The Hassle Factor - how welfare reform looks in Camden, New Jersey

Reason, Dec, 2000 by Michael W. Lynch

Yet four years out, 6 million Americans have left the rolls, the majority of adults passing the homeless shelters and food kitchens on their way to work. States engaged not in across-the-board cuts but in varied experiments that emphasized and supported work. In many cases, as traditional welfare caseloads plummeted, states shifted spending to support services such as child care and transportation subsidies. The number of Americans living in poverty didn't increase; it dropped. In 1998, the last year for which data are available, 2 million fewer Americans-1 million fewer children--lived in official poverty than in 1996. In New Jersey, welfare rolls have dropped by nearly half since 1997; the same is true for the city of Camden.

Not Your Mother's Welfare System

Cookie, born in Richmond, Virginia, in 1957, came to Camden as a baby and has lived most of her life in Camden's public housing, where she is a fixture. Children play in front of her apartment, located next to a community center where she supervises recreation programs. When a friend is pregnant, she hosts a shower, as she did for Tiffany just before I arrived in Camden. When people need a place to stay, she puts them up. By her own admission, her world is limited, but she is not afraid to try new things. She is proud of what she has made of her life. None of her five children has ended up on drugs, on the system, or in jail. Her youngest, a boy, is a high school basketball star. She did her time on welfare, and she is glad to be off. I ask about the difference between being on and off welfare. "I feel good about myself," she tells me. "I don't have to answer questions like, 'Do you have insurance for your kids? Do you have a car? Do you have money in the bank?'" Says Cookie: "Yes, I have money in the bank. I work hard for it. I feel good I don't have to answer to none of that. All I have to do is pay my bills and keep on going."

As we sit discussing the system, old and new, it strikes me that Cookie's and Derica's experiences encapsulate a fundamental shift in the system, an inversion of the incentives. The system Cookie faced was easy to get on and hard to get off. Derica is facing one that's hard to get on and easy to get off.

When Cookie had her first baby at 18, shortly after graduating from Woodrow Wilson High School in 1976, the system welcomed her with open arms. When, as the mother of a 2-week-old infant, she showed up to apply for assistance, she says the caseworker asked, "Why did you wait so long?" She immediately got a grant of $235 a month, and her rent was set at the standard 30 percent of her cash income. She received food stamps and Medicaid. She and her sister got an automatic transfer out of her mother's public housing unit to an apartment of their own. Within a year, she had her own unit. She struggled but managed to get by, supplementing her income at one point by being a foster parent. (Such income didn't affect her welfare check or rent.)

Why was it hard to get off the system? At the time, giving up the cash grant meant giving up other benefits. Unless a recipient got long term training, like Blondie did, saying goodbye to welfare meant saying goodbye to Medicaid. For every $3 Cookie earned over her welfare grant, a rent increase would gobble up $1. If she made too much money, her food stamps would be reduced. These policies combined to create a punitively high marginal tax.