COMMITTEE ON WAYS AND MEANS BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois E. CLAY SHAW, Jr., Florida NANCY L. JOHNSON, Connecticut AMO HOUGHTON, New York WALLY HERGER, California JIM MCCRERY, Louisiana DAVE CAMP, Michigan JIM RAMSTAD, Minnesota JIM NUSSLE, Iowa SAM JOHNSON, Texas JENNIFER DUNN, Washington MAC COLLINS, Georgia ROB PORTMAN, Ohio PHIL ENGLISH, Pennsylvania WES WATKINS, Oklahoma J. D. HAYWORTH, Arizona JERRY WELLER, Illinois KENNY C. HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida KEVIN BRADY, Texas PAUL RYAN, Wisconsin	CHARLES B. RANGEL, New York FORTNEY PETE STARK, California ROBERT T. MATSUI, California WILLIAM J. COYNE, Pennsylvania SANDER M. LEVIN, Michigan BENJAMIN L. CARDIN, Maryland JIM MCDERMOTT, Washington GERALD D. KLECZKA, Wisconsin JOHN LEWIS, Georgia RICHARD E. NEAL, Massachusetts MICHAEL R. MCNULTY, New York WILLIAM J. JEFFERSON, Louisiana JOHN S. TANNER, Tennessee XAVIER BECERRA, California KAREN L. THURMAN, Florida LLOYD DOGGETT, Texas EARL POMEROY, North Dakota
Allison Giles, Chief of Staff Janice Mays, Minority Chief Counsel  SUBCOMMITTEE ON HUMAN RESOURCES WALLY HERGER, California, Chairman
NANCY L. JOHNSON, Connecticut WES WATKINS, Oklahoma SCOTT MCINNIS, Colorado JIM MCCRERY, Louisiana DAVE CAMP, Michigan PHIL ENGLISH, Pennsylvania RON LEWIS, Kentucky	BENJAMIN L. CARDIN, Maryland FORTNEY PETE STARK, California SANDER M. LEVIN, Michigan JIM MCDERMOTT, Washington LLOYD DOGGETT, Texas
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined.

Advisory of March 27, 2001, announcing the hearing

Library of Congress, Vee Burke, Specialist in Income Maintenance, Congressional Research Service

Center for Law and Social Policy, Steve Savner

Michigan Family Independence Agency, Douglas E. Howard

New York City Human Resources Administration, Jason A. Turner, accompanied by Lisa Falcocchio, New York City Parks Department

Welfare to Work Partnership, Rodney J. Carroll, accompanied by Takia Roberts, CVS Pharmacy

YWCA of Greater Milwaukee, Julia Taylor, accompanied by Dorothy Taylor, Generation 2 Plastics

Community Voices Heard, New York, NY, statement and attachments

National Employment Law Project, New York, NY, Maurice Emsellem, statement

NETWORK, statement

Noble, Deborah, Willimantic, CT, statement

NOW Legal Defense and Education Fund, New York, NY, statement and attachments

Wider Opportunities for Women, Diana Pearce and Jennifer Brooks, statement and attachments

House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.

The Subcommittee met, pursuant to notice, at 3:02 p.m., in room B-318 Rayburn House Office Building, Hon. Wally Herger (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

Chairman HERGER. The subject of today's hearing is work requirements and welfare reform. At our first hearing, we heard that welfare reform has had a number of positive effects. Caseloads are down 50 percent, incomes are up, and more than 2 million children have been lifted out of poverty nationwide. There are many factors behind these impressive results, but none more important than work. Since States started reforming welfare and the 1996 law took hold, a new ethic of work has swept over America's welfare system and the families who had come to depend on it. The best measure of this change is what happened among low income workers, especially women. Today single mothers are more likely to work than even married mothers, with working never-married mothers close behind. That is a dramatic shift from the early 1990s when fewer than half of never-married mothers worked.

The result? According to the Urban Institute, mothers, even in the bottom two-fifths of income earners, have gained ground. How? Because they are working and so earning more. And in place of welfare, they are earning new benefits like the earned income credit which rewards work.

The purpose of today's hearing is to help us better understand this renewed work ethic, the implications for former, current and would-be recipients, and what this all means as we take a look at more reforms in the coming year.

First we will hear from practitioners and beneficiaries in cities and States around the country. They will tell us how the most aggressive work programs have changed the lives of beneficiaries and entire communities. Next, we will hear how the business community has stepped up to help put former recipients in jobs. Then we will get some perspective on moral issues involved in requiring work for benefits. And finally, we will hear from experts about work requirements, both under the new cash welfare block grant and related programs.

Considering the changes we have seen and our hopes for future progress, this is an exciting topic. We thank all of our witnesses for being here today to explore these issues with us. Without objection, each member will have the opportunity to submit a written statement and have it included in the record at this point.

[The opening statement of Chairman Herger follows:]

Chairman HERGER. Mr. Cardin.

Mr. CARDIN. Thank you, Mr. Chairman. I want to thank you for convening this hearing and I also want to compliment you on the panels that we have before us today. I am pleased that we are focusing today on the most important component on welfare reform: That is work. Enabling people to make the transition from welfare to work is the first critical test of any welfare reform initiative. I believe the 1996 welfare law is passing that test. In fact, the employment rates for poor single mothers with young children increased 23 percent between 1996 and 1999.

However, our enthusiasm about these results should be tempered by three facts: First, we still have about one-third of people that are leaving welfare and are not going into the work force. We don't have much information about this group. We should find out what is happening to them. Secondly, there is a growing proportion of people that are currently on the caseload that have severe barriers to finding employment. They lack high school diplomas, they have, in some cases, drug addiction problems, they have poor work history and have sometimes mental or physical disabilities.

So I think we need to understand that we have to devote the necessary resources to deal with the people that remain on cash assistance.

And third, Mr. Chairman, there is the uncertainty of our economy and what impact that will have on our work with welfare reform.

The second major test of welfare reform is whether former recipients are keeping their jobs and whether they are moving up the employment ladder. In this regard, we are not able yet to give a grade to the 1996 law as to whether it has been successful or not. We just don't have enough information.

As the Congressional Research Service told us during our last hearing, most welfare leavers are not increasing their income when they leave welfare for work. If this trend continues, the final legacy of welfare reform will be that we replaced a generation of welfare poor with a generation of working poor. We can and must do better than that.

There are several remedies for this problem: Some are outside jurisdiction of the Subcommittee such as increasing the earned income tax credit or improving our Nation's educational system or expanding investments in inner city neighborhoods. But other reforms are directly relevant to this panel's reauthorization of TANF. First, Mr. Chairman, I would suggest we must maintain the Federal financial commitment to TANF. Let us make sure that the dollars that we are currently making available to our States are retained to deal with these problems.

Second we should help individuals take advantage of some of the positive steps taken by most States under welfare reform, namely, raising the so-called earnings disregard so that we can increase the income for people that are in the work force. And we should adopt a national policy of work-stops-the-clock so that a person is not under a disincentive to take advantage of higher earnings disregards.

Third, we must do a much better job ensuring that individuals who are leaving welfare for employment are receiving the work supports that they are entitled to such as Food Stamps, Medicaid and child care. Fourth, the restrictions on training and education contained in the 1996 law must be revisited. And finally we should encourage States to consider the impact of TANF policy on poverty.

I have talked about this before, but we should encourage our States to be more aggressive in not only getting people off of cash assistance and dependency on Federal support, but also getting people out of poverty.

Before I conclude, let me quickly comment on the issue of Workfare, which is one of issues that this hearing will focus on. The goal of work experience programs should not be to discourage needy families from obtaining assistance nor to provide a source of cheap labor for city or State projects. Work programs should be specifically designed to help individuals make the transition into wage-paying jobs. Furthermore, recipients of work programs must be treated with dignity and respect as well as being afforded all the protections provided to other workers.

Mr. Chairman, I look forward to hearing our witnesses and working with you so that when we reauthorize TANF, we certainly maintain the focus on employment, but also deal with the problems that we have identified in getting people out of poverty and making sure that they are able to succeed in the workplace.

[The opening statement of Mr. Cardin follows:]

Chairman HERGER. Thank you very much, Mr. Cardin. And now we will have our first panel, please. First we will hear from Julia Taylor, the executive director of the YWCA of Milwaukee, who is accompanied by Dorothy Taylor a former welfare recipient who is now working. Next will be Jason Turner, commissioner of the New York City Human Resources Administration. He is accompanied by Lisa Falcocchio. Then we will have Doug Howard, director of the Michigan Family Independence Agency. And our last witness of this panel is Rodney Carroll, who is president and chief executive officer of the Welfare to Work Partnership, and he is accompanied by Takia Roberts, who has gone to work with the help of the Welfare To Work Partnership. Would our first panel be seated, please. Thank you.

Ms. Taylor.

STATEMENT OF JULIA TAYLOR, EXECUTIVE DIRECTOR, YWCA OF GREATER MILWAUKEE, ACCOMPANIED BY DOROTHY TAYLOR, EMPLOYEE, GENERATION 2 PLASTICS, MILWAUKEE, WISCONSIN

Ms. JULIA TAYLOR. Good afternoon, Chairman Herger and members of the Subcommittee on Human Resources. Thank you for the opportunity to speak today. I am Julia Taylor, chief executive officer of YW Works and president of the YWCA of Greater Milwaukee. I am pleased to be hear to respond to the Subcommittee's request for information on work requirements of TANF and to share with you our experiences while operating Wisconsin's TANF programs, W-2, since 1997. We knew that implementing W-2 would be an awesome responsibility as well as a challenge to operate a program that meets the vast range of needs of our customers. The resources provided by the Federal Government are essential in our efforts to move people towards self-sufficiency. Your commitment to supporting TANF and other anti-poverty programs is critical to our customer's success and it is greatly appreciated.

W-2 funded through TANF provides cash assistance case management job placement and retention services. Additionally, the Food Stamp and Employment Training, known as FSET receives TANF dollars. Currently, there is very little funding for the FSET program, which serves primarily men. It is serves a large percentage of homeless individuals. Under the current work and education programs for the FSET program, it is mandated by the State of Wisconsin, the Federal Government does not match the amount of food stamp benefits an individual receives with the amount of work they are required to do, thereby creating a disincentive to participation.

The services that YW Works provides is delivered through a comprehensive one-stop job center model. It is designed to meet the needs of employers searching for skilled workers in training and education and employment needs of the community. In 2000, we served over 27,000 customers, 703 attending job clubs, 12,378 utilizing our job net, and 1,258 attending on-site employer recruitments and 1,359 assessments.

