Faculty Journal Posted on Thursday, December 20, 2018

Trump’s Work Requirements Replicate Past Failures: The Courts Might Stop This Ill-Conceived Policy

Sanford F. Schram Professor of Political Science, Hunter College and Professor of Sociology, CUNY Graduate Center

My prior research with Joe Soss and Richard Fording has shown that work requirements for welfare programs have not led to reductions in poverty and improved economic well-being among recipients. Yet this has not deterred the current President. Instead, Donald Trump has issued an ill-conceived plan to require work of adults who benefit from social welfare programs, including not just food stamps but also medical assistance to the poor. Litigation has commenced over granting states like Arkansas, Kentucky and New Hampshire waivers to impose work requirements on Medicaid recipients. Federal District Court Judge James E. Boasberg has issued a ruling blocking the Kentucky waiver. The judge found that the U.S. Secretary of Health and Human Services, Alex M. Azar II, had not adequately considered whether Kentucky’s work requirement would cause some Medicaid beneficiaries to lose coverage and whether it would promote the central goal of Medicaid, to “furnish medical assistance to citizens.” Now he is expected to rule on Arkansas’s waiver after rejecting a request by the Trump Administration to assign the case to another judge. Either way, the issue is likely to end up on the doorstep of the Supreme Court, either on matters of diversity jurisdiction or constitutionality of the requirement.

The Court will likely have to rule first if it chooses to let the lower court decision to stand or to take the case. While the courts emphasize questions of law and do not give priority to research for deciding legal questions, the research on work requirements could well figure in the decision given the lower court ruling that there has been a failure to consider whether work requirements will promote access to health insurance. Supporters are arguing that work requirements will lead to Medicaid recipients eventually getting jobs that will offer them health insurance. Advocates for the work requirements claim that work requirements have a proven track record by pointing to Clinton’s 1996 welfare reforms that gave us the Temporary Assistance for Needy Families (TANF) program replacing the previous Aid to Families with Dependent Families (AFDC). They claim the evidence clearly supports extending work requirements from TANF to other programs.

The problem with this argument is that it is just not true – or more precisely, it distorts the available evidence. My prior research on the welfare work requirements joins with other research to suggest that this is not likely. Our research actually shows welfare reform’s work requirements proved to be more harmful than helpful fighting poverty. Additional research indicates that work requirements increase poverty as much as they do anything to decrease it. Instead, it is the Earned Income Tax Credit (EITC), not work requirements, that has the proven record for producing long-term positive effects in decreasing poverty among the poor by specifically increasing participation in the labor force. That’s the program that should be expanded, not work requirements. Yet, given Donald Trump’s antipathy to aiding the poor, it is unlikely that effective anti-poverty policy is likely to be enacted during the Trump administration.

Conservatives are attracted to work requirements because they are projected to lead to major savings in reduced social welfare spending by removing from the rolls recipients who do not work while receiving benefits. For instance, it is projected that 1.2 million recipients will be cut from the food stamp rolls due to work requirements. That would lower spending on food stamps by about $9.2 billion over the next 10 years.

The advocates for work requirements claim that work requirements would not only save money, they will reduce welfare dependence, increase earnings from employment and reduce poverty. This is probably overly optimistic at a minimum. While the number of recipients relying on welfare programs will surely decrease, employment earnings are likely to only marginally go up for some and down significantly for others. In fact, close study of work requirements under welfare reform has shown that imposing work requirements decreases earnings for those who have to struggle with the effects of being pushed off the welfare rolls before they are prepared to rely strictly on earnings from employment.

Worse, there is research indicating that work requirements will probably increase poverty among those people who depended on assistance. The declines in poverty we have seen over the last few decades have largely come from people being able to rely on social assistance programs that provided need food assistance, health care and other benefits. Research indicates that poverty rates in recent years actually would have been worse were it not for access to government transfer payments that work requirements would now further restrict. In other words, any predictions about the effects of work requirements need to account for the fact that regardless of the other effects, they will increase poverty rates by denying poor people needed assistance. Since the advent of welfare’s work requirements, we find that around 20-25 percent of low-income single mothers are “disconnected” from both work and welfare, with over 80 percent living in poverty. They are but part of a larger trend since welfare reform was enacted in 1996. According to Child Trends, 62 percent of poor children received cash aid in 1995; by 2015, this number had fallen to just 18 percent. Many families in need of assistance are being denied that aid even though the head of the family, most often a single mother, is not able to support the family with earnings from paid employment.

Given these negative findings about the failures of welfare reform, it is more than disappointing that work requirements rather than the EITC are being emphasized. In the 1990s, federal officials revised the program, which subsidizes low-income workers, especially those with children, to offer more incentives for people to take low-paying jobs. Larger tax credits for low-income workers meant that even minimum wage jobs would effectively pay more. The largest EITC increase passed in 1993 and it especially boosted the incomes for families with children, including single mothers. The best available research suggests that EITC incentives – carrots, rather than sticks – were a significant factor in both reducing welfare caseloads and increasing the rate of single mothers taking jobs.

This incentivizing approach encourages welfare recipients to take low-wage jobs that might not pay sufficient wages to support their families. The program also allows families to continue to receive needed food assistance and health care from the government. Yet research indicates that the EITC both reduces poverty and reliance on welfare programs. The research indicates the EITC has proven effective in reducing poverty while over time also reducing reliance on government aid.

In fact, the gains in labor force participation by single mothers that are often attributed to welfare reform’s work requirements began before they went into effect and began to spike when the EITC was significantly expanded in 1993 (see the figure below).

The bottom line is that work requirements in the past have helped lower welfare caseloads but often by denying aid to those who need it, while the EITC has, more often than not, boosted incomes above the poverty line for those who are able to work. EITC incentives, rather than punitive measures, are in the best interest of the government in order to improve Americans’ quality of life. However, given the current political dysfunction in the Executive and Legislative branches, it may require the Judiciary to step in – as Judge Boasberg did – to advance this end.

Sanford Schram is Professor of Political Science Department at Hunter College, CUNY and a faculty member of the Sociology Department at the CUNY Graduate Center where he teaches in the doctoral program in Political Science.