include full discussions of a number of other policy options to help the working poor gain comfortable self-sufficiency. They write of the need to expand adult education and retraining to meet the needs of not only welfare recipients but also the working poor. They offer data showing the role discrimination plays in keeping women and minorities in underpaid positions. They recommend extending the limits of EITC. Their boldest suggestion is creating public service jobs, a proposal batted around in Washington but usually dismissed as too expensive. Showing that high unemployment rates are correlated with crime, mortality, and health and social problems, they convincingly argue that the cost of correcting the problems caused by inaction is far greater than the money needed to fund the jobs themselves. And, they write, "[t]here is no shortage of useful work that could be performed to fulfill needs unmet by the market economy; society's work is never done" (p.96). It is the authors' willingness to go beyond proposals that are politically popular that makes Working But Poor a stimulating book.

Although Levitan and his colleagues conclude that the work disincentives inherent in the current welfare system should be addressed head-on, they nonetheless state unequivocally that employment must provide a reasonable standard of living for all workers, former recipients and working poor alike. The low-wage no-benefit jobs available for the poor do not motivate welfare recipients to leave the system and do not motivate the working poor to stay out of the welfare system. Workfare programs are good if they improve public support for the social welfare system, but the social welfare system is essential to keep people, working or not, from falling into destitution.

Levitan and his colleagues have produced a number of useful books on poverty and the American welfare system, most notably Programs in Aid of the Poor (Levitan, Sar. Baltimore: Johns Hopkins University Press, 1985), and each provides a wealth of background information for researchers and policy makers alike. Working But Poor is an important contribution to this important collection. It provides a compendium of facts and figures with which one can better understand poverty among workers, and policy proposals useful in pointing out directions for change.

Is employment the answer to poverty? Judging from these books, the answer is both yes and no. Employment reduces an individual's dependence on government benefits, but it does not necessarily improve the individual's well-being. The finest of workfare programs too often serve only to move recipients from welfare to low-paying jobs without making a substantial improvement in their economic condition. As the authors of all three books emphasize, low-income workers can thrive with government-subsidized assistance in the form of child care, health insurance, and tax credits. These essential services inevitably will prove to be expensive -- perhaps more expensive than the current welfare system. We can devise any number of welfare-reform packages, but only with an earnest desire to reduce poverty in America can we design programs that eschew simplistic slogans and truly meet our underlying needs. We must not go from welfare to workfare without a renewed commitment to address the harsh realities that already lock so many working Americans into grinding poverty.

BOOKS REVIEWED

From Welfare to Work. By Judith M. Gueron and Edward Pauly. New York: Russell Sage Foundation, 1991. 220 p. $34.95(c), $12.95(p).

Working But Poor: America's Contradiction. (revised edition). By Sar A. Levitan, Frank Gallo, and Isaac Shapiro. Baltimore: The Johns Hopkins University Press, 1993. 160 p. $32.50(c), $10.95(p).

The Forgotten Americans: Thirty Million Working Poor in the Land of Opportunity. By John E. Schwarz and Thomas J. Volgy. New York: W.W. Norton & Company, 1992. 288 p. $19.95(c), $9.95(p).