When the AFDC programs ended in Wisconsin in the fall of 1997, there were 34,650 cases statewide. At that time at YW Works, we served 2,420 customers. Our average starting wage at placement at that time was $6.87. As of February 2001, there were 10,853 cases statewide, of which almost 76 percent remain or are in Milwaukee County.

We currently serve 909 customers in our program with an average starting wage of placement of $7.45. Those figures demonstrate a significant drop of individuals on welfare. However, they also show that the vast majority of the remaining customers reside in one area of Wisconsin, Milwaukee County, and we are also witnessing that these remaining customers have increased barriers to successful employment, including lower education and literacy levels, mental and physical health issues, alcohol and drug abuse and criminal records that make it difficult to secure a job. With the dynamics of a caseload constantly changing, our programs must continue to evolve to meet the demands of the customers we serve.

We believe that the work requirements are beneficial to our efforts getting people engaged in work is the first step in self-sufficiency, and our program has been successful in placing customers in jobs. From January 2000 to February 2001, we have helped 2053 customers secure employment with an average wage of $7.54. In order to build upon this requirement and improve our customers ability to retain employment, we have created specialized work settings that provide customers with assessment, soft skills, and on-the-job training and support services that go hand in hand with the work requirements. Creative Workshop is a workplace that creates wearable art, and Generation 2 Plastics is a plastic injection molding company with an emphasis on recycling. These training workplace environments ensure that our customers receive ongoing training, intensive and specialized job coaching, supportive services on site and sustained case management. Both Generation 2 Plastics and Creative Workshop offer the training and sustained social support needed by many customers with multiple barriers such as lack of transportation, child care, alcohol, drug abuse and mental health issues.

In order to strengthen the TANF program, we recommend that service providers be offered increased flexibility within the first year of a customer's participation to concentrate on intensive education and training needs. In addition, the funds need to be set aside for work force advancement that can provide education and training opportunities for individuals currently in lower paying jobs. The hours for the FSET program also need to be incorporated with short-term training and supportive services that will address the barriers experienced by the specific population.

In addition to the programs already mentioned, YW Works offers other programs that increase our customers ability to gain employment. The State of Wisconsin has secured money from the U.S. department of Labor to focus on services for non-custodial parents and hard-to-serve W-2 customers. YW Works Welfare To Work program serves the non-custodial parent in those hard-to-serve W-2 customers. We have enrolled and served the most Welfare to Work customers in Milwaukee County. Out of 387 enrolled customers, 36 percent were referred to alcohol and drug treatment. 259, or 60 percent, were placed in jobs of which 156 percent had completed job training programs -- or 156, I am sorry, 60 percent.

Of the employed customers in Children's First, a court ordered support program for non-custodial parents and Welfare to Work, 42 are now paying child support, many for the first time. These customers participate in the same intensive of case management and training as our W-2 customers and also part split in the Fatherhood program, which teaches dads how to be good fathers and increase their involvement with their children. There are many more challenges ahead and as we continue to meet the needs of our communities, such as bridging the digital divide, providing business with a skilled and trained labor force, assuring affordable housing, education and training for career advancement of low income individuals currently in the work force, continuing support for fathers, and getting employers more involved, the TANF programs in Wisconsin have been successful in engaging people in the work force, and we believe there is still a lot more to do.

We strongly encourage you to support the TANF reauthorization which is making a significant difference in people's lives. This Federal program has helped thousands of Wisconsin residents to enter the work force and to begin to break the cycle of poverty.

Once again, we thank you for the opportunity to share with you our experiences. I would like to introduce Dorothy Taylor to share with you her story.

[The prepared statement of Ms. Julia Taylor follows:]

Ms. DOROTHY TAYLOR. Good afternoon, Chairman Herger and members of the Subcommittee on Human Resources. Thank you for the opportunity to speak to you today. My name is Dorothy Taylor. I am 40 years old. I have three children, two grandchildren. I work at Generation 2 Plastics in Milwaukee, Wisconsin where I drive a forklift, operate plastics machinery. I am here today because of the W-2 program. I spent 10 years of my life on welfare, taking odd jobs here and there, until W-2 came around.

I didn't think much of W-2 a couple of years ago until my last unemployment check ran out. I thought to myself, I have got to feed these kids. I went through the whole program at the YWCA including the pre-Academy, the Academy of Excellence, Creative Workshop and Generation 2 Plastics. I worked hard and was offered a full-time job at Generation 2 Plastics. I took the job. Now I have benefits, medical insurance, and a pension.

It is important for me to have this chance and to have people behind me. Excuse me, I am kind of nervous.

Chairman HERGER. You are doing great.

Ms. DOROTHY TAYLOR. I am going to show everyone that I am not going to fail. If I hadn't joined W-2, I would probably be homeless, walking the street, going to churches to eat. I see a lot of that. Some people just don't want to try anymore.

Some people blame their situation on W-2, but it is not W-2. It is them. I tell them you can't get something for nothing. I tell them to get up and get what W-2 has to offer. And it does have a lot to offer.

There is training and help to get you your GED. You need an education. I tell my children that you need an education just to sweep the sidewalk. I am working on my GED. I am almost ready to start taking my tests. I want to wait just a little while longer because the one thing I hate is failing on the first try. But if I can get my GED, I can keep my kids on track so they don't wind up like the old me. Maybe some day I will take some college courses. If I wind up doing that, I will know I have done my best.

My 14-year-old son is proud of me. I was interviewed by the Los Angeles Times and some other newspapers. They took my picture. My son has my picture up on his wall. You don't know how much this means to me, that my 14-year-old son is so proud of me.

I tell my children that it is not necessarily what you learn in school that helps. It is how you use what you learn in everyday life that means something. W-2 isn't like AFDC. You can't just sit at home and keep having babies. W-2 stopped that and that is the best thing. It used to be that kids as young as 12 years old were pregnant. That was alarming. And those girls weren't going to school. If I had the resources, I would have helped those girls. W-2 got those people back to work and got their children well cared for.

Keep the program going. If the program helps me, it can help a whole lot of other people. If the program stops, it will hurt all the little people. It will hurt our children. If the programs don't keep going, a whole lot of people are going to suffer. Thank you.

Chairman HERGER. Dorothy, thank you. We want you to know not only is your 14-year-old very proud of you, but we are all very proud of you as well for what you are doing.

[The prepared statement of Ms. Dorothy Taylor follows:]

Chairman HERGER. And with that, next is Mr. Jason Turner, Commissioner of the New York City Human Resources Administration. And he is accompanied by Lisa Falcocchio.

Mr. Turner.

STATEMENT OF JASON A. TURNER, COMMISSIONER, NEW YORK CITY HUMAN RESOURCES ADMINISTRATION, ACCOMPANIED BY LISA FALCOCCHIO, DIRECTOR, WORK EXPERIENCE PROGRAM, NEW YORK CITY PARKS DEPARTMENT

Mr. TURNER. You got her name right. That is really good. It took me a while to do that myself. Thank you very much, Mr. Chairman. I am pleased to have this opportunity to present before the Committee, and representing Mayor Giuliani. At the onset of his administration in 1994, Mayor Giuliani decided he wanted to have two emphases, one on crime reduction and the other on welfare reform. Today, tens of thousands of individuals who are temporarily receiving welfare are engaged in work activity, contributing to the city and making a difference in their own lives.

Although work while on welfare was not -- although, work while on welfare for those not in the private sector was one of the central goals of the PRWORA legislation, this Committee may be interested to know that there is -- it is not a significant component of what most people do during the day. What I mean by that is the caseloads have gone down and private employment has gone up. Most of those are the central successes of welfare reform to date.

But of those who are not working in the private sector at the moment, very few are working in the work experience programs. And it is, I believe, very important for us as a country to create work opportunities while individuals are waiting to go into the private sector. And Lisa will talk about how we operate our parks deputy program in just a moment.

Actually, only 4 percent of the entire welfare caseload of 2.1 million adults is engaged in work activity right now who are not in the private labor market. Since welfare reform, there has been only an increase from about 35,000 to 78,000 people in work activity nationwide. Clearly, States as a group have exercised their option under the TANF caseload reduction credit to focus their attention on other aspects of the program. A major management commitment is necessary to mount a large and ongoing work experience program for a high proportion of recipients. And in New York City, and in Wisconsin, they each run programs which share the aspiration to have a fully work-based system. What that means is that those people who are not privately employed, a 35-hour simulated workweek is created, which is a blend of actual work in the Parks Department, or it could be in a welfare office or a nonprofit facility of three days a week, and usually two days is dedicated to other related things like helping look for private employment, or maybe getting a GED or going to ESL class.

So what we like to do in New York and in Wisconsin is the same in many respects, is blend -- create a real workweek but blend that workweek between actual work and skills upgrading. And it is those two things, actual work which is practicing the skills and habits of showing up to work on time and getting your children to school, and the skills upgrading which allows you to use some of the education or ESL training that you have got in an actual work site.

Those two things together create the best opportunity for people with very, very low work histories to move up into the labor force. But that is not happening. It really isn't happening on a very large scale. What we believe should occur, is that work experience play a larger role in most State's welfare operations. As it relates to what our recommendations are for this Committee, is, number one, we should increase the proportion of TANF recipients participating in work experience. We believe that every State should be required to have a substantial proportion of its caseload engaged in real work activity on an ongoing basis, if they are not privately employed while they are on welfare.

We all agree, if you are working part-time and you are still receiving welfare, leave you alone. Because you are doing the right thing and we hope you increase your hours and get off of welfare. But if you are doing nothing and you are able-bodied, you should be engaged in work activity, and that is not currently the case.

Second, we should enforce the provision of the TANF law that requires sanctions for non participation applied on a pro rata basis. Let me explain what that means. When the Congress passed welfare reform in 1996, it said they wanted the welfare benefit to act like a wage so that just like if you show up at your work site and you only show up half of the time, you take home half of the paycheck, they wanted welfare benefits to operate in much the same way so that people would get used to going to a work site and earning their benefits.

Actually the way the Clinton administration interpreted that law, they didn't enforce it so that at the moment in many States, including New York, California and many other States, if you don't go to your work assignment, very little -- there is very little benefit change.

Currently in New York City, for instance, we have 40,000 people actively participating in work activities, but an equal number, about 40,000 who have been asked to come in and participate in work activities who are sitting at home and not doing anything, and there is very little that we can do to encourage them to come in because we don't have -- they are still receiving almost their entire welfare check. That provision should be enforced.

Third, States should be able to merge their work obligations under Food Stamps and those under TANF. And since Food Stamps is not a program responsibility of this Committee I won't spend too much time on that. But finally, the constraints imposed on work experience programs by Federal regulations should be lifted through legislative clarification. And what I mean by that is that the Clinton administration, in its regulations, imposed the requirements of the Fair Labor Standards Act and other requirements, such as OSHA, on those individuals who are in a work experience activity where they clearly don't apply.

