Our Ill-conceived Workfare Maze

A Moral Economy #7. Part II: What do we have? (continued)

This continues a three part series of excerpts from Social Security Basic Income: A Safety Net for All Americans, which I published in March 2020. Part I: What would it look like? concluded with #2. Part III is How do we get from here to there? This essay includes text from Chapter 4 Moral Inventory. Refer to #1 in the series for a brief introduction of my purpose and perspective on this subject.

Losing streak

In 2014, a House Budget Committee Report, The War on Poverty: 50 Years Later, admitted Congress’ failure to deal with poverty:

Today, the poverty rate is stuck at 15 percent — the highest in a generation. And the trends are not encouraging. Federal programs are not only failing to address the problem. They are also in some significant respects making it worse.

In addition to federal programs and policies, the report blames broken families, falling male labor force participation, and insufficient education. It details what is and is not working among numerous programs designed to assist those who cannot work and to help those who cannot find work. What it does not question is the premise that work is the solution.

Unsurprisingly, most entitlement reform ideas similarly take the existing structure of flawed programs as given and propose tweaks that might appeal to Congress. For example, a report published by the American Enterprise Institute (AEI) lists a couple of dozen safety net reforms such as block grants to replace federal income support programs, Earned Income Tax Credits (EITC), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance to Needy Families (TANF), and child support enforcement that promote work. In other words, they recommend doubling down on the strategy that has failed.

Shaefer and Edin found that the drastic reductions in cash assistance following welfare reform in the ’90s pushed thousands of children into extreme poverty, especially those in single-mother households.

In 1995, some 289,000 SNAP households with children reported no source of cash income. That number began to rise in 2002, and by 2005 it had jumped to about 599,000. By 2015, this figure had grown to just under 1.3 million, down slightly from 2014.

In the US, we have a rather strong preference for attaching conditions to public assistance, supposedly to limit cost and to encourage independence. We have succeeded in controlling the cost of benefit programs, but that does not mean social costs were avoided. Stingy poverty relief program designs meant to limit eligibility for income support can harm intended beneficiaries. Earnings limits, for example, raise the marginal cost of work and lead to dependency.

It is not hard to see why such strategies fail. Eligible individuals rationally avoid work or sever ties to family members who do. When such rules prompt a father to leave his children with their mother, there are at least two bad economic consequences: the living arrangement is inefficient and the broken household makes it more likely the younger generation will remain poor. And those forced into labor have not necessarily achieved financial independence. Policies that make law-abiding citizens work for a “job creator” to earn benefits might be considered a form of human trafficking.

It is worse for those who break the law; we commonly make prisoners work to offset the cost of their incarceration. Another curious policy is jailing people who cannot pay fines. What purpose does that serve? For small debts, incarceration amounts to selectively harsh punishment for those who are unemployed. Moreover, the expense of keeping them locked up punishes taxpayers and certainly doesn’t help the offender pay the debt (or find a job upon release).

Stingy bureaucracy

Poverty in America is hardly acknowledged, let alone taken seriously. This is supposedly the land of opportunity, so we conclude that if anyone is suffering, it must be their own fault. Food stamps are still a mark of shame, and anecdotes of people on public assistance living well evoke outrage. To those of us who don’t qualify, public benefits appear generous because we see the similarities (what they buy at the grocery store) but not differences (where they live). We also tend to attribute our own tax payments to these individuals. This is all emotion, not reason, and it can all be traced to the mythical work ethic.

Tying public assistance to past or future work is not ethical policy. It is judgmental. The American people have not become lazy. They are playing a game of musical chairs for good jobs designed by the one percenters, who have found a way to get rich without employing much labor. It’s evil to pretend we are helping someone by giving them a job when that is the only way they can survive. Proposals to guarantee jobs are wasteful and do nothing to address the injustice of such an attitude. And shaming people into work is not working. An enlightened public policy would replace the class-based, sanctimonious notion that work is noble with an honest recognition that work is primarily a means to consumption. Instead of shaming people who don’t work, we should help those who do, and focus on alleviating poverty.

Welfare-to-work policies have not reduced poverty, but politicians continue to push them because they believe work is a duty for citizens and a resource we have elected them to manage. They suggest that those who are not working are lazy, that if employers cannot fill positions, it is because no one is qualified, and that workers’ lack of qualifications is a problem public institutions should solve. No wonder we have a system that is carefully designed to make all able-bodied persons “earn” their keep and hypocritically avoids subjecting those with means (plenty of unearned income) to the same indignities.

