House Speaker Paul Ryan unveiled a new House Republican anti-poverty plan on Tuesday. On the surface, it reads like a greatest hits of past Republican attempts to restrict safety net benefits and includes some bizarre non sequiturs that Republicans also happen to support, like a call to eliminate a regulation banning investment advisers from scamming their clients into bad, higher-priced investments.
But the plan is nonetheless hugely revealing about how Ryan, and the Republican Party in general, thinks about poverty. When left-of-center analysts talk about poverty, they're talking about material deprivation, and government spending is as good at reducing homelessness or hunger as money from earnings. So big, ambitious liberal plans to end poverty tend to lean heavily on direct spending initiatives, like subsidized jobs or just handing out cash.
Ryan, the plan makes clear, views this as cheating. Ending poverty by spending money does not, in his framework, address the "root cause" of poverty: Too few people are at work making enough money to support themselves. So his plan is animated by an obsessive desire to reduce reliance on safety net programs and increase the share of low-income people getting by through work.
He's right on one thing: It does appear that work requirements like the ones he's proposing get people to work more, increase their earnings, and reduce their reliance on government programs. But America's experience with welfare reform has taught us that this comes at a significant cost. While requirements boost work somewhat, they're not enough to get a job at a living wage for everyone who can work, and they do nothing for the elderly or disabled who can't work at all. The result is enduring poverty among those who can't work or can't find work.
The problem for Ryan is that the make-more-people-work vision of fighting poverty, at least when not accompanied by government spending to get everyone a job, doesn't have a great track record of lessening material deprivation. Indeed, among the poorest Americans this approach has increased hardship.
Ryan's work requirements won't fix poverty
Ryan's plan is long, but the biggest components are:
- New work requirements for recipients of food stamps (or SNAP) and housing assistance.
- Tougher work requirements for Temporary Assistance for Needy Families (TANF, or cash welfare).
- Slash cash assistance from Supplemental Security Income (SSI) in favor of subsidizing services for the disabled.
- Give states more control over safety net programs, including the power to consolidate them.
- Evaluate social programs and direct money toward ones with positive results and away from ones showing little effectiveness.
The first problem with the emphasis on work requirements is that SNAP recipients, in particular, generally aren't capable of working. Forty-four percent of recipients are children, 18 percent are either elderly or disabled, and another 4 percent are full-time caretakers. And 14 percent are already employed, for good measure:
That leaves only a fifth of recipients as potential targets of this policy. Even if every non-disabled, non-elderly adult on the program got a job, and even if those jobs paid enough to lift their kids out of poverty too, you'd still be left with roughly 10 million disabled, elderly, and caretaker recipients, the vast majority of whom will remain below the poverty line. Work requirements do nothing to lift them out of poverty.
And the call elsewhere in Ryan's plan for SSI funding to be cut and redirected toward spending on services would likely sink significant numbers of elderly and disabled people further into poverty.
What's more, it's not clear exactly how effective additional work requirements would be at increasing earnings and cutting poverty among the minority of SNAP beneficiaries who could be working and aren't. Perhaps the best evidence we have on the question comes from experiments conducted in states in the late 1980s and early '90s, when the federal government gave out waivers to let state and local governments experiment with welfare-to-work approaches. Those experiments were usually done rigorously, with random assignment.
A recent piece by the Center on Budget and Policy Priorities' LaDonna Pavetti took a look back at that experimental literature. In most studies, welfare requirements really did lead to an increase in the share of recipients working, in the first year or two. That said, only a small handful still found significant results after five years.
The best of them, in Riverside, California (long touted as a success story in welfare reform circles, and fairly so), raised the percentage of welfare recipients working by 5 percentage points by year five. That's good, but it was ultimately an increase from 39.9 percent to 44.9 percent. Huge numbers were left not working and were no longer eligible for benefits either.
That helps explain why Riverside's work requirements did not significantly change poverty rates, relative to a control group without requirements. In only two experiments, in Atlanta and Portland, did work requirements significantly cut poverty, and even then the effect size was small. In Portland, 83.4 percent of those not subject to work requirements were in poverty, but so were 79.4 percent of those subject to them.
That's progress, especially if, like Ryan, you view gains against poverty made through work as more legitimate than those made through transfer payment. But even the most effective welfare-to-work programs did not provide a solution for the remaining four-fifths of recipients left mired in poverty.
Ryan is trying to repeat a policy from the 1990s that raised earnings for some but left others behind
The experience of national welfare reform bears this out, and suggests that though work requirements increase earnings and workforce participation on average, they simultaneously lead to an increase in the share of single mothers receiving neither welfare checks nor paychecks from jobs.
The Urban Institute's Pamela Loprest and Austin Nichols estimate that while one in eight low-income single mothers were disconnected — having no earnings and no TANF or SSI benefits, and not in school — in 1996, one in five were in the years from 2004 to 2008:
Similarly, Wisconsin's Rebecca Blank and Michigan's Brian Kovak (now at Carnegie Mellon) find that the share of single mothers with no earnings or welfare and not in school doubled from 10 to 20 percent from 1990 to 2005. If you include women with very low earnings and no SSI income, the rate goes from 12 to 22 percent. As work requirements spread, mothers who couldn't find work lost benefits and were left getting by with nothing.
Currently, people in this situation get by mostly by using food stamps, as Johns Hopkins's Kathryn Edin and University of Michigan's Luke Shaefer have documented in their research on the extreme poor in America. It's not a complete support system, as you can't spend SNAP money on housing or clothing or other non-food necessities, but it keeps people from starving. If SNAP were suddenly subjected to a work requirement, the poorest would no longer have that final safety net. They'd be truly left with nothing.
Imposing work requirements would also destroy SNAP's role as a tool for fighting recessions. Because food stamps are currently an entitlement, anyone can start claiming them when they lose their job or their earnings fall, and so there are natural increases in caseloads during economic downturns where work is hard to come by. If benefits were limited to those in work, or states suddenly had a strong incentive to push people off SNAP, that wouldn't be the case.
Recessions would lead to much larger increases in poverty than they currently do. This is a situation where the unsubsidized work-only approach to poverty reduction really falls short. If your whole approach is pushing the poor to lift themselves out of poverty by getting jobs in the private sector, you're naturally going to run into problems when the private sector is not generating enough jobs to go around.
Ryan's vision of poverty reduction has real political appeal. The bootstrap narrative of a plucky poor person escaping poverty through hard work and perseverance has a lot of purchase in the US, and when Americans imagine someone "escaping poverty," it's usually through a story like that, not by getting a check.
But the last major attempt to reform programs for poor Americans suggested that simply pushing the poor into a Horatio Alger narrative isn't enough. There need to be jobs to gain, those jobs need to pay a decent amount, the people being pushed need to be capable of working, and none of those prerequisites will take care of itself. If there aren't enough jobs, or a large population that just can't manage to work due to disability or other limitations, or jobs don't pay enough to escape poverty, a free market work-only approach will leave people struggling.