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Excerpts--Fall
1999
Washington's
New Poor Law
Dissecting
Our So-Called Full Employment Economy
Back
to Austerity? The Scene from Europe
Australia's
Situation
Coalition Goes Global
From
the Chair
Coalition Gets Grant
for Latino Research
International News
Beyond the 50th Anniversary
of the Universal Declaration of Human Rights: Defending the Right
to Work
George Brown's Commitment
to Full Employment Policies
Network News
WASHINGTON'S
NEW POOR LAW: WELFARE REFORM TWO YEARS LATER
By
Sheila D. Collins
Two years after passage
of the Personal Responsibility and Work Opportunity Reconciliation
Act (PRWORA), the nation's policy elites have declared welfare
"reform" a resounding success. As evidence they cite dramatically
reduced welfare caseloads and increased numbers of welfare recipients
taking jobs. But the evidence from numerous state follow up studies
paints a far less sanguine picture.
Most states have been
using sanctions for rule infractions much more aggressively than
they had in the past, and many have been discouraging families
from even applying for welfare in the first place. This suggests
that a significant proportion of those who left the rolls (or
were deterred from them in the first place) may have fallen into
deeper poverty.
Economic Growth
and Deepening Poverty
Indeed, the first
two years of welfare "reform" have been correlated with disturbing
rises in several poverty indicators, despite a dip in the overall
poverty rate. Here are some of the findings from several different
studies:
- average incomes
of the poorest 20 percent of female-headed families fell from
1995 to 1997.
- between 1996
and 1997, over 400,000 more children were living in extreme
poverty--below one-half of the poverty line.
- 81 percent of
34 cities surveyed reported significant increases in requests
for food assistance and emergency shelter.
- Second Harvest,
the nation's largest distributor of donated food to emergency
food providers projects a shortfall from 1997 to 2002 of 24.558
billion tons of food or the equivalent of three meals a day
for 3.24 million low-income people for an entire year. To
make up for this loss, they estimate they will have to expand
their collection and distribution activities by more than
425 percent over their 1995 capacity and maintain this expanded
level throughout the six-year period. Yet despite this quantum
leap in demand, the companies that donate food are now donating
less than they were, in part because of streamlined business
methods which result in less leftover food.
Working, But Still
Poor
Welfare recipients
are required to work a minimum of 20 hours a week for the first
two years of the law's operation, rising to 30 hours by the year
2000. In two-parent families, both parents must work--one for
35 hours and the other for at least 20 hours per week. What do
we know of those who have been tracked? While the evidence is
still spotty, state follow up studies indicate that between 61
and 87 percent of those who left the rolls for work found jobs
in 1998 and between 50-70 percent in 1999. The National Governors'
Association hailed this job placement record as "far exceeded[ing]
expectations of proponents and skeptics alike." But again, the
glowing rhetoric of policy makers obscures the reality of life
after welfare.
- Many of the
jobs were part-time and temporary
- Few provided
paid vacations, sick leave, or health and retirement benefits
- Despite increased
efforts by states to "make work pay," by March 1998, only
8 percent of the previous year's recipients had jobs paying
weekly wages above the three-person poverty line
- Between 1997
and 1998, the proportion with weekly wages below three-quarters
of the poverty line surged upward from 6 to 14.5 percent.
- The percentage
who left for work in 1999 was only 5-10 percent higher than
the proportion of recipients who left welfare for jobs under
the old AFDC program, when general unemployment was higher
than it is today.
- Most families
continued to rely on other forms of public help like food
stamps, Medicaid and transitional childcare subsidies, as
well as on family and friends.
- Since welfare
repeal, fewer families are receiving Medicaid and food stamps,
even though they may be eligible.
The Job Gap: Fact
or Fiction?
The lowest unemployment
rate in 30 years would appear to indicate that the job gap we
have called attention to (see Uncommon Sense #5 ) has been
overcome. But several findings belie this assumption:
- in 1998, 163
cities and 670 counties had unemployment rates that were more
than 50 percent higher than the national average.
- 92 percent of
34 cities surveyed in 1997 reported that there were not enough
low-skilled jobs to meet the federal work requirements of
the welfare reform law.
- at rates of
job expansion in New York City at the time of welfare "reform,"
it would take 21 years for all adults on public assistance
to be absorbed into the economy, even if every newly available
job went to a welfare recipient.
