New Welfare System Seen as ‘Recession-Proof’

Eleven months ago, when the local unemployment rate was steadily rising, Shantrese Burkes was defying the trend. A welfare mom with three kids, she landed a $9-an-hour job as a cashier at a cafe attached to a gas station.

She didn’t stop there. Two promotions later, Burkes, 28, is earning $27,000 a year as the cafe’s manager and is eyeing her next step up the ladder.

Burkes could be a poster child for the welfare overhaul of 1996, when Congress limited lifetime benefits to five years and encouraged states to require recipients to go to work.

At that time, advocates for the poor predicted that the program would end in disaster for those who lost their safety net. When, instead, welfare recipients flocked to jobs during the booming second half of the 1990s, advocates warned of an unraveling when the economy finally turned sour.

The economy is now in its third sour year. But to the surprise of many of reform’s loudest boosters, onetime welfare recipients have held on to most of their gains in the job market -- even as jobless rates among the general population are rising. Welfare rolls have remained level nationwide, and continued to decline in Chicago and other big cities.

“The forecast that somehow a recession was going to dramatically undermine the gains we have seen in five years simply did not happen,” said Wade F. Horn, assistant secretary for children and families at the Department of Health and Human Services. “The new welfare program is relatively recession-proof.”

Burkes’ success story has been duplicated hundreds of thousands of times around the country. Job placement professionals say they can still find work for most of their welfare clients -- and that when they do, the clients are invariably better off than they were on the dole.

The ’96 law, they say, has brought about a significant cultural shift among poor, single mothers. Work has taken the place of welfare checks for millions of them as the primary way that they expect to support their families -- exactly what reform sponsors had hoped.

Some poverty experts, however, find the failure of the welfare rolls to rise in tandem with unemployment to be an ominous trend. To them, it suggests that more and more people are slipping through the cracks between welfare and work.

In Chicago, former welfare recipients tell of friends who resorted to hustling drugs and sex to support families after their jobs withered. They tell of others who moved in with a succession of relatives before taking their chances at a homeless shelter.

“But whatever has happened hasn’t happened in massive numbers,” said Harry Holzer, a professor of public policy at Georgetown University. “Part of that may be due to the fact that so far, the recession has been relatively mild.”

Even the bleak job market has been easy on welfare reform. Low-paying jobs have weathered the downturn better than others.

In Chicago, with an unemployment rate of 8.1% in January compared with the national level of 5.8%, many welfare recipients are still moving into low-rung jobs as home health-care workers, day-care providers and janitors. At the bottom of the ladder there is opportunity to climb.

“I came in as a cashier in April,” Burkes said. “In three months I became an assistant manager, and in three more months I became the manager.”

Ten people report to her, and she has hired other former welfare recipients. “I snatched my sister off welfare and gave her a job,” Burkes said with a smile. “My sister-in-law too.”

Burkes’ children, ages 7 to 11, also enjoy their mother’s success. “They can’t wait until payday; that’s when they get their allowance,” Burkes said.

Nationwide, never-married mothers such as Burkes -- the group that had most commonly relied on welfare -- have flocked into the workplace. Only 47% of such women were employed in 1994, according an analysis of census data by the nonpartisan Urban Institute. By 2000, 69% had jobs, a figure that dropped slightly, to 68%, in 2002.

“We haven’t seen the kind of drop-off [in employment] that people were most worried about, and that seems to be reflected in the welfare rolls themselves not jumping up dramatically,” said Robert Lerman, an economist at the Urban Institute and American University in Washington.

One reason: People who were long-term welfare recipients in 1996 have become connected to the workforce. Some remain with their original employers and are promoted; some lose their first jobs but find others.

Rita Flowers, who like Burkes lives on Chicago’s impoverished west side, used to personify the dependency Congress sought to break when it overhauled benefits. She had received welfare for 16 years, had six children, and couldn’t imagine life without public aid.

But four years ago, she started working as a child-care provider for $5.20 an hour. Now she’s a head teacher at her day-care center, earning $1,054 every two weeks, about $13.20 an hour.

“I can afford to do things with my kids and pay bills on time, and sometimes I have change left,” Flowers said.

Some poverty experts stress that success stories like these disguise the dark consequences of welfare reform.

“It’s an obvious puzzle: Why didn’t welfare rolls grow in a recession?” said Wendell Primus, who quit his job as a welfare policy specialist in the Health and Human Services Department in protest when President Clinton signed the GOP-written reform bill. “A safety net ought to respond to a recession; there is something wrong if it doesn’t.”

Primus went to the Center on Budget and Policy Priorities, where he studied how the poorest 20% of single mothers were doing under reform. In 1993, he found, 18% of this group received neither a welfare check nor a paycheck. By 2001, that slice had grown to 39%, or about 400,000.

“How are they making a go of it? We don’t know,” said Primus, who has since become an economist for Congress’ Joint Economic Committee, a bipartisan House-Senate panel that studies economic issues. “I do think life is a lot harder for that group than it was before 1996.”

The goal of Congress’ welfare reformers was to end reliance on the dole. Many states made requirements for getting welfare so onerous that some people are making do without benefits rather than deal with them.

The rules drove others into the job market. To get a welfare check under the new federal program -- which Congress pointedly named Temporary Assistance to Needy Families -- recipients have to pursue some activity related to work. Depending on the state, that might mean attending school or a job preparation program, picking up trash on city streets or doing office work for a charity.

Linda Dix, a 42-year-old mother of two, is back on welfare after leaving the dole for a job in the late ‘90s. But she is determined to make this stay on welfare brief.

“I’m not going to volunteer 30 hours for just $292 a month,” she said.

In Cook County, where Chicago is, welfare caseloads dropped by about one-quarter in each of the last two years. Statewide, about 42,000 Illinois families received welfare as of January; in 1996, the caseload was 226,000.

Nationwide, rolls have stabilized at about 2 million families, down from a peak of 5 million in 1994.

California’s rolls also are declining, but only in single digits after shrinking by almost half between 1996 and 2000. In Los Angeles, caseloads declined by 7.7% from October 2001 to October 2002, more than twice the statewide average, according to analysis by the nonprofit California Budget Project. This was true even though the average unemployment rate increased a full percentage point between 2001 and 2002, to 6.7%.

One of the consequences of rising unemployment rates is that episodes of joblessness last longer. “It’s taking us a much longer time to help them get into employment,” said Steve Redfield, executive director of STRIVE Chicago Employment Services, which helps welfare recipients find jobs.

In the meantime, many former welfare recipients find themselves forced to draw down some of their five-year lifetime allotment of benefits.

In Illinois, only about 60 parents have exhausted their benefits so far. Freddie Hopkins, a 36-year-old mother of seven, is one of them.

“I was trying to find a job before it ran out,” Hopkins said. Her history of drug convictions did not make her job search any easier. “The background keeps following me,” she said.

Nonetheless, STRIVE helped her get a training position with the local Hospitality Academy, which pays her the federal $5.15-an-hour minimum wage while she learns a job she’d actually like to have -- cleaning in hotels.

“I have children, so I know about cleaning,” Hopkins said. While in jail, she even volunteered to clean facilities there.

Hopkins does not want to think about what would happen if she does not land a job when her training program is over.

“I don’t even know,” she said. “I’m taking it one day at a time.”