Ali’s blog

Mostly quant stuff with occasional digressions

Welfare-to-work programs

Posted by alifinmath on February 28, 2008

In the FT:

A rethink by policymakers as well as economists has brought a big change over the past decade in the way many developed countries think about their welfare states – turning them into active supporters of work rather than passive supporters of inactivity at the taxpayer’s expense.

Most famously in Wisconsin, and then in other US states, lone mothers on benefit within weeks of having given birth were required to look for work and take it – or face removal of their cash assistance. Time limits were set on how long they could claim.

America’s welfare rolls tumbled 60 per cent from a peak of more than 5m cases to fewer than 2m in less than a decade. Controversy remains over the impact of that. Some former claimants did well. But even advocates of an approach that to European eyes looks decidedly harsh worry about the one in five “floundering families” – lone parents who appear to have no recorded income from either benefits or work.

Whereas European programmes tended to train the unemployed – often expensively and unsuccessfully, for jobs where it turned out there was little real demand – the US approach was “work first.” The important thing was to get people into a job – any job – whether flipping hamburgers, waiting at table or lugging parcels. Dealing often with families where parents and even grandparents had never worked, programmes focused on “soft skills” – getting up and turning up on time, losing weight, looking neat, not swearing at the boss or customers. Skills training could wait.

In exporting their model, however, the US operators face some hindrances. “There is a marked difference between the US and much of Europe,” Dan Finn, professor of social policy at Portsmouth University and an employment programme expert, says of the sector. “In the US, the central aim was to reduce the rolls – simply to get the numbers claiming down.” Although the UK, Australia and the Netherlands have moved much more to a work-first approach, much of Europe “still has a stronger sense of social inclusion and the need to build human capital, while the UK, for example, has a strategy to reduce poverty. So it is not enough to claim success simply because lots of people have disappeared and stopped claiming. The sort of outcome seen in the US – where some families appear to have no income – is not one that European countries want.”

I have mixed feelings about all of this. My first point is that in post-industrial USA and Europe, many well-paid and skilled industrial and white-collar jobs have irrevocably disappeared — casualties of technology or because they’ve drifted to lower-wage countries. There are fewer meaningful, skilled, and manufacuring jobs around: flipping burgers is not quite the same as die-making and welding. 

My second is that real work serves not just an economic purpose but alse to provide some sort of social cohesion. The erosion of this cohesion can be seen in contemporary Britain, where the growth of a large underclass  — households where no-one works — has exploded in the last thirty years. But this cohesion can’t be recovered by placing people in meaningless low-paid temporary service-sector jobs or make-work schemes.

And my  third is that welfare-to-work schemes often serve cynical political purposes: the idea is to massage the unemployment or welfare figures, while not addressing the root of the malaise. This is particularly the case in the United States, where politicians seeking re-election or more important jobs, and immersed in a soundbite media culture, are anxious for good statistics — regardless of the truth behind them. 

Related to this political anxiety to get people off the unemployment or welfare rolls (and the concomitant evisceration of whatever sparse welfare provisions the USA may have once had) is the fact that there are large swathes of American workers who can be classed as “working poor”: people whose incomes don’t really allow them to support families; whose incomes aren’t enough to pay for a roof, clothing, or food (let alone medical care, higher education, or any sort of rea; skills training). The Europeans aren’t keen to go this route.

Having said this, however, there is some merit in schemes that encourage unemployed and demoralised people to enter the world of work again, no matter how meretricious the work or how ill-paid. Humans define both themselves and their social relationships by their work and the lack of meaningful work can be detrimental to mental and physical health.

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4 Responses to “Welfare-to-work programs”

  1. Chris Prouty said

    I hesitate to comment on this story for fear of coming across as ignorant and heartless, but I can’t help myself.