- workfare--a
program in which welfare recipients work off their welfare
checks in jobs that have been carved out of those held by
retiring workers or workers whose hours and wages have been
cut are operating in at least half the states surveyed. The
existence of large workfare programs in cities like New York
where welfare recipients are the most numerous, is an indication
of the failure of local labor markets to provide enough entry-level
jobs.
Sheila D. Collins
is Professor and Chair of the Political Science Department at William
Paterson University and a member of NJFAC's Executive Committee.
Dissecting
Our So-Called Full Employment Economy
June
Zaccone
With the unemployment
rate lower than in decades, the media, many politicos, economists
and ordinary folks now talk about our "full employment" economy.
So why is the Coalition still talking about unemployment? I will
discuss three reasons: 1.We don't have real full employment; 2.
the current "low" rates are accidental, not the result of a policy
commitment; and 3. the economy is nowhere close to what real full
employment can offer.
Not Real Full employment
We don't have real
full employment: Each month the Coalition's web site reports the
real unemployment rate. In addition to the official jobless, we
include part-time workers who want fulltime work, and those who
want work but are too discouraged to look, or need some help,
like childcare or transportation so they can be available for
work. This roughly doubles the official unemployment rate. And
even that is an average rate that masks extremes. For example,
in September, when the official unemployment rate was 4.2 percent,
among 16-19 year-old black men it was at the Depression level
of 30.6 percent. And though downsizing is out of the news, more
people were laid off in 1998 than in any other year in the 1990's
and laid-off workers often end up with lower paying jobs.
No Policy Commitment
Current "low" unemployment
is not the result of a policy commitment, but rather of extraordinarily
high consumer spending. Rising income, the stock market boom,
and ads galore have encouraged this spending, which has risen
even faster than income. Saving has fallen from what mainstream
economists considered the perilously low rates 5 percent of the
1980's to recent negative rates--the first since the Depression.*
Household debt has risen in an expanding economy with rising income.
This is truly extraordinary since paying off a mortgage and employer-provided
pensions are counted as part of household savings. Capital gains
from the stock market boom have fueled a spending spree. This
euphoria is unlikely to be sustainable. The Federal Reserve, which
didn't interfere with this economic expansion, is always on the
lookout for inflation (still invisible), and may soon ruin the
party with interest rate increases. The rest of the government
is infatuated with budget surpluses, which are potentially very
depressing to an economy.
Real Full Employment
Means Decent Wages and MORE
Our view of the meaning
of full employment is a comprehensive one, and our goals very
long-term. It is not just about unemployment but also wages:
they are still terrible for many workers. Though rising, real
[inflation-adjusted] wages are still considerably below what they
were in 1973. Even new college graduates have suffered; their
starting wages fell by 7 percent between 1989 and 1997. The good
news is that recently, due to declining unemployment and the minimum
wage increase, the largest percentage gains have gone to the lowest-paid
workers, whose wages have fallen the most.
The problem is not
only the level of wages. As average wages have fallen,
income inequality has increased so that the many on the down
escalator watch the few on a rapidly rising up escalator. The
US now has the widest gap between rich and poor in the industrial
world. Using an old cliche, the rich have gotten richer and the
poor have gotten poorer. This has not always been true, but it
is now, and the poorer includes some of the formerly middle class.
Wealth inequality, even worse than income inequality, has continued
to grow. In 1997, the top 1% of U.S. households owned a larger
share of wealth than the bottom 90 percent. Together, just three
Americans own more assets than the poorest 50 million. According
to Public Citizen, "If the minimum wage had kept pace with
CEO pay since 1960, it would now stand at $40.97 an hour." So
we wouldn't need living wage campaigns!
Finally, it is by
no means our ideal to get every last person working fulltime,
50 weeks a year. Clearly, many people work too long and too hard
while others are shut out of jobs. The National Jobs for All Coalition
advocates shorter workweeks, longer vacations, and sabbaticals
for all workers. It is absurd that much of our increased social
riches has been used for mega-houses, more prisons, and more Prozac
instead of more leisure, meaningful work, environmental protection,
national health insurance, smaller classes, and child and elder
care.
*Recent
government revisions have converted these to very low positive
rates.
This article was
adapted from a talk given to the Planners Network Conference.
June Zaccone is Associate Professor of Economics (Emerita), Hofstra
University, and a member of the NJFAC Executive Committee.
Back
to Austerity ? The Scene from Europe
Jörg Huffschmid
In 1997 and 1998,
the conservative governments of Italy, Great Britain, France and
Germany were voted out because of frustration and opposition to
the policy of downward wage pressure, social cuts and deregulation,
sold as the only way to more employment and European unity. By
the end of 1998, 12 out of 15 European Union member states had
Social-Democratic-led governments. Hopes were high for new policies,
with employment as top priority.
