Skimping on the Poor

Most of the news about welfare reform these days touts success. In Maryland, half as many people receive cash assistance today compared to only four years ago. The assumption is that welfare recipients are getting jobs, leaving welfare, and living happily ever after with their children.

If only that were true.

Instead, the majority of families who leave continue to have very low incomes. Even most who work have earnings that are not enough to lift their families out of poverty.

Surprisingly, Maryland's welfare program is designed to end assistance for families even when earned income remains very low. A report by the Maryland Budget and Tax Policy Institute shows that last year, a family of three with income of $520 per month was considered too rich to be eligible for cash assistance. In other words, having earnings that remained below half of the federal poverty level was deemed sufficient to pay rent and utilities on a two bedroom apartment, clothe and support two children, and get back and forth to work. Never mind incidental items such as school field trips, after school activities or lessons, or even the smallest of treats that many of us provide to our children.

Every state eventually phases out eligibility for benefits when a welfare recipient begins to work. However, in Maryland the benefit reductions begin sooner and are deeper than in virtually every other state. Last year, only two states -- Texas and West Virginia -- ended assistance payments sooner than Maryland for recipients who began to work. In contrast, many states continued support to families that had twice the earnings allowed by Maryland.

Maryland's method of reducing welfare payments when families begin to work is an artifact of the uncertainty that followed passage of the federal welfare law in 1996. Most states opted for a "make work pay" strategy, an approach that allowed families to combine work and welfare until their earnings were enough to make ends meet. However, Maryland's reformers did not enact more generous policies out of concern that it would end up costing too much money. Such reasoning is no longer applicable. Caseloads have fallen, and state spending on welfare and related programs has dropped by nearly $90 million a year.

Meanwhile, welfare recipients earning a little more than $500 per month are on their own. Even if food stamps and the federal and state earned income credits are added, family income is still falls well below the poverty line.

There is no apparent reason for Maryland to continue its miserly ways. As one of the richest states in the country, it certainly has the means to be a little more generous toward its lowest income, working families. Not only are state resources available, but Maryland has tens of millions of dollars in federal welfare funds that remain unspent.

Ample public policy research suggests that expanding welfare policies for families who work would be a good investment: The state would be better off because more welfare recipients would begin to work once work pays; recipients would be better off because their incomes would be slightly higher; and children would be better off if family income approached or even exceeded the poverty level.

Just because families are leaving welfare doesn't mean that they're able to make ends meet. That fact seems to be lost amid the gloating about welfare reform. But now that new light is being shed on this issue, the question is whether policy makers are going to do anything about it

Note:

A version of this article was published in the Washington Post Outlook Section on Sunday, March 14, 1999.