1995 Global Cultural Diversity Conference Proceedings, Sydney

Poor Support, Poverty and the American Family
Assumptions behind Welfare Reform in the USA
and their Relationship to Lives of Welfare Mothers

Continued, from part one

Assumption 4: Welfare mothers do not work even when jobs are available.
Fact: As I indicated, many welfare mothers work. Of those that do not, many probably would if they could juggle family and work responsibilities.

Ellwood repeatedly underscored this point in his acclaimed book on poverty and the American family, Poor Support. He says that expecting single mothers to work when work does not pay is unrealistic and expecting them to simultaneously perform two roles, breadwinner and nurturer, is plainly unfair. The conundrum is clear: work as much as possible to support your family but do not neglect your children in the process.

Two factors, among the several, that significantly prevent a single mother from holding down a job are child care and the minimum wage.

First child care. Many researchers in the U.S., like Blau and Robins (1988), have shown that child care costs affect female labour force participation. The evidence is persuasive. Also, quality market child care is expensive. Clearly if single mothers have access to relative-provided child care then market child care is less of a concern. But not all welfare mothers have relatives available for child care nor can they afford to pay for market child care. Child care studies in California, Kentucky, and Massachusetts have each shown that the labour supply of welfare mothers is sensitive to child care costs and that poor mothers would prefer to use relatives if they were available (Blau, 1991).

Furthermore, child care expenditures take up a relatively larger share of a single mother's paycheck as most earn less than their married counterparts. A back-of-the-envelope calculation shows that even if a welfare mother finds inexpensive child care for her two children while working at a minimum wage job she is still no better off financially than if she had stayed at home and cared for her children. Her monthly earnings after accounting for child care and other work-related expenses are lower than her monthly welfare benefits. Why would anyone choose a paycheck that further impoverishes them over a welfare check and medical insurance?

Second, the minimum wage. The low-wage labour market in the U.S. is shrinking. As a result, wage inequality between those with college training and those who do not continues to grow. Murphy and Welch (1993) have repeatedly documented this trend.

Basically, there are too few low-skill, low-wage jobs for too many people wanting them. Different groups, including welfare mothers, teenagers from middle-income families, and low-skill single males, search for these low-wage jobs and fill them, until a better job offer comes along. I do not have data to support this conjecture, however I suspect that among all low-wage U.S. workers, welfare mothers who lose these sorts of jobs are the ones most likely to have shorter time horizons within which to find another job; with children to care for, their job searches are severely constrained.

My research shows that when a welfare mother gets a low-wage job, increases in minimum wage, which raise the cost of her labour, make her less competitive in the market place, more likely to lose a job, and more likely to remain on welfare (Brandon, 1994).

Although hikes in the minimum wage may raise some low-wage workers out of poverty, I believe such hikes do not help welfare mothers compete in low-skill, low-wage labour markets. If we want to help welfare mothers attain and retain jobs, as well as increasing their productivity, there are better policies than ones that increase the minimum wage, like subsidised child care, job search services, and training programs.

In any case, commonly-held perceptions that welfare mothers are slothful and evade work are fallacious. Instead of questioning the work ethnic of welfare mothers, it is probably better to ask questions about the effects of the secular downward trend in the demand for low-wage labour market is the U.S. on welfare mothers' work prospects while seeking extra data about the effects of regulated labour markets on their employment patterns too.

Assumption 5:

Single mothers are chronically dependent on welfare.
Fact: Most single mothers do not receive welfare for a long period of time. Danziger, Sandefur and Weinberg's book Confronting Poverty (1994) shows that most welfare spells are short. For blacks, 33.7 percent of spells last only a year, and an additional 16.2 percent end in the second year. For non-blacks, the corresponding figures are 44.0 and 22.8 percent. By the end of two years, half of the welfare spells for blacks and two-thirds of the spells for non-blacks have ended. These data provide evidence that most welfare entrants are not trapped in perpetual dependency.

