Politics: The Welfare Fraud 

Whenever the subject of welfare arises, an eerie forgetfulness takes hold of politicians. Why doesn't anyone ever call them on it?

In 1969 the National Governors' Conference voted 48 to 1 to turn welfare over to the federal government. Now the governors overwhelmingly favor a plan to take it back. (Bills doing just that have passed both houses of Congress.) Did the governors know what they were doing back then? Do they know what they're doing now? Does a pendulum know which way it will swing next?

When the members of the Newt generation of Republicans chisel away at environmental protection they love to insist that what's left be based on "sound science." Environmental laws and regulations, they say, should be based on research published by reputable scientists in peer-reviewed scholarly journals and not on press releases from advocacy groups that raise money by predicting catastrophes.

Fair enough. But now--with new studies out from the University of Chicago, the University of Michigan, and Northwestern University--is a good time to apply that same high standard to the scary story conservative welfare reformers tell. ("Welfare" can mean almost any government payment to anyone, but it's generally defined as a means-tested government payment, made only to people who can show that they're poor. Usually when people complain about welfare or do research on it, they mean a particular means-tested program, Aid to Families with Dependent Children.)

Today's conservative reformers say that

welfare is very expensive,

it's so generous that it greatly discourages people from working, and

it greatly encourages them to have kids without getting married.

They also say that

there are plenty of jobs out there for those interested in working;

if potential welfare recipients would only act responsibly--graduate from high school, get married, and then have children--they would have less trouble landing those jobs; and

state welfare agencies will do a better of job of helping them do all these things if the federal government gives the states more freedom and no more money.

This story line is easy to follow, and it has a happy ending. But every point of it is either unproven or false.

Before we get into that though, let's give the conservatives credit for shaking up the dialogue. Over more than a decade their attack on welfare has weakened a few liberal taboos. One can now acknowledge in public that some people are poor because they do dumb things. And most liberals have a more modest faith in the government's ability to eradicate poverty than they had 30 years ago.

But conservatives have their own taboos (no questions allowed about the availability of jobs or the adequacy of wages) and their own blue-sky optimism (state incentives will end poverty where federal money failed). And they like their story line so well that they will hear nothing against it.

This became obvious last spring when Illinois Republicans rushed "fast-track" welfare reforms through Springfield, giving 15 minutes' notice of the one official committee hearing. As a result many of the key conservative proposals are already law in Illinois, including "two years and out" (a two-year cumulative maximum time on AFDC for those with kids over 12), and a "family cap" (no additional payments for children born to AFDC families after October 31, 1996).

Even in the more genteel realm of policy analysis, inconvenient facts can cause conservatives' attention to wander. Consider, for instance, the March 1992 issue of the Journal of Economic Literature, in which Brown University economist Robert Moffitt spent 60 pages going through his colleagues' findings on the "incentive effects" of the U.S. welfare system, trying to decide whether the evidence shows that "the welfare system seriously reduces labor supply, encourages long-term dependency, increases marital breakup and illegitimacy, induces migration from low-benefit to high-benefit states, and produces succeeding generations of welfare recipients."

This is the conservatives' story line. Liberals like to ask "What would a compassionate welfare system do?" Conservatives, and Moffitt, like to ask, "What are the actual effects of what we're doing?" And with a few honorable exceptions they, like Moffitt, prefer not to ask how government might cause dependency among people who wear suits to work.

But conservatives haven't listened to the answers Moffitt came up with. In preparation for this article I read several recent reports on welfare reform from the Cato Institute, the Heritage Foundation, the Heartland Institute, and other conservative and libertarian think tanks. All viewed welfare's "incentive effects" with alarm; many were heavily footnoted. Yet not one mentioned Moffitt's research review--which concluded that these effects aren't much of a problem.

There's something genuinely strange about the welfare "debate" in this country. Whenever the subject arises, an eerie, robotic forgetfulness takes hold of politicians. The same words come out of their mouths whether the economy is up or down, whether the welfare rolls are growing or shrinking, whether the programs they're discussing are old or new. Few seem to recall, for instance, that Congress passed a major welfare-reform bill in 1988 (the Family Support Act). Before its effects could be known Bill Clinton was running for president on a promise to "end welfare as we know it." And few seem to recall that almost every welfare measure in American history has sought to encourage recipients to work in some way. Employment programs for AFDC recipients in Illinois date back to 1963. And yet every time politicians get the urge to reform they start from the premise--as if for the first time--that welfare recipients are getting something for nothing and must be made to work.

Why don't the pundits ever call them on it? Why does this ritual make (almost) everyone feel so good? What's really going on here?

Myth number one: Welfare is way expensive.

