Work first, train later
Poverty | Successfully moving people out of government dependency and into self-sufficiency
by Peter Cove
Posted 2/24/18, 10:25 am
I’ve written books on poverty-fighting history based on library research, but Peter Cove has lived that history: His introduction to Poor No More: Rethinking Dependency and the War on Poverty—WORLD’s 2017 Book of the Year in the Understanding America category—begins, “Nearly half a century ago, I dropped out of graduate school and enlisted as a foot soldier in America’s War on Poverty.” Cove once embraced conventional government-centric solutions, but he realized their inadequacy and founded America Works, the first for-profit, welfare-to-work company, which makes money not by sticking poor people into jobs but helping them stick with those jobs. In the following excerpt, courtesy of Routledge, Cove notes that work works and substitutes, such as training programs, rarely work as well. —Marvin Olasky
Perhaps the best indicator of the importance of work can be found in the dire consequences for people who have none. According to the Los Angeles Times, “Nearly 12% of Americans between ages 18 and 25 were deemed to be depressed based on their answers to eight questions that were part of a survey conducted by the Centers for Disease Control and Prevention and state health departments. But within this age group, those who were unemployed were 3.17 times more likely to be depressed than their counterparts with jobs. … Depression during these formative years can have ‘long-term consequences,’ they wrote, including setting people up for a lifetime of lower earnings.”
To a degree, the government pitches in to support people with low-paying jobs, making sure that they’re able to access the positive effects of work, even if their wages are not high enough to lift them out of poverty. Working at low or modest wages makes you eligible for generous wage supplements through the tax system such as the earned income tax credit (EITC) and the child tax credit that add substantial dollars to your actual earnings. In many states you are also likely eligible for subsidized child care. Your first job might not be the type of job you want forever, but it will build your resume and give you skills you can use to move upward and start a career. In the words of Martin Luther King, Jr., “No work is insignificant. All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.”
The real question at hand, however, is whether the norms that applied in the past are still applied now to able-bodied adults on welfare. Based on my experiences and on crunching the hard data, I would argue that for years our cash welfare system diminished the value of work and increased dependence on government for many adults, predominantly single parent women. Only since 1988, when a first real attempt to encourage work for those on welfare was undertaken by the Family Support Act—Job Opportunity and Basic Skills (JOBS) program, has the country begin to tilt, albeit slowly, toward a true work-based and personal responsibility approach to welfare reform. The 1996 Personal Responsibility and Work Opportunity Reconciliation Act, by creating TANF [Temporary Assistance for Needy Families], greatly accelerated the new norm as cash assistance being temporary and work or activities preparatory to work being expected.
This shift came predominantly for three reasons:
- Americans believe in work and expect people who are able-bodied to work;
- More and more women entered the labor market beginning in the 1960s and continue to do so today, making single mothers on welfare the outliers instead of the norm;
- The advent of new wage supplement programs such as the EITC and other tax credits made it indisputable that having a job makes people far better off economically than remaining on welfare.
Ron Haskins, a former White House and congressional advisor on welfare issues, sums it up succinctly: “Americans place a high value on adults who work hard to support themselves and their children. As a result any group that becomes known for non-work is, by definition, unequal to working Americans. Government support for non-work exacerbates the problem of social inequality both because it encourages non-work and because productive citizens resent being forced to support those who so conspicuously flout the value Americans place on work and self-support.”
Based on the rigorous evaluation of various JOBS Programs begun in 1988 and the pivotal National Evaluation of Welfare to Work Strategies (NEWWS) in the late 1990s and early 2000s, a work-first approach has proven to be a far more effective strategy than a human capital approach. The component study of the NEWWS provides particularly compelling evidence on this point—showing that those in work-first programs were not only more likely to get and keep jobs than those in education-first programs, but earned more money as well. One group of individuals drawn from Portland, OR, averaged $900 more per year than those who hadn’t participated in work-first programs, while groups from other cities saw gains of $400–500 per year. In all cases, work-first programs tended to be the most effective at reducing reliance on welfare and increasing reliance on earnings instead.
As Amy Brown states in A How-to Guide. Work First: “What defines (work first) programs is their overall philosophy: that any job is a good job and that the best way to succeed in the labor market is to join it, developing work habits and skills on the job rather than in a classroom.” In other words the best approach to welfare reform is getting people into an entry-level job and then offering ongoing skill training and education that can and hopefully will lead to a career ladder. In short, “Work is what works.”
Even the federal government seems to recognize that work-first works. The hinge moment in the history of the government’s changing relationship to work and welfare came in 1996. That year, the Welfare Reform Act (PRWORA) created TANF and finally made work and personal responsibility the basic underpinnings of the nation’s cash welfare system.
In addition, other research has established that the common assumption that skills must be learned in school or training programs separate from work is mistaken. That idea reflects middle-class experience, where many people spend years in school or college before they take a regular job. In fact, most workers learn their skills largely at work, not in school or training programs. The best way to elevate one’s skills for most people is simply to work steadily in one’s current position and move up to more demanding jobs over time. Thus, immediate work attachment need not come at the expense of skills.
