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The End of Welfare?

Just as Communists, radicals, and progressives traveled to Moscow in the 1920s to see socialism being built in one country, so are politicians, policy analysts, and journalists today arriving in Wisconsin to see the welfare state being dismantled. The BBC, the London Observer, and leading Japanese papers have all sent correspondents there. So have most major American news organizations, including The New York Times, whose Jason DeParle has taken up part-time residence in Milwaukee to report on the state’s “workfare” system.

What is occurring in Wisconsin is one of the most far-reaching social experiments in modern American history. Years before President Clinton signed the welfare law of 1996, replacing Aid to Families with Dependent Children with a program of time limits and work requirements, Wisconsin began overhauling its welfare system. In a more radical step, the state in September 1997 introduced the plan called Wisconsin Works, which requires everyone (with few exceptions) to work in return for cash assistance. In addition, W-2, as it’s known locally, imposes strict limits on how long one can receive that assistance.

The number of people on welfare in Wisconsin has dropped sharply, from around 100,000 cases a decade ago to fewer than 9,000 today. (The welfare caseload nationally has dropped 47 percent since January 1994.) At a Manhattan Institute forum, “Next Steps in Welfare Reform,” held in April, Lawrence Mead, a professor at New York University and a longtime proponent of welfare reform, called the Wisconsin program “absolutely revolutionary.” It was, he added, “the most positive development in American social policy, I think, for about forty years.” In Wisconsin and other states, he said, “there’s a notable lack of acute hardship. We do not see families on the street, rises in homelessness, foster care and so on…. On the contrary, we see, on balance, major improvements in the condition of the poor and the near-poor.”

The keynote speaker, Wisconsin’s Republican governor Tommy Thompson, was even more enthusiastic. “We’re shucking the status quo,” he said. “We’re tearing down the old and the outdated. We’re building the bold and embracing the daring.” The states, Thompson went on, “are showing that welfare reform is working and it’s more successful in helping the poor than the old entitlement programs such as AFDC. And no state epitomizes the success of American welfare reform more than my own state of Wisconsin.” W-2, he asserted, is “a model for the nation to follow.”

Already, other states and cities are copying it. In New York City, for example, Mayor Giuliani has brought in Jason Turner, an architect of the Wisconsin program, to reform the city’s welfare system. Under Turner’s direction, New York is transforming its welfare offices into job centers, with applicants expected to seek a paycheck rather than a welfare check. Since March 1995, when the number of cases was at its peak, nearly 500,000 New Yorkers have left welfare.

A great deal, then, is riding on the Wisconsin experiment. How accurate are the claims being made on its behalf?


Driving around Milwaukee this past May, I had a hard time finding its inner city. Milwaukee lacks the crowded tenements of New York and the towering projects of Chicago. The typical ghetto dwelling is a solid-looking duplex house situated on a small plot of land. Youths tend not to hang out on street corners, and panhandlers are relatively rare. But the poverty here is acute. Inside, those duplexes are often squalid and depressing, with as many as five or six families crammed together. Crack, which came later to Milwaukee than to many other large cities, continues to exercise its malevolent attraction. During my stay, the Milwaukee Journal Sentinel ran a front-page article about the “House of Doom,” a fetid crack house full of prostitutes and children.

Milwaukee has long been Wisconsin’s welfare capital. Of the nine thousand families remaining in W-2, 80 percent live in Milwaukee County. Historically, benefits were so high here that the city attracted single mothers from Chicago, ninety miles to the south. “They used to put posters in the Greyhound Bus depot down in Chicago that said go to Wisconsin for $18.50 [and] you can increase your welfare allotment by at least $175 a month,” Tommy Thompson said in his talk at the Manhattan Institute.

In that talk, Thompson described how, soon after becoming governor, he began inviting welfare mothers to his residence to tell him their stories. From them, he concluded that the welfare system had fostered dependence and needed to be fixed, and so he began asking for and receiving waivers from the federal government to experiment with changes in delivering AFDC.

Initially, those changes were modest. But Thompson made large claims on their behalf, and in 1993 several Democratic legislators—frustrated by the favorable attention he was receiving—introduced their own bill, which would commit the state to phasing out welfare and replacing it with a work program. The Democrats in the State Assembly—many of whom wanted to show up the governor—supported the bill, and it passed without a single Republican vote. After some hesitation, Thompson—unwilling to be outflanked on the welfare issue—signed it.

