Critics Say Budget Accord Undercuts Welfare Reform

A chorus of governors, welfare reform advocates and experts on the issue is accusing Washington of crafting a budget deal that will undermine the primary objective of last year’s historic welfare reform legislation: forcing people to take real jobs.

The governors, meeting in Las Vegas, issued blistering assessments of the budget accord endorsed by the White House and Republican congressional leaders. They said their efforts to reintroduce welfare recipients to the world of work could be foiled by the agreement because it would extend a range of employee benefits to welfare recipients who must perform public-sector and community-service jobs as a condition of aid.

Similarly, proponents of strict welfare-to-work requirements warned that the new pact could dangerously dilute last year’s bill by allowing states to count a large number of high school and adult vocational students as working. That would ease states’ task of meeting the work targets set out in the 1996 bill, which conditions aid on states putting a growing proportion of their welfare recipients to work over the next seven years.

Both provisions, critics charged, will result in fewer welfare recipients actually leaving the rolls and becoming self-sufficient.

Sources close to the budget talks said the White House’s insistence on full employee rights for workfare participants appeared to reverse earlier signals sent by the Clinton administration.

But with Labor Department officials adamantly in favor of full employee rights and a stepped-up lobbying effort by organized labor in recent weeks, the administration’s willingness to deal on the issue diminished, said several sources familiar with negotiations.

Governors across the political spectrum used blunt language to slam the president’s refusal to accept a GOP congressional provision to exempt welfare recipients from some of the protections of the Fair Labor Standards Act.

Wisconsin Gov. Tommy G. Thompson, one of the nation’s most influential voices on welfare reform, called the accord a setback to reform efforts and warned it “will impede the progress of the many states who have seen remarkable success in helping families become self-sufficient.”

California Gov. Pete Wilson echoed Thompson’s concern. Wilson spokesman Sean Walsh said Wilson had expressed disappointment at “Congress’ shortsighted action in ducking the FLSA issue.”

“It has critical implications to state budgets and also prevents a state like California from taking a common-sense approach to the management of its employees and its procedures.”

At issue is whether welfare recipients in workfare slots as a condition of receiving public aid should be considered “employees.” If they are, then employers may be required to pay unemployment and workers’ compensation insurance, FICA taxes and the other expenses in addition to a basic wage.

Employers would also be required to keep close track of hours worked to ensure that the participants are receiving the federal minimum wage and overtime. Such requirements would be so onerous, governors say, that it will be very difficult to recruit employers to hire welfare recipients.

“In New Jersey, many nonprofit agencies have stated that they will not participate in work programs if FLSA is imposed,” said Gov. Christine Todd Whitman, a moderate Republican.

Currently, state workfare programs put welfare recipients to work in a number of different workplaces, ranging from government agencies such as parks and sanitation departments to nonprofit organizations such as church-sponsored charities. Some states are experimenting with so-called diversion programs, which allow private-sector employers to employ a welfare worker on a trial basis while the state continues to pay the recipient a grant.

Under the budget agreement, either the states or those organizations hosting a workfare participant would be responsible for ensuring federal health and safety laws are observed in the workplace. The Treasury Department has yet to rule on whether workplaces that host such workers will be responsible to pay the recipient’s Social Security, unemployment taxes and worker compensation insurance.

Ire over the Clinton administration’s latest victory was not limited to Republicans. Several Democratic governors, including Lawton Chiles of Florida and Thomas R. Carper of Delaware, assailed the White House position.

“Basically, our concern is not with the people who actually get a real job; it’s the ones we put into a make-work situation,” Chiles said. “To spend our money [paying for benefits and FLSA protection] is to take some people away from the chance to get a job.”

After a frantic day of lobbying the White House, Republican and Democratic governors alike said they were hopeful the White House would compromise. White House Domestic Policy Advisor Bruce Reed, however, said the issue is closed as far as the budget deal is concerned. He suggested that Congress might take it up.

In another measure on which House Republicans yielded to the White House, negotiators agreed to allow states to count as many as a quarter of their welfare-recipient population as meeting work requirements, even if they are teen parents completing high school or other recipients pursuing vocational education.

House and Senate negotiators had adopted language that would have allowed states to take credit for a much smaller proportion of such welfare recipients as meeting work requirements.