The jury is no longer out. Findings from numerous reports unequivocally show better results from the work-first approach as it relates to placement, retention, and wages. Or as Larry Mead put it: “Successful approaches embody the principle that to go to work, one must simply go to work. There is no substitute for taking a job and working out what that requires—on the job. Nothing that a program does can substitute for actual work experience. The program’s role, rather, is to get its clients working as quickly as possible and keep them there.” Using education and training to upgrade then becomes the next step.
But, in spite of the clear evidence that rapid attachment strategies are most effective, some critics still hold dearly to the mentality that poor people on welfare should not quickly be placed in a job and indeed, even more paternalistically, are not capable of rapid employment. Most notable as of this writing, after 20 years of work-first success in NYC, Mayor de Blasio wants to largely abandon the work-first approach and return to an unsuccessful education and training first approach, along with industry-specific bridge and pathway programs that will likely swell the welfare rolls again and leave people lingering in lengthy preparatory programs that simply delay, but do not truly promote work.
Additionally President Obama announced broad changes in July 2012 that set the stage for a potential retreat on work. He offered states waiver authority to dilute TANF work participation rate requirements in favor of other less enforceable measures—this in spite of the fact that the president had stated on numerous previous occasions that he had no authority under TANF statute to grant such waivers. While increasing state flexibility is always a good idea, this guidance seemed strongly biased toward granting waivers to states who would rely on softer and less clear measures of work rather than those who further emphasized and strengthened the strong work participation rates. Strong opposition in Congress and elsewhere to preserve measurable work requirements in TANF and actual legislative challenges have so far stopped any states from seeking such waivers.
But retreats from strong work requirements such as Mayor de Blasio’s new employment plan for New York City and the president’s attempt to allow weaker work compliance measures do not bode well for our goal of decreasing poverty in the long run. As Robert Doar, former commissioner of HRA in NYC and now the Morgridge Fellow in Poverty Studies at the American Enterprise Institute, put it in his June 2014 testimony to the House Budget Committee: “Not working is the quickest pathway to poverty in the United States.”
And his statement is well substantiated. According to a 2013 US Census Bureau report, in 2012, 60 percent of those in poverty ages eighteen to sixty-four did not work at least one week out of the year. In contrast, the poverty rate for full-time, year-round workers was only 2.9 percent.
There is no reason to delay putting individuals to work by putting them into a training program first—in fact, delaying work can actually cost families money. One crucial benefit of work is it makes families eligible for two significant wage supplements through the federal tax system: the EITC and the child tax credit (CTC). These are in effect negative income taxes, because, to the degree they exceed the amount of taxes owed, they come to the households as a refund check when tax returns are filed. Since most low-income working families owe little or no taxes to begin with, about 87 percent of EITC benefits come in the form of a tax refund. This tax refund amounts to a significant boost to real wages for many low-income families. Both credits are easily accessible by most eligible households because they are redeemed by simply filing out an annual tax return. Additionally, they are only available to working households, garnering strong historical bipartisan support.
In Tax Year 2014, a single parent household raising one child could receive an EITC of up to $3,305. A single parent household raising two children could receive an EITC of up to $5,460. A single parent household raising three or more children could receive an EITC of up to $6,143. Eligible married couples with children receive a somewhat higher EITC, and single or childless couple taxpayers receive a smaller but important wage supplement through the EITC as well. The refundable CTC adds further wage supplementation to households raising children under age seventeen who are claimed as dependents on their tax return. Russell Sykes, former New York State Deputy Commissioner from 2004 to 2011 and previous Chair of the National Association of State TANF Administrators (NASTA), emphasized a work-first philosophy because “not only was it a good thing for single parent households to escape being on welfare, it also set a positive generational impact for their children. And, once working and receiving the EITC, the CTC, child care subsidies, and other wage supplements, their family income situation was dramatically better.” He also noted that New York, one of the twenty-six states with their own EITC, added almost another billion dollars in the aggregate annually to the incomes of low-wage earners, over and above the federal EITC. “Basically, when just looking at the economics, it makes no sense to delay work and become mired in a classroom setting—instead get a job, work hard, take the first step towards a potential career and reap the benefits of all the additional tax supplements that go along with work—upgrading skills and education can still occur after that first step.”
So, is there a role for ongoing education and training? Of course, the answer is yes, but it should come predominantly after a job is secured, not before. Throughout this book, I’ve emphasized that “work-first” is our mantra. [My wife Dr. Lee] Bowes and I have fought long and hard to successfully move dependent people into jobs and self-sufficiency. This strategy has worked. Work acculturates, socializes, creates self-esteem, establishes role models for children, and nourishes the soul. And it is equally clear that focusing on raising the level of human capital before work has failed, most often, to pull poor people from dependence to independence. There is no good argument that sitting in a classroom is preferable if a job exists outside.
From Poor No More: Rethinking Dependency and the War on Poverty by Peter Cove. Copyright © 2017 by Taylor & Francis. Published by Routledge. All rights reserved.