Guess Who Pays for Workfare?

It is one thing to claim—as the politicians of both parties now do—that the replacement of welfare by work would be a good thing for recipients, for taxpayers, and for the general reputation of public assistance to the poor. It is quite another question whether that transformation can actually be accomplished, and what it would then take to accomplish it. In particular one is entitled to ask: What jobs will former welfare recipients find, and how will they find them?

This elementary distinction between desirability and feasibility is often neglected in political debate. During the rhetorical maneuvering that led to the welfare “reform” bill passed in the summer of 1997 everyone seemed to be devoted to ending “welfare as we know it” but no one was prepared to describe how the new system would actually function. (Very likely “none of the above” would have been the most popular answer if the question had been asked.) Some time will pass before the shape of the new system is visible. The legislation left the main decisions to the individual states, which may well pass the buck to the large cities where most of the problem is, which may in turn pass the buck to the bishop of Caesarea.

That particular question is not my subject here because I am not trying to understand the consequences of any particular legislative proposal. (That has already been done for the 1997 bill by the Urban Institute, with scary results that do not seem to faze the bill’s sponsors a bit, as well as by Peter Edelman in a recent Atlantic Monthly article.1 ) My intention is quite different from theirs. It is, first, to describe in theoretical but common-sense terms the consequences of withdrawing welfare benefits and forcing the former recipients into the labor market. What will become of them? Where will the jobs come from that they are supposed to find and occupy?

I will also examine the results of some experimental “workfare” initiatives on the part of several states, in order to get a quantitative grip on the employment and earnings prospects of former welfare beneficiaries and their successors. Finally, I will speculate briefly about what would be required for a successful transformation of welfare into work. My conclusion is going to be that we have been kidding ourselves. A reasonable end to welfare as we know it—something more than just benign or malign neglect—will be much more costly, in budgetary resources and also in the strain on institutions, than any of the sponsors of welfare reform have been willing to admit. And the reasons are based on normal economics.

On the question of job availability there are two extreme positions to consider. The first is very optimistic: there is no problem. The jobs are there; they are always there. It is only necessary that those who seek them be willing to accept realistic wages. Former welfare recipients, having nowhere else to go, will do just that. They will be paid…

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