I wish President Reagan could get it clear that welfare and the War on Poverty are two different things. His confusion on this point marred an otherwise solid (though thoroughly conservative) radio address last Saturday.

"From the 1950s on," the president said, "poverty in America was declining. American society, an opportunity society, was doing its wonders. In 1964, the famous War on Poverty was declared, and a funny thing happened. Poverty, as measured by dependency, stopped shrinking and then actually began to grow worse. I guess you could say poverty won the war."

A more careful examination of the period the president had in mind might show something else: poverty was declining when the overall economy was doing well. Then the growth in productivity, which had been humming along at nearly 4 percent a year, fell to about 1.5 percent, and the poverty curve started up again. It strikes me as plainly wrong to blame the increase on the War on Poverty, which, contrary to the president's characterization, was not primarily concerned with transfer payments but with improving the education, the attitudes, the job skills and the employment opportunities of poor people. The War on Poverty was by no means an unqualified success (partly because we stopped fighting it), but I know a number of people whose lives it permanently changed for the better.

But Reagan's major point -- the harm done by welfare -- was on target. "We are," he said, "in danger of creating a permanent culture of poverty, as inescapable as any chain or bond, a second and separate America, an America of lost dreams and stunted lives. . . . The irony is that misguided welfare programs instituted in the name of compassion have actually helped turn a shrinking national problem into a national tragedy." That is a libel against the War on Poverty but a sad fact when it comes to welfare.

Welfare can be a lifesaver for those who are temporarily out of luck and who expect shortly to become economically self-sufficient once again. Welfare does its damage to those who live at the margin: for whom the choices are the public dole or a job that pays little if anything more, and which provides no health insurance or prospect of promotion. There is, as the president said, something "desperately wrong" with an approach that makes it reasonable to prefer handouts to a job.

But it is far easier to see the harm welfare does than it is to see how to fix it. If you set the welfare grant at what it costs to care for a family, you create a disincentive for anyone to take a dirty, dead-end job that pays approximately that amount. If you set the grant at less than it takes for a family to live in decency, you have government-ordained squalor.

Nor is it any solution simply to eliminate government assistance to those who need it desperately.

The White House expects in the next several months to release the results of a study of welfare and proposals for revamping the present system. I don't know what that study will propose, but I can tell you what ought to be its centerpiece: jobs.

One thing that has led to the heartbreaking increase in fatherless homes is the sinfully high rate of unemployment among young black men. Since these young men do not qualify for welfare, welfare can hardly account for their joblessness. What does account for it is the fact that the economy, even while in a modest recovery, does not provide anywhere near enough entry-level jobs. And creation of those jobs has not been a high priority for this administration.

Let President Reagan propose jobs, and the appropriate training for those jobs, as an alternative (or adjunct) to welfare, and he might be surprised at how much backing he will get from people who have never been among his supporters.

Such a proposal would cost money, of course, but to use the president's words regarding welfare, that prospective outlay "pales before the sinful waste of human potential -- the squandering of so many millions of hopes and dreams."