Holes in the Safety Net
As the recession persists and the labor market continues to contract, the holes in the safety net will become more and more apparent. Gaps in how we provide help to the working poor exist in part because of significant increases in demand for aid, often from persons with few previous connections to the safety net. Not only may programs be ill-equipped to meet the needs of many low-income job-seekers, but public and private funding for many antipoverty programs decreases during economic downturns. The cyclical nature of antipoverty ironically makes less aid available right at the moment when demand is rising.
A dramatic example of how nonresponsive social programs are to economic downturns can be found in last Sunday’s New York Times, where Jason DeParle discusses how welfare cash assistance caseloads are not expanding despite many rising indicators of need.Temporary Assistance for Needy Families (TANF), a program commonly referred to as welfare, imposed strict time limits and work requirements as a condition of receiving aid back in 1996. Changes to welfare at that time also capped federal program funding by converting the TANF to a block grant. Because the TANF block grant hasn’t been adjusted for inflation in more than a decade, there is far less money available today to help poor families than in 1996. Combined, work requirements and fixed federal financing make it difficult for states to expand TANF assistance during the current downturn.
Yet, this a reality of welfare that has existed for several years. I show in my recent book that between 2000 and 2003, a period that brackets an economic recession, the number of families living below the poverty line increased by 18.9 percent. The TANF caseload, however, decreased by 8 percent during that time. Increased need in post-welfare reform America has not correspond to an increase in the number of persons receiving cash or social-service-based assistance.
Even more evidence can be seen in this chart tracking welfare caseloads from 1997 to March 2008:
Even in the wake of the recession in 2001 and the jobless recovery in the following years that did little to expand job opportunities for low-skill workers, welfare caseloads have continued to shrink and the program was unresponsive to changing need. Using the most recent data available from the Department of Health and Human Services, caseloads haven’t changed appreciably since March 2008.
The question we should be asking is: where are working poor families going for help? This is a question on which scholars and experts are still gathering information. There may not be many good options for the working poor. More families might qualify for the Earned Income Tax Credit (EITC) this year, which will provide a temporary boost in household income to working poor families. More families are seeking help from the Food Stamp Program and from food pantries. Nonprofit service organizations, dealing with their own fiscal crises, are unlikely to have the resources to meet rising needs. Many families may simply have to make tough choices between having enough to eat, maintaining a car to get to work or search for work, and making rent or mortgage payments. Ensuring there is a safety net for these families, however, is critical if they are to cope with temporary job loss, find work, and help get the economy moving again.