    I’ll say simply this: it starts and ends at home. Any attempt at “worker training” and “workfare” is a pathetic band-aid for a deeper social problem. Kids who are born into and raised in households where nobody works, nobody is expected to work, and nobody has any ambition to help themselves are doomed. This is the real problem that needs to be addressed, but it is politically intractable. Telling parents: “get off your ass and raise your children” won’t get votes. I went through the public school system, for better or worse, but I attribute every ounce of success I’ve had to my parents’ willingness to teach me things at home and provide me the resources to explore my ideas independently.

    This is not a problem that will be solved through policy or rhetoric. The only real solution will come from within the communities that currently rely on the government. When they decide they will no longer accept failure and medicority, then change will happen, and not a moment before.

    As an aside, I’d like to share my view that the European approach is extremely naive. Barring some physical or mental disability, people who don’t want to be poor anymore simply are not. I will express a few simple rules that virtually anyone can follow to live a decent lifestyle: 1) Don’t use or sell drugs, 2) Do not have any children before being able to support them, 3) Try hard at everything you do. Following these rules may not make you Donald Trump, but it will keep you off of state sponsorship.

  2. alifinmath said

    You’re making valid points. It’s generally acknowledged that the home is more important than the school or other state institutions in early character formation and development of basic skills (such as literacy and numeracy). I would like to look at it from another angle, though. You refer to “communities.” Yet communities have vanished in much of today’s world. We don’t live in the USA of 1850 or the England of 1700, when organic communities thrived, and the role of the state was minimal. The co-evolution of modern capitalism and the modern state has rent asunder these communities; as Maggie Thatcher once famously proclaimed, “There’s no such thing as society.”

    What we often have today are nuclear families, with both parents working long hours to make ends meet, and with scant time for the children. If wages had kept pace with productivity, this might not be necessary. My point is: laissez-faire capitalism creates intense pressure on families and communities, thus helping to engender an unskilled underclass. For instance, with regard to Thatcher’s Britain (1979-1990), the proportion of women aged 18 to 49 who were married fell from 74% to 61%, while the proportion cohabiting increased from 11% to 22%. Births outside marriage more than doubled. One-parent families increased from 12% in 1979 to 21% in 1992, with the biggest single increase being in single mothers who had never been married. By 1991 there was one divorce for every two marriages in Britain — the highest divorce rate in the EU and comparable only with the US. These statistics are from John Gray’s “False Dawn.” Gray goes on to ask whether it is coincidental that no EU country apart from Britain has imposed American-style deregulation on its labor market.

    I could go on in similar vein. Modern capitalism, I argue, demands labor mobility and downward flexibility for wages and benefits. And this is across the board — for white-collar workers as well as blue-collar. If jobs and entire factories are being transplanted (often overseas), what impact does this have on families and communities? How can people plan for their children’s upbringing if they don’t know where they’ll be next year, either geographically, or with regard to employment? Furthermore even the anxiety, uncertainty and stress so prevalent at the workplace today have to have an impact on the family.

    In conclusion, I’m not sure it’s entirely fair to blame just the individual, family, or “community”: the economic and political structure of the modern world, created largely for the benefit of financial elites, has done much to undermine community cohesion, social bonds, and family functions and ties.

  3. Chris Prouty said

    The alternative to American-style capitalism isn’t particularly appealing either. You brought up the EU in your post – take a look at France. Is it preferable to have legions of disenfranchised youth and young adults in their late 20’s unable to find work? It’s my understanding that not working until the late 20’s has become institutionalized in France. Thanks to onerous government labor policies and an economy on the verge of collapse under the weight of social programs, people under 30 are virtually unemployable.

    Thatcher was right – every man for himself.

  4. alifinmath said

    Neither alternative — the European one with no jobs, and the American one with McJobs for Generation Xers — seems particularly appealing.

    It’s Thatcher’s hypocrisy that grates on people’s nerves. If it really were every man for himself, at least it would be a level playing field. But Thatcher hijacked state powers to enrich her cronies. The “neo-liberalism” that began with Pinochet, Thatcher, and Reagan has involved elites hijacking the state for personal benefit and then having the gall to tell everyone else “they’re on their own.”

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