The Effects of Welfare reform.

The Personal responsibility and work Opportunity act was passed and signed into law in 1996. The legislation is also known as Welfare reform. The act redistributed welfare delivery, and structure from the Federal government to state, and local governments. Allowing states to determine their own model for welfare. Since then some states have placed more requirements for welfare recipients  then the act placed.
Some of the major provisions of the PRWORA of 1996 include but are not excluded to:
1)      Requiring welfare recipients to be actively in search of employment. Limiting benefits for beneficiaries who do not obtain employment two years after receive benefits.
2)      The act also placed a 5 year lifetime limit on benefits paid by federal tax dollars, however there are some exceptions for children.
Now we are on to the real felt effects of Welfare reform. Firstly A study conducted by “The Center on Budget and Policy Priorities,” published in 1999[Yes over ten years ago] found that from 1993-1995 poor families income increased by near $1,000. However the poorest families income after the passage of Welfare reform decreased even though the economy was experiencing significantly better economic growth. Their income fell by around $750 dollars in the two years preceding legislation. [1]
Other findings from the study show a significant drop in the number of children leaving poverty or extreme poverty. From 1993-1995 2.4 million children were lifted out of extreme poverty, compared to only 360,000 in 1995-1997, this is again despite a better economy during the latter years. [1]
The above mentioned effects are a bit shocking and disappointing for the well being of American families yet there's more.  
Before the welfare reform act 12 million Americans were on welfare, after the act the number of Americans on welfare fell to 5 million in 2001 or by 60%. Total yearly benefits for those on welfare fell by around $200 or by 10%. Total welfare spending equaled 28 billion dollars in 1996, and 24 billion dollars in 2001.[2,3] If your scratching your head wondering, “How come total welfare spending only fell by 15% when the number of people on welfare fell by 60% and their benefits fell by 10%?”[2,3]
The answer lies in the fact that the major effect of Welfare reform was a substantial increased in administration costs, commonly known as  bureaucracy, and wasteful spending. In fact the total amount of administration costs increased by 300%. [2,3]. After doing the math I found that we could double the number of people on welfare without adding a cent to the total cost of welfare, if we simply repealed “The Personal responsibility and work Opportunity act (welfare reform)”. The savings would come in the reduction in wasteful spending.
The major reasons why welfare reform increased wasteful spending include but don’t exclude:
1)      A decentralized system. Instead of one federally operated program there are now 50 different ones.
2)      Requirements on welfare recipients such as that they must be actively looking for a job. There’s tons of paperwork that has to be done to prove you’re looking for a job and it takes government time and employees to make sure you’re following the requirements.

Feel free to copy and past these realities as you desire.

References:
Footnote #1
http://www.cbpp.org/...
Footnote #2
http://www.libraryindex.com/...
Footnote #3
http://www.libraryindex.com/...

 

 

The Weekly Audit: One Nation With No Jobs

by Lindsay Beyerstein, Media Consortium blogger

Tens of thousands of Americans rallied for jobs and justice at the Lincoln Memorial in Washington, D.C. on Saturday. Organizers say that 175,000 people turned out for the One Nation Working Together rally, which was organized by labor unions, the NAACP, and other progressive groups. In an interview with GritTV's Laura Flanders, AFL-CIO president Richard Trumka, a leader of the One Nation coalition, summed up the agenda: "Jobs, jobs, and more jobs."

America isn't working

In total, 8 million jobs have been lost in this recession and 2.5 million homes have been repossessed. According to the official figures, about 10% of Americans are unemployed. The true number may be much higher because the official stats don't count those who have given up looking for work. In AlterNet, NAACP President Benjamin Todd Jealous, another featured speaker at One Nation, points out that the black unemployment rate is nearly twice that of whites. Another 11 million Americans are underemployed, according Trumka.

No end in sight

An already bleak job market is about to get even bleaker. Last week, Senate Republicans scuttled a popular emergency fund to create jobs and an extension of long-term unemployment insurance benefits, as Andy Kroll reports in Mother Jones.