Forty percent of Americans imagine that welfare costs more than national defense or social security. Yet the 1995 Statistical Abstract of the United States shows that the federal government spent $13.6 billion on AFDC in 1992--less than 5 percent of what it spent for the military ($282 billion) or social security ($296 billion).

In Illinois total state spending on AFDC did triple between the mid-1960s and mid-1970s, even after correcting for inflation. But since then it has fallen back to less than half the peak level. In 1965 AFDC made up 7 percent of the state budget; today it's less than 4 percent. (What's eating state budgets alive is medicaid, which has a whole different set of problems.)

For recipients, the alleged welfare bonanza has proved equally elusive. In constant dollars the average AFDC grant in Illinois rose modestly until the middle 1970s--but has been dropping ever since. In constant 1965 dollars it went from $41 a month per recipient in 1966 to $25 in 1992. Food stamps made up for some of that loss, but even so, the purchasing power of the welfare package (food stamps plus AFDC) has fallen by about a quarter since the mid-1970s.

No wonder few economists believe that welfare incites many people to loaf, or make babies, or anything else. Maybe it would if it were more generous, but the maximum package is $690 a month (calculated by the Public Welfare Coalition).

Myth number two: Welfare has created a dependency epidemic.

In theory, small and shrinking benefits seem unlikely to make big changes in behavior. And in fact they don't. Every June the Illinois Department of Public Aid takes a snapshot of its AFDC cases. In 1988 13 percent (29,000 families) had been on the dole for more than ten years. In 1995 that group had shrunk to 11.5 percent (27,700 families). That many is still a problem--but it's hardly a crisis if their numbers are shrinking.

Nor is there a crisis on the national scene. In the May 1994 American Economic Review Moffitt and a colleague translated the slippery term "welfare dependent" into checkable numbers. A family is more dependent, they reasoned, the greater the share of its income that comes from welfare or the longer the time it spends on welfare. They checked the numbers on a representative sample of U.S. women aged 15 to 44 between 1974 and 1987, and found that the proportion of income from welfare went down very slightly and the time on welfare went up slightly. "There was effectively no change in welfare dependence over the period for the population as a whole." The authors did find "substantial" increases in both figures for women aged 15 to 24, because they were getting on welfare earlier. That too may signal a problem, but it's hardly a crisis.

Conservatives believe that welfare encourages significant numbers of women to work less so that they can get on AFDC. But researchers have tested that faith too and found it wanting. The studies Moffitt reviewed in 1992 show that AFDC does indeed encourage its recipients to work less (dropping from roughly 14 hours a week to 9), but not enough less to matter--because they would qualify for benefits either way. "The evidence indicates that [such] disincentives [to work] increase the caseload by 5 percent at most," wrote Moffitt. "Thus the problem of welfare 'dependency' (i.e., participation in AFDC) cannot be ascribed to the work disincentives of the program."

Of course conservatives might reasonably ask whether one generation tells the whole story. Even if the parents don't get hooked on welfare, their kids might. After all, isn't it true that the children of welfare recipients are more likely than the general population to be on the rolls? The answer is yes (it's clearer for daughters than for sons)--but so what? As Moffitt wrote in 1992, this finding is "essentially noninformative." It doesn't even come close to proving, as conservatives believe, that being on welfare--as opposed to being poor, or not having many skills, or living in a bad neighborhood, or lacking self-confidence--led to the current plight of the younger generation. Correlation does not equal causation.

"Intergenerational transmission" could be real--it's just difficult to find enough poor, unskilled people with no experience of welfare to serve as a control group. Late last year, in a background paper written for the Chicago Assembly on welfare reform, Northwestern University economist Greg Duncan reviewed several more recent studies. He wasn't satisfied with the controls the researchers had used, but the studies all show that there is some effect. Duncan concluded that, other things being equal, children would be better off if their parents weren't receiving welfare. (Though he's quick to add that the evidence is much stronger that poverty hurts children's cognitive and behavioral development. And "deep poverty"--the kind that could well follow "two years and out" in a slack economy--will damage children more than having their parents on the dole.)

If you're keeping score, Duncan's conclusion is a point for conservatives. But it's a point they seem driven to exaggerate. Back in 1988 Duncan (then at the University of Michigan) coauthored a report called "Welfare Dependence Within and Across Generations" that was published in Science magazine. The data weren't perfect--Duncan and his colleagues used two windows of time, first tracking families when their daughters were 13 to 15, and then tracking the daughters eight years later, when they were 21 to 23. You could miss a lot this way, but the results proved interesting nevertheless. When parents had been "highly dependent" on AFDC in the first window of time, their daughters had a 20 percent chance of also becoming highly dependent once they were on their own. By contrast, daughters of parents who hadn't been on welfare in the first window had only a 3 percent chance of being heavily dependent on it in the second.

