In his 2016 State of the State address, Governor Herbert has emphasized, “our state economy has added 219,000 new jobs, with an unemployment rate dropping from 8 percent down to 3½ percent today.” According to the U.S. Dept. of Labor, he’s right; Utah has the 15th lowest unemployment rate in the country. Why then did the state request a federal waiver for time limits on welfare requirements? Why are we still keeping some able-bodied working age adults dependent instead of helping them become self-reliant?
In 1996 Congress passed significant welfare reforms, ending the Aid to Families with Dependent Children (AFDC) and replacing it with Temporary Assistance for Needy Families (TANF). The rationale behind the change came from a study by the Cato institute in 1995. Cato found in some cases that someone on welfare could earn as much as twice the amount of a minimum wage job. While welfare has undergone many reforms, there is still room to improve and incentivize work instead of perpetuating a cycle of dependency—a trend that for too many has become intergenerational.
In its 2013 follow-up study, The Work vs. Welfare Trade-Off, Cato compared the poverty level with the amount of total welfare benefits available (up to 126 federal programs, not including local programs) and found that in 42 states, the value of welfare programs more than exceeded the poverty level as compared to wage earners—sometimes more than twice over (220% in Hawaii).
To put this into perspective, one of the highest paying states for welfare benefits in hourly wages is Hawaii at $29/hr; 13 states pay the the equivalent of over $15/hr. Moreover, welfare benefits are tax-free; thus, the dollar value of benefits is worth more than wages at a minimum wage job. While that differential may be offset with the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), the value and dignity of work and self-reliance cannot be understated. Those who work now, even if at a low wage, are building experience for future wage increases putting them in a better long-run position than those who do not work and subsist on welfare programs.
While there are certainly a variety of problems in assistance programs, including fraud, improper asset testing, and inaccurate income eligibility caps, the work requirements for ABAWDS (able-bodied adults without dependants) seem ripe for reform.
ABAWDS receiving food stamps have three months in a 36 month period where they don’t need to fulfill work requirements. After exceeding that time frame, they are required to work for 20 hours per week or participate in either a work or workfare program of the state. If they do not meet this requirement, they will no longer be eligible to receive food stamps.
This is the very reason welfare programs have work requirements—to give recipients time to work and build job skills while still receiving assistance in order to propel them into future self-reliance.
After the recession in 2008, the federal government established a state-by-state waiver for the work requirement time limits. States could seek the waiver and renew it each year. The waiver removes the time limit (three months) for which an ABAWDS can receive food stamps without utilizing any work programs. With the waiver, one no longer has to participate in these required work programs that are designed to assist individuals in becoming self-reliant or gaining job skills or experience in preparation for re-entering the workforce. This in turn places the recipient of food stamps at a long-term disadvantage as they may put off activities that would otherwise help them transition into the workforce.
Many welfare recipients report fear of job security at low wage jobs. Because many lack job skills to obtain high-paying jobs and therefore often work in entry-level positions, they are reluctant to leave the security of various assistance programs. However, this is the very reason welfare programs have work requirements—to give recipients time to work and build job skills while still receiving assistance in order to propel them into future self-reliance. Removing work requirements actually exacerbates the problem of recipients fearing lack of opportunity in the job market. Given this reality, it is understandable to see why many people remain on federal programs.
Deterring dependence on welfare and promoting self-reliance does not just matter to taxpayers—it matters to individuals, to families, and to entire communities.
The work requirements are not just in place to protect taxpayer dollars from freeloaders or those who would abuse the system—they exist because of the economic value of putting people to work, both individually and collectively. Deterring dependence on welfare and promoting self-reliance does not just matter to taxpayers—it matters to individuals, to families, and to entire communities. Work brings a sense of individual dignity and accomplishment. Work starts people on a ladder to future economic success. Work increases the economic pie of a community, and it creates very real social and economic capital for a family. Work is a valuable thing for society. Assistance programs were designed to assist individuals in times of hardship and then push them to find a job that pays enough to free them from a cycle of government dependence.
Many Utahns desperately need assistance. A few extra dollars for food every month can make a big difference for a family in need. However, insofar as these assistance programs are provided by government, policy makers must ensure that the inherent problems of bureaucracy do not inadvertently incentivize dependence. These workers need incentives to become self-reliant and they need the constructive support of work programs.
A study of Kansas, which reinstated work requirements in 2013, found a huge increase in re-employment. The study monitored the effects on individuals’ employment and earnings through an extensive tracking system. It found that the number of ABAWDS on food stamps dropped 75%, freeing 13,000 Kansans from welfare at the end of 2013. “Nearly 60% of those leaving food stamps found employment within 12 months,” notes the study, “and their income rose by an average of 127% per year.” This in turn increased economic activity, allowing the state to apply those resources to other state priorities. Kansas work participation has nearly tripled.
A study of Kansas, which reinstated work requirements in 2013, found a huge increase in re-employment.
On average, Kansas enrollees earn more than double the amount since work requirements were reinstated, and dependence on food stamps has been cut in half. Welfare reform in Kansas helped taxpayers save nearly $100 million over two years. The study’s conclusion is that the best anti-poverty tool is work.
Similarly, in 2011, Maine re-established work requirements and watched the ABAWDS caseload drop 80%, from over 13,000 recipients to under 2,700. As the Heritage Foundation noted, “Giving welfare to those who refuse to take steps to help themselves is unfair to taxpayers and fosters a harmful dependence among beneficiaries.”
Work is a sound principle of self-reliance and the greatest of anti-poverty tools.
Food stamp dependents across the country have tripled in the last 15 years, growing from 17 million in 2000 to 46 million in 2015. Spending on the food stamp program has grown ten times as fast as federal revenue—diverting resources from other priority programs. Studies show that implementing work requirements is the best way for food stamp dependents to move out of poverty.
Utah sought, received, and has renewed a partial waiver for the time limits on work requirements since 2009. This partial waiver allows the state to remove time limits for work in counties with “hardship” where unemployment rates exceed 10%. Our research indicates that 17 counties across Utah have met this criteria since 2009. In a letter to the U.S. Department of Health and Human Services in 2012, the state defended the waiver and the ability of states to receive it. The argument centered on the need for state flexibility and autonomy instead of federal executive micromanagement. While we agree that federal programs should be returned to the states, it is important that the programs we implement in Utah are based on sound principles. Work is a sound principle of self-reliance and the greatest of anti-poverty tools.
Utah sought, received, and has renewed a partial waiver for the time limits on work requirements since 2009.
Utah’s robust economy should provide ample opportunity for those in need in our state to find a job, even if it requires moving from a low population rural county to a place in the state with more opportunity. With an economy this great, Utah should not be incentivizing reliance on federal welfare programs. If Utah followed the examples of Kansas and Maine, it would likely further reduce unemployment while helping more Utahns to become self-reliant. Utah’s motto is industry. In the beehive state Utahns ought to be industrious, not dependent.
In 2012 Wyoming Governor Matthew Mead rejecting the waiver that Utah now has, stating that, “such a weakening waiver is not something Wyoming will neither seek nor accept… We must all continue to encourage a productive society, empowering Americans by promoting individual responsibility.”
Cato’s study concluded that, “If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions, and narrowing the list of activities that qualify as ‘work.’ Moreover, states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements.”
If our economy is so strong, why do we continue to implement a policy that abuses taxpayer dollars and deters economic growth? By implementing these sound principles, we will gain a more resilient workforce, lower unemployment rate, and better assistance programs that help move people from welfare to work. That is—or should be—the Utah way.