The fundamental conservative law of work incentives goes like this: If you give rich people more money, they will work harder. If you give poor people money, they will work less. Therefore, the rich need tax cuts, and the poor need work requirements.
President Trump and the Republican majority in Congress have, of course, passed the regressive tax-cut package. They are actively pursuing adding work requirements to food assistance (SNAP), housing subsidies, Medicaid and the rest of the safety net.
Should they succeed, the result of their strategy will not be more work. It will be richer rich people and poorer poor people. It will exacerbate existing inequalities.
I will present the evidence in a moment, but, to be clear, requiring work of those who use low-income programs may initially encourage those who would have worked anyway to do so more quickly, at least if they don’t face significant employment barriers and also live in an area where jobs are available. But the reality of the stressors of poverty, the volatility of the low-wage labor market, the lack of decent and affordable child care, discrimination, and more will assert themselves and limit the long-term effect.
For example, the combination of work requirements in the 1996 welfare reform, the expansion of the earned income credit, additional child-care funding and the uniquely tight latter-90s labor market led to increases in the employment rates of mother-only families. But as the job market weakened, those employment gains faded, even as the work requirements remained in place. Meanwhile, the loss of income supports exacerbated not just poverty but deep poverty (families with income below half the poverty threshold, about $10,000 for a single parent with two children).
Compelling new evidence comes from data on the Kansas TANF (Temporary Assistance for Needy Families) program, which imposed tough, new work sanctions on some of the state’s most economically vulnerable families. For example, in late 2011, the state began requiring applicants to complete 20 job contacts per week before their application would be considered, along with shorter time limits on recipiency, longer sanction periods and harsh sanctions for missing appointments.
The first thing that happened is the Kansas TANF caseload fell sharply, by more than half. But did the leavers join the labor market?
In fact, most adults who left TANF were already working, and they worked just as much before they left TANF as they did afterward (see chart). About 70 percent of these low-income parents worked at some point both in the year before and the year after they left, and 84 percent worked at some point over that full period (before or after leaving the rolls). These relatively high employment rates suggest that their spells on TANF were probably short, with families using the program as it was intended: a temporary support when work is not available or feasible.
This is an extremely common finding in the literature on poverty and benefit receipt. The notion that working-age, able-bodied poor people with public assistance do not work is wrong. It is true that their connection to the job market is often less stable than that of the nonpoor. About a third of the parents in the Kansas study posted solid labor-market attachment, working at least seven of the nine quarters observed in the study, and about half worked between one and six quarters. Among adults who work and receive some form of assistance to meet their basic needs, just under half work full-time.
More than half of able-bodied, working-age SNAP recipients work when on the program, and more than 80 percent work in the year before or after receiving SNAP benefits (that is almost 90 percent for families with kids). About 60 percent of Medicaid beneficiaries work, and among working-age households in the Housing Choice Voucher program, 70 percent have at least one member who is working or recently worked.
But work is not the ladder out of poverty it needs to be for these families. Though some falsely claim that sanctioned workers are thriving in Kansas, a full four years after losing TANF benefits, the parents who were kicked off the program because of a work sanction had median earnings of only around $2,000, about 10 percent of the poverty level. Clearly, the labor market problem facing these impoverished parents was not receiving TANF. Thus, work requirements utterly failed to move them out of poverty.
The true problem is that too many poor adults face steep labor market barriers, including skill deficits, criminal records, mental health issues and employer discrimination. And/or they live in places where even in good economic times, living-wage jobs are scarce.
Punitive measures like work requirements and time limits won’t help them. They need sectoral training (skill building specific to local employers’ needs), adequate minimum wages, work supports such as reliable child care and paid family leave, wage subsidies (e.g., an expanded EITC), health care, and in areas with too few opportunities, direct job-creation programs.
The current Republican playbook is to provide tax cuts for the wealthy and offset their cost by cutting benefits for the poor. Seen in this light, work requirements are a thinly veiled tactic to reduce participation in these programs. We know how to help economically vulnerable people, and, unsurprisingly, it does not entail making them worse off.