JOBS FOR ALL COALITION
UNCOMMON SENSE 5
© Sept. 1996
"Reform": Where Are The
Gertrude Schaffner Goldberg, Director, Center for Social
Policy, Adelphi University, and Sheila Collins, Associate
Professor of Political Science, William Paterson College, Helen
Lachs Ginsburg, Professor of Economics, Brooklyn College of
the City University of New York, and Philip Harvey, Associate
Professor of Law, Rutger University School of Law. All are members
of the Coalition's Executive Committee
as enacted by Congress (the Personal Responsibility Act of 1996)
enforces stricter work requirements on welfare recipients and
overlooks the fact that about 17 million people in the U.S.
either want jobs and don't have them or are forced to work part-time
time because they can't find full-time employment.
MORE JOB SEEKERS
Vacancy surveys conducted
in the mid-1960s, when the U.S. unemployment rate averaged about
4.5 percent, found that there were approximately 2.5 unemployed
persons for every vacant job. With higher unemployment, the ratio
of job seekers to jobs rose--to about 4.0 unemployed persons for
every vacancy1 in the early 1970s and to 5.0 in the late 1970's.
Another survey of 28 southern and mid-western cities conducted in
1982 found that with unemployment rates averaging 10.1 percent,
there were about 9.2 officially unemployed job seekers for every
- Job vacancy
data are not regularly collected in the U.S., but surveys
that have been conducted show that even when unemployment
rates are much lower than the current national average there
are several times as many job seekers as available jobs.
More recently, job
vacancy surveys in the Milwaukee metropolitan area have found
that even with an unemployment rate in the 4-5 percent range,
there are three to five persons needing work for every available
job. Only officially unemployed workers and able-bodied welfare
recipients are included in these estimates. If discouraged workers
and involuntary part-time workers were counted, the shortage of
jobs would be even more severe.3
The ratios are much
worse in depressed urban neighborhoods where most welfare recipients
live. A recent study of the low-wage labor market in a Harlem
neighborhood found that an average of fourteen people had applied
for every job opening in the local McDonald's restaurant during
a five-month period in early 1993. Among those who applied but
were rejected, 73 percent had not found work of any kind a year
later. The study also found that younger applicants, especially
those under the age of 20, had the most difficulty in obtaining
entry level employment in the low-wage job market. To get jobs
at McDonald's, most applicants needed substantial prior work experience.4
- Despite such
evidence, many still believe there are enough jobs to go around
for everyone who wants to work. One way to settle this question
would be to have the Department of Labor establish a job vacancy
survey that would regularly collect nationwide data on the
number, location and quality of job vacancies in the United
States. But special interest groups protecting the status
quo don't want the public to know the true state of the nation's
labor markets. They want to perpetuate the myth that there
are jobs available for everyone who really wants to work.
WELFARE "REFORM" AND
- Welfare reform
requires recipients to enter a labor market in which there
aren't enough jobs to go around and in which the job shortage
is worsened by policies of the federal government itself.
Fighting inflation, even before it actually occurs, the Federal
Reserve uses its control over interest rates to slow the economy
when unemployment dips significantly below six percent. The
result of these preemptive strikes against inflation is to
keep unemployment rates from falling further. Even unemployment
in the 5.5 percent range translates into about 17 million
Americans who want jobs and are either fully or partially
- Using the
unemployed as involuntary "inflation fighters," forced to
suffer joblessness to hold down prices, is immoral and unfair.
At the very least, these "inflation fighters" should be compensated
for their sacrifice. Yet only slightly more than one-third
of the unemployed receive any unemployment insurance benefits.
All jobless individuals should be eligible for unemployment
insurance or some other form of government income support
for as long as they cannot find work.
- A democratic
society should be able to control inflation without increasing
unemployment. Sacrificing the welfare of the unemployed
and their families to achieve lower inflation rates is not
an acceptable option. It is immoral to impose that kind of
suffering on other people.
