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NATIONAL
JOBS FOR ALL COALITION
% CIPA, 777 UN Plaza, Suite 3C, NY, NY 10017
UNCOMMON
SENSE 18
© February
1997
WELFARE
REFORMING THE WORKPLACE:*
The Hidden
Threat to Workers and Labor Standards
#5
of FAIR WORK AND WELFARE: A WELFARE REFORM PACKET
by Maurice Emsellem, Staff Attorney, National Employment
Law Project, Inc.
Welfare
reform came with a promise to "end welfare as we know it." For
many, that phrase creates images of welfare recipients working
their way out of poverty, and with the help of better job opportunities,
joining the American mainstream. Reality belies this cheerful
view. The new law, the Personal Responsibility and Work
Opportunity Act of 1996 (PL 104-193), threatens to create an underclass
of workers who will be required to work without benefit of federal
laws that protect other workers, such as the minimum wage; the
earned income tax credit; occupational health and safety, workers'
compensation, and anti-discrimination laws; and collective bargaining
rights.
Temporary
Assistance for Needy Families (Title I of PL 104-193 or TANF)
imposes strict work requirements on recipients and deprives them
of rights guaranteed under the repealed law, Aid to Families with
Dependent Children (AFDC). Yet, despite the new responsibilities
TANF imposes on welfare recipients, it creates no new work opportunities.
Many regular workers will be dismayed to learn that welfare reform
not only means exploitation of workfare participants. It also
threatens the livelihood of millions of other workers--low-paid
and even higher-paid workers. State and city governments are already
replacing union workers with welfare recipients, and regular workers
face further declines in their wages and working conditions as
they are forced to compete with those lacking any protection.
Efforts to establish work standards and other protections for
both welfare recipients and current workers will have to be conducted
state by state.1 To understand the nature of the threat, it is
useful to examine some key problems of the law:
Work Requirements
Ignore Lack of Jobs and Restrict the Option of Substituting
Training or Education for Work. TANF imposes a life-time
limit of five years for receipt of benefits, even for individuals
who cannot find work. Though states may specify "hardship" exemptions
from the time limit, the law caps these at 10 percent of caseloads.
In addition, the new law requires that by the year 2002, 50
percent of a state's caseload of single parents must be engaged
in "work activities" at least 30 hours a week. In contrast to
previous legislation, TANF work requirements emphasize workfare
or performing services in exchange for benefits over education
and training.
With these time limits
and work participation requirements, it is estimated that that
the labor market will have to absorb one to two million new workers.2
Time limits are based on the assumption that there are jobs for
welfare recipients forced to leave the rolls. This is not the
case. Even in a state with lower-than-average unemployment there
are 2.7 applicants for every available job and more than triple
that number for every livable-wage job.3 Increasing the
number of job seekers without expanding the number of jobs will
add to unemployment and depress wages. The Economic Policy Institute
estimates that welfare "reform" will result in an average wage
loss of 12 percent for those in the bottom third of the pay scale.4
TANF's work requirements and time limits on benefits are
particularly unrealistic and unfair in areas with high unemployment
and high rates of participation in public assistance programs.
In New York City, which ranks seventh in the country in proportion
of the population on welfare, it would take 21 years for all adults
on public assistance to be absorbed into the economy at current
rates of economic expansion, even if every newly available job
went to a welfare recipient.5 Compliance with work participation
or workfare requirements in New York City could add new workers
equal to one-half of the current municipal labor force.6
TANF could result
in displacement for tens of thousands of regular workers.
TANF eliminates AFDC's protection against "partial displacement,"
such as prohibition against reductions in non-overtime hours
and benefits of already-employed workers. Since workfare participants
will receive TANF benefits in return for their services, employers
will be getting free labor. This means that employers could
cut the hours of their full-time workforce and make up the difference
with welfare recipients working off their benefits and therefore
costing their employers nothing.
TANF jettisons
the requirement that workfare programs support work in the
"public good." This will create a new pool of free labor for
private employers and threaten the jobs, wages, and working
conditions of regular workers in the private sector. Whereas
the AFDC law stated that Community Work Experience Programs
(CWEP) "shall be limited to projects which serve a useful public
purpose," TANF contains no such requirement. States are thus
free to place workfare participants in the private sector regardless
of the social value of the work performed and without cost to
employers.
