The Hassle Factor

Blondie thinks the current system should do for others what it did for her: let them engage in long-term training that will enable them to have a career, not just a series of $7-an-hour jobs. "I'm talking about putting them into the medical profession," says Blondie, expressing a preference for career training. "Not wiping people's butts, but teaching them how to draw blood."

Blondie is certain that life has gotten worse in Camden's public housing projects since New Jersey started sanctioning women for noncompliance. In Camden crack is still king, and a woman sanctioned off welfare can support herself by attaching herself to a drug dealer. "I get sanctioned 'cause I don't go, so I get me a drug boy," explains Blondie in an extended hypothetical example, as Derica and Tiffany nod in agreement. "He takes good care of me, and my house becomes a rock spot. I got to survive, so that's what I do."

The new welfare system does look great on paper. When President Clinton signed the Republican welfare reform bill into law in August 1996, the predictions were dire. The Urban Institute spit out a study showing 2.6 million Americans-including 1.1 million kids-would be pushed into poverty. Advocates for the poor claimed that, absent a major public jobs program, welfare recipients would be unable to find employment. Americans were told that homeless shelters would fill up and soup kitchens would be deluged as states, free of federal micromanagement, cut spending on social services. Warned Sen. Daniel Patrick Moynihan (D-N.Y.) from the Senate floor, "We are putting our children at risk with absolutely no evidence that this radical idea has even the slightest chance of success."

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 pub-lic 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.

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 is 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 a long, 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 full-time 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.