These findings were put to dubious use in a 1994 "policy analysis" published by the libertarian Cato Institute. Michael Tanner, who directs health and welfare studies for the institute, used them to argue that "welfare dependence is increasingly multigenerational." Of course they show exactly the opposite. Out of every five daughters who grew up in highly dependent homes, four did not share their parents' fate. In fact, Duncan and colleagues add, "More than three out of five (64 percent) of the daughters with dependent backgrounds received no AFDC during the 3-year period. The stereotype of heavy welfare dependence being routinely passed from mother to child is thus contradicted by these data."

Ironically, Tanner could have drawn true-blue conservative conclusions from this research without doing violence to its findings. He might have argued that one in five is still too many. Even better, he might have used the occasion to praise American free enterprise, under which a landslide majority of daughters raised in welfare families proved able and willing to avoid dependency. But evidently he was pushing another agenda that day.

Myth number three: Welfare encourages single women to have babies.

At this point conservatives might admit that dependence isn't a crisis, then ask, but doesn't welfare tend to encourage single women to become parents? And since children in single-parent households have a harder life on average than those from two-parent homes, isn't that reason enough for drastic welfare reform? The concern seems reasonable, but the argument dissolves if exposed to the numbers.

Most women aren't on welfare. Never were. Never will be. But in the last 35 years births to unmarried women have shot up in every class, every race, every age group. If welfare benefits caused this trend, then poor single women--trying to scrabble together a living in tough neighborhoods through occasional jobs, welfare, friends, and family support--must be the role models, the lifestyle leaders of American society. So they're the ones enticing Murphy Brown and her yuppie friends down the garden path!

Economists frown upon mirth in professional journals. So Moffitt just deadpanned that "the welfare system does not appear to be capable of explaining most of the long-term trend or any of the recent trend of increasing numbers of female-headed families in the United States."

Myth number four: There are enough jobs out there.

The best numbers available for Illinois don't support this conservative article of faith either. In a report published last December Virginia Carlson of the University of Wisconsin-Milwaukee and Nikolas Theodore of the Chicago Urban League did something so simple it's surprising no one had done it before. They compared the number of entry-level jobs (based on state Department of Employment Security projections) with the number of welfare recipients likely to be required to work under current federal proposals as well as other people who were unemployed and had few skills. Statewide that came to 69,000 entry-level job openings--beckoning to 119,000 job-seeking AFDC recipients and another 165,000 unemployed job seekers. The number of jobs relative to the number of seekers in Chicago was even more lopsided. In Illinois only Du Page County had more jobs than likely applicants.

Making accurate employment projections is tricky, but Carlson and Theodore would still have a point even if their available-jobs figures were off by 100 percent. With admirable restraint, they conclude, "The figures presented in this report stand in stark contrast to assertions that large numbers of jobs go unfilled in Illinois and that welfare recipients could secure jobs if only they tried....Clearly, the Illinois economy meets neither condition."

Myth number five: If you just stay in school and get married before having kids you can make it.

"We badly want to live in a society where all people can 'stand on their own two feet,'" write Northwestern University sociologists Christopher Jencks and Kathryn Edin in the winter 1995 American Prospect, summarizing their own and others' work in language so clear that their credentials as sociologists may be in danger. "We are particularly keen on three forms of responsible behavior: delaying parenthood until you are in your 20s, getting married before you have children, and staying in school." They go on to explain that even if everyone did all three, some would still need welfare.

First of all, comparisons within families show that, by itself, waiting until you're 20 to have a baby doesn't help much: "Women who had had their first child while they were teenagers ended up only a little poorer than their sisters who had waited."

Nor will a trip to the altar cure all, for obvious reasons. "Marrying a man with an unstable work history or low wages is not a good formula for avoiding welfare." And then they demonstrate that there aren't enough of the other kind of guys. "In 1989, just before the recent recession, there were 22 million American women between the ages of 25 and 34. About 20 million of these women either had a child or wanted one. Fewer than 16 million men of the same age had annual incomes above $12,000. Some of these men were gay or reluctant to marry for other reasons. Others were philanderers, wife beaters, substance abusers, or child molesters. By traditional American standards the number of acceptable husbands was probably no more than two-thirds the number of women who wanted children."

So is finishing high school the key? Jencks and Edin write, "Women with low test scores who finish high school on schedule do earn $1 to $1.25 an hour more than those who drop out. But that does not mean today's dropouts would earn an extra $1.25 if they stayed in school. Much would depend on what they did with their time while they were in school."