Moreover, these private
employers, have no obligation to offer workfare participants jobs
in return for the state's subsidy. In high-unemployment areas,
working in return for their welfare checks could be recipients'
only alternative for meeting TANF work requirements. Here, too,
employers will have a strong incentive for replacing regular workers
with the free labor of welfare recipients.
TANF eliminates
the minimum wage standard designed to prevent exploitation of
women on welfare and to protect wages of other low-wage workers.
The recently repealed AFDC mandated that the number of hours
required of workfare participants be equal to the size of the
welfare grant divided by the minimum wage. TANF has no such
provision. Instead, as previously mentioned, it requires that
by the year 2002, states meet a 30-hour minimum for half of
their caseload. This new 30-hour rule, in combination with the
increase in the federal minimum wage ($5.15 as of September
1, 1997), means that few, if any, states will "pay" workfare
participants the equivalent of the minimum wage unless they
count education and training or other activities to reach the
30 hours. If employers are not required by the Fair Labor Standards
Act (FLSA) to pay workfare participants the minimum wage, the
new welfare law offers them an added incentive to replace regular
workers with cost-free workfare participants.
TANF eliminates
the labor and employment standards protecting welfare recipients.
In contrast to the repealed AFDC law, TANF does not specify
that workers are to be covered by workplace standards and protections,
such as workers' compensation and anti-discrimination laws.
Unless independent employment law applies, such as FLSA or the
Occupational Safety and Health Act, welfare "reform" threatens
to create a new class of disadvantaged workers. Because workfare
assignments often involve rigorous physical labor that pose
significant health and safety risks to participants (for example,
maintenance, cleaning, and painting), lack of workers' compensation
is particularly risky and disadvantageous. Because TANF recipients,
mostly women, will be forced to take almost any job in order
to avoid loss of family benefits, absence of protection against
gender discrimination, especially sexual harassment, is another
serious risk. States can, and should, pass welfare laws to protect
workers and welfare recipients against some of these abuses
(but are not obliged to do so). A Florida statute, for example,
stipulates that welfare recipients who are working off their
benefits must be employed in the public sector and paid the
same wages and benefits as unsubsidized workers performing similar
benefits.
TANF authorizes
a broad expansion of services performed by private job placement
agencies. There is, however, no evidence that these services
are effective in placing welfare recipients in jobs. Such services
might even place people in unstable, contingent work. For
instance, a pilot study in Pennsylvania found that, despite
the fact that "job contractor" agencies were paid to provide
job readiness and job search programs, enrollees in these programs
were less likely to find jobs and were paid lower average wages
than a control group of independent job searchers.7 Employment
agencies often place job seekers in part-time and temporary
work. Such contingent work pays less than regular employment
and discriminates against women and minorities.8 There are serious
concerns regarding the level of public accountability over temporary
agencies, e.g., whether welfare recipients would have access
to a grievance process in case of a dispute with the placement
agency.
TANF emphasizes
placement in any job over access to education and training.
This downgrades the skills and hence the competitiveness of
the nation's workforce and undermines efforts of welfare recipients
to achieve long-term self sufficiency. TANF allows no more
than 20 percent of a state' s caseload to participate in "vocational
educational training" in fulfillment of work requirements and
recipients are limited to twelve-months of vocational
training. Basic education and training activities, such as the
General Equivalency Diploma and English as a Second Language
programs, are no longer automatically counted toward a state's
work participation rate. They may therefore be less available
to recipients depending on how states implement the federal
law. Finally, enrollment in post-secondary education is no longer
counted as participation in work activities unless the states
provide otherwise.
Limits on education
and training have serious consequences for welfare recipients,
training institutions and programs, and the productivity of the
workforce. For example, the number of students on welfare enrolled
in the City University of New York was reduced by nearly half
between 1995 and 1996.9 Other providers of education and training
are also witnessing dramatic declines in the size of their programs.