Let me give you an example of how that can be harmful. For instance, the minimum wage provisions of Federal law, mean that you could be working almost at a schedule of 35 hours a week and be in a simulated work environment. But if the provisions of the Fair Labor Standards Act were invoked, the individual participant would have to work far fewer hours and not get that practice.

Finally the promise of welfare reform has been achieved to a far larger degree than was anticipated, but we should be concerned that States are not developing the work programs and infrastructure necessary to constructively engage those who remain on assistance. It is often asked what will happen when the economy declines. What will happen to welfare reform. The right answer is that work experience should act like an accordion and absorb people who are temporarily out of the private labor market, while keeping their work habits and skills moving forward so that when the economy improves, they can move right back.

And now I would like Lisa to talk a little bit about how we run a very large work program in the Parks Department.

[The prepared statement of Mr. Turner follows:]

Ms. FALCOCCHIO Thank you, Mr. Chairman and members of the Subcommittee on Human Resources. My name is Lisa Falcocchio. I am from the Parks Department. I was asked to come here today to talk a little bit about how we run our Welfare to Work program operationally.

The Parks Department is a unique city agency in that we have really embraced Welfare to Work and Workfare. In 1994, we had a work experience program or a WEP participant head count of a little bit over 1,000, and we peaked in 1998 with almost 7,000, which is equivalent to about 3,000 full-time employees.

For us, this has been a big undertaking, but the work we put that setting up the program has proved enormous. Our cleanliness ratings, which is one of the ways that we rate how effective this program has been for us is, as a city agency, have shot up. 1994 there were 75 percent cleanliness ratings with the parks and playgrounds, and currently we are at about 95 percent. And our WEP head count today is about 3,000. One of the things that we are able to do is the way the program is structured, is every 2  weeks we get referrals from HRA from each of the boroughs.

From day one, when participants come into our program, we wanted it to be very clear to them that they are part of the Parks Department. They are part of our work force. We explain to them that this is not a permanent job, that is, probably won't lead to permanent employment, but we offer them the different tools that are there to help transform them into private sector employment.

We have two job training programs that are part of their time while they are in the parks Welfare to Work program. And since 1994 we have placed over 2,000 people in full-time private sector employment. And our retention rate is about 86 percent for over 3  months. And the average rate is a little bit more than $8 an hour.

The way the work site is actually set up is each of our boroughs are separated into districts. We have trained supervisors who are called crew chiefs. They were in-line workers. Their responsibility before they were promoted to supervisor was basically the position of a city park worker to do maintenance jobs in the parks, to maintain the parks and playgrounds. Before or while they were promoted, we realized that it was very important for them to receive additional training. Initially when they were promoted to supervisor of our WEP group and they are about 15 to 25 participants per group, depending on our head count and operational needs, they go through initially about 6 days of training, and then each year it depends, sometimes it is three days, sometimes it is one day, depending on the needs.

When participants come into the program, we make sure we explain to them about HRA policy, about park policy. And then they usually get assigned to a work assignment that is closest to where they live. Sometimes, depending on child care and other issues, it makes more sense for there to be an assignment closer to where their child goes to school. We try to accommodate those needs.

We make sure they have their safety equipment they need, the uniforms they need, and that they understand that there are different options available to them. They have the option to get assessed. Every participant who comes through our program we do a self-assessment with them, usually through one of our job training programs to see what their skills are. If people have special skills or are in college, we try give them an assignment that reflects their scheduling needs, or if they know computers, to help them get up to date in whatever the latest technology is so that that becomes a marketable skill.

In addition, we give driving training for people to get their license or commercial driver's license where they can practice on the parks' trucks. It is sort of the bigger picture, how can this really be a work experience? I mean, that sort of is the presentation.

And I think the final thing to say, though, is that our supervisors who have such an influential role because they are with our participants 3 days a week, they are trained very much in how to make this a real work experience.

Chairman HERGER. Thank you very much.

Next I would like the gentleman from Michigan, Mr. Camp, to introduce our next witness.

Mr. CAMP. Thank you, Mr. Chairman. I do want to welcome and introduce Doug Howard, who is the director of the Michigan Family Independence Agency, and also to mention that under his leadership, Michigan has experienced the lowest welfare enrollment since 1969, and under his leadership also under Michigan's Project Zero Initiative, more importantly, the number of families without earned income has been reduced to zero in 86 out of 104 sites in Michigan. So we look forward to your testimony and thank you for being here, Doug. Welcome.

STATEMENT OF DOUGLAS E. HOWARD, DIRECTOR, MICHIGAN FAMILY INDEPENDENCE AGENCY

Mr. HOWARD. Thank you. Thank you, Chairman Herger and your colleagues, and a special thank you to Congressmen Camp and Levin for their interests in not only what we do in Michigan, but how it is affecting children and families. I know you all share that interest. I also want to thank you, Chairman Herger, for continuing what many of your colleagues have done before you in coming and reaching out to the States.

You recently appeared at an American Public Human Services Association meeting where we had the opportunity to interact. I am a member of the board of directors for that association. One of the things the States have done is try to come together on consensus on a number of social policy issues. Some of you are familiar with the recent publication, Crossroads-New Directions in Social Policy. It is broader ranging than today's discussion, but there are a number of references in here to TANF and work requirements. And if it is appropriate and if there is no objection, I would like to ask if we could submit this as part of the record. We can make it available in electronic format.

Chairman HERGER. Without objection.

Mr. HOWARD. Thank you. I appreciate it. Michigan is a State that began down the path of moving towards work-based reforms as early as 1992 under Governor John Engler's leadership. Along with a number of other States in the early and mid 90s, we really began moving into that environment through a number of State waivers. And we have had great success, as Congressman Camp has pointed out, we have seen very sharp declines in the cash assistance caseload. We have seen a decline of nearly 70 percent. That doesn't mean that we are serving 70 percent less. What we are doing are moving people from a pure reliance on cash assistance into the work force. In some cases they are leaving all programs, in other cases we are still providing supports.

I would like to put up a chart reflecting the shift from cash grants to work support -- yes, that chart. This is an example of the types of support we are providing for work and an example of how the flexibility of TANF has allowed us to focus more on work-base supports. This is included in a separate exhibit from the testimony I have submitted. The upper dark blue line that is on a downward trend reflects the annual payout in cash assistance grants in the State of Michigan.

The lower kind of mauve colored line that is increasing represents child care assistance. You will see that last year those lines actually crossed, and we are now paying out more in a service such as child care to support families in the work force than are actually paying for families who may be staying at home. We are seeing those same type of upward trends in other States. We see those same type of upward trends in a number of other services, transportation, some programs perhaps with lower cost but upward trends in mentoring, parenting skills and other services that help families keep their family structure intact so they can remain in the work force.

So we believe that the flexibility under PRWORA has really allowed us to do that reinvestment. The whole centerpiece in this is, of course, the work requirements. We do believe very strongly that the focus on work requirements has helped us change the culture of the program, not only for staff, but also for the clients and the general public. If nothing else, it has helped us create the opportunity for families to make good business decisions.

I would like to jump to the next poster board as an example of what I referred to in the way of good business decisions. Under the old ADC program, which essentially is represented by the first column entitled "welfare," there was not a lot of incentive to go to work. Families would lose their benefits nearly as fast as they gained income. Between cash assistance and Food Stamps, these are Michigan specific numbers, they had roughly $800 in disposal income a month.

As we move into the work requirements under TANF, essentially matching up the welfare and work column to the current 30-hour work requirement looking at minimum wage, adding in earned income tax credit, the employment and the continued eligibility for Food Stamps and cash we see in Michigan, that their disposable income has climbed to over $1,300. Finally if they go to work full-time, even at minimum wage, that further increases their income. Obviously, the higher the income level, the better off that family is.

So we know that this has certainly created value for the family. There are a number of studies out there that show that the most common reason for leaving welfare is work. We have seen over 260,000 families leave assistance just due to work in the State of Michigan. Their wages have ranged from minimum wage all the way up to $25 an hour. We think one of the opportunities before us in work-based reforms that we are trying to integrate locally is a focus not just on job placement, but on retention and advancement activities.

One of the things we have often said is that we believe work strengthens families. But sometimes to help with that retention and advancement, we need to put some things in place to strengthen the family so they can keep the job. So we have seen an expansion of the messages we think about, how we support families and work, child care, transportation, helping them deal with issues at home. We have seen clear success stories where parents have relayed, as you are hearing today, that they are doing this for their family and children.

One of the things we do in Michigan we are quite proud of because it puts a face on this every month, is hold an achiever-of-the-month ceremony around the State in which a current or former recipient tells their story. And the most common thread in those stories is that they have done this for themselves and their children, the message that they are sending for their children is very important.

I think, in conclusion, I would just say that there are continuing issues under the work requirements. We need to keep the focus on work. We would ask Congress to continue with the things you have done under PRWORA around the ability to reinvest funding, the flexibility States have been given which will allow us to focus not only on placement, but retention and advancement, and ultimately on strengthening families. Thank you for your time.

Chairman HERGER. Thank you very much, Mr. Howard.

[The prepared statement of Mr. Howard follows:]

Chairman HERGER. Our concluding witness for this panel will be Mr. Rodney Carroll, the president and chief executive officer of the Welfare to Work partnership. He is accompanied by Takia Roberts, who has gone to work with the help of the Welfare to Work partnership. Mr. Carroll.

STATEMENT OF RODNEY J. CARROLL, PRESIDENT AND CHIEF EXECUTIVE OFFICER, WELFARE TO WORK PARTNERSHIP, ACCOMPANIED BY TAKIA ROBERTS, LEAD PHARMACY TECHNICIAN, CVS PHARMACY, MARYLAND

Mr. CARROLL. Thank you and good to see you again Mr. Chairman. Mr. Cardin, Mrs. Johnson and other distinguished members of the Committee, I am delighted to be here to represent the American business community. I would like to also commend you on having this hearing and taking the important steps to fixing the 60-year-old problem.

As I was preparing my notes and preparing to talk today, I wasn't quite sure what I was going to say. I was going tell you about the Welfare to Work Partnership and how we started with five companies, and that we now have over 22,000 companies, and those 22,000 companies have hired 1.1 million people, and 40 percent above the minimum wage average salary, and 83 percent promotion track jobs and so forth. But I figured I didn't want to tell you that.

I also was going to tell you about our recommendations that we have and we have a book that we handed President Clinton last year on our recommendations, but you have a copy of that book in front of you, so I guess you could look at that at your leisure.

