EMPLOYMENT - It’s time for “the corrections”: a reset of Biden employment policies by the new Administration.
A first part of this reset, as discussed last month, involves increasing wages and mobility opportunities in the blue collar economy. This part of the reset is receiving a good deal of attention since November 5, given the working class political realignment.
But there is a second part of the reset that has received little or no attention post- November 5, and that is equally important. This second part involves reclaiming a first principle of employment policy: the role of a job in organizing and structuring a life. It was a principle taught by influential workforce figures of the 1970s and 1980s—Peter Cove and Lee Bowes, Hugh Price, Jason Turner and Lawrence Mead—and one that was the centerpiece of Clinton’s welfare reform of 1996.
Over the past four years, it has been a principle lost sight of by the Biden Administration and administrations of major cities. Welfare reform has been pared back; government benefit programs, prominently SSI and SSDI, have remained untethered from employment; guaranteed income schemes have been embraced without serious review of their social and economic impacts.
In the novel, The Corrections, Jonathan Franzen’s characters must confront self-deceptions about their own lives. With a new Administration, it’s time now to confront some of our current collective deceptions related to government benefit programs and employment.
The Corrections (1): Welfare Offices as Employment Offices
I can recall the welfare offices of the 1970s and early 1980s in California, when I started in the job training field. They were lifeless places, with case managers dispensing the meager benefits that welfare recipients received. The welfare recipients themselves were regarded mainly as a budding underclass—unable to function in the economy and a threat to social stability.
Change in the welfare office culture began in the mid-1980s with state-level work expectations and requirements, and accelerated with the passage of the federal welfare reform. Welfare offices became more than dispensers of benefit. They became employment centers, with a main goal of placing welfare recipients into jobs.
In their new roles, case managers increasingly recognized the strengths that welfare recipients could bring to the job world. At the same time, welfare recipients, pushed by work requirements to take action, found a new confidence and structure. Welfare rolls dropped dramatically. Employment rates of former welfare recipient increased significantly.
The welfare reform story is a complex, multi-faceted one. The jobs obtained largely were entry level and low wage. Most former welfare families continued to struggle with high levels of economic insecurity. Job loss and turnover was part of the process. A segment of those who left welfare went on to other government benefit rolls.
But if welfare reform had its complexities, and need not be romanticized, it clearly demonstrated a first principle of employment: the power of a job. This power went beyond the economic gains, short term and longer term. It often resulted in former recipients finding ways to more effectively organize other areas of their lives and families, Peter Cove, co-founder of America Works, would capture this power in his book, Poor No More. Writing about his experiences at a job training agency in New York during the 1970s, Cove would recall:
“At Wildcat we showed that the best way to get clients off welfare was to get them paid work immediately, rather than enroll them in training and education programs. I saw with my own eyes the value of work—any kind of paid work—in reducing welfare dependency and attacking poverty. I learned that if we helped welfare clients get jobs, even entry level jobs, they would then attend to their other needs. By contrast if the government gave them money and other benefits they were likely to remain dependent.”
America Works co-founder Dr. Lee Bowes, whose career in job placement also dates back to the 1970s, similarly recalls:
“I heard repeatedly from former welfare recipients placed in jobs how work expectations and job placement changed their lives. They would say, ‘I didn’t think anyone would hire me’, or ‘I never would have left (welfare) on my own.’ Once in a job, they found themselves able to address issues like child care or transportation, that previously seemed overwhelming.”
Structured research studies would confirm these positive impacts. An Urban Institute review in 2006 drawing together several major studies up to that time, underscored the employment and economic gains (aided by the strong economy of the late 1990s), and the increased independence and confidence of job-holders. A review by a multi-university research consortium in 2007 reached similar conclusions of economic and social impacts. Prominent social scientist Scott Winship, an initial skeptic of welfare reform, published a 20-year review of welfare reform in 2016, documenting the longer term impacts, including the decline in child poverty rates.
Despite the participant support and research findings, from the start welfare advocacy groups sought to undermine welfare requirements, and have continued to do so to the present. Their efforts have not been without results, with Blue states and major city governments over time weakening these requirements and reducing resources for job placement. During the pandemic, most work requirements were halted, and have been slow to restart.
