Are "safety nets" working?

The following is an excerpt from the CQ Researcher report on "Straining the Safety-Net: Is joblessness overwhelming aid programs?"
~~~~~~~~~~~
By Peter Katel, July 31, 2009

Many experts gauge safety-net effectiveness in hard times by the level of Temporary Assistance to Needy Families (TANF) payments. The population TANF serves — low-income households almost always headed by a single parent — is especially vulnerable to economic reversals.

Others view food stamps (officially, the Supplemental Nutrition Assistance Program) as a more sensitive indicator. Enrollment in SNAP is relatively simple, and statistics show the program is responding effectively to growing hardship. Nationwide, food stamp enrollment rose 20 percent, to 5 million recipients, during the 12 months ending in April 2009. [10]

Meanwhile, as President Obama put it recently, the recession is clobbering many people traditionally considered outside the target populations for SNAP and TANF. This group includes employees laid off from well-paid jobs that once offered considerable stability — autoworkers are the classic case. As of July, 1.9 million manufacturing jobs had vanished since the recession began in December 2007 — including 335,000 in car and auto-parts factories. [11]

Still another group of laid-off workers includes ex-TANF recipients, or future ones. The low-wage jobs they held provided paycheck-to-paycheck living but little or no cushion to fall back on when the jobs disappeared.

In other ways as well, low-wage workers enjoy less of a safety net than those laid off from better-paying, more stable jobs. A Congressional Research Service expert reported in February that low-wage workers are less likely to receive UI benefits. Some states, for example, bar UI participation by those who earned below a set amount. In any event, as of November 2008, 55 percent of unemployed people weren't receiving unemployment benefits. [12]

The huge economic stimulus bill the Obama administration pushed through Congress in February included a series of measures designed to expand the safety net's coverage.

TANF got an extra $5 billion to be distributed to states according to their needs for cash welfare and work subsidies. [13] The food stamp program received $20 billion to be spent over five years in boosting allotments, for example by $80 a month for a family of four. [14]

And the stimulus bill included a series of provisions to increase unemployment insurance benefits, including a 33-week extension in high-unemployment states, and $7 billion worth of incentives to states that expand UI eligibility to part-time employees and others; by mid-June, half the states had done so. [15]

“Food stamps and TANF have responded as they were intended to do, with the government spending more money,” says Haskins at the Brookings Institution.

He adds that he — unlike some Republicans — supports expansion of TANF caseloads as long as states maintain pressure on recipients to find work. “If you don't have state programs that emphasize work and penalize people who don't look for work, then people stay on the rolls much longer. A lot of people do find jobs, especially in services, during a recession.”

Liberals who opposed the 1996 welfare law argue that the recession has shown the safety net in general, and TANF in particular, to be inadequate, especially by dropping recipients if they're not working or looking for work.

“In general, TANF is too hard to get on, and too many people are being kicked off,” says Georgetown University's Edelman, who resigned as assistant secretary of Health and Human Services when President Bill Clinton signed the 1996 welfare reform law.

Moreover, the entire safety net system is strained far beyond its capacity. Even before the recession, the country was engulfed in a slow-motion socioeconomic disaster created by the expansion of the low-wage economy, Edelman argues. “You have to figure out how you're going to get a decent income to people who are being failed by the labor market,” he says. “The labor market functioning as a ‘free market’ is injuring millions and millions of people who are just playing by the rules.”

But the Heritage Foundation's Rector, a longtime critic of anti-poverty programs, argues that the safety net actually is working in ways that liberals support and that he opposes. Government programs provide “a permanent subsidy to people in the lowest one-third of income distribution.” In a paper in February, he listed some 50 programs aiding people below a certain income threshold, including Pell grants for low-income college students. [16]

As for TANF, Rector argues that the stimulus funds effectively return the welfare system to pre-1996 days, when states got more money as their caseloads expanded. “We are now in the business of paying states to put more people on welfare,” he says, predicting that that provision will be transformed from a one-time measure into a permanent feature of the system.

Zedlewski at the Urban Institute argues that a far bigger issue confronts the entire safety net system. “The great recession shines a light on the somewhat misguided notion that you could just focus on work supports” in revamping the welfare system. “You now have a much larger group of low-income parents who don't have work, and are not getting the Earned-Income Tax Credit because they don't have a job and don't qualify for unemployment insurance. What do you do there?”

Furthermore, Zedlewski argues, the rebuilt welfare system, with its focus on pushing recipients into jobs, has never served people with disabilities that keep them from working but don't qualify them for disability benefits. “I don't think anybody's really come up with a great solution for that group, who account for a large share of our poverty population.”

Footnotes:

[10] “Supplemental Nutritional Assistance Program: Number of Persons Participating,” U.S. Food and Nutrition Service, updated June 30, 2009, www.fns.usda.gov/pd/29SNAPcurrPP.htm.

[11] “Employment Situation Summary,” op. cit.

[12] Gene Falk, “The Potential Role of the Temporary Assistance for Needy Families (TANF) Block Grant in the Recession,” Congressional Research Service, pp. 16–18, http://assets.opencrs.com/rpts/R40157_20090224.pdf.

[13] Ibid., pp. 1,4.

[14] “American Recovery and Reinvestment Act of 2009,” U.S. Food and Nutrition Service, undated, www.fns.usda.gov/fns/recovery/recovery-snap.htm.

[15] Alison M. Shelton, et al., “Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009,” Congressional Research Service, March 4, 2009, http://assets.opencrs.com/rpts/R40368_20090304.pdf; “Federal Stimulus Funding Produces Unprecedented Wave of Unemployment Insurance Reforms,” National Employment Law Project, June 16, 2009, www.nelp.org/page/-/UI/UIMA.Roundup.June.09.pdf?nocdn=.

[16] Robert E. Rector and Katherine Bradley, “Welfare Spendathon: House Stimulus Bill Will Cost Taxpayers $787 Billion in New Welfare Spending,” Heritage Foundation, Feb. 6, 2009, www.heritage.org/research/economy/upload/wm_2276.pdf.

~~~~~~~~~~~~~
To view the entire report, login to CQ Researcher Online [subscription required], or purchase the CQ Researcher PDF.