I think that the force perpetuating his purblind assumption is the substantial minority of cases that remain open for protracted periods. At the end of seven years, 5.8 percent of welfare spells of non-blacks were still in progress and 25.4 percent of welfare spells of blacks were still in progress.

Assumption 6:

Single mothers are "hooked" on welfare. If they leave the system, most return.
Fact: Not so. Data on multiple episodes of welfare use are limited but new research suggests that most women do not return to the welfare system.

Ellwood (1986) reported some time ago that only 11 percent of the mothers he studied returned within 12 months of exiting the welfare system. Estimates from others are not that much higher than Ellwood's numbers. Blank and Ruggles (1994) found that about 20 percent of mothers returned within six months of leaving the system and I found when building upon their research with fresh data that only 16 percent returned within six months of leaving.

Assertions that such rapid returns to the welfare system shows that it is too attractive and too permissive are mistaken.

My latest research rejects the notion that the welfare system has an "addictive property" (Brandon, 1994). Rather, my research suggests that it is poor education, labour market failures, and income uncertainties that drive mothers back onto the welfare rolls. I have found that single mothers with a repeat of welfare experience are those that cannot nail down an income floor or are the ones who become responsible for additional children.

Like others, single mothers aim to avoid the vagaries of the labour market and want to minimise fluctuations in their income. Thus, it is logical to return to welfare if that low yet certain income base better safeguards their family than unstable income earned in the labour market.

Assumption 7:

The welfare systems breaks up families and encourages female hardship.
Fact: In America because welfare benefits are primarily paid to female heads of families the system provides an obvious incentive to delay marriage and remarriage, increase rates of marital dissolution, and have children outside of a marital union, all of which lower the percentage of the population that is married.

Moffitt (1992) shows that since 1960 there has been a steady growth in female headship discussed previously, which can be seen to have progressed considerably faster for blacks than for whites. Also divorce rates and illegitimacy rates have increased, which have been stronger for non-whites than for whites (Moffitt, 1992).

There have also been mixed signals for the hypothesis of welfare effects. Real benefits grew from 1960, into the mid-70s as did most of the demographic variables. However, the decline in real benefits after 1975 does not accord with the hypothesis. Of the trends in the demographic variables in the figure, only the divorce rate turns down in the post-1975 period. In addition, while the growth rate of non-white illegitimacy is slightly lower after 1975 than before, the lack of a strong similar slowdown in female headship or in the white illegitimacy makes the evidence on non-white illegitimacy not very convincing. For these reasons the evidence fails to support the argument that the welfare system had been responsible for the time series growth in female headship and illegitimacy. (See Moffitt [1992] for an excellent review of the incentive effects of the U.S. welfare system and demographic trends).

Apart from the lack of time series proof, evidence from rigorous economic models that test the conjecture and that control for other determinants of female headship is mixed. But the most notable characteristic of this literature, as Robert Moffit (1992) has ably described, is a failure to find strong welfare system effects. None of the existing studies find effects sufficiently large to explain, for example, the increase in female headship in the late 1960s and early 1970s.

Assumption 8:

Welfare is transmitted across generations.
Fact: Again, in Moffitt's seminal 1992 article in the Journal of Economic Literature he reviewed results from the available studies on this issue. He concluded that these studies on the intergenerational transmission of welfare dependency provide consistent evidence of strong correlations between parental welfare receipt and the later behaviour of daughters. I agree with him and I believe that there is indeed a strong correlation across generations.

Findings show that daughters from welfare families are much more likely to get welfare themselves at a later date, and are more likely to have births in general, especially premarital births (Danziger, Sandefur and Weinberg 1994). Moreover, Gottschalk (1990) finds that although a substantial proportion of the daughters of welfare mothers do not get welfare themselves as adults, their risk is much greater than the risk of daughters whose mothers did not receive welfare.

