Hold Off on Welfare Change
IF it does nothing else, Bill Clinton's proposal to limit Aid to Families with Dependent Children (AFDC) collections to two years should at least give pause to those who see Mr. Clinton as a middle-of-the-road Democrat committed to the status quo. A two-year time limit would be the biggest change in AFDC since Congress established the program in 1935. A two-year limit would cut the number of recipients by more than 70 percent. But what happens when a recipient's two years are up?Skip to next paragraph
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Studies of both welfare mothers and single mothers who work suggest that in the absence of noncash benefits, they need at least $15,000 a year to pay for their food, housing, utilities, clothing, medical care, and other expenses. Welfare mothers get far less than this from AFDC, but they usually supplement their meager benefits with unreported income from work or from relatives, boyfriends, or ex-husbands.
Census data show that few welfare mothers can earn $15,000 a year. Most are young and few have attended college. Those with the lowest potential earnings are the 18- to 24-year-old high school dropouts. These women typically earned about $5.50 an hour in 1990. Since most also held jobs that involved a lot of layoffs, short weeks, and turnover, even those who tried to work steadily were unlikely to earn more than $10,000. Many earned even less. Today, with unemployment much higher than it was in 1990, the
figures would be lower.
We can, of course, raise single mothers' potential earnings through education and job training. But the best available data suggest that even two years of full-time schooling can be expected to raise a high school dropout's potential earnings by only 10 or 15 percent. Less intensive programs, which are more practical for mothers with young children and cost the taxpayer less, usually yield even smaller gains. Realistically, then, we have to assume that a lot of welfare mothers will only earn $10,000 or $ 11,000 a year after training. If they are to support their children, they will need to get $4,000 or $5,000 from other sources.
Ideally, absent fathers should fill this gap. But the best available data, collected in 1987, suggest that the typical absent father earns so little that under current law he will be ordered to pay only about $2,000 a year in child support. In many cases, moreover, the absent father is in jail, unemployed, or has moved, so he will not pay anything.
These stubborn facts mean that even if they work and get child support, many single mothers will continue to need some help from the government. The simplest way to provide such help is by increasing the Earned Income Tax Credit (EITC), which gives employed parents with children a refundable credit if their earnings are low enough. But an EITC that could raise a single mother's income from $9,000 to $15,000 seems unlikely to pass anytime soon.
We need to supplement the EITC with programs that cut single mothers' expenses. Ideally, such programs should cover all children, regardless of income, to ensure that the programs win broad political support. Even if we remain unwilling to provide universal health insurance, for example, we should at least make Medicare cover all children whose parents pay Social Security taxes.