I also could tell you about the two biggest problems that we have found, which are child care and transportation, but everybody knows that. So as I began to think about what I was going to say, how I was going to say it, I thought that I would tell you about nobody. That is right, I said nobody. You know when I was growing up in Philadelphia, I was 16 or 17 years old, grew up in a family on welfare. I guess I thought I was probably nobody. You see, nobody really had anybody, any plans for my life. Nobody was expecting anything from me. Nobody felt that I was going to make anything. Just wanted me to stay out of trouble, stay out of the way, you know, don't really do anything. Because as growing up on welfare, nobody really believed that I was ever going to do anything to make any difference in life and be a good citizen.

But you see, deep down inside, I knew differently. And I knew that if I could get an opportunity, a chance to do something in my life, that I could make a good life of it.

So as I went to high school and I eventually went to college, and at some point I got a job. And I got this job at UPS. And I worked at UPS for 22 years up until last year when I left UPS to be the chairman of the Welfare to Work Partnership. When I came into UPS, I didn't come into UPS with a suit and tie on, I started in the trucks unloading and loading boxes, like most of the UPS people do. As I go through the Partnership and I go around the country and I talk to companies and people all around, you know what they tell me? They tell me the same thing: welfare recipients, by and large whatever race or color, they all are looking for a chance. They are looking for an opportunity. They want to make something out of their lives. They want to do something. And many times it is just a barrier that causes them not to be able to reach these goals.

You remember Mr. Cardin said that although the roles have been cut in half we have impressive numbers all around the country, certainly impressive numbers in Michigan and Wisconsin and certainly New York City, we still have about 2 million people that are still looking for that same opportunity. It is not time to raise the flag now and say hey, we have won. We have still got a long way to go. The question begins how are we going to get there? But first, we need to recognize that we do have some distance to travel and we do need to make some more gains as we go along. You see, my experience has been that the people that have not yet made the transition, those people even have more difficulties. They may even have more challenges ahead. There may need to be more resources put toward those people so that they will have the same opportunity that I had and the same opportunities that perhaps you had. The Welfare to Work Partnership is very proud of its record so far. We are in five cities on the ground. And the objective, again, as Mr. Cardin, said is not only getting a job, going from welfare to the working poor, but also it is really about going from dependence to independence.

And in order to do that, you not only have to get a job, but you have to be retained on the job and you also have to advance on the job. So as I go around the country and talk to businesses all around, I talk to them about why it is smart for them to hire people from welfare. I never tell them about charity or social responsibility. I tell them why it is a smart solution for their business. I tell them about people like Takia Roberts, I tell them about myself.

One of our business partners is CVS Pharmacies. CVS Pharmacies sits on our board. I am proud to say that CVS has hired an estimated 12,000 people in the last couple years from Welfare to Work. They hire many times entry level, but they have programs that allow people to come in entry level and if they work hard, if they do a good job, they can advance and they can make something out of their lives.

As I told you earlier, I came here not only to tell about those things, but to tell you about nobody. But now I would like to introduce you to somebody.

Sitting to my right is Takia Roberts. I would like for her to tell you about her life and her story and where she is going and where she hopes to be.

[The prepared statement of Mr. Carroll follows:]

Ms. ROBERTS. Good afternoon. I really don't have anything prepared. I just want to tell you a little bit about myself. I grew up in the projects as some of these people in the panel. I was a high school dropout. I went back to school, which was a nice school. I was working in a fast food restaurant. When I went back to school to get my high school diploma, I met a young man with an apprenticeship program who introduced me to Welfare to Work.

Before I started, I was just like, well, it is just another job. It wasn't anything to me. And now, you know, since I have been working there, I am a lead pharmacy technician, I work with doctors, pharmacists, a lot of different people. My job includes filling prescriptions, now I know what I want to do out of life. I want to go to school and become a pharmacist. It is just -- I just really don't have anything prepared, you know, I just wanted to tell you all that I am really nervous, excuse me. So I just -- you know, if it wasn't for the program, I really don't know what I would be doing right now.

You know, I came from working in the fast food restaurant to a lead pharmacy technician. So I just want to thank them for having this program because I now have a career not just a job. That is it. Thank you.

Chairman HERGER. Thank you very much, Mr. Carroll and Ms. Roberts. We are also very proud of you. You are really a role model, both you and Ms. Taylor, to show that if you are willing to work and become involved, you can make something of yourselves. And it is not just you. We believe everyone out there can do it. The goal of this Committee, and certainly I believe of our country, is to help everyone be able to enjoy the American dream. Maybe with that we will turn to some questions.

Ms. Julia Taylor, a key outcome of Wisconsin's program has been a staggering caseload decline of over 90 percent. That has meant increased work by those who left the rolls, but another key outcome has been that Wisconsin has the resources and the capacity to focus intensive individualized services on those still remaining on the rolls who often have difficult issues to overcome.

Ms. Taylor, I would assume you agree that Wisconsin's work requirements and time limits in keeping with the national welfare reform law are key components driving the caseload decline, but can you tell us more about these key features of Wisconsin's welfare law?

Ms. JULIA TAYLOR. Certainly. Actually the largest drop in the caseload occurred during pay for performance, which was actually just prior to W-2, which was when we first began putting a work requirement in place under the initial jobs program. When W-2 began, we saw another substantial caseload dropoff, and a lot of it, part of it was indication load cleanup. We go out and visit houses where we had not even a response. And we would find that there was no house at that address or that person was no longer residing there.

We also found that there were a lot of people that just need a little bit of help to go to work and be successfully attached to the workplace. So the very first, I would say, first massive dropoff happened in the first 6  months. Actually, for the last year and a half to 2  years, we have not seen a significant dropoff in the caseload. Part of that is that the people that are remaining in the caseload are much more multi-barriered, are much harder to serve, often have a family member with a disability, very low reading skills and math skills.

So being able to provide the supportive services has been critical in terms of helping people move towards employment. I don't want to sound like people still don't move towards employment in the caseload, because they do and they are often very successful. It just takes a longer period of time and it takes more much more intensive counseling. Because often we are working with the entire family not just with one individual. And we have also been working a lot more with men recently particularly men just getting out of prison, men who are identified as non-custodial parents, to try to get them employed not just to help with the child support, but also to work with the family and to understand some more responsibilities about being a father other than just the responsibility of paying child support.

Chairman HERGER. Well, thank you. In your estimation, would relaxing work requirements in general make the task of helping the hardest to serve easier or tougher?

Ms. JULIA TAYLOR. I think it depends on how you define work requirements. We have often defined work requirements as having a substantial training base and supportive services so people might be in a GED program. They also might be working in the Creative Workshop, which is more of an assessment program as part of their work requirement.

So I think some of it is in how it is defined. Part of it is also creating a real life work environment so people know what it is like to go to work, so they are getting used to the discipline of work. The reason we created Generation 2 Plastics was rather than put a person with an employer and have them fail, we would rather have them learn what the workplace is like before they were permanently attached to the workplace. That has been a pretty successful process for us. We have a fairly high rate of retention, about 76 percent and a higher rate of placement.

Chairman HERGER. Mr. Turner, would you mind answering the same question?

Mr. TURNER. Let me start by answering that by elaborating on what Ms. Taylor just said. Because I am somewhat familiar with the Wisconsin program. She said that much of the caseload decline occurred right after pay-for-performance. And translated, that means the pro rata provisions that the Congress inserted for the entire welfare reform bill were actually tried before the Welfare Reform Bill passed in 1996 on a waiver in Wisconsin. Once you connected the benefit with an obligation to participate, all of a sudden the things that she was describing, people who really didn't need the money and really had other options, didn't come on the caseload or leave the caseload right away. And of the remaining ones, they got the practice of what it means to show up to an assignment and get a benefit. So a lot of the success was contained in that provision itself.

The other aspect that I would like to elaborate on is that now there is a very low proportion of individuals that are remaining in the caseload in Wisconsin. The same can't be said in New York, yet although we have reduced the caseload 52 percent since its high. But for those individuals who were participating, only work experience really gives them the practice that is necessary to work out issues that they need before they succeed in private employment.

It is very easy to get a private job right now. The problem that we have with welfare recipients is they don't keep the jobs. The reason they don't keep the jobs is not usually because they can't master the tasks that are asked of them but they don't have the habits. Getting to work on time, getting along with coworkers, showing up the next day, doing it day after day, making the arrangements to get your kids to school on time. We don't want to burn out our employer community by having welfare recipients move totally into employment and then have the employers disappointed.

One thing a work program does is allows all these issues to be worked out in a practice motion before they are launched into private employment. And that is why it is so critical to have a large and ongoing work experience program in addition to private preliminary.

Chairman HERGER. Thank you, Mr. Turner. You mentioned you are familiar with Wisconsin. Would you like to tell us why you are familiar with Wisconsin?

Mr. TURNER. Well, I was very flattered to have the opportunity under Governor Thompson as a State employee in Wisconsin, back in the early 1990's and into the mid 1990's, to be the director of the Welfare Reform Project that made recommendations that became Wisconsin Works.

Chairman HERGER. So you actually worked there or were very instrumental in putting together that work program initially?

Mr. TURNER. Well, it was the Governor's program, but I was happy to help out.

Chairman HERGER. Thank you. The gentleman from Maryland, Mr. Cardin.

Mr. CARDIN. Thank you, Mr. Chairman. And let me, once again, thank all of our witnesses here, and particularly those who have experienced the system first-hand. Your testimony here is very important to us. You put a face on the issues. We hear about the numbers. But we don't always see the people. And it is very helpful to us. I know it is not easy to testify before our Committee, but I want to personally thank you all for being here. It has made a difference in this hearing.

I want to talk a little bit, Mr. Turner, about your testimony, because I am somewhat confused on a couple points maybe you could help clarify. I thought you made a good point about the mixed workweek for the people in Workfare in that they have a work experience, plus they do other assignments during the week to find private sector employment or to gain additional skills. Now, if the minimum wage law were not applicable, wouldn't that just encourage the system to have the individual participate in work activities for a longer period of the workweek?

Mr. TURNER. No, not necessarily.

Mr. CARDIN. Then why are you concerned about the minimum wage applying?

Mr. TURNER. Because when the minimum wage is applied where welfare benefits, for instance, in a small household don't allow you to, for instance, put together a workweek which includes three days of actual working plus two days of other activities, it becomes very, very difficult. And much -- many low benefit States -- New York is not a low benefit State -- you can't really create a simulated workweek with a 3-day, 3-plus-2 the way I described it. You have to cut back on the work. What you want to do to have a successful program is simulate an actual workweek. That is why we object to it.

