Strict Work Requirements for Welfare are a Classic Neoliberal Idea, and Now We Need Them More than Ever
“Handouts are not enough. Government subsidy is not the ultimate answer to the problems of the poor.” — Joe Biden, 1987
“Asking something of people on the dole is perfectly rational, but liberals in Washington have long prioritized making the poor comfortable over helping them out of poverty. These days, weaning people off welfare by encouraging them to be more productive is an afterthought on the political left.” — Jason Riley, “Make Welfare Reform Part of the Debt Ceiling Deal,” Wall Street Journal
“The debate over work requirements for social programs is hot and heavy. I'll chime in there as I don't think even the Wall Street Journal Editorial pages have stated the issue clearly from an economic point of view. As usual, it's getting obfuscated in a moral cloud by both sides: How could you be so heartless as to force unfortunate people to work, vs. how immoral it is to subsidize indolence, and value of the "culture" of self-sufficiency.
Economics, as usual, offers a straightforward value-free way to think about the issue: Incentives. When you put all our social programs together, low income Americans face roughly 100% marginal tax rates. Earn an extra dollar, lose a dollar of benefits. It's not that simple, of course, with multiple cliffs of infinite tax rates (earn an extra cent, lose a program entirely), and depends on how many and which programs people sign up for. But the order of magnitude is right.
The incentive effect is clear: don't work (legally).” — John Cochrane Hoover Institution Fellow on his blog, “The Grumpy Economist”
Because I glossed over it in course of my EV tax credit hawkishness, I have since acquired a kind of guilt for not giving the GOP’s work requirements provision of the Limit Save and Grow Act its due criticism.
A Little Introduction to the Case for Reform
I have nothing but praise for the deal Kevin Mccarthy secured with Joe Biden, now termed the Fiscal Responsibility Act, in which stricter work requirements supplement the “Supplementary Nutritional Assistance Program” otherwise known as SNAP Benefits, also TANF “Temporary Assistance for Needy Families.” These work requirements involve raising the age at which single able-bodied adults without dependents have to work to receive government assistance from 49 to 54 or 50 to 55—one of those two, I don’t remember which. This is estimated to affect at least a million people. Not that many, but not that few. Moreover, according to Kevin Corinth of the American Enterprise Institute, as it happens the majority of people on SNAP are currently in the fifties age range, and the majority of individuals in that same age range are also ABAWD’s!
The federal budget and taxpayers, as well as the poor, need this sensible welfare reform measure. In 1996 back when the Democratic party was more neoliberal and less progressive, Bill Clinton’s welfare reform reduced poverty for a generation with work requirements for TANF.
AP Photo/ J Scott Applewhite
However, since then welfare rolls have only multiplied dependents, who increasingly elude, or in some or other way fail, to work; as progressives have expanded social programs and—though progressives like to react that we already mandate work for welfare, presumably making more reform redundant—states for decades have exploited federal loopholes to skirt enforcing work requirements, granting unjustified exemptions, waving eligibility standards for programs, and hiding welfare caseloads. In their Wall Street Journal editorial, “The Real Stakes of the Debt Ceiling Fight” Phil Gramm and Mike Salon give us an overview,
Since 1967, average inflation-adjusted transfer payments to low-income households—the bottom 20%—have grown from $9,677 to $45,389. During that same period, the percentage of prime working-age adults in the bottom 20% of income earners who actually worked collapsed from 68% to 36%.
While the 1996 welfare-reform law was a resounding success, generating a surge in employment and a decline in welfare rolls, much of its effectiveness was offset by work-requirement waivers granted during the Obama administration and the pandemic. The effect of welfare reform was further limited by the explosion of other welfare benefits—such as food stamps and refundable tax credits. The work requirement applied only to the Temporary Assistance for Needy Families program.”
Objections
Some of those who object to increasing work requirements now cite states’ dodging enforcement as a reason for why work requirements will not work. Like Joshua Mccabe of the Niskanen Center who writes in Time Magazine, “Why the Republican Job Requirement Push Won’t Actually Get People to Work,”
“Work activities sound fine on paper. Still, case workers and beneficiaries alike often complain that they end up spending more time tracking countable hours to complywith these requirements – filling out paperwork and checking boxes – than engaging in the sort of integrated caseworkfocused on ensuring access to family services, intensive job-search assistance, and job training reflecting local employer demands that has proved to be more helpful in getting families back on their feet. It is unclear whether chasing countable hours leads to permanent employment that allows families to leave welfare for good.”
Mccabe thinks that because states lack funding to support enforcing work requirements, it will only make them more creative in finding ways to hide their bloated welfare caseloads.
But the GOP has been creative, too, in anticipating that, as the Wall Street Journal editorial board wrote just last night, “The GOP’s Progress on Work and Welfare,”
“States can exempt 12% of their rolls from the requirement, which the House bill reduces to 8%. The bill also cracks down on stockpiling these exemptions year to year. Yet another way states water down the requirements: States can apply to suspend the rules in areas where jobs are hard to find, and they have gerrymandered regions to goose unemployment data.