Those hopes have mostly
been dashed. Though in some small countries like Denmark and the
Netherlands the unemployment rate has fallen, this is largely
due to more part-time workers with considerable wage losses. Only
France has pursued a macroeconomic policy with public programs
for new jobs in services and a law introducing the 35 hour week
in the private sector. In two years, the Jospin government created
750, 000 jobs. Though not enough, the direction is right.
The rest of Europe
looks bleaker. Persistent unemployment averages about 10%. The
really black spot is Germany. After a promising start, the government
has increasingly given in to business. Social Democrats and Greens
have completely reversed their policy. Before election they insisted
again and again that Germany's biggest scandal was mass unemployment.
Now these leaders state that the biggest scandal is public debt,
so its reduction must be top priority. And, like their conservative
predecessors, their first spending target is social benefits.
As a result, unemployment in September 1999 was exactly the same
as one year earlier.
Also, the German and
the British governments have reinforced the European austerity
agenda. The "European Employment Pact," adopted at the June 1999
summit in Cologne, rejects monetary and fiscal policy as tools
for more job creation and relies entirely on lower wages to increase
employment. Tony Blair and Gerhard Schröder also formulated
a program for European social democracy, featuring flexibility,
low wages and "modernisation" of the social welfare systems--which
comes down to large-scale privatisation and deregulation.
However, this slap
in the face has led to a sharp drop in votes for Social Democrats
in European Parliamentary elections and an even stronger defeat
of the German ruling parties in regional elections. The French
Socialist Party has refused to take the Schröder/Blair road
and calls for an alternative program to control and regulate the
destructive forces of free markets. More European economists are
criticizing monetarist polices. Although neoliberal policies have
recently made a comeback, albeit with slightly modified rhetoric,
public debate is more intense than before and the potential for
protest and change is increasing.
Jörg Huffschmid
is Professor of Political Economy and Economic Policy at the University
of Bremen and co-founder of European Economists for Alternative
Economic Policy. He is a member of the Coalition's Advisory Board.
Australia's
Situation
By
Jocelyn Pixley
Australia's unemployment
has deteriorated further as a conservative Federal Government
moves into its second term--with a majority of seats but not votes.
Since the 1980's, unemployment has mainly ranged between eight
and 10 percent. Yet the unemployed have "universal" rights to
an austere, means-tested wage replacement. These Federal unemployment
allowances, paid from general revenues, are of indefinite duration
and available to all who meet the means test (one can still own
a house and car) and are actively seeking work. Disability, old
age, and single-parent pensions (until the youngest child turns
16 years) are also comprehensive but less austere forms of means-tested
welfare. Thus, anyone unable to obtain gainful employment with
little or no access to "unearned income" has a right to welfare.
Since 1907, centralized industrial relations courts have set basic
minimum wages and conditions (such as the right to paid sick leave
and four weeks' annual vacation pay) for most workers. After Equal
Pay decisions in the 1960s, the gender wage-gap nearly rivaled
that of Scandinavia. The previous Labor Government also introduced
subsidized and accredited child care centers across Australia.
Australia has been
called a "wage earners' welfare state," with wages decided by
industrial relations judges based partly on need, not exclusively
on employers' alleged capacity to pay. In the 1980s, Medicare,
universal health coverage for people of all ages, financed from
progressive taxes, was introduced. Thus, there was a universal,
if austere, system of means-tested payments for everyone not in
the labor force, and a more systematic defense of workers' wages
and conditions.
The former Labor Government
(1983-1996) undermined some of these provisions, under the slogans
of international competition and inflation reduction (via an Accord
with unions on wage freezes). But social wages were enhanced and
the safety net left in place. Since 1996 the conservative government
has cut child-care funding, and the work tests for unemployment
benefits now resemble US Workfare, with a 'Work-for-the-Dole Scheme'
(the actual name) targeted at the young unemployed. This, along
with heavily regressive taxes and reductions in wages and collective
bargaining rights, comprises the Federal Governments' "employment"
strategy.
Blaming the victim
is more common when "the economy" is said to be "healthy." Thus
chronic unemployment is now alleged to be due to a culture of
"welfare dependency" and "job-snobs," not policy obsessions with
zero inflation, high profits, and a near-destruction of the public
service.
