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| | Welfare Dependency: Not a Factor In Alabama
A Fact Sheet made possible by the Ford Foundation Revised March 25, 1998
"Welfare Dependency": In Alabama, as in other
states, much of the discussion of welfare reform is
built on the assumption that families on welfare are
victims of "welfare dependency." Alabama has been
led to believe that a huge number of adults are sitting
around, living a more comfortable lifestyle than they
would if they got a job. This assumption does not
stand up to the facts.
Arise policy analyst David Dawson studied the net
benefits of welfare, comparing them with the net
benefits of work, and the conclusion is clear:
A woman on welfare in Alabama can increase
her cash income over 450% by taking even a
minimum wage job. She can increase her net
income by 78%, from about $9,200 a year to
over $16,400.
If she stays on welfare, it's not because welfare
offers her family a better living.
 Life on welfare: In Alabama, the typical adult on
welfare is a woman with two children. She and her
children have been forced to double up and live
with other family members, because they can't
get housing assistance. She gets as much as $164
a month from Temporary Aid to Needy Families.
If you add her food stamps and Medicaid, and if
they qualify for WIC benefits, her total benefits
from welfare are $9,232 a year.
First year on the job: If she were to find a full-time minimum wage job with no benefits, her net
cash income would increase by 450%, from
$164 a month to $904 a month.
It is hard for most of us to imagine the change in
her family's day-to-day existence, having five
times as much cash available, so she doesn't
have to decide whether to pay the heat bill or buy
the children shoes.
However, her family is still at just 80% of the
poverty line, so they still qualify for food stamps,
WIC, and transitional Medicaid. In Alabama,
she is guaranteed subsidized child care for her first
year in employment after welfare. Including these non-cash benefits, her total net income grows from $9,232
on welfare to $16,439 with the job.
Year 2, with no raise: In her second year on the job,
if she gets no raise, her net income drops to $12,769
because she loses transitional benefits like her personal Medicaid. Her children continue to be covered
by Medicaid if her income falls below the poverty line.
In Montgomery, a basic policy for herself would cost
$150 a month. Her child care, subsidized on a sliding
scale, can continue as long as her income is below
$27,300. She still has 38% more net income than she
had on welfare.
Alabama, more than most states, has this built-in
incentive to work. Our benefits are so low that even a
minimum-wage job with no benefits offers a liberating
improvement in family lifestyle. But few families on
welfare take advantage of the incentives: Of 6,749
families leaving welfare for work in the twelve months
ending last September, only 2,841 transitional child
care slots were claimed. What are the barriers to moving even more people
from welfare to work?
First, many people don't know about the
transitional benefits. Alabama needs to do a
better job of informing people that they qualify for
subsidized child care and transitional Medicaid in
the first year on the job after welfare. In fact, Alabama needs to revamp its intake process so that eligibility workers explain the advantages of work:
You can make five times more money
at a minimum wage job;
if you find work, the Earned Income
Credit (EIC) alone can be nearly twice
what a welfare check would be;
you probably won't get housing
assistance on welfare (only 32% of
welfare recipients do, and many have
been on a waiting list for years); and
you can still qualify for food stamps
and WIC, and your children can get
health coverage, if you work full time
at minimum wage. Subsidized child
care is also available, although there
may be a waiting list. Second, there aren't enough entry-level
jobs they can get to.
Most adults on welfare have low education
and skill levels.
Many entry-level jobs are part-time. The
average person going off welfare finds a job
working 32 hours a week at $5.38 an hour.
It's not as good as full-time work, but that
still gives a net cash income of about $6,661,
a 240% increase from welfare.
Several counties don't even have part-time
jobs: They have high unemployment rates,
few jobs, and often have no transportation
from low-income areas to the jobs. Fifteen
rural counties have no fixed-route public
transportation at all.
Finally, the study showed that child care is a
critical issue. An Alabama woman with two children, deciding whether to take a job that offers no
child care or to go on welfare, faces the reality
that she has no guarantee of subsidized child care
unless she is moving into the job market from
welfare. Alabama has cut the waiting lists for the
working poor from about 30,000 child care slots
to less than 10,000. Until more child care slots
are funded, thousands of low-income workers will
be left with child care choices that are less than
ideal.
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