The new system, introduced in September 1997, featured a four-step employment ladder. Those people deemed “job ready” by the state’s welfare officials were expected to find a job in the private sector. Those judged not quite ready would receive a monthly payment, in return for which they were expected to perform “community service jobs,” such as cleaning parks. Participants with serious problems preventing them from working were to be placed in a transitional category in which they would attend training and education classes in return for assistance. No participant could remain in any one category for more than two years, and no one could receive cash benefits for more than five years in all.

In addition to the work requirement, Thompson decided to offer some incentives. The basic monthly payment would be increased by about 20 percent, from $555 to $673 a month. (Unlike AFDC, however, the new system would not offer increased payments based on the number of children in the family.) Participants would have free access to a variety of generous services as well, including child care, health care, and transportation allowances. Each person enrolled would be assigned not to a caseworker but to a “Financial and Employment Planner” (FEP), who, in addition to determining eligibility for the program, would help in arranging training and finding work. To encourage inventive approaches to helping clients, the state contracted with five different agencies to administer the program in Milwaukee, with each setting up a job center in a different part of the city.

During my stay, I visited one of those centers, run by a for-profit company called Maximus. It occupied four floors of a renovated brick building in a commercial district on the west side of town. I was shown around by Keya Shears, a tall, young, self-assured African-American woman. Physically, the center was impressive. In a brightly lit waiting room, people were applying for cash assistance, child care, and food stamps. There was a “Wisconsin Gas Line” service to help prevent utility disconnections, a learning center full of computers, and a resource center with counselors ready to help people write résumés and prepare for interviews. At a stand packed with announcements for available jobs, I picked a few at random. There were openings for a food service worker (a high school diploma required), a utility pole inspector (paying $10 an hour), and a care coordinator for children with emotional problems (annual salary: $26,000)—all testifying to Wisconsin’s booming job market.

In the classroom area, I sat in on a session for parents. A well-dressed instructor in her forties was talking about nutrition and preparing meals, and the seven women in attendance were listening intently. When one said that she fed her kids “chicken, macaroni—the basics,” the instructor prompted, “How about green vegetables?” “Oh, yes,” the woman quickly replied, “they get plenty of fruits and vegetables.”

The class ended a few minutes before the scheduled sign-out time of 4:30, and, as the women waited, I began talking with two of them. Teresa, a forty-four-year-old Latina mother of one, told me that until February she had been working at Goodwill, earning $6 an hour, but business had slowed down and she had been laid off. Worried about paying her $460-a-month rent, Teresa two weeks earlier had applied to W-2 for assistance. In return, she was attending classes eight hours a day. Unfortunately, W-2 always waited at least a month before issuing the first check, and Teresa feared being evicted.

As I prepared to pursue the point, Mia, a twenty-year-old African-American, jumped in. “This is a good place,” she declared. “I have little job experience. They’re teaching me how to write a résumé and prepare for interviews.” Her FEP was going to help her look into job opportunities, and in the meantime Maximus was providing child care for her six-month-old daughter.

But you have to wait so long to get your check,” Teresa put in.

They let you know you can’t be on welfare forever,” Mia countered. “You don’t want to be dependent on a check.”

Teresa was unconvinced. “I was supposed to pay my rent two weeks ago. If I don’t pay it in five days, they’ll put me out.”

The same thing happened to me,” said a heavyset woman sitting a few rows away. “We had to go to a shelter. We were there a month.”

I can refer you to a good shelter,” said Mia, who again began talking about how much she liked Maximus. At this point, Keya announced that it was time to go, and the women rushed to leave. I felt frustrated. Having heard such radically conflicting views of W-2, I wanted to learn more. Yet, as I was to discover during my visit, W-2 is often the subject of conflicting views.

Consider, for instance, the central question of how mothers leaving welfare have gotten on. In January, the state issued a survey of those who had left the system in the first quarter of 1998. Of the 375 people interviewed, 83 percent said they had found paying jobs since they left the system, and 62 percent were still employed at the time of the interview. The average wage they earned was well above the minimum wage of $5.15. Encouraged by such results, state officials publicized the report.

Buried in it, however, were other, more troubling, findings. While 48 percent said they had more money now than they had on welfare, 69 percent said they were just barely making do. Thirty-three percent said that they couldn’t afford child care after leaving welfare, compared to 22 percent who said this was a problem while they were on welfare. Similar increases occurred in the number reporting difficulties in being able to buy food and pay the rent.

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