Mr. CARDIN. I am still not sure I fully appreciate that.

Mr. TURNER. You want to have a 35 hour --

Mr. CARDIN. If you were not subject to the minimum wage, then you could have the person participate in a 35-hour work -- direct workweek, could you not? Could you not? Am I correct on that?

Mr. TURNER. Let me see if I understand your question.

Mr. CARDIN. If you are not subject to the minimum wage, you could then have the person participate in a work activity for 35 hours.

Mr. TURNER. What we do in New York and what Wisconsin did is create 3 days of work plus 2 days of other activity.

Mr. CARDIN. But you were subjected --

Mr. TURNER. If you retain the minimum wage provision, that is -- as interpreted in the current law in many States, you can't run a simulated workweek.

Mr. CARDIN. Currently you cannot do a 5-day workweek, correct, of all work if you are under the benefits you are providing?

Mr. TURNER. You can, but only if you have a high benefit State plus you add the Food Stamps, and together, then you can do the 5 days. But many low benefit States you can't do that.

Mr. CARDIN. I understand what you are saying. I still question whether the incentives might be just the reverse if the minimum wage laws were not applicable. But let me get on to some other issues. Because I am somewhat confused by why you were so concerned about protecting the people that participated in your program from the protections that are in the law, you want work experience, you want to protect the individuals in the work experience. I know that New York has had alleged problems with sexual harassment. The City has suggested Title 7 of the Civil Rights Act does not apply. I know you are contesting that currently. What protects the people from being sexually harassed?

Mr. TURNER. Let me answer that very simply: First, the application of workplace laws, basically creates a work training program that leads to crazy outcomes. For instance, you don't want to have crazy things going on such as welfare recipients treating welfare benefits as though it is income and having wage income. And you don't want to have unemployment insurance --

Mr. CARDIN. I don't mean to interrupt you but we are on a limited time here. Are you suggesting that because the person is, under your definition, not an employee, it is permissible for to you sexually harass that individual?

Mr. TURNER. Oh, that is nonsense. I am not going to even bother with that question.

Mr. CARDIN. I know that is nonsense. But I asked a specific question. Wait a minute, sir.

Mr. TURNER. Sexual harassment is not permissible under any --

Chairman HERGER. Mr. Cardin.

Mr. CAMP. If the witness would be allowed to answer.

Mr. CARDIN. Yes. If I could ask the question first.

Mr. CAMP. Well, you keep interrupting.

Mr. CARDIN. Mr. Turner, my question dealt with protection against sexual harassment.

Mr. TURNER. It is already in the law.

Mr. CARDIN. What law?

Mr. TURNER. You cannot be part of any welfare program in New York City or be an employee, either one, and be subject to sexual harassment without having your rights protected.

Mr. CARDIN. Under what law?

Mr. TURNER. If you go to --

Mr. CARDIN. Then what is the problem with Title 7?

Mr. TURNER. In you go to City University of New York, and you are in a training program or in a class and you are sexually harassed, you are not at work but your rights are protected. My point is it is totally superfluous, but it has crazy unintended consequences. One wants to use the laws that already apply to people in training programs and apply them while they are in work experience. That is the comparability, not workplace law. It doesn't make any sense.

Mr. CARDIN. It doesn't make any sense because the Federal remedy doesn't work in the -- for people in your program, but it works for people in the work force or it doesn't work for people that are normally in the work force?

Mr. TURNER. I started to give you some examples, but I was cut off.

Mr. CARDIN. Give me some examples.

Mr. TURNER. Some of crazy things that happen, if you apply workplace laws to a training program, which doesn't apply, is you have people getting welfare benefits, counting it as wage income and having all of the different -- there are 25 different programs, 25 different laws that the GAO came up with that apply in the workplace that don't currently apply when you are running a welfare program. Do you want to have all these laws apply? They don't all apply. Some of them do. Some of them don't. But what you do have already in place are protections that are endemic -- in Michigan, in New York, and in Wisconsin, we have run training programs for many, many years. And we have laws that apply there. The comparability is between somebody who is in a work assignment, and that is part of his Welfare to Work program, and somebody who is in a GED class. That is the comparability. Not somebody who is working at McDonalds and has workplace laws apply to them and somebody in a training program. That is thing I am trying to get across. The provisions are right there.

Mr. CARDIN. Do you supervise the people that are in this program?

Mr. TURNER. I lost you.

Mr. CARDIN. Do you supervise the people that are in the work force program?

Mr. TURNER. I still don't understand the question. Do I personally?

Mr. CARDIN. Is there supervision?

Mr. TURNER. Of course.

Mr. CARDIN. Is there direction given to the individuals that participate in the program?

Mr. TURNER. I don't know what you mean by that. Obviously, if you are going to run a program, you have to manage it. And that is what we do.

Mr. CARDIN. And that is to use similar supervision to someone who is in the GED program?

Mr. TURNER. Absolutely. We supervise people that are in the GED program. They have to show up and participate. Their benefits are reduced, and they are in a training program and we try and move them to work. That is the same thing. The difference is they are in a simulated work activity. That is the comparability.

Mr. CARDIN. What type of work activities are we talking about? Aren't we talking about working?

Mr. TURNER. We just had a description of some of the things that we do. The best kind of training for work is actual participation in a real work-like activity, not something where you are sitting in class. Most welfare recipients who have never been in a work environment before don't know how to act, they don't know how to get ready for work, and they don't know what to do in a work environment and work site. That is the kind of practice they need.

Mr. CARDIN. And therefore, it is adequate for you to figure out how to protect their interest in regards to the laws that you do not believe should be applicable to this type of a circumstance.

Mr. TURNER. The system already protects them throughout their participation whether they are in GED or working at the Parks Department.

Mr. CARDIN. Perhaps you will just make available to our Committee an explanation to that statement. I would appreciate it if you would provide that in writing to the Committee.

Chairman HERGER. Thank you. The gentleman from Oklahoma, Mr. Watkins, to inquire.

Mr. WATKINS. Thank you, Mr. Chairman. Members of the Committee. Let me say to Mr. Carroll, I will ask you a question. I would like to say to Mrs. Taylor and Mrs. Roberts, I salute you and I commend you. I know it takes a lot of guts. I think about my own mama, who was a forced single mother, trying to raise three kids, and she said that we weren't going to go on welfare. And I realize what she meant by that when I was working three part-time jobs to try to get through school. But also, I would like to say to you, don't underestimate your role as a mother. That 14-year-old son that is proud of you, I can assure you my mother was a lady with very little formal education, but a woman with a world of wisdom and the stigma of welfare she wasn't going to have us be in the welfare.

But she had little formal education. But she kept preaching education, education, education. And I reflect on my mama and realize that she didn't know what college was, but all three of her children received advanced degrees. And all of them are participating, I would like to think, maybe all except me ,in a constructive role in life.

But Mrs. Taylor, Ms. Roberts, I just cannot emphasize enough what you can stand for where your families, as you develop your families in life, whatever you do. And so, I hope you will carry that with you. And I know I, when 10 years of school after coming back from California, my family has broken up because of economic instability. My father became an alcoholic and died an alcoholic. They went to California three times before I was 9 years of age. We came back to Oklahoma. But I say this because it is important that you carry that with you because keep those young people in school.

I want to ask Mr. Carroll, I don't come from a large city, I grew up outside of the community of less than 200 people. And one time though, when I was a youngster about the time I was leaving, we had two banks and two streets of businesses. Now, we have one store in that small rural area. So we don't have jobs, but we have people who are on welfare and I devoted my entire public life to try to build jobs and build the economy.

I am very interested when you said you started five new companies under the partnership under the program. Could you -- would you maybe let me know, or what are those five companies and what do they do?

Mr. CARROLL. I think I tried to say we started with five companies. And we began the partnership about five companies.

Mr. WATKINS. Okay.

Mr. CARROLL. The five companies were United Airlines, Monsanto, Burger King, UPS and Sprint. And then we grew slowly but surely, and we now have over 22,000 companies throughout the U.S.

Mr. WATKINS. These are companies that started working with you as partnership trying to take people off welfare, which is tremendous. That is a great, great partnership if you can have. I don't have Fortune 500 companies in my district.

Mr. CARROLL. Over half of these companies are small companies that we may not have heard of, so about half the companies, 12,000 or so are small, less than 50 employees.

Mr. WATKINS. I have been working, starting up companies and literally, in rural economic depressed areas trying to build jobs from scratch. What I was wondering, if there was any you might -- could spare. I will commend you, UPS, you said you had 22 years. I always thought if I could get a team of campaign workers like those UPS workers, I could do a great deal more. You know, I might amount to something too by that time.

Mr. CARROLL. Let me say what I am gathering is that there could be people in a very rural area, and there is not a lot of job opportunities in that particular area. The Internet offers tremendous possibilities.

Mr. WATKINS. If I can get Internet in that rural area.

Mr. CARROLL. Now with wireless you can get Internet everywhere. So I am more than happy to share information on companies that would be willing to assist you.

Mr. WATKINS. I would welcome if you would have any companies that would help in the rural areas. Because we are left behind in the digital divide. I am trying to work to bridge that gap because it is a different situation out there in economic depressed rural areas. There are many of them have not recovered since the Great Depression. And we have got to build off farm jobs because we cannot save them, which is Ag, which I have two degrees in Ag, we cannot do it.

Mr. CARROLL. I would be more than happy.

Mr. WATKINS. Thank you, Mr. Chairman.

Chairman HERGER. Thank you, Mr. Watkins. Next to inquire is gentleman from Michigan, Mr. Levin.

Mr. LEVIN. I will be brief, I know Mrs. Johnson also has to go to another meeting. Let me make a couple of comments then I will leave and turn over my time to you Nancy, whatever other time you have left.

First of all, I want to say, Mr. Turner, when we were considering welfare reform, went into this issue of exemption from Federal law in great detail. I don't remember all of the back and forth. We rejected the notion of a blanket exemption. And I want to go back and read some of the documents relating to it. I remember that the reference to see what wasn't a decisive, by any means, precedent for that kind of exemption. And I missed some of the back and forth. But I remember having long, long discussions about worker safety issues, et cetera. So I may be back in touch with you. But I want everybody to know we have looked into this and there were serious questions we had about your proposal.

Let me -- Mr. Howard and I have had a chance to talk about this. I want to refer to one piece of your testimony, Mr. Howard, to emphasize what I think is the challenge ahead, and actually the response of Ms. Taylor referred to it. On page 4 you talked about wages have ranged from minimum wage up to $25 per hour. You and I have talked about this. I had a meeting with the program in Macomb County, and from their records, the best they could tell the average wage for someone who had moved from Welfare to Work was under $7 an hour. And I do think the studies that we have indicate that that is much more prevalent than $25 an hour.

