The Missing Half of the Welfare Debate

The Wall Street Journal
Copyright (c) 1995, Dow Jones & Company, Inc.
By Gary MacDougal

The Senate is expected to take up welfare reform today. Two of the leading Republican presidential candidates, Bob Dole and Phil Gramm, are offering competing plans. President Clinton and the Democrats have their own reform blueprint.

All of these politicians strive mightily to give the appearance that they know what to do about our failing welfare system. They come up with sound bites ("End welfare as we know it," "Two years and out," "Workfare," etc.). But the truth is, they aren't even close to having thought through plans for reforming the multiplicity of government programs referred to as the " welfare system." They have proposed a variety of rules changes but for the most part lack a positive plan for making welfare dollars effective in reducing dependency.

Conservatives tend to stress the disincentives in the system, and want to go back to core values and individual initiative as the answer. Liberals label the poor as victims, needing help from the richest country in the world in order to survive. My work in the inner city of Chicago has convinced me that both groups have a point.

Part of the problem is accountability. No one, not the sharpest state budget officers or the most thoughtful think tank gurus, can tell you how much federal, state and city human services money goes into a community, much less what the outcomes of these expenditures might be. Money from a variety of programs (food stamps, Aid to Families With Dependent Children, etc.) flows to a bewildering array of private providers, state workers and direct recipients, most of whom operate largely unaware of the others' activities. The management information systems don't speak to each other, and the incredible array of well intentioned and expensive programs almost always operate independent of one another, even though they are intended to serve largely the same families.

The spending from just seven human services departments in Illinois is in the range of $6,000 to $8,000 per poor person, not including public housing, special education, criminal justice services and other outlays. The spending on a poor family of four is demonstrably more than twice the $14,700 poverty level. A river of money flows, yet no measurable progress is made.

To achieve results, it is useful to separate people in the welfare system into three major groups. The approach needs to be different for each group.

First, there are large numbers of intelligent, capable people, many with useful skills (carpentry, auto repair, etc.) who haven't been able to find that first rung on the ladder to escape poverty. They face barriers that most Americans don't -- horribly inadequate transportation from the inner city to the suburbs (where jobs tend to be); bad schools; regulatory roadblocks such as licenses for shoe shiners or corn braiders; and the "crab effect," in which the friends and relatives of individuals striving to break free of economic dependency "pull them back down." And, yes, there is still discrimination -- but not necessarily because of race. Research by William Julius Wilson at the University of Chicago has shown that employers believe an address in the Robert Taylor Homes project in Chicago is shorthand for unreliability. Employers want better bets.

We owe this first group some temporary help in identifying and gaining access to the first rungs on the ladder of opportunity. But they must climb it themselves.

The second group of welfare recipients tends to be the conservatives' favorite target -- those who are capable of work but have become used to dependency (perhaps over three generations). These people generally don't see any clear connection between hard work in an entry-level job and longer-term success. There are almost no successful role models in their neighborhoods, and laziness has become a habit. And a low-paying job is often a setback economically because it means higher transportation and clothing costs and the loss of Medicaid and other welfare benefits. Besides, a minimum wage job isn't very "cool."

The members of this group need at least three things: access to those bottom rungs on the ladder of opportunity; the removal of the disincentives; and, most important, the tough love necessary to convince them that they won't be able to continue their dependent ways. The conservatives are right about this group. There should be no one-way street for those able to work.

The last group contains those welfare recipients who most of us would agree can't work, or can do so only in a very limited way: for example, those with developmental or cognitive disabilities and those in situations where the best use of their time, both for their family and for society, is that of family caregiver. We have to face the fact that there will always be a group of people, especially in our economically impoverished areas, for whom society must provide a safety net. In Scarsdale, N.Y., Lake Forest, Ill., and Beverly Hills, Calif., these people can be supported by their families. This usually isn't possible in communities where the unemployment rate hits 60%. The liberals are right about this group. We owe them something.

All three groups total 10% or more of all Americans -- people not really participating in this country's economy. What can a state do to turn around this terrible, persistent problem that conservative activist Paul Weyrich has called the "Achilles' heel of capitalism"?

Local communities know who belongs in each of the groups described above, what needs to be done to put rungs on the ladder, what the disincentives are, and other crucial inputs that the well-meaning bureaucrats in Washington and Springfield can't possibly know. Communities are dramatically different -- one size does not fit all.

The Governor's Task Force on Human Services Reform in Illinois is reinventing the human services delivery system. The centerpiece of this plan involves creating community federations comprising leaders of businesses, schools and churches, as well as local residents, consumers of state services, and providers of services. Federations, which establish the community's needs and priorities, will work together with a state-level team to develop a community-based system of services that will be delivered efficiently and funded based on outcomes. The ultimate goal is to empower communities, families and individuals to use the state resources to support private sector job creation and reduce dependency.

Illinois Gov. Jim Edgar looks forward to rolling out his community-based approach statewide. So far, the task force has established five federations. One covers the Grand Boulevard community on Chicago's near South Side, which encompasses two of the three worst public housing projects in the U.S. The median household income in Grand Boulevard is one-quarter of the state's average, and 83% of the children live in poverty. An estimated $135 million per year of federal and state funds alone flow into this community of 35,000 people, 28% of whom are in poverty.

As a result of an unprecedented joint venture, the Grand Boulevard Federation will place an initial group of 50 residents in well-paying, career path jobs with United Parcel Service. The UPS/Grand Boulevard employees will be provided with an array of supportive services designed to offset the "crab effect," ensuring that the job holders retain their jobs and eventually no longer need support services.

To view the state's social services network in terms of its impact on a family is itself a revolutionary concept in a system that currently categorizes, classifies and isolates those whom it serves in a tangle of narrow benefits and programs. Measuring outcomes, listening to communities and families, showing flexibility in funding, removing disincentives, working with the private sector, integrating systems at the state level -- all are common sense everywhere but in our nation's welfare systems.

Bob, Phil and Bill, come visit us in Illinois. We'll show you the missing half of your welfare reform vision.

In yesterday's editorial page article by Gary MacDougal on welfare reform, the poverty level of the Grand Boulevard community was misstated. Of its 35,000 residents, 28,000 are poor. (WSJ Sept. 7, 1995)