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Welfare Rolls On The Rise

by Linda Ostreicher, Jun 22, 2004
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For the past year, the number of households on public assistance in New York City has been quietly climbing up. The family assistance caseload has remained nearly the same, while the number of "safety net assistance" cases rose eight percent in the year ending in April 2004. Safety net assistance provides benefits, at an even lower level than family assistance, to single adults and to families who have used up their five-year lifetime limit on federal assistance. Unlike family assistance, which is partly paid for by federal funds, safety net assistance comes only from the city and state budgets. This caseload has gone up in 11 of the past 12 months, suggesting that economic recovery has not reached the neediest New Yorkers, and that the federal government is shifting more of the burden of continuing poverty onto state and city taxpayers.

A promising idea will not become reality

The commissioner of the city agency that administers welfare, Verna Eggleston of the Human Resources Administration, briefly considered giving welfare recipients a shot at entry-level jobs with city agencies and contractors who do business with the city. For those recipients already working at city agencies in return for their benefit checks, this would have opened the door to permanent jobs with real salaries, paid vacation and sick time, and strong union representation.

Days after the possible jobs program was announced, the mayor revealed that it was only a "hypothetical" option, because city agencies are under a hiring freeze in anticipation of a large budget deficit in 2006. At present, only the city's Department of Parks and Recreation hires welfare recipients for entry-level jobs.

New York City lost 6,500 public-sector jobs in the year ending in April 2004, according to the state Department of Labor. Because private-sector jobs were added, the city had an overall increase of 12,600 jobs in that time. But in a city with over 200,000 households on public assistance, many more new jobs are needed to absorb recipients who hope to become self-supporting.

Washington may offer a bonus to job hunters who find work

The House of Representatives has passed a bill that would give about 15,000 unemployed Americans "Personal Reemployment Accounts" of up to $3,000. If the bill passes the Senate as well, the president will sign it into law.

The money could be used for job training, computer classes, career counseling, skills assessment, relocation services, child care, transportation or housing assistance. Those who found a job in 13 weeks or less, and held it for six months, could keep any part of the $3,000 that they hadn't used for job hunting.

The accounts would be targeted to people expected to use up their unemployment benefits: high school dropouts, workers laid off from declining industries, and those living in areas (such as New York City) that have high rates of unemployment. Unfortunately, these are the same job seekers who could benefit most from training and education.

With a $3,000 bonus dangled in front of them, they are likely to grab at the first job to come along, rather than finish a training program leading to a more secure, better-paying job. Each person who accepted an account would also sign away his or her right to up to $10,000 worth of free employment-related services offered under the Workforce Investment Act. These services are receiving so little publicity that many unemployed workers have no idea they could use them.

Critics of Personal Reemployment Accounts see them as a distraction from Washington's failure to extend unemployment benefits beyond the basic 26 weeks. In New York State, most unemployed workers don't get even those benefits. The state discriminates against temporary, seasonal, and newly hired workers by usually excluding the last three to six months of earnings when deciding whether an applicant has worked long enough to qualify for unemployment insurance. Many laid-off employees do not realize they are eligible for benefits, or know how to apply for them. Written materials and services are only in offered in English and Spanish, even though a large portion of New York City's labor force is fluent only in a language other than these two.

Who benefits from unemployment insurance?

Inequality among wage earners persists even after they lose their jobs. A survey of unemployed New Yorkers found that those who earned high salaries before being laid off were twice as likely to receive unemployment benefits as those who earned low salaries. [See Recession and 9/11: Economic Hardship and the Failure of the Safety Net for Unemployed Workers in New York City (In PDF Format)] White workers were the most likely to get benefits, followed closely by Asians, then by African-Americans, with Latinos least likely to get benefits.

These differences disappeared among union members, who are actively informed about their right to benefits, and who are helped through the application process by union advocates. The differences also melted away during one four-month period within the two years covered by the study. From September through December in 2001, immediately after the World Trade Center disaster, there was little variation in the likelihood that an unemployed worker would get benefits based on language, race or ethnicity. In fact, members of the sample were 24 percent more likely to receive benefits if they lost their jobs during those months, thanks to the blitz of publicity about all forms of assistance at that time.

Most people would rather be earning an adequate salary than collecting a pittance in unemployment benefits or public assistance. If a job is too much to expect, most would welcome a chance to learn skills that could help them climb out of poverty. But if we cannot guarantee jobs or training to everyone, the least we can do is give everyone the same chance to get those benefits.

Linda Ostreicher, a former budget analyst for the New York City Council, is a freelance writer and consultant to nonprofits.

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