August 10, 2006

WOMEN, WELFARE, WORK, AND WAGES


Caption: Venus can attest that it's not always easy to be a single mom.

The 1996 federal welfare reform legislation is ten years old this month. Some people are celebrating this anniversary as a great success. The legislation has been celebrated for reducing poverty among single parent families and increasing workforce participation.

It is true that poverty rates went down for single-mother families between 1995 and 2000, but other factors were at work as well. The minimum wage was increased in 1997 and the federal Earned Income Tax Credit--one of the best anti-poverty programs ever--was expanded in the 1990s as well. Probably the biggest factor, though, was the rapidly expanding job market.

According to Jared Bernstein of the Economic Policy Institute,

the strong increase in employment opportunities in the latter 1990s meant that the demand for labor expanded more than enough to meet the increase in labor supply precipitated by welfare reform.


So what happens when the labor market heads south? You guessed it, the poverty rate tends to rise, in this case from 33 to 36 percent for single mothers between 2000 and 2004. Annual hours worked by these women decreased from 1,170 to 1,068 in the same period.

According to Bernstein,

Single mothers clearly responded to both policy and economic changes in the latter 1990s, sharply increasing their annual hours of work in the paid job market. But the recession and jobless recovery meant fewer opportunities for these women. Note, for example, that employment for non-managers in retail grew by 1.9 million jobs from 1994 to 2000, but actually lost 33,000 jobs form 2000 to 2005. Thus, single-mothers' annual hours fell, and their poverty rates reversed course.


These trends didn't completely reverse the gains made by single mothers in the 1990s but they do highlight the need for a better safety net for these families when the job market sours.

West Virginia rant: one reason that welfare reform wasn't as bad as it could have been in El Cabrero's beloved home state is that lots of people worked hard to change and improve state policies to make education and support services more widely available and to ensure that the families of people with disabilities or survivors of domestic violence weren't cut off from benefits. Unfortunately, the latest welfare changes passed by Congress represent a step backward.

GOAT ROPE ADVISORY LEVEL: ELEVATED

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