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Photograph by John Soares

These are the best of times, economically speaking. So perhaps it is not surprising that the headlines concerning welfare reform have so far brought mainly good news. Politicians celebrated 30-year lows in the welfare rolls this past January. But most continuing recipients of welfare have yet to reach the time limits on their benefits, and the news media have reported a smattering of cases in which reforms have led to hardship. These stories, of course, constitute little more than anecdotal evidence. To learn where the real-world impacts of welfare reform are likely to be felt, Harvard Magazine managing editor Jonathan Shaw spoke recently with Geyser University Professor William Julius Wilson. A supporter of welfare reform as originally proposed, Wilson is conducting a four-year study of 2,800 welfare families in Chicago, Boston, and San Antonio to discover what the underpinnings of the recent successes are, and what trials a reformed system may yet have to face.

Harvard Magazine: What is the current status of welfare reform?

Wilson: When President Clinton first talked about welfare, he said that to have adequate reform, you needed national health insurance and training, education, and childcare support for welfare mothers so that they could take care of themselves by obtaining jobs in the private sector. You also needed to increase the minimum wage and stand behind the earned-income tax credit. And he also said that when welfare recipients reached the time limits, if they couldn't find work in the private sector, the public sector should provide a job of last resort. That was a responsive approach.

But the Welfare Reform Bill he signed [on August 22, 1996], for the most part, reflected none of these promises. It came out a Republican bill, reflecting the assumption that recipients are on welfare because of gross deficiencies--they don't want to work. Those of us who do research in the field know that the overwhelming majority of welfare recipients want to work. So when he signed that bill, we were all quite worried about what would happen when welfare recipients joined the ranks of the jobless, competing with them for jobs.

We didn't anticipate that the economic recovery would extend so long. That has muted the effects of the decreased relative demand for low-skilled labor. It's incredible. We're experiencing an unemployment rate that has plummeted to 4.2 percent. The black unemployment rate is now the lowest since the Bureau of Labor Statistics started collecting that data in 1972. From 1992 to 1998 the unemployment rate for high-school dropouts decreased from 12 to 7 percent. There are labor shortages in some parts of the country, so employers will give on-the-job training to individuals they would have passed over previously. People are being drawn back into the labor force--the ranks of the long-term jobless declined from close to 2 million in 1993 to roughly 700,000 in 1999. And the economic recovery has continued for more than nine years.

This is having a positive effect. Between 1973 and 1996, 80 percent of the population experienced a decline or no growth in real income, while 20 percent of the population experienced an increase. But in the last two years, the rising tide has indeed been lifting all boats, a situation that existed between 1943 and 1973, when all income groups experienced increases in income, and the poor became less poor not only in relative terms, but in absolute terms as well. If the recovery continues and productivity growth remains relatively high, the growth of income inequality could be halted. Who knows? But that's the optimistic scenario. If all of that happens, I think many welfare recipients will reach a time when they'll be able to find jobs that offer them higher income. The doomsday scenario that was painted in 1996 will not happen if the economy remains strong, and if productivity growth continues at the rate it has: 4 percent in a quarter.

HM: What is the pessimistic scenario?

Wilson: If the economy suddenly turns sour, if we enter a period of economic stagnation, we're going to be in real trouble, because we're not prepared for that. Instead of building on the surplus we have--establishing the infrastructure for public-sector jobs if we need them, setting aside money to cover real hardships--very few states are doing this. The federal government is not really focusing on these issues. And that worries me because--given this trend of a decreased relative demand for low-skilled labor, which is unlikely to reverse itself--if we do enter a period of economic stagnation, the welfare reform bill will reveal its full impact.

HM: When will the time limits start to take effect?

Wilson: In Massachusetts--one of the states with shorter limits--we've imposed a two-year limit. Some people have already reached the time limit, and our study is documenting how this has impacted them, although some have gotten extensions. But the big crunch is going to come late in 2001, five years after the deal was signed.

HM: Will welfare reform as currently enacted survive an economic downturn?

Wilson: No, it will not. I think we will experience severe problems of economic dislocation. If we're in an economic downturn, we could even see a situation in which the homeless population would include not just individuals, but whole families. One of the things I recall from the research that we were doing in Chicago is that, because welfare mothers hate being on welfare, many of them will move off it to take a job, a minimum-wage job or a job that pays even less than the minimum wage. The overwhelming majority of these jobs lack the benefits that we associate with stable employment: vacation time, healthcare, and so on. Yet the women take these jobs despite the fact that, when they move off welfare, they lose their medical card. So they worry about what will happen to their children. And they have to pay for childcare and transportation costs. There is a high cost for them to go to work, and so they fall deeper and deeper into poverty, and eventually they reach a time when they try to make ends meet and can't. I can see a situation where, if you have economic downturn and working mothers who can't return to welfare, many of them are just going to end up on the street.

HM: Who is on welfare now?

Wilson: From our early interviews we've identified two major types of welfare recipients. One loses a job or gets laid off from work and goes on welfare for a short period until they find another job. This is the temporary work-to-welfare recipient. I think the sharp reduction in the welfare rolls is in large part due to the success of short-term welfare recipients in finding jobs in a strong economy.

The second major type of welfare recipient has been consistently jobless for long periods of time, or never really had a job. These people find it much more difficult to move off welfare because they don't have the training or the experience, and because, as a result, they have little confidence in their ability to find work. This is the group that I'm really worried about. They're struggling even in a strong economy. If the economy turns sour, we will see a disaster.

HM: Given that we now have a high-tech economy with fewer low-skill jobs, and more jobs that require a higher level of education, does the welfare reform package have any hope of breaking patterns of multigenerational poverty? Are there adequate provisions for education?

Wilson: No, there are not. If we're thinking that adults on welfare are going to be prepared by the welfare reform legislation to take better jobs or jobs that provide some opportunity for promotion or social mobility, no. They will remain ill-trained, and they will have access only to jobs that are low-skill.

HM: Is requiring welfare recipients to work likely to have an impact on their children's attitudes toward work?

Wilson: It's too early to tell whether pushing people off welfare will result in changing attitudes, orientation, and norms regarding work. But we do know that people who are working have different experiences than people who are jobless, because we organize our lives around our work. Our behavior is much more predictable if we're working. And the norms associated with steady work are different from the norms that develop in environments of casual work or nonwork.

A child growing up in a steady work environment has an advantage because he or she automatically develops some of the disciplined habits associated with steady work. They see their parents getting up at 6 or 7 o'clock in the morning and going to work, and they understand the importance of discipline and regularity, and being at work on time. If you could increase employment in a lot of these jobless neighborhoods, I would hypothesize that you would see people developing more of the habits associated with steady work. That's one of the things that we will be looking at in our project.

One of the reasons why I have always been in favor of welfare reform is that I don't think it's healthy for people to be on welfare, to be in a nonwork environment. That's why I was very enthusiastic about Bill Clinton's idea of welfare reform when he first took office, and why I was so disappointed with the bill that he finally signed. I'm for welfare reform, but I want the correct package of reforms.

HM: And he's aware of that?

Wilson: He's aware of that, yes.

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