“Arizona has a statewide waiver even as the state has about 1.5 open jobs for every person looking. Minnesota relied on data as old as September 2020 to justify its request, according to the Foundation for Government Accountability. The House bill forces the Agriculture Department to publish state waiver requests and data, and the hope is that such scrutiny can shame states into better behavior.”
Other objections particularly from the left are that work requirements needlessly move citizens who are actually eligible for welfare off whatever program they’re on, whereupon they are beset with bureaucracy often at risk to their health and wellbeing, as Catherine Rampbell, (perhaps my favorite left-leaning editorialist), reacts to the GOP’s proposal for work requirements for Medicaid, (which notably Republicans have backed down on in the latest deal) writing in the Washington Post— “How the GOP’s Medicaid Work Requirements Will Backfire”
“By the time a federal judge paused Arkansas’ experiment less than a year after it launched, 18,000 lower-income people had already been purged from the state Medicaid rolls — and not necessarily because they were failing to work 80 hours a month, as the state required (and as the new House GOP bill would mandate, too). Many were working but found it challenging to prove to the state that they met the “community engagement” requirements or allowable exemptions. That’s because the reporting process was confusing and onerous.
“In fact, at least one person I interviewed at the time had been working, but was forced out of his work as a result of the reporting requirements.
“Adrian McGonigal, a full-time employee at a poultry plant, had difficulty accessing the state website required to log his hours. He was abruptly disenrolled from Medicaid and was unable to afford the medications he needed to manage his severe COPD, a chronic lung disease that makes it difficult to breathe. McGonigal landed in the emergency room multiple times, missed too much work and ultimately lost his job.
“In other words, for people such as McGonigal, access to health insurance and care should be seen as a work support, rather than a work disincentive.”
Mccabe in his Time article makes a similar point. But while these objections are obviously important, it doesn’t detract from the argument for new work-for-welfare policies, because these are critiques of administrative problems. Although I’m more right wing than she, I don’t like it any more than Catherine Rampbell that states may throw perfectly eligible people off social programs just to encumber them with bureaucracy to reassess their welfare qualifications. Frankly it horrified me when I first read that column of hers. And, as Mccabe regrets the lack of funding federal funding to states’ administration, I agree with him that states need more federal resources, especially in light of the migrant influx recently. Additionally, if more funding is necessary to make work requirements stick and administration more efficient, then by all means states should be supplied the extra funds. I would also support efforts to make the SNAP program healthier, even if that would cost money. (Sidenote both the American Enterprise and the Cato Institute discuss how the food dependents eat adds to their physical and mental illnesses putting them out of work—I’ve seen this for myself working in a corporate grocery store, where the majority of SNAP people I ring up are in a lot of cases dreadfully obese, and eating horrible processed and frozen food—according to CATO this makes it more expensive to provide for them, and AEI says healthy foods actually cost less than healthy food, so making dependents eat healthy is a win-win, and there’s no reason why we can’t restrict them to eating healthy food the same way SNAP can’t buy you alcohol) In a Niskanen Center interview, “How Administrative Burdens Undermine Public Programs,” Pamela Herd who studies this says,
“Broadly speaking, we think about this burden as having or entailing three different kinds of costs. So these include learning costs, which are sort of figuring out which benefits or services that you’re eligible for and need, compliance costs, which are that sort of time, paperwork, interviews, those sorts of administrative ordeals. And then the third category are psychological costs. These psychological costs can entail everything from just sort of stress and frustration. It can entail stigma. But broadly speaking, they’re the sort of psychological costs that might be a consequence of these encounters.
“We think these burdens are important for a few different reasons. One reason they’re really important is because they actually impede access to needed benefits and services. So we know for example that one in five people eligible for food stamps don’t receive them in large part because of these burdens. Similar for Medicaid or public health insurance for low income individuals and families. And then other programs are much worse. So for example, the Supplemental Security Income program, which is a really kind of poverty based program for older adults and people with disabilities has take up rates about 60%. So 4 and 10 of people, really poor people eligible for these programs aren’t getting those benefits.”
This is obviously horrible. If extra funding would streamline administration for public programs, then by all means, we should support that. But notwithstanding the problem of administrative burdens—and my neoliberalism deplores bureaucracy—is not an argument itself against stronger work requirements for able-bodied adults without dependents on SNAP and TANF. Although it’s worth mentioning work requirements for Medicaid despite the few who ended up like the guy in the Catherine Rampbell article, were on the whole a huge success in Arizona at least.
Nick Stehle writes in the Wall Street Journal “Work Requirements for Welfare Aren’t Wacko” (Biden had called the Republican measure “wacko” originally)—
“In 2018 Arkansas became the first state in America to implement a broad work requirement for Medicaid. It did so under a federal waiver, requiring that able-bodied, childless adults work at least part-time to keep receiving Medicaid benefits—very close to what’s contained in the bill passed by House Republicans.
