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

Reason, Dec, 2000 by Michael W. Lynch

It's not that people couldn't work their way off. Cookie left in 1990 for a job as a recreation aide at her housing complex's community center. But the combined benefits were more than many individuals could expect to earn from a job, though not enough to live on comfortably. That reality was hardly limited to Camden or New Jersey. According to the Cato Institute, in 1995 the benefit packages of 40 states paid better than an $8-an-hour job; in New Jersey, it equaled $12.75 an hour. For many low-skill women, the old welfare system was a deal that couldn't be beat.

Work First New Jersey, Gov. Christine Todd Whitman's welfare package that became law in March 1997, changed this. It wasn't the state's first attempt at reform. In 1992 New Jersey enacted a controversial family cap law that meant recipients who gave birth to additional children while on welfare wouldn't get any extra money. At the same time, the state increased post-welfare support, extending Medicaid and child care support for individuals who left welfare; the state also created training and community college-based education programs. Birth rates declined, but a Rutgers University study found that the education and training programs didn't help people get off welfare any sooner, stay off any longer, or attain higher-paying jobs than folks who were left alone.

Work First New Jersey is succeeding by all three measures. While federal law allows states to give individuals up to two years to find a job, in New Jersey clients must go to work right away. If you're under 18, your job is to finish school. If you're over 18, your job is to get a job. If you've worked in the last year, it's straight into an intensive job search, the goal of which is to avoid getting on the system in the first place. If you don't have a high school diploma, you must work toward a GED. But you will spend 35 hours a week in some "work-related activity" to earn your assistance money. Counties run Community Work Experience Programs, which offer on-the-job training at government agencies and nonprofits, and Alternative Work Experience Programs, which offer remedial education programs for individuals who need basic skills before they are likely to be hired. If an individual doesn't comply, then she gets sanctioned like Derica Lee, and her check is cut in half. After 90 days of inaction, her case i s closed. On average, New Jersey closes 300 to 400 cases a month due to sanctions.

So when Derica says she might as well get a job, she's not kidding. This, in essence, makes the new system hard to get on. A client is faced with along, privacy-invading application and a contract in which she must promise to look for work. The payoff is a cash grant of $322 for one child, $424 for two children, and assistance finding a job or placement in a fulltime job training program. Considering the hassles, unless you're in a crisis situation or actually want the training, you might as well just look for work.

Unlike earlier programs, recipients get to keep most of their wages. Individuals lose only 50 cents of their grant for each dollar they earn, so even low-paying, part-time work can make one financially better off. Medicaid, food stamps, childcare vouchers, and, in some cases, public housing rents have been separated from the cash grant. The average wage earned by individuals who leave welfare for work in New Jersey is $7.31 an hour. The federal Earned Income Tax Credit can also add more than $3,000 a year to the wages of individuals working full time for $7 an hour.