A nationally representative
sample of single welfare mothers studied over a two-year period
by the Institute for Women's Policy Research found that only a minority
(27 percent) were not in the labor market, a figure that includes
the seven percent who were disabled. The rest, nearly three-fourths,
combined welfare with low earnings (20 percent), worked some of
the time and were on welfare between jobs (23 percent), worked limited
hours and looked for work (7 percent), or looked for work the entire
time they received welfare (23 percent). This study shows that it
is primarily insufficient jobs and wages, not work incentives, that
keep women on welfare.5
- By driving
welfare mothers into a labor market with a chronic shortage
of jobs, welfare "reform" will actually create more unemployment.
- With a shortage
of jobs--in good times as well as bad--it is dishonest and
cruel to blame welfare recipients for being jobless. It
is foolish to think that the need for welfare could be eliminated
by forcing people to look harder for work. Some state plans
would provide welfare benefits only in return for work but
would not guarantee jobs for anyone.
in the labor market--both in the availability of jobs and
wages--are major causes of welfare dependency.
NO SUBSTITUTE FOR REAL JOBS
- There also
are good reasons why some welfare mothers should not be expected
to work outside the home. These include the need to care
for very young, disabled or seriously ill children or for
infirm family members. Nor does it make sense to force teenage
mothers to go to work before they complete high school.
- Real welfare
reform would include policies to provide jobs, child care,
transportation, health coverage and education and training
for all families, not just those on welfare.
- Forcing welfare
mothers to work when there are not enough jobs will add further
downward pressure on wages by increasing the number of job-seekers
in the labor market. Government needs to create more
jobs, not more job-seekers.
- JOBS FOR
ALL AT DECENT WAGES would reduce the need for welfare and
make many more men and women self-supporting. The assumption
that we cannot afford to create the jobs we need ignores the
costs of unemployment. We might actually save taxpayers
money by creating jobs for all.6
Instead of offering welfare
recipients real jobs, workfare forces people impoverished by a job-short
economy to earn a meager public assistance benefit pegged well below
the poverty line. This is considered fair by workfare advocates
only because they assume erroneously that real jobs are available
in all locations for anyone who really wants to work.
- Welfare "reform"
will require single parents on welfare to work a minimum
on 20 hours per week in exchange for their benefits. Two parent
families in such workfare programs will be required to work
a minimum of 55 hours per week. The act does not require states
to provide benefits high enough to ensure that this work will
be paid at the minimum wage. In the state with the lowest
benefits (Mississippi), a single parent required to work 20
hours a week would receive only $1.38 per hour. Two parents
required to work 55 hours per week would be paid only $0.50
per hour. In a state paying the average benefit ($381 per
month in 1996), a parent would work at the rate of $4.40,
or 85 percent of the new, still inadequate, minimum wage.
Workfare programs that require people to work for less
than the minimum wage violate the Fair Labor Standards Act.
BLEAK EMPLOYMENT PROSPECTS
FOR "WELFARE" MOTHERS & FATHERS
- Under the
new legislation, states are not only permitted to pay welfare
recipients less than the minimum wage. Recipients will, in
addition, be denied social security credit, the Earned Income
Tax Credit, unemployment insurance, and collective bargaining
rights to which other workers are entitled. If society
thinks welfare recipients should work, they ought to be offered
real jobs and real benefits-as should all workers. Indeed,
many workers, especially part-timers, are now denied essential
health and child care benefits that workfare participants
will continue to receive. The solution is not to deny essential
benefits and rights to any group but to provide them to all.
- More is at
stake in welfare reform than the economic security of welfare
mothers and their children. With more fiscal pressure
on state and local governments, people on workfare increasingly
are being used to replace regular government employees, thus
lowering wages and working conditions in the public sector,
with spillover effects on the private sector. For example,
one estimate is that the Senate's welfare proposals would
depress the wages of the poorest 30 percent of workers by
an average of about 12 percent.7
- Work requirements
are punitive when there are not enough jobs and unnecessary
when there are. The vast majority of welfare recipients
want to work, and many do already. When jobs are available
in lower-income communities, the number of persons who apply
for them far exceeds the number of openings. With decent jobs
and child care available for everyone who wants to work, the
need for welfare among able-bodied persons of working age
who are not needed to provide family care will largely disappear.
