A new report by the Hunger Action Network of New York State finds that low-income New Yorkers have not benefited from welfare reform. The poverty rate in New York remains above the national average; the demand for emergency food has continued to increase; and few people escape poverty when they depart welfare for work.

“A decade ago many welfare participants were heartened when they were told that welfare was going to focus more on helping them move into a job that would enable them to support their family. That promise has not been kept. Helping many of these individuals become employable would be a difficult challenge under any circumstances. It is of course especially difficult during a major economic recession. But the local districts and the state have failed to provide the basic training, education and jobs needed to make this happen, and both taxpayers and low-income New Yorkers have been hurt by this failure,” said Mark Dunlea, Executive Director of the Hunger Action Network of New York State and author of the 95 page report.

The report, Evaluating a Decade of Welfare Reform in New York State: Putting Jobs into New York’s Welfare to Work Program, may be downloaded from www.hungeractionnys.org.

The group called for the state to substantially increase funding for transitional jobs and other wage subsidies programs from the annual one billion dollar surplus from the federal TANF (Temporary Assistance for Need Families) program. Hunger Action is also supporting pending legislation to require districts to focus more on finding living wage jobs for welfare participants; increasing the Earned Income Disregard (i.e., the amount of earnings welfare participants are allowed to keep from employment); and strengthening the right for education.

While even most welfare officials admit that placing participants into jobs with a paycheck is most effective in helping participants become employable, only a tiny percentage (3.3%) of individuals are placed in such programs. The state instead relies heavily on make work programs (e.g., workfare or WEP); 40.5% of the TANF caseload in NYS is engaged in workfare or community service, compared to 23.7% nationally. The state and local districts have also failed to make education (10.9%, compared to 21.3% nationally) and job training (under 1%) available to participants. Hunger Action said that there has been some improvement over the last two years (including nearly $30 million of new federal dollars this year for job programs) but the changes have fallen far short of what is needed.

The federal government has consistently rated the effectiveness of New York’s welfare to work programs among the worst (48th) in the country. A major flaw in New York’s approach is a heavy reliance on expensive and ineffective workfare programs that do little to make participants more job ready. The study called upon the state to reject its Jobs First approach because it is based on a false premise – namely, the welfare participants will obtain needed education and training programs once they find a job, no matter how dead end or low-paying that job is. The state unfortunately fails to have programs that effectively provide such assistance once a job is obtained.

A major problem is that after a decade of declining welfare caseloads, those still on welfare have multiple barriers to employment. Even state officials have admitted that the workfare approach is especially ineffective for this population.

“Welfare officials from the President to county officials need to come to grips with the fact that a significant number of welfare participants are not likely to become employable, particularly in unsubsidized private sector jobs, and they need to provide a humane and adequate safety net. The government must do more to create living wage jobs that welfare participants are able to secure if they expect welfare to work to be successful. And they need to be willing to provide the upfront investment needed in real jobs, education and training to enable those with multiple barriers to become employable,” stated Rev. Debra Jameson, Community Outreach Minister for FOCUS Churches in Albany.

Hunger Action noted that even with increased investments and more support, helping people move from welfare to work will not be easy or quick “OTDA officials argue that many participants who do enroll in education programs drop out, sometimes for a job but other times because they find it too difficult. They need to be realistic that individuals who discontinued their education at an early age probably do not find it an easy, pleasant process Some may have learning disabilities, while many do not have English as their prime language. Having promised they were going to make welfare more jobs oriented, public officials need to get serious about what it will take to be successful. Terminating or denying benefits is easy. Overcoming real life barriers is hard work. So far the government has taken the easy approach,” added Dunlea.

“Too many welfare officials are in denial about the poor performance of the state’s welfare to work programs, but the data and studies are overwhelming. Some may argue that investing in real jobs and paychecks is too expensive, but studies by groups like the Fiscal Policy Institute show that the payback is relatively quick. Instead the state continues to throw away public funds on programs that don’t work; in fact, the evidence was clear that workfare didn’t work before Congress approved the TANF program in 1996. The taxpayers, poor children and poor adults are the victims of this failed approach,” added Heidi Siegfried, a Hunger Action Board member and attorney who has often represented welfare clients in litigation and fair hearings.

