Monday, March 31, 2008

Life After Welfare

If you hear a government minister or their Tory shadow talking about the future of the welfare state, there would be plenty that they'd find to agree on. Both would agree that work is the best route out of poverty; benefit levels cannot and should not be high enough to lift people out of poverty on their own; the right to receive public funds (from benefits to social housing) should go alongside greater responsibility to look for work; the private and voluntary sectors should play a greater role in getting the 'stock' of out of work claimants into work; and alongside support for people to remove the barriers that they face in finding work, there should be sanctions if they don't comply with the rules. Both agree on changing the rules so that lone parents have to look for work when their children are at least seven years old. And both would agree that the 'culture of worklessness' is a majority cause of poverty, that if poor people changed their behaviour, then they would no longer be poor.

Ten years ago, many of these ideas were on the political fringes in the UK. But they underpinned the welfare reform policies in the USA. This was true both at a national level, where Bill Clinton signed the Republican Party's Personal Responsibility and Work Opportunities Reconciliation Act; and at state level.

Life After Welfare is a detailed piece of research which looks at welfare reform in Texas and what happened to people who left welfare, using multiple different research methods and data sources.

In Texas, the Texas Works programme emphasises to welfare claimants that their responsibility is to find work. Cash assistance is limited to between 1 and 3 years. Parents have to seek work as soon as their children reach the age of two. Welfare payments, for those who qualified, were low compared to other states in America. To qualify for welfare, recipients have to sign 'personal responsibility agreements' , which included searching for jobs, co-operating with child support enforcement against the fathers of their children (if they lone parents), and documenting their children's school attendence. The aim of all policies is to make sure that 'pride in self sufficiency replaces the mindset of entitlement'. After the study, further changes included requiring parents to seek work when their children reached the age of 1, and extending sanctions so that families lost benefits for their children if they didn't comply with their responsibility agreements.

If you are a right-winger who believes that the welfare state causes poverty, then the above list should delight you.

And the result?

Fewer than 5% of welfare leavers went on to get steady jobs which paid above the poverty line (and these were all people who had previous qualifications acquired before they became unemployed). Fewer than half left welfare because they found a job, while more than a quarter found that they couldn't meet the requirements, couldn't make the appointments or believed they were not entitled because they had reached the time limit (when they hadn't). Many of the people that found a job returned to welfare after a few months.

So Texan-style welfare reform meant that some people got jobs, and stayed poor (one example given in the research is of a mother of four who was working 114 hours per week, and still couldn't afford her rent or school expenses for her kids), while others dropped out, didn't work and lost even the meagre safety net that they had had before welfare reform. And this was during a period of economic growth.

But the research doesn't just demonstrate that a policy championed by the Republican Party didn't, in fact, have the best interests of the American people at heart and didn't deliver what it had promised. It also came up with a whole load of lessons about what works and what doesn't when trying to help people find jobs, which are just as valuable for us to learn here in the UK as over the Atlantic:

1. If the welfare system is complicated, then many claimants (and their advisers) won't understand it. It is really unfair to punish them for this. Most claimants in Texas didn't make use of things like subsidised childcare, and some left their jobs because they thought that they had lost their Medicaid health insurance. Others found that they were being required to turn up for compulsory interviews at times which they couldn't make (e.g. because their car had broken down or their children were sick and there was no one to look after them). Or they had to produce masses of detailed paperwork to comply with their responsibility agreement But if they didn't turn up or keep up with the paperwork, then they got sanctioned. And, of course, because year after year Republican politicians loved to tinker with the rules, claimants and staff alike couldn't keep up with what they were and were not entitled to.

2. For people to be able to stay in work, they need to be in good health, and be able to get affordable childcare, transport, housing. It only takes one thing to go wrong, and people ended up back out of work. If they got sick, or their kids got sick, or if they couldn't get anyone to look after their kids while they were at work, or if their car broke down and they couldn't afford to fix it, or if they couldn't pay the rent, then the safety net didn't work. It only takes one of these things to go wrong - and one problem can easily lead to another - for example bad housing causing ill health.

3. Wages aren't high enough to cope with problems. Working for $6/hour, even 60 or more hours a week, isn't enough to pay for health insurance, or daycare places for 2 year olds. If you need to drive to work, and your car breaks down, the only way to get by is to borrow money.

4. The jobs which are out there aren't all regular, full-time ones. Families in low paid work found that their income would be different from week to week, or that some weeks there would be nothing to do, while other weeks they were being required to work hours which weren't compatible with their caring responsibilities. Most jobs which claimants could take offered little or no opportunities for training, or increases in wages for employees who stayed in work to be able to get out of poverty.

5. Tough requirements on making parents find work make it hard for them to be good parents to their children. The Texan welfare to work system made parents face impossible choices.

Of course, the Texan system is very different from that in Britain at the moment. But the same ideological beliefs are becoming part of our Conventional Wisdom, and ambitious politicians in both the Tory and Labour parties are borrowing from the failed policies of the Republican Party.

We could go down the Texan Road, boasting about how few people receive help from the government. Where people have to borrow money from friends and family to get by, where the slightest problem means losing your job, where parents regularly skip meals because they only have enough money to feed their kids and where to get any help requires jumping through incredibly bureaucratic hoops and where failure to comply with ever changing rules results in sanctions both for yourself and your children. And, the inevitable consequence, where more than 1 in every 100 people is in prison.

But it doesn't have to be this way. When the Americans changed their welfare system, they did so based on theoretical assumptions about how poor people behave. But ten years on, we don't have to rely on theory. We can learn from what works in getting people into work and out of poverty, and avoid what has not worked.

Wages which pay all workers enough to live on and support their families, straightforward rules which are easy to follow, personalised advice which helps claimants get good jobs and find out what support they can get without threatening them, affordable childcare, transport and housing for all workers, and health care that is free when people need it. These could be the building blocks of a society in which all who can work are able to do so, people who can't work can live with a decent, adequate income, and where parents can combine work with being good parents to their children, and giving them the best possible start in life.

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