Indeed, one of the real problems is people move to Welfare to Work which has, I think, very substantial benefits, and the core of welfare reform is that it is essential that people, as they move from welfare to work, make a living in colloquial terms. And when people are making 7 bucks an hour and have a couple kids, it is very tough going, to put it mildly. And especially when the evidence is that a lot of them, though eligible for Food Stamps, never apply.

And also the disturbing fact that a lot of them do not have health care after the year. So I just want us to realize that a good part of the challenge remains ahead to make sure that as people move from welfare to work, they are in positions that pay them a living wage. Ms. Taylor, that really refers to your response, which I think was interesting and I think enlightened.

In terms of people's placement, it is important to keep in mind training and retraining that moves them up the ladder economically. With that, I will turn the balance of my time over to Mrs. Johnson. Thank you for letting me go before you.

Chairman HERGER. Thank you, Mr. Levin. The gentlelady from Connecticut.

Mrs. JOHNSON. Thank you. First of all, I do want to say to Ms. Taylor and Ms. Roberts how helpful your testimony is because for those of you who have been in this business for long times and been through several rounds of welfare reform, and how many women have looked at me, it is such a trap, I can't get out, I can't get medical coverage, I can't this, I can't that. It is really wonderful to see that the kind of things that we have been able -- people have been able to offer you, have actually helped you see that there are careers out there. And things you would be good at that would give you a good income, a good living and a good group of people to work with, and that this does matter to your kids.

So it is really wonderful to hear your testimony. And I congratulate both of you on how far you have come, and I hope your friends are doing as well.

Also I want to put in the record, Mr. Turner what a very good procedures manual that you have for your work experience program. And how clearly you spell out that sexual harassment is not allowed and discrimination is not allowed on the basis of age, citizenship, color, creed, disability, gender, marital status, race, religion, prior record of arrest or convicts, sexual orientation or national origin, and that you do actually have a very good procedure here for your supervisors as to what should happen when there is an injury on the job and how they should complete the workmen's comp forms and all those things.

So we will try to figure out the law, the legal issue of making sure that all programs would have such good procedures and why students are covered this way and the difference between this and being sort of caught in the employment laws which catch you the same way the old welfare program caught women on welfare.

So I think, I don't want people to be able to be discriminated against because I also want us to be able to give people voluntary work experience, combine it with other things and help them move on in life. Sometimes the constraints of laws that were written for full-time employees are a hazard to your health if you are trying to just move forward. Then I just want to ask two questions, and since I am way behind on time too, do you think the system has -- if we just fund it at the current level and we allow flexibility, is there enough money for day care, substance abuse treatment and to deal with the mental health issues that you are getting into as you reach, you know, those who are unemployed? And then the other part of my question is the work opportunities tax credit helpful to you at all? So just quick responses.

Mr. TURNER. Well, speaking for New York City on the first issue, is there, now that we are getting to the lower levels, is there sufficient funding for some of those other activities that you described? The short answer is yes. In New York City, we used to spend $217 per adult per year on non-benefit related services, like job training and child care. Today, because of the TANF block grant and the combined reduction in the caseload, we spent $3,200 per adult per year on those activities. We currently have no shortage of substance abuse slots in New York City. We have -- child care is made available for everyone going to work. We are very happy with that.

Mrs. JOHNSON. Work opportunities, tax credit?

Mr. TURNER. We have not found employers clamoring for the work opportunities tax credit.

Mrs. JOHNSON. Do you educate them about it?

Mr. TURNER. No, we don't. We probably should.

Mr. CARROLL. I would say that as far as the funding, sure we would love to see the funding stay the same. The people that are remaining do have multiple barriers. But even the people that are just off are barely just off. And they are going to need some additional training and some support. The people that Mr. Watkins is talking about is rural America, they may need some special assistance to get from where they are connected with the economy at large.

The American business we have a split, we have some companies that are taking advantage of the Welfare to Work tax credit like you wouldn't believe, into the millions. I could even give small businesses like Burger King franchises, they swear by it. It has to do with education. You have to be able to explain what it is and how it is. There is a perception to some how this is going to be so difficult to hand out and so difficult to access, that particularly a small business says I don't want to deal with it. We talk to them and tell them why they should do that and how this tax credit may offset some of the costs they may put out, it is a win-win.

Mr. HOWARD. I would say on the funding, if I put on my ADHSA hat, there are probably some States that may have some disagreement on whether you stay the same or think about an index to inflation. But generally I think I would agree with what I have heard. We have seen some increased barriers in the remaining caseload. It is not a blanket statement. There will be people that can move through quickly. We are able to refocus more resources on job retention and job advancement.

So I think generally, funding is probably adequate for the path we have been on, for the path we want to go as long as we retain the flexibility. The flexibility may be just as key to the States, if we start seeing carveouts and mandates that may affect our ability to do things and my answer changes.

The work opportunity tax credit, I am aware that employers are using it. I don't know to what extent that is driving the decision right now. I would say, probably, the labor market demand we have seen over the last couple of years has been more critical in their decision to hire recipients and partnerships like the Welfare to Work partnership and some things we have going on with employers in the States where they have actually done this. We have seen some experiences of employers where they have job retention rates go from 20 percent up to 85 percent when we have targeted services. So they are recognizing the benefit they get from targeting individuals who need the work and then working to keep them in the work force. So it may be important to some employers, but I don't know to what extent.

Mrs. JOHNSON. Thank you very much. And thank you all for your testimony. I appreciate the good work you are doing out there.

Chairman HERGER. Thank you, Mrs. Johnson. The gentleman from Michigan.

Mr. CAMP. Thank you, Mr. Chairman. Mr. Howard, I just wanted to ask you since welfare was enacted, welfare reform in 1996, what surprised you the most about its impact on work and welfare recipients?

Mr. HOWARD. I think, to some extent, the speed with which we have been able to succeed and our ability to reinvest. It has been a very pleasant surprise. I don't want to leave the impression that I don't think there aren't a few problems and there aren't opportunities for improvement. We know there are still families struggling.

But I firmly believe with all of my heart that this program is so much better than the old ADC program. It helps more families. It moves more people to work. It sends the right message. It has been tremendous. The speed with which things have happened, I have referred to obviously, the economy has contributed to a great extent. I would tell you it is not just the economy. I also ran a welfare reform program in Iowa before I came to Michigan. And one of the earlier experiments we did under waivers was looking at the job entry rate. Same people in the same economy in the same counties, when they had welfare reform policy, were entering the work force at over twice the rate of those who continued to get the old ADC policies.

So we know the policies clearly have advanced work, but we knew we could bring the rolls down. We knew we would move more people into work. I think as administrators we look back we see that it was real, but I don't know anyone would have estimated it would have happened this fast. I am very pleased that we have thus been able to refocus on helping remaining families and continuing to focus on job retention and advancement instead of only what does it take to get someone in any job.

Mr. CAMP. What do recipients say about that focus?

Mr. HOWARD. There is mixed reaction, but generally it is very positive. One of the things I have included in my written testimony is a set of vignettes on some of the -- I mentioned earlier, the achiever of the month. And generally, we get very positive feedback. There may be always an individual here or there that may have fallen through the cracks or who may not have taken advantage of an opportunity. But I would tell you the majority clearly believe that this has provided them the support to go to work. You saw our chart on day care investment.

We are clearly putting support in place. Our achievers of the month always talk about the focus on the children. You heard that today. That is critical, the message they are sending. I would tell you, some of the proudest people in the room at those ceremonies are the kids. They are watching their mother, or two parents in some cases, at the front of the room talk about it. So we get very good feedback.

One of the very first pieces of feedback I ever had from a recipient was something that stuck in my head, it was a comment that the toughest thing about welfare reform isn't that you are making us do something, the toughest part is you are making us make decisions about it because under ADC, you never made us do that before, you just told us what to do and when to do it. That tells me we are engaging people in taking charge of their lives.

Mr. CAMP. Thank you very much. I also want to thank Ms. Taylor and Ms. Roberts for their testimony. Thank you for coming here today. Appreciate it very much. Thank you, Mr. Chairman.

Chairman HERGER. Thank you, Mr. Camp. I want to join in thanking each of you for being here and again particularly it is great to see the success stories. And certainly, Ms. Taylor and Ms. Roberts, you two are outstanding examples and just keep up the good work. As we mentioned before, we are very proud of you. And we are also very pleased and very proud of the job that all of you are doing in administering this.

So with that, I would like to thank you and call up our second panel to testify at the witness table, please. Our first witness on this panel is Father Robert Sirico, president of the Acton Institute for the Study of Religion and Liberty. Our next witness is Steve Savner, senior staff attorney, Center for Law and Social Policy; and our third witness is Vee Burke, specialist in income maintenance at the congressional research service. Father Sirico.

STATEMENT OF FATHER ROBERT A. SIRICO, PRESIDENT, ACTON INSTITUTE FOR THE STUDY OF RELIGION AND LIBERTY, GRAND RAPIDS, MICHIGAN

Mr. SIRICO. Thank you.

Mr. CAMP. If I could just welcome Father Sirico from Michigan from the Acton Institute and he is a well-known lecturer, and really a commentator on important issues involving not only welfare reform, but also economic civil rights and other issues and has been a former member of Civil Rights Commission. Welcome you to the Subcommittee today, and look forward to hearing your testimony.

Mr. SIRICO. Thank you. Thank you, Mr. Chairman Congressman Camp, ladies and gentlemen of the Committee. I have submitted prepared testimony but I will try to summarize that. It is difficult for a preacher, when you put a clock in front of him, but we will see what we can do. The test of any moral society is how it treats its most vulnerable members. But this test is not one merely of sentiment nor of intention alone. It must be considered rationally, it must be looked at with a cool and objective eye. Others have already dealt with the question of the economic efficiency of the Workfare programs in terms of the material results.

But I would say that before even these things can be considered, the moral question must be addressed. Some have called Workfare "slavery." Admittedly, this is a somewhat emotive term that has been applied to it. But nonetheless, it undermines and calls into question the moral validity of such programs as Workfare.

I would like to focus my testimony on two moral issues: the first being the nature of obligation, and secondly, the importance of reciprocity or what might also be called solidarity, human reciprocity and community. First there is an obligation to the poor. Our society has this obligation to the most vulnerable, to the most defenseless. But there is also an obligation by the poor, that is, an obligation that the poor themselves have. And to disregard this obligation I think is to disregard the integrity and the dignity of the people who are vulnerable. In this regard, I think how one goes about implementing programs such as Workfare is very important, and I would advocate an implementation of the principle of subsidiarity, which basically says that needs are best met at the most local level of their existence. I have elaborated on that in my prepared remarks.

