Thompson’s Welfare Reforms Cut Rolls but Also Safety Net

Wisconsin’s welfare program is the most severe in the nation: Work, or you don’t get a cent.

It’s also the most generous: Work, and the state will give your family health insurance. Work, and your kids can stay in day care almost free. Work, and you’ll get loans for car repairs or even a more professional wardrobe.

And if you can’t find a job, the state will create one for you.

This is the program that won Gov. Tommy G. Thompson the nomination to head the Department of Health and Human Services for President-elect George W. Bush. And no wonder: It has slashed Wisconsin’s welfare rolls by an astounding 84% since 1993. Just three other states can top that record, and they’re all mostly rural, with much smaller caseloads.

“There is no other state that has truly broken the back of urban welfare like Wisconsin,” said Lawrence Mead, a professor at New York University who studies welfare reform nationwide. “They haven’t solved all urban problems. There’s still a lot of poverty. But when you drive into Milwaukee today, you’re driving into a city in which cash welfare payments have virtually disappeared. It’s extraordinary. It’s a revolution.”

But is it a success?

The answer depends, as always, on who’s doing the evaluating.

And on which statistics they choose to highlight.

Without a doubt, more people are working. But Milwaukee’s homeless shelters are full. And demand for food handouts has soared.

Without a doubt, the new jobs have given self-esteem and real hope of advancement to thousands of single mothers who make up the overwhelming majority of aid recipients--and who once figured they would always live on the dole. But there also are many who remain unable to hold down a job. And many who, despite hard work, have slumped deeper into poverty.

A University of Wisconsin survey of women who left welfare in the early days of reform shows both the promise and the peril of Thompson’s program.

Yes, 70% of the women found work. But they switched jobs frequently. Their wages were low. And many couldn’t--or didn’t--work full time. The result: Even with the state’s ample earned income tax credit, only 36% of the women were better off financially working than they had been on welfare. Three in four remained below the poverty line. And 81% still needed food stamps to survive.

Reformers argue that these low-wage jobs are starting points; that raises will come with time. (Indeed, a recent study of ex-welfare recipients found average income growing by $1,200 a year.) More important, they say, these women are for the first time developing a work ethic--one they will pass on to their children, thus saving the next generation from welfare dependence.

“You can’t evaluate how effective we are until you see this thing through,” said state GOP Rep. John Gard, who helped design the reforms. “We need at least five more years, or preferably 10.”

But Pat DeLessio, a Milwaukee attorney who helps families scramble for aid, has seen enough. “Sure, we ended welfare as we know it. But that doesn’t mean that anyone’s better off.”

Thompson’s signature program, dubbed Wisconsin Works, or W-2, hinges on a simple but radical premise: The needy are no longer entitled to aid. They are, instead, entitled to work.

Those who cannot hold down a job must spend 40 hours a week getting ready to work--by attending classes, drug treatment or counseling. Only then do they earn their monthly $628 aid check (and they’re docked for every hour they miss). Once they’ve achieved some stability, they get a raise to $673 a month. But to earn this aid, they must work in a community service job, such as cleaning public schools or folding clothes at Goodwill.

Participants don’t get extra money for big families. If a woman has a baby, she gets 12 weeks’ maternity leave and more food stamps, but no bump in monetary aid. And there are two-year time limits on the training phase and the community service jobs. The state has been generous with extensions, granting 239 of 297 requests. But caseworkers only seek them for their most troubled clients. Most are expected to move on, or move off the rolls, within two years.

Many who have taken the leap praise Thompson’s reforms for nudging them into the workplace.

Dorothy Taylor, for instance, spent 10 years on welfare--taking odd jobs now and then but not bothering to seek more. “They didn’t press you,” she explained. Wisconsin Works, however, pushed her into a community service job at a plastics factory. She did so well that the manager has offered her full-time work--with medical insurance, a pension and a 401(k) plan. She’s learning how to drive a forklift, earning $8 an hour, and beams with pride.

“The way they have it set up now makes you more responsible,” said Taylor, a 39-year-old mother of three. “You have to get up and do something in order to get something. That’s a pretty fair system.”

Yet the system has its pitfalls.

Many of DeLessio’s clients work at on-and-off jobs, such as cleaning motels or washing cars. If there are no rooms to clean or cars to wash in a given week, they don’t get paid.