A suspected link between welfare use in one generation and that of the next does not mean that welfare per se causes welfare use across generations, however. It could simply mean that mothers and daughters share similar traits that can increase both individuals' chances of getting welfare. If a mother and her daughter both grow up in blighted neighbourhoods, where jobs and potential marriage partners are scarce, then both will most likely be poor and be more likely to experience single motherhood; ergo, both have a greater need for public assistance.

Critics and criticisms of the American welfare system abound. This paper has presented just a few of those complaints. Other objections include that the welfare system encourages additional births so that mothers can get higher welfare benefits; or that it promotes illegal migration into the U.S.; or that it causes poor women to move to states with higher welfare benefits; or that it leads non-custodial fathers to pay less child support. These are serious accusations that deserve scrutiny as well. (The literature cited section in this paper cites several notable books that deal with these issues.)

Contrary to what political pundits say, I argue that the American people support a federal welfare system. In fact, public opinion polls show that Americans want more not less government involvement in health care, crime prevention, job creation, and education. American suspicion with big government and taxes is not the same thing as wanting social programs gutted (Bobo and Smith, 1994).

However, ever since the New Deal, welfare programs have caused hand-wringing in America. Yet, I think that Americans do not want to dismantle the welfare system, instead they want successful programs that help the poor single mothers into a state of economic independence. Americans are generous; they have a long historical tradition of poor support at all levels, local through federal.

If the American people appreciated findings, like the ones contained in this paper, more of them would back modification to the current system, not its eradication. The key lies in promoting understanding of the diversity in welfare mothers' lives. If the public agreed on understanding the variety of responses to the welfare system, then 60 years of progress, starting with the New Deal, will not be replaced in the 1990s by a raw deal.

References

Blank, R. and Ruggles, P. 1993. When Do Women Use AFDC and Food Stamps? The Dynamics of Eligibility vs. Participation, mimeo. Northwestern University.
Blank, R. and Ruggles, P. 1994. Short-Term Recidivism among Public-Assistance Recipients, American Economic Review (May) pp. 49-53.
Blau, David. 1991. The Economics of Child Care. Russell Sage Foundation, New York.
Bobo, L. and Smith, R. 1994. Antipoverty Policy, Affirmative Action, and Racial Attitudes, in Danziger S., Sandefur G., and Weinberg D. (Eds.) Confronting Poverty Cambridge Mass.: Harvard University Press.
Brandon, Peter. 1994. A comment on Future Dependence among Former AFDC Recipients, submitted to Journal of Human Resources.
Brandon, Peter. 1994. Jobs Taken by Mothers Moving from Welfare to Work and the Effects of Minimum Wages on this Transition, Working Paper, Employment Policies Institute, Washington D.C.
Danziger et al., 1982. Work and Welfare as Determinants of Female Poverty and Household Headship Quarterly Journal of Economics, August, 97(3), pp. 519-35.
Danziger S., Sandefur G., and Weinberg D. 1994. Confronting Poverty Cambridge Mass.: Harvard University Press.
Edin, Kathryn and Jencks, Christopher 1992. Welfare in Rethinking Social Policy: Race, Poverty and the Underclass Cambridge, Mass.: Harvard University Press.
Ellwood, David 1988. Poor Support Basic Book, Inc., New York.
Garris, Kathleen. 1992. Work and Welfare among Single Mothers in Poverty paper presented at the Population Association of America Annual Meetings, Denver, April, 1992.
Gottschalk, Peter 1990. AFDC Participation across Generations American Economic Review May 80(21), pp. 367-71.
Moffit, Robert 1992. The Incentive Effects of the U.S. Welfare System: A Review Journal of Economic Literature. vol. XXX (March), pp. 1-61
Murphy K. and Welch, F. 1993. Industrial Change and the Rising Importance of Skill in Danziger S. and Gottschalk P. (Eds.) Uneven Tides: Rising Inequality in America Russell Sage Foundation, New York, NY. pp. 101-132.

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