Date: Fri, 17 Feb 1995 10:59:50 -0800
From: Mike Meeropol <mmeeropo@kraken.mvnet.wnec.edu> To: Multiple recipients of list <pen-l@anthrax.ecst.csuchico.edu> Subject: [PEN-L:4211] Three economists "protest" punitive "welfare reform".

Dear Penners:

The following memo was put together three economists (all PENNERS) in an effort to influence my (Mike M's) local Congressman. We decided it might be useful to share it with a wider audience in case -- a) people have ideas how to make such an argument better [but not longer!], b) people think they might be able to adapt it for their own Congressperson and get some other economists/activists/academics/people to sign it. The memo follows in its entirety.
>
> TO: Congressman Richard Neal
> FROM: Michael Meeropol, Professor of Economics, WNEC

>         Nancy Folbre, Professor of Economics, UMASS, Amherst
>         Randy Albelda, Professor of Economics, UMASS, Boston

> RE: Trying to introduce sanity into the "welfare debate." >
> There are two ways to imagine "welfare reform" in a rational > way. One is from the point of view of fighting poverty; one is > from the point of view of saving the taxpayers' money. If we start > with either or some combination of both criteria, the punitive > approach to welfare reform that is sweeping the country --- from > the various states, including Massachusetts which have instituted > cut-off and work-fare programs to the proposal in the Republican > Contract with America --- will neither reduce poverty nor save the > taxpayers money.
>
>
> SUMMARY OF POINTS MADE:
> 1) Time limits of welfare benefits will increase the work that is > > done for poverty wages. It will not reduce poverty. >
> > 2) Real reform that might work would involve more jobs, higher > > wages, widespread (affordable) availabiligy of child care, all of > > which would cost more money than does AFDC now. >
> > 3) The current approach to welfare reform will end up costing the > taxpayers more money in health care costs and law enforcement. >
> 4) This will also cost society more "intangibles" in reduced time spent by > mothers with their children. Women raising children do important work for > society. This fact is always ignored in most discussions of welfare reform. >
> > 5) Overall teenage pregnancy rates are decreasing -- it is the > > percentage of teenage parents who are not married that has been > > rising.
>
> > 6) The percentage of AFDC families with a teenage mother is less > > than 10% of all AFDC families.
>
> > 7) There is no credible evidence whatsoever that the availability > > and generosity of AFDC has increased the illegitimacy rate. > >
>
> > 1) The reason time limits will not reduce poverty is because > > there is already a sizeable population of the poor in this country > > who work full or part time. Shifting people out of welfare will > > increase the proportion of the poor who work for pay outside of the > > home. If these people also lose medicaid beneifts, they will then > > increase the proportion of Americans who are without health > > insurance, guaranteeing that when they get so sick they must use > > our health facilities they will be getting the most costly > > treatment which will then be shifted to the taxpayers in general or > > to the premiums of purchasers of health insurance. Unless more > > jobs that pay decent wages are within reach of people with little > > educational background, moving from welfare to paid work will not > > reduce poverty.
>
> > [According to the GREEN BOOK, analyzing the major study by LaDonna > > Pavetti, more than 70% of the families who begin a stay on welfare > > remain on the rolls for less than two years -- with only 8% staying > > on for more than eight years (1993 GB: 714-720). HOWEVER, there > > are many who move BACK onto welfare within five years of leaving > > the rolls (such a move would be prohibited by the 2 years and out > > suggestion...) because the low wage job they have isn't sufficient, > > or they lose it, etc. In 1989, 40% of women working full-time > > year-round earned less than $13,500. In 1991, 5.5 million people > > lived in working poor families with children, where at least one > > wage earner worked full-tiime year-round. See a very interesting > > book: _The Forgotten Americans_ by John E. Schwarz and Thomas J. > > Volgy (NY: W.W.Norton and Co. 1992) A case study of California's > > GAIN system which was a voluntary workfare system, showed that > > participants earned an average of $271 per year more than non- > > participants while receiving $281 less in welfare benefits. (NY > > Times, Apr 23, 1992.)]
>
> > 2) Thus, if we're really interested in meaningful welfare > > reform a minimal starting point is a significant increase in the > > minimum wage, expansion in the avilability of child care and a > > universal system of health insurance for all Americans Anything > > less would be a cruel hoax. Beyond that, we'd need a vigorous full > > employment policy such as was attempted during the depression but > > which is too often derided today as "make work." Much as we > > believe such a vigorous full employment policy to be valuable, it > > is, we must acknowledge, more expensive than the current welfare > > system. Creating a government job is not as cheap as giving an > > unemployed person a check.
>
> > 3) Note, forcing AFDC women off of the welfare rolls and into > > the low wage job market (without spending any money on job- > > creation) probably will save some money in the welfare budget but > > will undoubtedly raise expenditures on health care (caring for the > > uninsured) and will increase criminal activity to some extent. >
> 4) There will also be serious long run consequences. In this era > > when the inculcation of good values by parents is considered > > crucial to the nurturing and socializing of the next generation of > > Americans, it is ironic that the welfare reform programs are going > > to force women to spend less time with their children. How do > > children brought up in poverty with the temptations of criminal > > activity all around them resist those temptations? The strong > > efforts of parents clearly play a role. When there is only a > > single parent, that person's role is even more important in the > > life of her child. Those who support current attempts to "reform" > > welfare by requiring work outside of the home act as if raising > > children is a costless and timeless activity. It clearly isn't. >