Secondly, with regard to obligation, perhaps the passage from Saint Paul's letter to the Thessalonians speaks at least for the Christian tradition with regard to assistance. He says "if a man will not work, neither let him eat." There is another ancient Christian text dating from about the first century, or perhaps the early second century, known as the Didache. And there we find some advice that modern policy planners might do well to adapt for use within the contemporary and secular context. It reads, "let everyone who comes to you in the name of the Lord be received but after testing Him, you will know Him. If the one who comes to you is a traveler help him as much as you can but he shall not remain with you more than 2 or 3 days unless there is need. If he wishes to settle among you and is a craftsman, let him work and eat. If he has no trade, provide according to your conscience, so that no Christian may live among you idle. If he does not agree to this, he is trading on the name of Christ. Beware of such men."

Now of course the Didache was addressed to a group of first century Christian believers, but I think the principles that it articulates and the sentiment of the obligation of the poor that it outlines with regard to a respect for the poor who have an obligation to work for what they receive, is something that should inform the contemporary debate as well.

While there is obligation, there is also reciprocity, which is important. We are, after all, talking about human beings. People who have needs, who have rights, and who have an inalienable dignity by virtue of who they are as human beings.

It is in this regard that I think it is important for people who receive welfare to have an opportunity provided for them to work. There are many ways there which work benefits the community generally by augmenting the amount of human capital that exists. I think in this regard we are, again, focusing on the dignity of the people who may find themselves marginalized and vulnerable for a period of time, but who nonetheless are seen to have something to contribute.

In this regard, we must prepare them for responsibility and the responsibility of long hours that are usually associated with higher paying jobs. What we are talking about here is something that has already been alluded to: habits. I use the word "habit" deliberately because it underlines another dimension of my thoughts about why people on welfare should be required and expected to work.

We must learn, all of us, how to manage our time, how to balance our responsibilities, and how to be more creative in whatever it is we do. And in this regard, we can develop many virtuous habits of action that express our development as persons.

The results of Workfare programs promise to help the unemployed in ways, however, that go beyond the mere material. Virtuous habits, moral habits of action will serve people in good stead no matter what situation they find themselves in. In an economy in which human capital continues to assume great importance, the necessity of possessing such virtues will only increase. As such, Workfare does not amount to an attack on poor people but rather is very much in the best interests of those who, for whatever reason, find themselves without paid employment. Thank you very much.

Chairman HERGER. Thank you, Father Sirico.

[The prepared statement of Mr. Sirico follows:]

Chairman HERGER. Next is -- our next witness is Steve Savner, senior staff attorney at the Center for Law and Social Policy.

STATEMENT OF STEVE SAVNER, SENIOR STAFF ATTORNEY, CENTER FOR LAW AND SOCIAL POLICY

Mr. SAVNER. Good afternoon, Mr. Chairman. Thank you very much for inviting me to testify today. I work for the Center for Law and Social Policy, which is a nonprofit organization that engages in research, analysis and advocacy on a range of policy issues affecting low income families. In my written testimony, I tried to lay out a framework for thinking about work requirements and work participation under TANF and included a number of recommendations for how those provisions might be changed. Let me start by saying I think there are two basic principles that were embodied in the law that could be improved. And I think that we have heard allusions and differences of opinion about those in the prior testimony.

First, one of the basic tenets of the law was that we wanted to get away from a one-size-fits-all system and give States broad flexibility. Coupled with that, there needs to be accountability for that flexibility, accountability for how the funds used, accountability for achieving outcomes in the context of stable jobs and higher family income, and also accountability in terms of treating people fairly.

I am struck by Mr. Howard's strong support for that, and I think implicitly, Mr. Turner's strong rejection of that. Mr. Turner indicates a strong desire to reimpose on States a one-size-fits-all program which says that work experience, unpaid work experience is really the only way that we can help prepare people for employment. Clearly, that is not what 49 other States think. They think there are lots of other ways to effectively help people prepare for employment. If you look at the recommendations of Welfare to Work Partnership, they encourage us to think about more training and skill upgrading for employees.

So clearly there are other voices. I think it is important that we, until we know for sure that there is only one right way to help prepare people for good jobs, not hamstring States by telling them how they must do this. It is also interesting that in the context of what States have been doing in terms of work participation, in 1999, States engaged about 38 to 39 percent of the adults on the caseload in work-related activities. That was more than the requirement which was 35 percent. So even without using the caseload reduction credit, people were engaged.

Now, Mr. Turner suggests somehow that States didn't do what Congress wanted because a lot of those people were in unsubsidized employment and getting benefits. It seems to me that is exactly what Congress and everybody else wanted, paramount, above everything else, was to get people into unsubsidized employment.

So I would disagree that counting people who are in unsubsidized jobs is somehow unfair, or not meeting the purposes that Congress set.

Turning specifically to the strategies that States are using, first of all, I think notwithstanding Mr. Turner's assertions, there is no evidence that the kind of program that he is supporting and running is better than any other Welfare to Work program that we see, better than paid work experience, better than certain kinds of skill development or job search and intensive engagement programs.

The evidence that we have from research suggests that there were very weak results from work experience programs, and it is not clear at all that there is any factual basis for the assertion that this is an effective way, much less the best way to prepare people for employment.

I want to respond to two additional points that came up in the testimony earlier. One is this whole issue of employment protections. As Congressman Levin pointed out earlier, this was much debated. Under the Family Support Act, we had protections that basically said work experience programs could not operate where people worked for more hours than their grant, minus child support, divided by the minimum wage.

So I think that is interesting that the law said we will take the net, what we give a family, taking into account the extent to which it is reimbursed by child support, and divide that by the minimum wage. So while the law explicitly said these aren't employees, these aren't wages, it put in place a comparable protection. I think one of the reasons why we ought to be serious and steadfast in maintaining these protections is also that we have Federal agencies, the Occupational and Safety and Health Administration, the Equal Employment Opportunity Commission, for example which have long experience and are expert in making sure that workers have safe and healthful environments to work in, and environments that are free from discrimination.

They are quite used to and an expert in dealing with people in the workplace trying to discover what issues are affecting them and make sure the laws are enforced. One of the big benefits to applying those workplace protections to people in unpaid work experience programs, is they get the benefit of that enforcement.

I want to just say a word about some other new programs, different models that we have heard about, and those are transitional jobs programs where State and local welfare agencies are creating programs that include part-time experience on a job, where people are getting paid wages, and are treated like employees, coupled with skill development activities, job training, and basic education.

Washington State has a State-wide program that is showing very positive results, Philadelphia has a program that is operated with both TANF and Welfare to Work funds. The program was the product of a joint agreement between Governor Ridge and Mayor Rendell. People work for 25 hours a week in paid jobs, and engage in 10 hours a week of professional development activity. The program is getting extraordinarily high placement rates for people who stay in the program through completion.

Again, these are programs where officials have made a decision that work should be treated like work for everybody else and people should get wages. That is a tenet of those programs and they are getting very positive results. So again, I think Congress should, in reauthorization, allow and promote further experimentation as long as States, one, are accountable for results and, two, are accountable for treating people fairly and consistent with civil rights and worker protections.

Chairman HERGER. Thank you, Mr. Savner.

[The prepared statement of Mr. Savner follows:]

Chairman HERGER. And in then our third witness on the panel is Vee Burke, specialist in income maintenance at the Congressional Research Service. Ms. Burke.

STATEMENT OF VEE BURKE, SPECIALIST IN INCOME MAINTENANCE, CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS

Ms. BURKE. Good afternoon, chairman Herger and members of the Subcommittee. My job today is to briefly review Federal policies and programs that help support needy families with children. I am to focus on work provisions. Federal cash welfare has a long history. It stretches back to the Great Depression. But work rules are much more recent. They didn't enter the program for 36 years. Over the years many policy changes have occurred. To whom should aid be given? This is one of the questions that Father Sirico raised. On what terms?

The most significant change over the years concerning welfare and work has come in perceptions about work. Who can work? Who should work? How can work effort be increased? Do jobs bring self-sufficiency? Chart 1 of my testimony summarizes the history of work provisions in the program of Aid to Families With Dependent Children. This chart, which is on page 3, also shows work provisions in the successor program we have today, Temporary Assistance for Needy Families. It shows the progression from no-work requirement in the 1935 law to no-work exemption for adult recipients in the 1996 law.

In 1935, when AFDC was started, benefits were allowed only for the child, and no-work obligation was imposed on the child. It was not until 1971 that Congress explicitly required welfare mothers, AFDC mothers, to register for work and training. This action was significant. It signaled that welfare mothers were no longer seen as outside the labor market. Now they were seen as people who should work. And it recognized the dramatic move of nonwelfare mothers into jobs.

It also reflected frustration with the way welfare rolls were growing and with their character. By this time most children in the program were no longer paternal orphans. They had two living parents, but the father did not live at home. The 1971 work registration requirement exempted mothers with a child under 6. Congress lowered the child's threshold age to 3 when it set up a more rigorous program called JOBS in 1988. Finally, in creating TANF in 1996, Congress exempted no adult recipient from work, but permitted States to exempt the parents of a child under 1.

Along with TANF, many programs offer help to low-income parents who work or are able to work. We can classify them in two groups loosely, with regard to work rules and work supports. In the first group, which is shown in table 1 on page 4, are TANF, Food Stamps and public housing as well as others. These are programs that generally require work or training or study in order to receive benefits. The table shows their work requirements, their rewards and their penalties. In the second group, which includes the earned income tax credit and the child care and development block grant, are programs that do not usually require work, but that generally help only people who do work or train or study. These programs provide work supports. Table 3 on page 9 shows State-by-State potential, not actual, but potential income that can be received by a single parent with two children who works 40 hours weekly all year long at the minimum wage, State by State. The income is shown from net wages (net of payroll taxes), TANF, EITC and Food Stamps. The table shows that the combination of earnings and the EITC slightly exceeds the poverty threshold for a three-person family in all States. Addition of Food Stamps and in some States, TANF, raises the income somewhat. However, these families are still near poor and they might be eligible for support services.

A word of caution, please don't consider these tables to show things that everyone gets. A given family does not receive all the potential benefits shown. For example, only a minority of eligible families actually receive housing subsidies.

To sum up, welfare and welfare policy, it can be said that the current trend is to treat most parents as potential workers. They can and should work, and their work efforts deserve support. They are required to work and increasingly they are rewarded if they do so. But at the same time, many evaluations have found that even mandatory Welfare to Work programs that succeed in moving people to jobs do not raise their overall income. Instead they change the composition of income, increasing the share from earnings.