Jencks and Edin conclude by looking beyond the statistics to the big picture. "For every schizophrenic who is completely out of touch with reality, there are half a dozen other adults who have trouble getting along with a boss or coworkers and therefore don't hold any job for a long period. Likewise, for every victim of Down's syndrome who cannot write her name, there are half a dozen others who can read and write but have trouble figuring out what their boss would want them to do in any unfamiliar situation. Such people cannot handle a job that entails much discretion or responsibility; they are employable, but they will be the last hired and the first fired. When the labor market is tight and no one better is available, someone will usually give them work. But in today's economy they are unlikely to find steady work that pays enough to support a family. When these people have children, they constitute the 'hard core' of the welfare population. Many get off welfare, but they mostly return again. This is the group that will be hit hardest by a two-year time limit.

"As long as America remains committed to competitive labor markets, open borders, and weak labor unions, most marginally employable adults will need some kind of public assistance if they have children." If there is a welfare crisis in 1996, it is that those who believe in competitive labor markets, open borders, and weak labor unions are trying to avoid the relatively small cost of public aid by denying this fact.

Myth number six: State welfare agencies will do better at encouraging self-sufficiency the more the feds leave them alone.

Everybody knows in a general way that policies immaculately conceived in the governor's mansion don't look the same by the time they're implemented at public aid offices on the south side. Now, thanks to political scientist Evelyn Brodkin, who teaches in the University of Chicago's School of Social Service Administration, we know this in great detail. From 1991 to 1993 Brodkin watched how the state ran Project Chance--the welfare-to-work program the state implemented under the 1988 federal welfare reform--at two inner-city Chicago welfare offices.

The picture she paints in an SSA working paper titled "The State Side of the 'Welfare Contract': Discretion and Accountability in Policy Delivery," issued last November, isn't pretty. It strikes at the heart of Governor Edgar's claim that the state can do things better by itself.

To begin with, writes Brodkin, caseworkers "were selected according to union rules that gave preference to applicants based on their length of tenure in the department....Neither post-secondary education nor any form of professional training or experience were required." In the right environment nonprofessionals might grow into the job--but not here. The workers were held accountable not for getting welfare recipients into the right spot but for meeting placement quotas. "Asked what was most important about his job, one caseworker readily replied: 'The count. It's a numbers game.'"

During recurring periods when there was extra pressure to meet the numbers, another caseworker told Brodkin, "You're going to have to put clients into components they don't belong in." Had she complained to her supervisor? "When we talk about quality, they tell us: 'You're crazy. We're talking about quantity.'"

On paper Project Chance participants weren't supposed to be sent out on an "independent job search" unless they had either a high school diploma, a GED, or a literacy test score above the ninth-grade level. But since "independent job search" was a quick, cheap way to meet the numbers, caseworkers often assigned recipients to that slot, regardless of the rules. One client's file, Brodkin notes, showed that she had a third-grade literacy level, had no GED, and couldn't even fill out the "client assessment" form without help. The caseworker nevertheless assigned her to job search, "listing nursing or a GED as the goals of her 'employment plan.'"

Brodkin also observed the following exchange:

"Caseworker: Are you an alcoholic?

"Client: Well, I drink a lot?

"Caseworker: Well, does it cause you to do things you wouldn't otherwise do?

"Client: (Mumbles)

"Caseworker: Do you want training?

"Client: It depends. What kind?

"Caseworker: It's up to you. What do you want?

"Client: Construction work.

"The caseworker then gave the client a 'resource sheet' and sent him off as 'job ready.' The client had no prior construction experience, and the city's construction industry was in the depths of recession. The caseworker made no further inquiry into the client's alcohol use."

Of course not every case is botched. "The point is not that the observations made in the course of this project represent what goes on in every program on every day," Brodkin cautions. "The point is that all sorts of things can go on in state agencies, and they do"--and they're not the consequence of federal interference. They happen because the state applies neither the money nor the management skills necessary to the job. "The attractive image of a 'helping' or 'service' bureaucracy supporting transitions to work simply does not square with the reality of worklife in state welfare agencies that are understaffed, underfunded, and underskilled." Nothing in the proposed federal reforms seems likely to improve this picture.

Current conservative welfare-reform proposals are a nonsolution to a noncrisis. Given Brodkin's research, they don't even look like a plausible solution to the welfare problems that do exist. Worst of all, we can't even say that they'd be harmless. The Illinois "two years and out" policy will likely put some families off AFDC for good early in 1998. Will they move to Iowa? Become destitute? Homeless? Contribute to a crime wave? Or be shocked into becoming disciplined workers and entrepreneurs?