> > No matter how much we might hope that people will remain law > > abiding in the face of adversity, the evidence is clear that > > adversity, poverty, hopelessness, and a sense of unfairness will > > produce increased recourse to criminal activity. The absence of > > adults constantly focusing on protecting their children from such > > temptations will only make it more likely that they will succumb. > > That will raise the costs to the taxpayers of putting more and more > > police on the streets, hiring more and more personnel for the > > criminal justice system, and finally building more prisons to > > warehouse more and more of society's rejects. What we save in the > > welfare budget, we will be forced to spend in larger amounts in the > > criminal justice and corrections system, not to mention the health > > care system for the uninsured.
>
> > BEHAVIOR MODIFICAION.
>
> > 5) Much of the discussion focuses on attempting to decrease > > the unwed teenage pregnancy rate. First of all, let's make very > > clear that the overall teenage pregnancy rate has been DECLINING > > for decades. WHat has happened at the same time is that the AGE OF > > MARRIAGE has been INCREASING during the same period. In other > > words, LESS teenagers are having children but a higher percentage > > of those that ARE having children are doing it BEFORE they get > > married. Second, let's make clear that a relatively small > > percentage of the recipients of AFDC are teenage mothers. [In > > 1991, 8.1% of all mothers receiving AFDC were under 20. (1993 > > Green Book: 296)] So if they are cut off from AFDC completely, > > there will be very little money saved by the taxpayers. >
> > 6) Finally, there is absolutely NO EVIDENCE that the decision > > by young women to have children out of wedlock has anything to do > > with the availability and the generosity of welfare. The rise in > > the percentage of births occurring to women who have never been > > married has coincided with a significant decline in the real value > > of welfare benefits. [AFDC has fallen in real terms 42.2% between > > 1972 and 1992, when combined with food stamps it has fallen 26% in > > the same time period, 1993 Green Book, 1240] This suggests that > > the lack of availability of welfare will not reduce the > > illegitimacy rate by much, if anything. However, let us assume > > that it does reduce the illegitimacy rate by 20%. What about the > > children of the other 80%? AFDC may be reduced but "group homes" > > (the current euphemism for the Charles Murray "orphanage" > > suggestion), etc. will cost the taxpayers more money! Everyone > > from the President to Newt Gingrich agree that we will not turn > > people out onto the streets. But not everyone is admitting that > > the alternatives to AFDC are more costly. >
> > CONCLUSIONS.
>
> > And why do our political leaders push these policy changes on us? > Because we have bought into a theory of the behavior of the poor that is > totally at variance with the facts. There is a serious lack of good jobs for > low skilled people who can then climb the ladder of success. Instead there has > > been a great growth of dead end jobs that don't lift people out of > > poverty. We assume the poor are poor because they don't want to > > work, ignoring the 40% of the poor who work full time and still > > remain poor. We assume there are jobs for everyone who wants them > > that can pay well enough to support a family but that's just not > > true. There aren't enough of those jobs. The minority that do get > > those jobs do not prove that the majority who can't get them aren't > > trying or willing.
>
> > There is also that belief that we can convince young women not to have > > children until they are capable of supporting them by taking away > > the "carrot" of welfare. This flies in the face of both our recent > > history and international comparisons. Timothy Smeeding of > > Syracuse University has been conducting what is known as the > > Luxembourg Income Study --- a long period comparative analysis of > > the welfare states of the US and its major economic competitors in > > Europe. The US has a more stingy welfare state than most European > > countries. These countries pay much more generous benefits to all > > families, including mothers and children without husbands. Yet > > they all have much lower illegitimacy rates than the U.S. >
> > The increase in births to unmarried poor women in the U.S. is > > a result of a complex of factors -- many having to do with the lack > > of self esteem and self worth on the part of many girls in poverty > > in this country. Punishing them by taking away their welfare > > benefits might, perversely, increase the amount of self-defeating > > behavior exhibited.
>
> > We believe that the real nature of the support for the kind of > > welfare reform in the Contract with America is a desire to punish > > bad behavior. This may, in fact, indicate that no matter what the > > preponderance of evidence shows, there will remain citizens more > > interested in taking money away from people they think don't > > "deserve it" than in actually fighting povery. We hope that > > Congressman Neal will be able to play a role in presenting the > > facts that have been collected in the Green Book and elsewhere. In > > doing that, he can show citizens misled by the rhetoric of the > > Contract with America and Governor Weld that this would represent > > an act of "immediate gratification" similar to the gratification > > one can get by gorging on second and third desserts. After the > > positive effects of satiation are gone, the long run problem of > > rising poverty, rising crime, declining health, declining skills > > and ultimately a massive increase in taxation will be similar to > > the massive stomach ache experienced by the "three dessert > > indulger."
> >
> Michael Meeropol
> Professor of Economics
> Western New England College
> 1215 Wilbraham Road
> Springfield, MA
> 01119
> mmeeropo@wnec.edu
>
Randy Albelda
albelda@umbsky.cc.umb.edu

Nancy Folbre
folbre@econs.umass.edu

Any comments can be sent to the list because at least Randy is a currently active subscriber. Or they can be sent to us as individuals as well. In solidarity and existential battle against a mighty foe! Mike --
Mike Meeropol
Economics Department
Cultures Past and Present Program
Western New England College
Springfield, Massachusetts
"Don't blame us, we voted for George McGovern!" Unrepentent Leftist!!
mmeeropo@wnec.edu
[if at bitnet node: in%"mmeeropo@wnec.edu" but that's fading fast!]