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Hawaii's Welfare Rolls Buck National Trend, Swell by 36 Percent

By William Claiborne
Washington Post Staff Writer
Wednesday, August 27 1997; Page A08

In Alabama, welfare rolls have plummeted 38 percent in the past four years. In New Hampshire, they've dropped by a third, and in Wyoming, they've fallen an astonishing 68 percent.

So why, in the midst of an unprecedented national drop in public assistance caseloads, has Hawaii remained a stubborn exception? What explains the 36 percent rise in welfare recipients in this tropical island state?

No one knows for certain what is causing Hawaii's rolls to balloon – or the rest of the country's to contract for that matter. But social policy analysts and welfare specialists here believe Hawaii's rising caseloads may result from a combustible mix of a stagnant state economy and a welfare system that, relative to others, has yet to be severely overhauled.

Indeed, Hawaii is one of the few places in the country where the economy has not staged a strong rebound from the downturn in the early 1990s – mainly because it is so tied into Japan's lackluster markets. And it is about the only place where welfare recipients have largely avoided the "get-off-the-dole and get-a-job" message that has bombarded recipients almost everywhere else. But questions are being raised about how much its uncurbed public assistance rate can be attributed to high unemployment and how much results from a welfare culture that has seen relatively little change.

Unlike many states that opted to cut off benefits to able-bodied recipients who fail to work, Hawaii adopted a soft-landing approach providing incentives for seeking a job and gradually escalating disincentives for staying on welfare.

Hawaii's 6.25 percent welfare dependency rate is second only to California's 7.5 percent rate. The national average is 4 percent.

State welfare officials here also note that, while the rolls may be increasing, the pace of growth has at least slowed. In 1993, average monthly caseloads were rising by 11.4 percent annually. This year, the rate of increase has been a more modest 1.7 percent. This demonstrates that while the total caseload may still be rising, the state is beginning to get a handle on welfare rolls, the officials contend.

Also, they believe that once the Hawaiian economy improves, so too will the welfare picture. "If you have slow economic growth and unemployment is high, you wouldn't expect the welfare rolls to go down. As we recover, the rolls probably will go down, and I think we will recover," said Kate Stanley, deputy director of human services.

In June, the unemployment rate in Hawaii stood at 6.6 percent of the work force, about 2 percentage points above the national average. That state jobless rate is up from last December, when it stood at 5.1 percent.

Last year, Hawaii registered a nearly 47 percent increase in business failures from the previous year – the fourth highest increase in the nation – and its listless economy is growing at less than 1 percent a year.

The sluggishness is part of Hawaii's almost dual economy with Japan. With the yen off about a third from two years ago, Japanese tourism and investment is down and as a result the shops, hotels and restaurants that provide low-wage, entry-level jobs are doing less hiring. Also, military bases – another source of low-wage jobs – are hiring fewer workers as a result of post-Cold War defense downsizing.

"High unemployment is a good predictor of welfare rolls. If you look at the states where the number of welfare recipients has gone down, you will also see that the economy has grown stronger," Stanley said.

However, Jack Tweedie, director of the children and families program at the National Conference of State Legislatures, said that while the economy is the "critical and primary reason for the caseload increases" in Hawaii, it may not be the only one.

Since the driving force in the decline of caseloads on the mainland has been the changing attitudes toward public assistance entitlements, "it makes sense that given the fact that Hawaii's caseloads have not gone down they may have resisted that," Tweedie said.

Tweedie said that Hawaii had adopted a "fairly aggressive stance" in reducing benefits to recipients who stay on welfare instead of finding work, but that its welfare reforms "may not have sent as clear a signal" as some other states that established strict time limits.

Rather than set two- or three-year time limits on cash assistance to force recipients into work, as many states have done, Hawaii created disincentives to remaining on welfare by making progressively deeper cuts to a recipient's benefits.

The program, called Pursuit of New Opportunities (PONO) provides that welfare payments – which at $712 a month for a family of three are among the highest in the nation – drop to $569 a month in the first two years if at least one person in the family is able to work but fails to do so. For the next three years, benefits drop 10 percent annually, after which recipients drop off the rolls. They also fall off assistance if their net earnings reach the 1993 federal poverty level of $1,140 a month for a family of three.

While the old welfare system reduced benefits dollar for dollar for what a recipient received from a part-time job, PONO allows recipients to keep a larger share of their welfare checks if they work. In the first two years of a reduced benefits check, a recipient has to work only 7.5 hours a week at the minimum wage to make up the difference, meaning that even with just part-time work, a family can end up with a higher income than provided at the top end of the welfare scale.

Stanley said the difference between Hawaii's reforms and those of most states partly explains the continuing increase in rolls here.

"Other states changed the eligibility for benefits and their economies can support the jobs required for that kind of reform. We reduced [the recipients'] monthly grants, but we didn't change the standard under which they are eligible. This means more people are eligible, but at a smaller total cost per month," Stanley said.

In fiscal 1995, Hawaii distributed $165 million in cash benefits, excluding food stamps. The next year, it gave out $163.6 million, and in the fiscal year ending last June, it distributed $161.7 million, state officials said.

© Copyright 1997 The Washington Post Company

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