With the unemployment rate hitting a 26-year high and government stimulus plans searching for ways to generate jobs, state budget shortfalls are putting more traditional welfare and employee-support programs on the chopping block. In California, where the jobless rate has hit its highest point since 1940, brutal cuts in welfare spending are providing a harbinger of dark things to come.
For much of its lifetime, welfare -- officially, Aid to Families with Dependent Children -- was effectively unlimited; qualifying families could draw on government benefits virtually forever. But in 1996, the Personal Responsibility and Work Opportunity Reconciliation Act completely changed the face of the program, placing lifetime limits on welfare recipients and actively encouraging employment.
Under the new program, Temporary Assistance to Needy Families, states controlled welfare spending, which has translated into a social-service safety net that varies widely by location. In California, TANF takes the form of CalWORKS, a welfare-to-work program that provides a wide variety of support services, including domestic violence and drug counseling, funding for child care, transportation to and from work, health care, and vocational training. Its ultimate goal is to ease recipients off the welfare rolls.
But CalWORKS, according to Gov. Arnold Schwarzenegger, is too lax in its job requirements and too generous in its benefits. Following a failed attempt to eliminate the plan, he has cut its funding, reduced eligibility to 48 months, increased oversight of the program, and imposed larger penalties on participants who fail to find work.
While these moves will reduce the cost of the program by $528 million, they won't go into effect until July 2011. In the short term, CalWORKS grants have been cut by 4 percent, reducing the program's payments to 1989 levels. In terms of inflation-adjusted income, however, CalWORKS recipients are actually receiving roughly 46 percent less than a welfare recipient did in 1989. These cuts have made job creation even more of a priority.
Unfortunately, Schwarzenegger has also moved to slice $375 million from CalWORKS by hacking away at the employee assistance programs that form the heart of welfare-to-work. The employment requirement, which necessitated vocational training, childcare, and transportation expenses, has been made optional for many recipients, and future program recipients may not even get the option to work. Cutting these programs has been a short-term boon for cash-strapped CalWORKS recipients, but program administrators fear the policy change will lead many recipients to feel entitled to handouts, as some critics charged of pre-1996 welfare culture.
While this change is difficult now, it promises to become unsustainable in 2011, when CalWORKS recipients will presumably be dropped from the welfare rolls without jobs, child care, or vocational training programs to soften the blow. While short-term stimulus programs like JOBS NOW are available to some CalWORKS recipients, they are limited, impermanent stopgaps. In San Francisco, where 45,600 people are unemployed, JOBS NOW is designed to fund only 1,000 jobs.
Some might expect that CalWORKS enrolees, freed from their work requirements and facing cuts in funded child care, would eagerly quit their jobs. In reality, the great majority of CalWORKS recipients want to keep working, even as their governor makes it harder for them to do so. While the idea of a "jobless recovery" continues to be bandied about, and the unemployed ranks swell to bursting, it's worth remembering that a society that encourages unemployment does so at its own expense.
Take the first steps to building your portfolio.View Course »