Unemployment now hovers
around 7.2 percent, but there are also many "discouraged" workers.
The total number of unemployed always vastly exceeds the number
of job openings, a rarely stated contradiction. Nor is the alternative
of socially useful and fairly-paid jobs put on the agenda. Australia's
unemployment/welfare system is not yet as bad as its US counterpart--which
our leaders simply love!
Dr. Jocelyn Pixley
teaches in the Sociology Department, University of New South Wales.
From
the Chair
Gertrude
Schaffner Goldberg
What does a Jobs for
All Coalition think and do when unemployment rates are the lowest
in 30 years?
- We celebrate
the beneficial effects of lower unemployment.
- We say "We told
you so," when both unemployment and inflation rates are low--thereby
punching holes in that pseudo-scientific justification of
high unemployment rates, the "natural" rate of unemployment.
- We continue
to tell the truth about official unemployment statistics that
seriously underestimate unemployment, give us the illusion
of full employment and retard the development of a full employment
movement.
- We point to
lousy jobs at lousy wages that, like sweatshop jobs, don't
count toward full employment.
- We expose the
paltry wage increases of the economic boom--for all but the
already rich. The median wage earner gained 1.9 percent between
1989 and the first half of 1999, and the bottom fifth of wage
earners gained 4.8 percent but still remain well below their
1970s level.
- We cheer the
increase in the minimum wage since the 1980s but point out
that the minimum would have to be $7.50 an hour instead of
the present $5.15 to equal its real value in 1968.
- We point our
fingers at the gargantuan and growing incomes of the rich,
noting that the share of the richest 20 percent is over 13
times that of the poorest.
- We deplore a
distribution of wealth that is even more skewed than income.
Political Commitment
Needed
If we want to have
a world without the economic downturns that shatter dreams and
without the chronic underemployment that has besieged workers
for centuries, we must exhort Bill Clinton, Alan Greenspan, and
Congress to use the abundant measures at their disposal to push
unemployment rates even lower and to take additional measures
to lower the disparities in income and wealth. And let's also
get our political leaders to make another commitment: to prevent
unemployment from rising and shattering dreams and lives in the
21st century.
The Benefits
of Lower Unemployment
Consider the consequences
of just a few years of lower unemployment. With unemployment well
below what most economists thought possible or "natural" only
a few years ago, more of the young, the old, and the minorities
are employed and paying taxes, and fewer workers are forced to
retire early, to collect unemployment insurance, or to go on welfare.
As a result, more revenues are flowing into the Social Security
and Medicare trust funds. Increased revenues have also helped
to lower the federal deficit.
The effects of low
unemployment are trickling down. More work has come to some of
the once "jobless ghettos," and more of the unemployed are taking
that work--proving that the so-called "underclass" was all along
an essentially underemployed working class. With unemployment
at a near three-decade low, desperate builders and eager unions
in Chicago began an aggressive campaign to court and train women
and members of racial minorities. Tight labor markets are bringing
more dropouts and low-skilled men and women of color into the
workforce. Black and Hispanic unemployment rates are lower than
they have been in years, and teenage unemployment has even begun
to drop. A quarter century of anti-union, anti-welfare, antiworker
policies is not overcome in a flash, but wages have begun a slow
rise and poverty rates have fallen. The picture for both indicators
is slightly better than a decade ago when the business cycle last
peaked.
Persisting Problems
Low unemployment pays,
but even fuller employment could pay more because many labor-market
problems persist. The Department of Housing and Urban Development
reports that one in six cities has "unacceptably high" unemployment
rates, and many suburban and rural areas also lag behind. Even
when the unemployment rate in October, 1999, was 4.1 percent,
13 million people were un- or under employed. Another severe labor
market disadvantage--year-round work for less than the poverty
level--afflicts about as many people as the number who suffer
some form of joblessness.
This is why we can't
stop at 4.1 percent. We must have lower unemployment rates, livable
wages, and more job creation to employ more of our people and
at the same time to meet gaping needs for affordable housing,
child care, elder care and transportation. Shortly before he died,
Martin Luther King, Jr. wrote: "In our society it is murder psychologically
to deprive a man [sic] of a job or an income." Curing inflation
by creating more unemployment--as the Fed has often done--is a
murderous remedy for a condition that can be treated by more benign
means. With political will and an agenda, the Coalition can help
build a movement that can make it our reality in the next millenium.
Gertrude
Schaffner Goldberg is Professor of Social Policy at Adelphi University)
and NJFAC Chair\
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