Welfare Reform Needs Full Employment

Moneybox
A blog about business and economics.
Aug. 7 2012 2:46 PM

It's Hard To Require Work Without Full Employment

A political controversy has been raging over the past couple of weeks over the idea that the Obama administration is massively undermining a key provision of the 1996 welfare reform by letting states wriggle out of requirements that Temporary Assistance for Needy Families beneficiaries be moving into the workforce. Read Mickey Kaus for a good, clear, detailed discussion of what a person obsessed with welfare reform is afraid of here.

But also read the part where Kaus puzzled over why the Obama administration would want to do what Kaus fears they want to do. As he says, it's not like there's some huge political winner here. The fact that the administration denies that this is even what they're doing is also relevant. Dylan Matthews spoke to Ron Haskins, one of the main authors of the '96 reform, and he's not worried. Indeed, Haskins thinks they could be used to promote speedier and more effective transition to work since waivers "might offer a way around limitations that prevent welfare checks from going to employers to subsidize the hiring of welfare recipients, rather than to the recipients directly." Kaus' countertheory is that this is part of a long-term plot by Department of Health and Human Services officials who've simply never approved of the work requirements.

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This is, I think, a good time to recall that the Obama administration is not a unitary entity that makes up its mind about things in an unequivocal way. The administration, reflecting the Democratic Party as a whole, contains people with different views of the 1996 law. So what argument might anti-reformers make that would persuade pro-reform people to let them have their way on the waivers? Well, what about the giant recession and years-long spell of mass unemployment? Here's what Kaus has to say about that:

Even if there is a job shortage, the answer isn't to get rid of the work requirements but to provide useful, public jobs (that recipients would then be required to perform, on pain of losing their checks, just like regular workers). You could call such jobs "workface," but in effect they would be something like a backdoor WPA.

OK. But just try proposing that at an interagency meeting somewhere. You'll be laughed out the door. To a lot of us who broadly agree with Kaus about the issue here but don't have his monomania about the idea of low-income single moms getting an easy ride in America, the concern that some states might use the waiver process to weaken work requirements seems a bit ill-timed. Dreaming up a fantasy WPA program as an alternative isn't a real answer.

Which brings me back to my obsession: monetary policy.

The great thing about the late-1990s was that we had a monetary framework committed to full employment and upward wage pressure. That created a dynamic in which nudging new people into the workforce really worked. With proven workers able to command raises, there was a market out there for marginal labor-market entrants. Consequently, not only was unemployment low and wages rising, but labor force participation was also rising. It was a really solid, virtuous dynamic. Hardly a full-blown utopia, but certainly an example of things moving in the right direction. Today that bargain's totally broken down, and the HHS TANF waiver process is not the place where the breakdown occurred.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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