Hunger Action surveyed former and present welfare participants about their experiences with welfare to work. Participants cite the need for more jobs and more education. They usually find jobs on their own, not through DSS / HRA. They want more vocational training related to computers and to degree / certification programs such as nursing. Local districts fail to provide comprehensive assessments to identify barriers to employment and to help individuals develop plans to overcome such barriers.

Hunger Action noted that while the number of participants in welfare have declined dramatically over the last decade, the number of applications for assistance has actually increased, indicating that the need for help has not diminished. New York still experiences a significant number of churning of cases; between 2003 and 2008, 21 to 30% of case openings were for individuals who had previously left welfare. Statistics compiled by the Schuyler Center for Advocacy and Analysis also showed a dramatic decline in the percentage of eligible poor children receiving welfare, from about 2/3 of eligible children in 1998 to about 1/3 today. In addition, many welfare cases in NY are now child only cases, with no adults receiving benefits.

Hunger Action said that addressing the problems of poverty needs to be part of the Governor’s Economic Security Cabinet, which, to date, has focused primarily on the working poor. Local districts need to focus on identifying sustainable employment opportunities in their community and to assist welfare participants in obtaining the training needed for such positions. Such legislation was passed two years ago but was vetoed by Governor Spitzer due to the objections of Mayor Bloomberg. The proposal recently passed out of the Social Services Committee of both houses. Hunger Action said the state should also increase work incentives for poor New Yorkers, such as the minimum wage and the Earned Income Disregard (e.g., how much earnings may welfare participants keep without loss of benefits).

Addendum

Summary of Findings

Welfare reform has been ineffective in improving the employability and income of most participants.

Welfare participants today are more likely to have multiple barriers to employment than a decade ago. To make such individuals employable require an increased investment in programs to assist such participants in overcoming such barriers.

Subsidized employments (e.g., wage subsidies, transitional jobs) are the most effective welfare to work programs in moving participants into jobs, as well as keeping them there.

New York State has a poor record in providing education and job training to welfare participants, thus failing to help them become more employable.

New York has made significant investments in increasing work supports, such as increasing the state supplement for the Earned Income Tax Credit. It raised the state minimum wage, though unfortunately if failed to index it to inflation. It has made it easier for working households to access food stamps. It has supported an expansion of child care subsidies, though the demand for child care assistance continues to exceed the resources provided.

The state’s poor track record with welfare to work is shifting more costs onto local counties / NYC as only a handful of TANF participants find jobs; five times as many merely shift into the county-state funded Safety Net program.

The State’s welfare to work program has a particularly negative impact upon people of color and women.

The state fails to help welfare participants find jobs that enable them to escape poverty. Those leaving welfare generally end up in the lowest-paying industries with little opportunity for advancement or wage increases over time, having acquired few new jobs skills, and often shortly return to welfare. The average wage earned is $8.50 an hour.

The state’s “jobs first” approach negatively affects participants. Pushing participants into low-wage dead end jobs has a negative impact on their long term income. Participants who begin working at higher paying jobs are more likely to secure wage increases.

There is little evidence that workfare increases the likelihood of finding a job. [1] In fact, it can impede finding a job. Workfare is least effective for individuals with multiple barriers to work – which is now the dominant welfare population in NYS.

Welfare cycling or churning – moving on and off of welfare – has increased under TANF.

The percentage of eligible poor New Yorkers receiving welfare has been cut in half since TANF was implemented. Yet while the welfare caseload has been cut 60%, the number of applications has actually increased. During the present economic recession, welfare caseloads have remained relatively stable while the number of food stamp participants has soared to an all time high.

Welfare reform has had little to no impact upon the official rate of poverty. The demand for emergency food has soared since TANF was implemented.
At the November 20, 2008 Assembly hearing on welfare to work, OTDA Commissioner David Hansell said that average starting wages at job placement are approximately $8.50 an hour, which he cited as the fourth highest in the country. Yet since the average welfare household is slightly over three persons, this falls short of the $10.19 poverty level wage for a full-time worker in a household with four people ($21,200 poverty level). (The poverty wage for a full time worker with a family of three is $8.46). In addition, few of these workers are likely to be getting 40 hours a week of employment; studies indicate they get between 30 to 34 hours a weeks (at 34 hours a week, $8.50 an hour provides an annual income of $15,028.). However, these workers may receive the Earned Income Tax credit, and transitional benefits such as Medicaid and food stamps, which does help boost their income.
According to a recent report by FPWA, NYC wage data from HRA is similar. The average wage for job placements in NYC in 2007 was $8.30 an hour, though the average wage in the four largest job categories (child care, fast food, home care and sales) was only $6.99.
Other studies have found that the most disadvantaged Americans — those living in dire poverty —became even poorer after TANF implementation. Although the dire poor increased their work participation rate by nearly 50 percent, their monthly income declined, most notably among those with the youngest children. The poorest families found themselves significantly worse off under welfare reform (Lyter, Sills, Oh, and Jones- DeWeever 2004).