We may never know for sure. When the state of Michigan abolished its general assistance program in 1991, researchers Sandra Danziger and Sherrie Kossoudji from the University of Michigan tracked a sample of former recipients for two years. Neither liberal predictions of disaster nor conservative predictions of utopia were borne out, but the liberals came closer. "Michigan's GA termination increased employment for only a small minority; it led to increased reliance on family and friends for housing and financial help for an even smaller minority; it increased the use of homeless shelters in at least one urban area, Detroit." Half of the former recipients were worse off than before the cutoff. Just one in eight even came close to fitting the conservative story line--people who hadn't worked before and who found employment after the cutoff.

We don't know even that much about the fate of people cut off general assistance in Illinois in 1992. "Rhetoric aside, Illinois has not been committed to understanding its own efforts in order to improve them," write Northwestern University researchers Dan Lewis, Christine George, and Deborah Puntenney in a recent paper prepared for the Chicago Assembly that describes the last ten years of welfare reforms in the state. "Perhaps the most disturbing legacy of this decade of effort is how little we know about its successes and failures....Research and analysis are done piecemeal, and the result is fragmentary knowledge that rarely informs state action." Most of even that research is now done only because the federal government requires it--a requirement that's likely to disappear if federal reform is enacted.

So why has an endless stream of politicians been elected touting "reforms" that have little basis in fact and that have rarely been properly evaluated? To begin with, most people don't know the facts. University of Illinois political scientists Paul Quirk, James Kuklinski, and Robert Rich surveyed a sample of more than 1,100 Illinoisans earlier this year. Sixty-three percent of those polled overestimated the proportion of people on welfare (the actual figure is 7 percent). Fifty-eight percent overestimated the average annual welfare payment (actually $6,000 for a mother and two children). Eighty-five percent overestimated welfare's share of the federal budget (actually 1 percent). More than half overestimated the educational level of women on welfare (actually 65 percent did not finish high school). And most of those who were mistaken expressed confidence that their answers were right.

People have mistaken ideas about public issues all the time, and the condition is rarely fatal. But in this case the ignorance creates a poisonous climate of opinion in which even well-meaning reformers would have trouble crafting a middle-of-the-road system that would encourage responsible behavior without denying help. Small personalized programs that try to do both of these things, such as Project Match and STRIVE, remain small while one "reform" after another makes punitive and ineffective changes.

How come? Racism is an obvious factor, since popular mythology also holds that a majority of the people on welfare are black (actually only 37 percent are). But there's probably more to it than that. Do we nonpoor folks just need someone to kick around? That's the case Joel Handler and Yeheskel Hasenfeld make in their 1991 book The Moral Construction of Poverty: Welfare Reform in America. Welfare policy, they write, is "fundamentally a set of symbols that try to differentiate between the deserving and undeserving poor in order to uphold such dominant values as the work ethic and family, gender, race, and ethnic relations. In this sense welfare policy is targeted not only at the poor, but equally at the nonpoor (emphasis added).

That would explain why the proclamation of policy is often more important than its implementation, and far more important than finding out whether it accomplished its goals. As Northwestern University's Dan Lewis and his colleagues write, "Claims of dependency and fraud create a moral indignation that symbolizes middle America's goodness. The claims are more important politically than the programs that follow."

That would also explain why work requirements are touted as new ideas. If such an announcement were directed to people on welfare it would be superfluous, because they know such requirements already exist. But if it were directed to those not on welfare--as a reminder of how good they are for working without being prodded to, or as a reminder of what awaits them if they go on strike or post one more Dilbert cartoon at the coffee machine--then it would make sense.

And that would explain why each new policy gets its own Pollyannaish name, like WIN, Project Chance, or GAIN. It's all part of what Handler and Hasenfeld call the "myth and ceremony" of welfare, "designed to affirm the modern, contemporary, middle-class employed mother by ensuring the failure and moral condemnation of the welfare mother."

Current welfare reform has already succeeded as myth and ceremony. And it will no doubt spur a few welfare recipients to work more and lift themselves out of poverty. But on the evidence, most poor people seem likely to end up worse off than before, with fewer prospects.

This is not what Jim Edgar, Newt Gingrich, or Bill Clinton say they want to do. But what else can they expect? When you ignore sound science you get bad policy. In effect, they found a few leaky faucets, declared a plumbing crisis, and sent a crew of arsonists into the basement. If they're lucky, Edgar and company won't have to live with the results. The real victims are the poor families who have been demonized so that the rest of us can feel good about ourselves.

Art accompanying story in printed newspaper (not available in this archive): illustration/John Zielinski.

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