Temporary Assistance for Needy Families (TANF) was designed to reduce poverty by encouraging work, but any effects it may have had on employment appear to be more a consequence of limiting aid; benefits are revoked after 2 years from those deemed able to work. Its most significant result was shifting child support costs from governments to non-custodial parents. Block and Piven fault TANF for its “arduous and insulting” conditions that require people to “submit to innumerable bureaucratic routines that teach the lesson that wage work, any wage work, is preferable to the dole.”

The Supplemental Nutrition Assistance Program (SNAP), more commonly known as the food stamp program, has been targeted for work requirements that are unlikely to be effective at anything other than adding billions of dollars in training expenses and an enormous administrative burden to states. States are already imposing new work requirements for Medicaid. Research indicates that work requirements have not lifted aid recipients out of poverty, even if they found jobs. And most able-bodied, working age Medicaid and SNAP recipients are already working. People who are eligible for these benefits already lose access for administrative reasons such as lost notices and administrative errors; adding work requirements will likely increase those risks.

Ed Dolan cites several studies conducted since the early 1990s as evidence that work requirements are ineffective, and offers several reasons for the failure. Sharp reduction of benefits with increasing income (to save money and target the poor) reduces the incentive to work. Additionally, jobs cannot be accessed on demand; many of those willing to work face barriers such as child care or transportation needs, disabilities, criminal records, addiction, and low skills. Moreover, the complex and changing nature of work for this population make eligibility determination, proper counseling and coordination with service providers, and tracking difficult for administrators who are chronically underfunded.

As the film I, Daniel Blake so effectively illustrated, navigating the workfare bureaucracy can be demeaning, infuriating, and ultimately tragic. While the setting for this story is England, the system and characters could easily be American. The story revolves around Daniel, 59 years old and disabled, trying to satisfy onerous work search requirements. As one reviewer described it, the movie shows how the process dehumanizes service providers as well as applicants, and how “[welfare] funds are dispersed and utilized… in a horrifically inefficient, bureaucratic, lunatic, dehumanising, hopeless, helpless fashion.”

Hypocrisy

Most politicians seem to have no qualms about using tax breaks to attract or retain business (and their campaign contributions). One rationale to justify federal tax expenditures is that it merely allows taxpayers to keep their own money. This is a moral argument to distinguish corporate welfare from direct spending forms of welfare that benefit individuals and — in a fantasy world wherein revenues match expenditures — require taxing someone else. Either way, it’s a spending decision, and debates properly center on whether the money is well spent.

What’s troubling, though, is that we have routinely applied a double standard. Tax expenditures are “neutral, invisible policies like the mortgage interest deduction” that benefit the wealthy, while benefit programs for the poor are means-tested. We trust people who can afford to purchase homes and make other (often spectacular) purchases to do so in ways that benefit society. Some of them take millions of dollars in deductions that only in theory are subject to audit. Yet we subject people who seek the stingiest of benefits to humiliating scrutiny and conditions. Not only do we think everyone should work, no matter what the pay or conditions. We don’t trust poor people with money.

Elizabeth Breunig points to the hypocrisy of those who continue to support work requirements for public assistance. While a mere two percent of America’s poor are able-bodied adults who choose not to work, those with incomes over $10 million received just 15 percent of it from salaries; the rest is interest, dividends, capital gains, etc. And while entitlements such as Social Security and Medicare are frequently cited as causing runaway federal spending, tax expenditures for the same purposes that benefit the wealthy (e.g., pension and health insurance benefits) to the tune of several hundred billion dollars each year do not seem to be cause for concern.

Many in what we call the “working class” are too proud to accept handouts. They may be dissatisfied with their situation but feel superior to those unable or unwilling to work. It’s hard to think of an issue that draws more righteous indignation than working for a living while others are idle and get paid, anyway. And this is why they often side with the one percent to oppose “unearned” benefits.

We need to look in the mirror when speaking of handouts. Fortunately, most of us have not had to apply for food stamps, subsidized housing, or TANF benefits. But that doesn’t mean we are financially independent. Income tax exemptions for children and deductions for mortgage interest are just two of the most common benefits that together exceed, per household, so-called welfare payments. Many of us feel entitled to these reductions to our tax burden because we earned the money; never mind that taxes are higher for others earning the same incomes. And don’t we reelect representatives who steer federal money to our communities? We should not look down on the poor for relying on public assistance when we all do it to some degree.

The next essay in this series will continue Part II: What do we have? It will include text from Chapter 5 Slaying the Payroll Tax Dragon.