Studies of metropolitan
areas with low unemployment rates in the 1980s found that young
black men with less than a high school education took jobs when
they were available, substantially increasing their labor force
participation rates and decreasing their poverty rates.9
mothers" often have little education and employment experience.
Without decent job prospects, the only realistic way to help
such individuals avoid the need for welfare is to enhance
their educational opportunities. Several studies indicate
that post-secondary education for welfare mothers is a powerful
antidote to poverty as well as enhancing their self-esteem
and increasing their children's educational ambitions.8
However, given the number of educated but unemployed workers,
education is no substitute for increasing the number of available
"welfare fathers" tend to be young men with little education
and poor employment prospects. More of these fathers could
contribute to the support of their families if there were
JOBS FOR ALL at decent pay.
needs JOBS FOR ALL AT DECENT WAGES; FAIR
WORK, instead of Workfare.
- In recent
years there has been a serious deterioration in the employment
prospects for these two groups. The proportion of young
workers, 18-24 years of age, who have low annual earnings
(8 percent below the poverty line for a family of four) more
than doubled between 1979 and 1993. As the U.S. Census
Bureau observed; "low wages make it less affordable for young
adults to marry, have children and establish independent households."10
- The problem
in the United States is not a lack of work incentives. It
is a lack of work opportunities. Those who wanted to increase
work incentives could have done so by making work more rewarding
rather than making welfare more restrictive. Supporting
a livable minimum wage11 is a fairer and more effective
way to increase work incentives than tightening work requirements
for welfare recipients. But increasing work incentives cannot
place people in non-existent jobs. The best welfare "reform"
is JOBS FOR ALL at decent pay. Short of this goal, reform
requires adequate welfare benefits for those unable to work
and for all who are denied the opportunity to earn enough
to support their families.
G. Abraham, "Structural/Frictional vs. Deficient Demand Unemployment,"
American Economic Review 73 (September 1983):722. Professor
Abraham now heads the U.S. Bureau of Labor Statistics, so the
Clinton Administration cannot plead ignorance of the economy's
long-standing failure to produce enough jobs for everyone who
wants to work.
Holzer, Unemployment, Vacancies and Local Labor Markets (Kalamazoo,
MI: Upjohn Institute, 1989), p. 48, Table 3.8.
and Training Institute, University of Wisconsin/Milwaukee, Survey
of Job Openings in the Milwaukee Metropolitan Area (biannual).
S. Newman and Chauncy Lennon, Finding Work in the Inner City;
How Hard is it Now? How Hard Will it be for AFDC Recipients? (New
York, Columbia University, 1995.
Spalter-Roth, Beverly Burr, Heidi Hartmann and Lois Shaw, Welfare
That Works: The Working Lives of AFDC Recipients (Washington,
DC: Institute for Women's Policy Research, 1995.
Harvey, "Paying for Full Employment: A Hard-Nosed Look at Finances,"
Social Policy, Spring 1995, 21-30. This article has beeen
adapted as Uncommon Sense #14.
Mishel and John Schmitt, "Cutting Wages by Cutting Welfare," Economic
Policy Institute Briefing Paper, Sept. 1995, p. 5
for Women's Policy Studies, "Getting Smart About Welfare" (Washington,
B. Freeman, "Employment and Earnings of Disadvantaged Young Men,"
in Christopher Jencks and Paul Peterson, eds., The Urban Underclass
(Washington, DC: The Brookings Institution, 1991).
U.S. Bureau of the Census, "The Earnings Ladder: Who's at the
Bottom? Who's at the Top?" June 1994, and unpublished data of
See "Let's Have an Adequate Minimum Wage," Uncommon Sense
June Zaccone, Economics (Emer.), Hofstra University