Post-Welfare Jobs No Cure for Poverty, Study Finds

Most aid recipients who are placed in jobs through Los Angeles County’s welfare-to-work program bounce from low-wage employer to low-wage employer, have stagnant incomes and remain stuck below the poverty line, according to a sweeping new study of welfare reform.

“The fundamental truth about welfare reform in Los Angeles County is that we are not yet seeing satisfactory outcomes,” stated the study by the Economic Roundtable, which tracked nearly 100,000 welfare recipients over eight years. “It is possible to dramatically increase employment rates among welfare recipients. However, we are not seeing evidence of long-term earnings growth.”

The study by the nonprofit nonpartisan public policy research group, titled “The Cage of Poverty” and scheduled for release today, is the latest salvo in a running battle with national implications over the success of the county’s welfare-to-work program.

County welfare officials and some experts say the program has been a success because it has placed thousands in entry-level jobs and provided at least modest increases in their incomes.

A study released just last month by the opposite camp in the welfare reform debate--one that favors the current “work-first” approach rather than the model stressing education that is recommended in the new study--praised the Los Angeles program because it cut welfare spending and boosted the average income of families.

Henry Felder, chief researcher at the county’s Department of Public Social Services, came down on the side of the work-first model Wednesday, saying the new report “provides very interesting information,” but “some of the policy prescriptions are more of the orientation of the writer.”

The authors of the Economic Roundtable study, believed to be among the most comprehensive evaluations of welfare reform and available on www.economicrt.org, say they intended to raise questions about the county program’s presumed success.

“What we’re doing is challenging the most basic template,” said Daniel Flaming, one of the study’s authors. “A few of these people are making it, but most of them are stuck.”

In the end, Flaming said, it is a question of whether the glass is half full or half empty--is welfare reform a cost-saving program that has helped some or a failure that has left many still mired in poverty?

The study, funded by a grant from the John Randolph Haynes and Dora Haynes Foundation, tracked its subjects from 1990 through early 1998. Most who found jobs began in 1995 when welfare reform was implemented, so the study tracks only three years of work records.

Based on county welfare and state tax data, the study found that the earnings of 70% of all workers level out three years after they leave welfare, keeping them below the poverty line. About one-fifth of the welfare workers escape poverty, with an income growth of 22% per quarter over more than three years.

Welfare workers also switch jobs at a dizzying pace, with only 17% employed by one company for more than three years. Average annual pay is $13,244. Only 13% reported full-time work during the three years they were in the work force. Most had a new employer every six to nine months and were unable to build up the seniority needed for pay raises and job advancement.

Much Is Beyond the County’s Control

The biggest employment area was in temporary services, researchers found. “That’s the nature of the economy,” said report coauthor Mark Drayse. “It’s hard to change that, especially when you have an economy that has such a large number of people looking for entry-level jobs.”

Indeed, by entering the work force, welfare workers tend to increase the supply of labor and allow businesses to keep wages low, the study argues.

Many of what the study’s authors see as the negative aspects of welfare reform are the result of regional and national economic factors beyond the county welfare department’s control. “A lot of this is not in the scope of welfare policy,” Drayse said.

The report recommends that the Board of Supervisors focus attention on creating better, higher-paying jobs, especially in communities with the most welfare recipients, and on improving child care and training opportunities for welfare workers.

The study, whose authors sometimes conduct research for the county, also recommends a hike in the minimum wage.

It also urges the county to use its more than $400 million in surplus welfare funds to raise people out of poverty rather than to create the numerous social service programs it is trying to set up under a “family self-sufficiency plan,” approved by the Board of Supervisors this year.

In a statement, Supervisor Yvonne Brathwaite Burke, who helped the researchers obtain access to county data, said: “It is sobering that so many working welfare parents have been unable to rise out of poverty. . . . We need to expand the availability of high-quality child care. We also need to provide more parents with work experience in jobs that pay living wages, and to make sure that at the same time we help them acquire the skills needed to keep those jobs.”

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Earnings Gap

The majority of welfare recipients placed in jobs by Los Angeles County who were studied in a report saw their earnings increase slightly but level off, leaving them in poverty. They are represented by the black line. A minority, represented by the gray line, saw their earnings increase enough to lift them out of poverty and maintain a rising income.

Source: Economic Roundtable