Under the old system, they could go on welfare if they hit a dry spell. They’d get enough aid to at least pay the rent. Under the new system, they get no cash at all. The state won’t create community service positions for them because they’re deemed job-ready--capable of working full time in the private sector. And because they’re not doing community service, they’re not eligible for state aid. The most Wisconsin can offer is “case management”--help looking for new work and applying for food stamps.

“What’s missing, obviously, is the safety net,” DeLessio said. “You can fall to the point where you have nothing.”

Shandrae McCain almost did. She had been working full time scheduling nurses in Milwaukee when her employer lost contracts with several hospitals and cut her back to less than 12 hours a week. McCain couldn’t find another job right away, so she applied for welfare. But she didn’t qualify for a community service job. Or rather, with her record of full-time work, she was overqualified.

She had no way to earn a welfare check. So she couldn’t get one.

She fell behind on rent, on her bills. Eviction notices piled up. The phone company threatened to disconnect her line. McCain, 29, had enough food stamps to buy groceries for her twin toddler girls and her 9-year-old son. But she couldn’t buy laundry detergent, dish soap or tissues. She couldn’t meet her $72-a-month co-payment for state subsidized child care.

After two months with no income whatsoever, McCain finally started receiving $117 a month in unemployment insurance, which had been held up by a paperwork snafu. She’s still looking for a job. And she’s still trying to understand how a welfare system designed to reward work could punish her for having worked too much. “I can see if I just up and quit my job [they might not help], but that wasn’t what happened. I don’t think it’s fair.”

As Thompson moves onto a national stage, he will have ample opportunity to trumpet Wisconsin’s successes--and to take note of cautionary stories like McCain’s. Fans and critics alike hope Thompson will emphasize two key lessons from the Wisconsin experiment.

First: Successful reform is not cheap.

Despite the drastic plunge in families receiving cash assistance, Wisconsin is spending just 4% less on welfare this year than it did in 1996, before the major reforms kicked in. That’s because the state has quadrupled spending on child care and bumped up funds for transportation and other services. (Many are available not just to people on welfare but also to any family with an income under 200% of the federal poverty line.)

The second lesson: To be successful, welfare reform not only must put clients to work but also must keep them working. And that is a definite challenge.

“Retention is far more complicated than we originally anticipated,” said Rita Renner, who runs a private nonprofit agency called YW Works, which handles the welfare program for Milwaukee’s north shore. Of the clients YW Works places in jobs, only 60% are still employed six months later.

Some women find that their jobless boyfriends resent them when they start earning regular paychecks. Others find that their children act out after long hours in day care. Some move too frequently to hold down a job. Others quit to take care of family business--a crack-addled mom, a disabled child, a custody fight that demands frequent court visits. And of course, there are those who simply can’t motivate themselves to punch a clock.

YW Works tries to address such problems through its unusual job-training curriculum.

Participants learn all the basics: Be on time to work, call when you have to stay home sick, and, as one woman put it, “don’t walk into a job interview all slouchy.” Yet they also take motivational classes to boost self-esteem. They learn about exercise and nutrition, on the theory that healthy workers are steady workers.

And there’s a lot of time set aside for talk, especially during a six-week program called Creative Workshop, which puts participants to work making sweaters. As they stitch, the women tend to open up about their lives--abusive boyfriends, empty refrigerators, troubled kids. Caseworkers listen in, trying to identify and knock down potential barriers to work.

Such creative approaches to job training have flourished under Wisconsin Works, which abolished the old welfare bureaucracy.

Analysts expect Thompson to encourage such innovation at the national level as well, giving states continued flexibility to design their own programs. And they predict he will fight any effort to cut welfare funding, on the grounds that cost savings from declining caseloads should be used to expand services for the working poor.

Advocates for the poor, meanwhile, plan to take their own case to the nation when the federal welfare bill, which allocates funds and dictates parameters for state reform efforts, comes up for reauthorization next year. Thompson’s nomination to the Bush Cabinet gives an extra sheen to Wisconsin’s program. But his critics remain determined to expose its failings before others rush to copy it.

“We’re concerned that other states will look at Wisconsin and say, ‘Hey, they got their caseload down,’ without looking at what happened to those families [that slid off the welfare rolls],” said Marcus White, who runs a Milwaukee homeless shelter.: “We’ve got our work cut out for us in making sure the lessons of Wisconsin make it to Washington.”