In addition to downgrading the competitiveness of the workforce,
the emphasis on placement in any job over education and training
reduces prospects for living wages and self-sufficiency of welfare
recipients. Access to higher education, which enrolled nearly
one-fifth of participants in the Jobs Opportunities and Basic
Skills Training Program under the repealed AFDC law, is the best
means of gaining self-sufficiency for women with children on public
assistance.10
What can be done?
"People on welfare who work should be treated like any other workers,"
says Andrew L. Stern, President of the Service Employees International
Union. Stern was reflecting positively on the February 1997 decision
of the AFL/CIO Executive Council to back a drive to organize more
than 1 million people, who, it is estimated, will be on workfare
under the new law. Like unions, other advocates of welfare
rights have work to do if they are to restore the federal standards
that formerly protected welfare participants, or to secure
passage of protective state legislation.
The National
JOBS FOR ALL Coalition believes that true welfare reform requires
jobs for all at decent pay. Before denying assistance to anyone,
government should undertake systematic job vacancy studies to
determine how many workers there are for each available job and
should create jobs wherever job applicants exceed job openings.
Government should also provide adequate income support to those
who are unable to work, who care for the very young or infirm
family members, or who are denied opportunities to earn enough
to support themselves and their families. Attacks on welfare recipients
are ultimately attacks on the employment conditions and standard
of living of a major part of the work force. We need the
creation of jobs for all at decent wages, not the creation of
a vast pool of exploited labor that threatens millions of regular
workers.
*Notes:
l. For proposals to repeal and amend PL 104-193,
see the Coalition's Policy Statement on Welfare "Reform." For
state proposals, see the author's original report, cited p. l,
above.
2. Lawrence
Mishel and John Schmitt, Cutting Wages by Cutting Welfare: The
Impact of Reform on the Low-Wage Labor Market (Washington, DC:
Economic Policy Institute, 1995) .
3. Bruce
Steurenagel, The Job Gap Study (Phase One: First Report of Findings),
(J0BS NOW Coalition: 1995).
4.
Mishel and Schmitt.
5. "Welfare
Clients Outnumber Jobs They Might Fill," New York Times, August
25, 1996, Al.
6. "New
York Girding for Surge in Workfare Jobs," New York Times, August
13, 1996, A1.
7. Pennsylvania
Department of Public Welfare, Special Project Management Report,
July 1996.
8. See, for
example, Commission on the Future of Worker-Management Relations,
Report and Recommendations (December 1994); and Marc Bendick,
Charles Jackson, and Victor Reinoso, Measuring Employment Discrimination
through Controlled Experiments (Washington, DC: Fair Employment
Council of Greater Washington, January 1993).
9. "Workfare
Rules Cause Enrollment to Fall, CUNY Says," New York Times, June
1, 1996, A1. Eleven percent of CUNY students are on welfare, and
its enrollment fell from 10,152 to 5,169 (between Spring semester
1995 and l996) .
10. See,
e.g., Marilyn Gittell and Margaret Schehl, with Camille Fareri,
From Welfare to Independence: the College Option, Howard Samuels
State Mangement and Policy Center, Graduate School and University
Center of the City University of New York.
*Adapted
from the author's Welfare Reforming the Workplace? Key Concerns
with the Work Requirements of The Personal Responsibility and
Work Opportunity Reconciliation Act of 1995 (New York: National
Employment Law Project, September 1996). See also Sharon Dietrich,
Maurice Emsellem and Karen Kithan Yau, Welfare Reforming the Workplace:
Advocating for the Employment Rights of Welfare Recipients, Immigrants
& Displaced Workers. New York: National Employment Law Project,
Inc., published in the Clearinghouse Review, January, 1997.
For further
discussion of lack of jobs for welfare recipients and millions
of other workers, proposals for documenting job deficiencies more
accurately, and for work creation, see Uncommon Sense, #5, "Welfare
'Reform': Where Are the Jobs?" #14 "Paying for Full Employment,"
and #15, "How Many Jobs Are There? The Need for a National Job
Vacancy Survey," all part of the Coalition's Welfare Reform Packet:
Fair Work and Welfare.
_________
Editors: Gertrude Schaffner Goldberg, Director, Center for
Social Policy, Adelphi University, and June Zaccone, Economics
(Emer.), Hofstra University
The
National Jobs for all Coalition is a project of the Council on
International and Public Affairs.
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