OTDA data is often suspect and incomplete. For some issues local districts enter data not based on what is most accurate but on the easiest way to get the computer system to accept the input. OTDA often changes its data collection methodologies and terminology, making it difficult to compare data over time.

 

Findings from 2008 SNAPSHOT Survey

In the fall of 2008, Hunger Action surveyed 128 present and former participants about their experiences with welfare to work (wtw). Unfortunately, we found many of the same problems as our prior workfare and wtw surveys in 1997 and 2001.

Only 11.5% of survey respondents rated the assessment done by DSS / HRA as good or very good. Almost half can’t remember actually having their barriers to employment assessed.

The two biggest reasons why welfare participants say they are not employed are a lack of jobs (36.7%) and the need for more education (35.2%) Others major barriers citied include the need for more work experience (27.3%), transportation problems (25.8%), wages too low (23.4%) and child care (18.8%).

Compared to prior surveys, individuals were less satisfied with their job training, though slightly more found it led to a job. Less than a quarter (22.7%) reported that training provided by DSS / HRA led to a job. (In a related question, only 24.7% reported that DSS / HRA had helped them become more employable.) Only about one third (33.3%) found the job preparation useful, down from 48% in 2001. Of the limited number of individuals reporting they had found a job, less than 20% (18.5%) said it was due to efforts by DSS / HRA, with most (70.4%) saying that it didn’t pay enough to get them off of welfare

When asked what job skills had they obtained from DSS / HRA, 25.8% cited resume writing; 24.2% job interview skills, 21.9% job readiness / job preparation skills; 19.5% computer training / typing; and 16.4% for job skills training. A very small percentage cited vocational training (5.5%) or job certification programs such as nursing or home health aide (5.5%).

Almost 2/3 thirds of the respondents (65.2%) cited the need for job training, skills or education to make them employable. 42.8% cited the need for technological training such as computers, with 35.3% citing the need for vocational training (carpentry, nursing, etc.) and 32.5% for education. Similar responses were reported in a related question: 53.8% cited need for technological training; 33.8% for education and 38.4% for vocational skills.

Less than a quarter of the respondents (21%) said that DSS/HRA had given them an opportunity to meet their work requirements by going to school instead of workfare, etc.

Of those individuals asking for education but being rejected by DSS / HRA, the most frequent reason (45.8%) was that they were told they had to work instead. 25% were told that education programs were not available.

RECOMMENDATIONS

New York should significantly increase the number of participants engaged in on the job training, wage subsidy, subsidized employment, grant diversion and transitional jobs.

New York – and particularly New York City - should reduce reliance upon workfare (WEP) programs, especially with so many present welfare participants having multiple barriers to employment.

The state should formally state that the key goal of welfare to work is to enable participants to become employable in jobs that allow them and their families to become economically self-sufficient.

The state should conduct a cost-benefit and performance analysis of its various welfare to work programs.

The state should expressly reject the Jobs First approach (namely, that any job, no matter how low the pay and benefits or lack of career advancement, is always the best solution) for one that promotes sustainable jobs and requires more upfront access to job training and education.

New York should substantially reduce the rate of sanctioning of welfare to work participants.

The state needs to increase oversight of local districts’ performance in welfare to work. The best and most cost-effective solution would be state take over off administration of welfare and food stamps.

The State should continue to expand the Career Pathways program. [2]

The State should increase work incentives for welfare participants, including earnings supplements, a higher Earned Income Disregard, Individual Development Accounts, and a higher minimum wage and Earned Income Tax Credit.

New York should increase access to transitional benefits, including child care.

New York should strengthen its job creation efforts, with clear target goals for low-income employment.

New York should work with advocates and other states to reform the federal TANF program to make it supportive of helping participants finding sustainable employment and reducing poverty.