“The need for work requirements was obvious to anyone paying attention. In 2013, under Democratic Gov. Mike Beebe, Arkansas became the first Southern state to expand Medicaid. The number of new enrollees was 50% higher than predicted, costing taxpayers at least $1 billion more than expected, and by 2015 40% of state residents were on the program. The majority of new enrollees were able-bodied, childless adults, and half of them reported being out of the workforce entirely.
“Without reform, Arkansas was on track to have more people dependent on the government, more spending and ultimately tax hikes, and a less dynamic economy for future generations. In short, it would have started a vicious circle of European-style failure.
“But the work requirement, which phased in starting in June 2018, turned things around. Medicaid rolls immediately began shrinking. Tens of thousands went back to work, and more than 14,000 boosted their incomes enough to leave Medicaid entirely. Moving people from dependence to independence as soon as possible should be the goal of safety-net programs.”
The GOP’s work requirements in the deal with Joe Biden now only apply to presumably healthy people without families which is around a million people on SNAP and TANF—whom taxpayers are currently paying $100 billion a year to support, who weren’t required to work at all during the pandemic “emergency,”which we might justifiably now condemn as a smokescreen for the Democratic Party’s profligate Green New Deal Industrial/welfare policies, raising the deficit by the mushrooming trillions over the last few years, that any reasonable person, whatever their party affiliation, must admit, needs urgently to stop. Thankfully capping spending will constrain the financial bloat, but adding work requirements has the potential to nudge the unemployed able-bodied back into the work force, adding to the tax base, and also certainly helping to reduce the persistent wage and price inflation owing to tight labor market conditions, and as Gramm and Salon pointed out in the WSJ article I cited earlier, in particular helping the Fed to reduce inflation without triggering a recession—
“The explosion of spending during the pandemic sent the inflation rate to a 40-year high and slashed the real wages of American workers. Now, Congress’s failure to rein in post-pandemic spending is denying the Fed a legislative partner in restraining inflation and forcing the central bank to tighten credit, choke off private-sector spending and heighten the risk of a recession. Is America really better off having the Fed stymie private spending instead of Congress clawing back unspent pandemic balances and constraining the magnitude of the post-pandemic spending surge?”
And to those objecting to work requirements because the work participation of a million people won’t have a sizable enough impact on the deficit, I would rejoin that it’s not just about those 1 million or so, but to tighten work requirements will help to add future generations to the workforce too, down the line, making up some of the 7 million or so able-bodied over the decades we have lost.
The Big-Picture Argument for Work Requirements
According to Nicolas Eberstadt, a demographer, the national economy since the 1970s has suffered from 7 million able-bodied, “prime age,” men disappearing from the workforce. These are men whose status is neither employed nor unemployed. He says that for every unemployed man looking for work, 3 or 4 are neither employed nor looking. For those downplaying or trivializing the GOP’s work requirements it would be salutary for them to recollect Eberstadt’s what should be paradigm-shifting research. There is not a one-size-fits-all policy solution to the problem, but stricter work requirements would be a start and if we do it right, may go a long way helping to replace the generations of millions of workers lost, which is especially important now when you consider declining fertility rates and babyboomers retiring. You could also make the case that these men, who Eberstadt notes tend to be the beneficiaries of disability compensation, were central to Trump’s success in 2016 and therefore constitute a major portion of the populist revolt.
Helping to employ these angry men with work requirements, or also cutting their government subsidies (like the earned income tax credit), or reapportioning entitlements, rather than needlessly idiotically rebuilding the industrial base, the low wage jobs of which made them accident prone and needy and entitled to begin with, could help to remedy our populist fever.
Some Closing Remarks
I hope here I made a good case for welfare reform, with strengthened work requirements. It would be still better if we used federal funding to streamline administration in the states too. We should also look to reform SNAP with nutritional restrictions. And I would add the GOP’s work requirements don’t nearly go far enough to reduce dependency and help people get out of poverty. These requirements only apply to able-bodied adults without dependents, however we should implement them among families with dependents too, helping parents raise their incomes and getting more young women into the workforce. We could attach them to Medicaid. We could even add work requirements to veterans’ benefits that Eberstadt says plays a role the men-without-work crisis.
For me as a neoliberal we won’t have a good namely lean welfare state until all able-bodied men and women are working and no longer need welfare. As I remember Hayek argued in The Constitution of Liberty it defeats the purpose of a social safety net, unless the net only supports those who fall and physically can’t work. In a properly liberal society it is in the interests of no one merely to subsidize dependency. AOC, on the other hand, a “democratic socialist” (a contradiction in terms) has advocated for redistributing the wealth and giving cash transfers even to people who are “unwilling” to work. That’s a transparently illiberal, not to mention absurd, idea all of us who claim to value liberal democracy should reject. There is nothing democratic about socialism moreover. There can’t be because for socialism to work to enable the collective, the individual has to be coerced to progressively to give up her liberty in proportion to the collective’s state-arbitrated needs. I would prefer it if, for accuracy’s sake, people like Bernie or AOC, instead of democratic socialists, called themselves socialist socialists.
— Jay