Steve Benen of the Washington Monthly offers more details on the now-defunct job creation program known as the Temporary Assistance for Needy Families (TANF) emergency fund. The fund provided cash to create jobs in the public and private sectors. Over 240,000 people in 32 states and the District of Columbia worked at jobs created with TANF subsidies. Last week, Senate Democrats lost their fight to extend the program for another 3 months. With the TANF money gone, layoffs will soon follow.

The Department of Labor will release the its monthly unemployment statistics on Friday. One group of independent analysts predicts that September's unemployment rate will be higher than the previous month, according to Brian Beutler of Talking Points Memo. Unemployment rose from 9.6% in July to 9.7% in August and experts surveyed by Bloomberg News expect the trend to continue. It's doubtful that the economy produced enough new jobs to make up for all the census workers whose temporary jobs ended.

Job skills for America

On the bright side, President Barack Obama is scheduled to unveil a new job training program this week, Annie Lowrey reports in The Michigan Messenger. The program is called Skills for America’s Future. The goal of the project is to encourage partnerships between community colleges and corporations. Colleges and companies will work together to identify areas of rapid job growth and train students to fill those jobs. So far, five companies have agreed to participate in the program, including the Gap., Accenture, United Technologies, PG&E and McDonald’s.

Lowrey argues that this kind of training program will do little to help unemployment in the short term. Right now, companies aren't hiring because there's an economy-wide lack of demand, not because they can't fill positions for lack of trained workers. Demand is low because unemployment is high. Quite simply, people buy less when they don't have jobs, or fear that they will lose their jobs. It's a Catch-22. The jobs won't come back because not enough people have jobs.

Food stamps are stimulus

At the most basic level, an economic stimulus package is designed to break the no jobs/no demand/no jobs impasse by injecting large amounts of cash into the economy. Extending unemployment benefits makes for very effective stimulus because the unemployed typically spend their money quickly. Food stamps are another very efficient stimulus because recipients redeem them right away. To give you some indication of how quickly, consider the Wal-Mart at Midnight effect, which Lowrey discusses in the Washington Independent.

Wal-Mart managers are noticing that increasing numbers of customers are buying staples like bread, milk, and baby formula at midnight on the first of the month. That's because state governments directly deposit welfare and food stamp benefits into debit accounts at midnight. Wal-Mart says it brings in extra staff to keep up with the influx of customers during this period.

By contrast, tax cuts are an inefficient stimulus, especially if the cuts go to people who are already wealthy. In tough times, people who already have everything they need may prefer to save their extra money instead of blowing it on luxuries. Rich people will not throng Best Buy at midnight on tax refund day, no matter how big their checks are.

The high cost of economic inequality

It would be nice to think that unemployment is part of a cyclical downturn, but there is mounting evidence that short-term unemployment is a symptom of a deeper problem: pervasive and growing inequality. Sam Petulla of the American Prospect interviews economist Jacob Hacker and political scientist Paul Pierson about their new book, Winner Take All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class.

The authors note that the U.S. has greater inequality than other industrialized countries. Since the 1970s, the richest Americans have gotten much richer while the rest of us lagged further behind. The authors found that almost 40% of household income gains from 1979-2007 went to the richest 1% of households. The trend is accelerating: the top 1% of households pocketed over half of the economic gains of the 2000s. Hacker and Pierson blame tax cuts for the wealth, lax financial regulations that allow the wealthy to rake in unprecedented profits, and stagnating middle class wages for the widening gap between the ultra-rich and the rest of society.

This brings us back to the old demand/jobs paradox. Contrary to the platitudes of trickledown economics, shoveling an ever greater share of society's resources to the ultra-rich doesn't make everyone else better off. Shocking, right?

Right wing economists say that letting the ultra-rich accumulate still more wealth is good for the economy as a whole because the rich have more money to invest in businesses, which are the main source of jobs. The ultra-rich aren't stupid, however. They aren't going to start businesses unless they foresee demand for goods and services; and everyone knows that demand is flat because there are no jobs. Trying to stimulate the economy by making the rich richer is like shoving money into a black hole. The tried and true way to end a recession is to create jobs and provide social services for people who need the money enough to spend it.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Weekly Audit: One Nation with No Jobs

 

 

 

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