Lawmakers on the tax-writing House Committee on Ways and Means will take a stab at welfare reform on Wednesday, the first such effort since then-Speaker Newt Gingrich and President Bill Clinton reached a bipartisan agreement on an historic 1996 law.
The committee will take up work on the Jobs and Opportunity with Benefits and Services (JOBS) for Success Act, which aims to address a paradox that has developed along with an improving economy — more people had dropped out of the labor force even as companies went begging for workers.
Government data show that there were 6.6 million open jobs on the last business day of March, an all-time high and exceeding the 5.4 million new hires in March. At the same time, some 7 million men of prime working age were out of the workforce — neither employed nor looking for jobs.
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“This bill really restores the promise of the 1996 welfare reform legislation. A lot of states have strayed over the years from the intent of the reforms under that law,” Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters on a conference call on Tuesday.
“Really, some have lost sight of what this program was intended to do, which is get people off the sidelines and into the workforce for good,” Brady said.
The bill would change the name of the Temporary Assistance to Needy Families (TANF) program — the federal government’s main cash welfare program — to the Jobs and Opportunity with Benefits and Services (JOBS) program.
It would allow up to 50 percent of a state’s welfare funding to be transferred to the child care and development fund, child welfare, and workforce programs. It provides additional access to child care and job training, along with case management services designed to help families become self-sufficient.
The bill maintains the same level of funding, which Brady said is sufficient if states spend it wisely.
“This also is a great opportunity,” he said. “We have a booming economy because of our new tax code. And our local businesses need more workers. But too many people are on the sidelines. There is a huge jobs gap in the country right now.”
Experts agree the gap is real, although they are divided over whether reforming the welfare system would significantly boost job participation. Alan Tonelson, an economic policy analyst, said many people remain outside the economy.
“There is little question about that,” he told LifeZette. “There does seem to be a lot of slack, as the economists like to say, in the labor force.”
On Tuesday, the Washington-based Center for Immigration Studies (CIS) published an analysis of labor data showing that the labor market still has not fully recovered from the Great Recession despite the fact that the unemployment rate stands at 3.9 percent.
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The report cites statistics from the Bureau of Labor Statistics (BLS) showing that 24.8 percent of native-born Americans from age 18 to 65 during the first quarter of 2018 were not working or looking for work. Among immigrants, that share was 25.7 percent.
Those percentages in both cases were higher than in 2007, the year before the economic collapse. The labor force participation rate of working-age Americans has declined among all education levels.
Steven Camarota, who wrote the report, said the numbers undercut the argument that businesses have no choice but to import more foreign workers.
“The idea that there’s a shortage of [potential] workers, particularly low-skill workers, is not supported by the data,” he said.
The 1996 welfare reform law established time limits on welfare recipients and incentives to push people to work. But former President Barack Obama’s administration weakened those requirements, stretching the definition of work.
The bill under consideration Wednesday gives states more flexibility but also holds them accountable for outcomes. It would make the expenditure of taxpayer funds more transparent and publish the data on a “dashboard.”
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Rep. Adrian Smith (R-Neb.), chairman of the Human Resources Subcommittee, told reporters on the conference call that he wants states to have the ability to innovate.
“We don’t want to tie their hands on coming up with new ways to address this,” he said.
The bill also would limit the ability of states to divert money to nonwork programs and focus welfare funds on families at 200 percent of the poverty line and below.
“Those are the families that often need the most help in work support to get them in a job and keep them there,” Brady said.
Experts cautioned that matching out-of-work Americans with jobs will require more than reforming welfare. Camarota, director of research at CIS, said part of the solution has to involve disability benefits reform. The number of Americans collecting disability payments has shot up over the past couple decades.
That number undoubtedly includes people who could work, he added.
“I know some of these people,” he said. “They could work more. Or they could work.”
Tonelson, who blogs about the economy at RealityChek, said drug addiction and lack of transportation are major impediments for many would-be job seekers.
Some people have been out of the workforce for so long that their skills have atrophied, Tonelson said. He said it is difficult for them to fill job vacancies that would pay salaries roughly comparable to what they once earned.
“They’re just not qualified for them, and they’re not going to be qualified for them any time soon,” he said.
What’s more, Tonelson said, even in a tighter labor market, many companies appear to be holding unrealistic expectations of the skills and experience of applicants.
“We have a lot of evidence that employers have gotten too damn picky,” he said.
Camarota agreed that many labor dropouts might not be employable. But he added that even modest success would translate into a significant boost in the number of people available to fill jobs.
“Ten percent of 37 million is 3.7 million,” he said.