As Dr. Bowes explains, the needed reset starts with returning to the principles of the 1996 welfare reform. Any welfare-to-work effort will be accompanied by a vibrant network of placement and income supports, by job placement specialists who can mix empathy and accountability, by ongoing job retention tracking and course corrections. However, these supports can function effectively only when linked to some mandatory job participation requirements.
No research agency has tracked the relation of welfare reform and employment impacts for more years and in more detail than MDRC. The considerable MDRC library of welfare studies since the 1980s, should inform this first correction, the welfare reset.
The Corrections (2): Getting Workers on SSI and SSDI Back to Work
In June of this year, the U.S. Government Accountability Office (GAO) issued its latest report on the ongoing work disincentives in the nation’s Social Security disability programs: Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Together these two enormous government benefit programs provided benefits to over 11 million working age adults in 2022, totaling over $170 billion.
As the GAO noted in its report, the issue of work disincentives with SSI and SSDI is a longstanding one. This year’s report is the latest in a series of reports on work disincentives dating back to 2008. Since 2008, the Social Security Administration has made several changes to allow recipients to retain at least a portion of benefits while returning to work, and to retain health insurance for a period of time. Currently, the benefits of SSI beneficiaries are reduced roughly $1 for every $2 of monthly earnings above $65, while SSDI beneficiaries can retain full benefits up to nine months. Yet, as the GAO concluded, these changes and several demonstration projects have brought only a very modest increase in the number of beneficiaries exiting the two programs.
In July 2023, the California State Council for Developmental Disabilities along with autism specialist Judi Uttal and Dr. Louis Vismara surveyed over 600 individuals with developmental disabilities, who were current or recent SSI recipients. The picture that emerged was of a highly dysfunctional system for SSI recipients who did take up employment. Respondents described improper adjustments in benefit amounts and overpayment notices, and months of trying to contact the Social Security to clarify. They described their fear of losing health benefits if they worked over a certain number of hours and difficulty of reclaiming health benefits if they lost their jobs.
Correction 2 starts with addressing the implementation issues. The correction, though, might go further to experiment with continuing health care benefits on an ongoing basis. Nearly all of the SSI recipients who do go back to work start in entry level, lower wage jobs.
The Corrections (3): Guaranteed Income and Work Incentives
Correction 3 involves the guaranteed income projects that have exploded in numbers in the past four years. Leslie Ford , an adjunct fellow at the American Enterprise Institute, detailed this explosion in a thoughtful paper earlier this year, that also pointed to the need for more serious review of these projects, especially on employment participation.
By 2023, Ford notes, the Mayors for a Guaranteed Income consortium, had grown to 125 mayors with pilot project in 34 states. This number has continued to expand since: earlier this year, the Stanford Basic Income Lab identified 68 active guaranteed income pilots.
These guaranteed income pilots differ in monthly amounts paid to individuals and families, and duration of payments. In most cases, though, they are not linked to work requirements. In this regard, they follow the Biden Administration expanded Child Tax Credit, which before it expired in December 2021 sent additional monthly payments to families for each child up to age 17.
Ford is particularly concerned with the employment impacts of guaranteed income, and carefully reviews the research evidence from the early guaranteed income projects of the 1970s through the present, and including guaranteed income experiments in other countries. Her conclusion:
“From the evidence currently available, if guaranteed income is nationally implemented, it could harm lower income Americans by disincentiving work. In the long run, this would likely have negative consequences for the citizens the programs seek to help because employment, not merely transfer payments, is key to overcoming poverty and exiting dependency.”
With the new Administration, it’s time to reconsider income supports and their tie to employment—as well as ties to the other measures of earnings, use of other benefits such as food stamps, mental health, and child well-being. It may be that a shift is warranted to income supports focused on workers and their families who take the low wage jobs that are needed in the economy (in direct care, logistics, general laborer) but poorly remunerated.
The Corrections: Honored in the Breach
It’s difficult to find anyone today who doesn’t agree that employment should be encouraged, and that a job has psychological and social values far beyond the economic—especially for individuals on the social margins.
Over the past four years, though, these themes have been honored in the breach, not seriously implemented. With the new Administration, time for a reset.
(Michael Bernick served as California Employment Development Department director, and today am Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and Fellow with Burning Glass Institute, and research director with the California Workforce Association. My newest book is The Autism Full Employment Act.)