Chairman HERGER. Thank you very much, Ms. Burke.

[The prepared statement of Ms. Burke follows:]

Chairman HERGER. And just a question before Congressman Levin left, he mentioned his concern about the minimum wage and whether or not those who were going back to work were receiving enough. And it is interesting, just looking at your table number 3, I would like to ask you, I believe that indicates that if the recipients were receiving Food Stamps and has a full-time job, even if it was at minimum wage, and receiving the different supports that they could, that even at a minimum wage, they would be above the poverty level; is that correct?

Ms. BURKE. In most States they would be -- it would take net earnings, that is, the earnings minus payroll taxes and the earned income tax credit to bring them above the poverty threshold for that family. In most places they still would be eligible for Food Stamps, and thus would get an even higher income. The net earnings would supply a varying amount because of State wage policy, but in the States where only the Federal minimum wage rate applies, you would generally have 74 percent of the poverty threshold from your earnings, net earnings. And the EITC would provide 29 percent of the poverty threshold. Together that would get you over the threshold. Now that is not to say that everyone works 40 hours a week.

Chairman HERGER. Right. But if they did work 40 hours a week, they would be above the poverty level.

Ms. BURKE. I do have a table showing that if you had a 20-hour-a-week job, there would be 13 States in which the combination of net earnings, EITC, TANF, and Food Stamps, all of those things together, would bring you above the poverty thresholds.

Chairman HERGER. How many States is that again?

Ms. BURKE. Thirteen.

Chairman HERGER. So 13 working only 20 hours a week.

Ms. BURKE. Working 20 hours a week. Now the exact number is hard to know, but studies indicate a range of how many hours people work. A study by the Urban Institute found that about 69 percent of welfare "leavers" worked more than 35 hours a week. 25 percent worked between 20 and 35 hours, so the 20-hour-a-week situation perhaps doesn't occur much. But we have no way of really knowing for sure.

Chairman HERGER. So it would appear that minimum wage alone, if we only counted minimum wage, would not put them over the poverty line. But when we do consider the earned income tax credit, Food Stamps, and other programs that would be available to them, recipients in virtually every State, would be above the poverty line if they were working full-time. You mentioned 13 only working 20 hours.

Ms. BURKE. All that would be required to bring them above poverty, would be the earnings from a full-time job and the earned income tax credit. And they could go a little further by benefit of Food Stamps. But poverty is not very luxurious. For a three-person family, it amounted to $13,290 in 1999. It would be scraping by at best. So the addition of Food Stamps, and in some States, TANF would help a little bit.

Chairman HERGER. Thank you very much Ms. Burke. Mr. Cardin.

Mr. CARDIN. Thank you, Mr. Chairman. Just to follow up on this chart just a little bit longer, because I think it is very helpful. This, of course, assumes that the individual is getting the Food Stamps, and we know there is a large number of people who left welfare who are not receiving their Food Stamps. It also assumes, and in some cases, some States that do disregard and provide TANF assistance, unless they do that under solely State funds, that would keep the 5-year clock running. So there is not a complete solution under current law to get people above the poverty level. And it is something we need to take look at.

Lastly as you pointed out, a 40 hours a week, 52 weeks a year, there is significant number that are not working that amount.

But I think it is very helpful, Chairman, the figures that are shown here.

Ms. BURKE. If you would care to have also the table showing the 20 hour week, we could add that to the record.

Mr. CARDIN. That would be fine, if you would make that available to the Committee.

[The following was subsequently received:]

Table A. Earnings and Selected Major Benefits for a Single Parent with Two
Children, Working 20 Hours Weekly at Minimum Wage for One Year

(as of July 2000)

Source: Table first appeared in CRS Report RL30579, Welfare Reform: Financial Eligibility Rules and Cash Assistance Amounts under TANF and was prepared by the Congressional Research Service (CRS) based on a survey of the states.

^aEarnings net of social security payroll taxes.

^bColorado, Iowa, Kansas, Maryland, Massachusetts, Minnesota, New York, Oregon and Vermont have their own earned income tax credits (generally calculated as a percentage of the federal EITC) but they are not shown in this table. Guam and the Virgin Islands have territorial tax systems that mirror the Internal Revenue Code, including EITC. However, revenues foregone and refunds paid under their EITCs affect their own territorial treasuries, not the U.S. Treasury.

^cConnecticut disregards all earnings below the poverty threshold in calculating both TANF and food stamp benefits.

^dPersons with jobs are not eligible for the Wisconsin program of transitional aid.

I am just curious as to why there hasn't been a greater success in the numbers given to us about 2000 permanent placements. I don't know over what period that was. But there has been roughly 250,000 people participating in the program. So I want to underscore the point that you said we want to give the States flexibility. That is one of the options available to the States, but it may not be the best model.

Mr. SAVNER. One of the things that is implicit in the question you asked, is the whole issue of displacement. I think one of the things that has been alleged, and I can't confirm whether it is true or not, but there is data that suggests from the period of 1993 to 1998, there was a significant drop in the number of permanent city employees who worked for the Park Department, and at the same time, a dramatic increase in the number of Workfare workers who were working in the parks. So it may well be that part of what is going on, is the ability to cut back on the work force because they had, WEP workers to do that work which would explain why they are not moving into permanent jobs. The number of permanent jobs have, in fact, decreased.

I think that is something we need to be very cautious about. First, we want to make sure people are moving into permanent jobs, and second, one of the big risks of large scale work experience programs is that they displace regular employees. Displacement destroys the jobs of regular paid workers by creating workfare placements for people on welfare. I think that is a bad trade-off. I think it is bad for the families because they are poor as a result of the difference in those jobs, and what it means is that essentially that the Federal Government, through TANF, is financing the New York City Parks Department. It is not clear to me that that is what we want to do. I think what we wanted to do is help people move into unsubsidized jobs.

Mr. CARDIN. It also, I think, moves into a moral issue of compensation for services performed if it is being used to cut the cost. There is one thing about providing a work experience to a person we want to do that. We want to get people permanently placed, but there is another thing as to -- with the motivations, as to what these programs are about.

I wanted to ask you about what is your finding in the States about post employment services? One of the areas that it looks like we really need to expand is we get people to work, they have enough skills at least to get in the door, but if they are going to be able to maintain a position with the company, if they are going to be able to grow with the company, they need help with their employer. What are we finding among the State as to the best examples of most employment opportunities?

Mr. SAVNER. First, there is a significant interest among the States in trying to address the issue of job loss after people leave welfare. There are about 35 States currently that are making investments and trying to provide services to people after they leave welfare and become employed to help them keep those jobs or to be reemployed quickly.

While States are trying a number of strategies, it is not clear yet what will be most effective. Some of the lessons that we have learned so far are that case management may be effective if it is intensive, if case managers start with the client before they get a job and are able to stay with them and visit with them frequently, they can help guide them through some of the problems that new workers face.

Another issue that we need to focus on is that one of the reasons why there is job loss is the lack of skills. In addition, there are some jobs that recipients are getting in which there is high turnover for all workers, not just former recipients.

One of the best programs that we know of that has addressed the retention issue is the Portland program. And the way they addressed it was by trying to find better jobs for people in the first place. So I think we need to be smarter about the kinds of jobs that people get. And again, it wasn't all based on training, it was just being smarter about the jobs and being more selective and taking a month or two rather than a week to help someone find a good job, not just any job. They were able to find better jobs that lasted longer and paid more.

So I think there are a number of strategies to work on to promote retention. But there is no one single thing yet that we can say that is the key to job retention.

Mr. CARDIN. I'm going to ask you, not necessarily on the spot right now, but if you can get back to us, as to what we can do with TANF reauthorization to encourage States to be aggressive in this area without jeopardizing the flexibility that we want the States to have. I want the States to be able to tailor their own programs, but we certainly want to encourage them to get the skills to the people coming off the welfare that they need. So if you have some suggestions in that area, I would certainly appreciate it.

Chairman HERGER. Thank you. I want to thank each of our witnesses that have appeared before us this afternoon. And I just might make a comment, Ms.  Burke, not to date you, but I understand that you have been involved on working in this area since the early 1970s, and much of the work that you --

Ms. BURKE. Not quite back in the depression, though.

Chairman HERGER. No, the 1970s. And much of the work that you did was instrumental in writing this law, the 1996 law. And I want to thank you and the great work that the Congressional Research Service does provide.

And just as Congressman Cardin requested a question, I would like to also mention before we close that we may be submitting questions for some additional answers that we would appreciate if you could provide in writing. And we would appreciate that you respond to those additional questions.

And, again, I thank each of you very much.

And without objection, I adjourn this hearing. Thank you very much.

[Whereupon, at 4:57 p.m., the hearing was adjourned.]
[Questions submitted from Chairman Herger to Mr. Savner, and his responses follow:]

Center for Law & Social Policy
Washington, DC 20036
April 19, 2001

Rep. Wally Herger
Chairman, Subcommittee on Human Resources
House Ways and Means Committee
B-317, Rayburn House Office Building
Washington, DC 20515

Dear Rep. Herger:

Thank you again for inviting me to testify at the April 3 Subcommittee hearing. I am writing to respond to the additional questions provided to me after the hearing. Please do not hesitate to contact me if there is additional information you would like me to provide on any of these issues.

• How many States require welfare recipients to work or participate in job preparation activities immediately or within the first few months of receiving assistance? In states that do not stress work early on, have there been any differences in the percentage of TANF recipients working while on assistance compared with states with more rigorous work requirements?

As a matter of policy, virtually every state requires adults to participate in job preparation activities of some sort immediately, unless the family is exempt. In most states, the initially required activity for most adults is job search. If an adult is unsuccessful in job search there is wide variation among states concerning the next required activity. Few states require participation in work experience or community service of all or most recipients who are unsuccessful in job search. Only Wisconsin, Virginia, Massachusetts, Alabama, Wyoming, Michigan, Hawaii and Texas have rules that appear to impose work experience or community service requirements on all or most recipients in single-parent families if job search is unsuccessful. ⁽¹⁾

Table 1 shows the percentage of all adult recipients in each state in unsubsidized employment in FY 1999, ranked from the highest percentage to the lowest. The third column reflects the percentage of all adults reported by the state to be involved in work experience or community service. There does not appear to be a correlation between states that engage adults in work experience and community service and states with a higher share of adults receiving assistance engaged in unsubsidized employment. ⁽²⁾ The variation in the extent to which recipients are engaged in unsubsidized employment is most likely due to the earnings disregards available in the state, the states benefit level, and the extent to which the use of earnings disregard to supplement employment are marketed to recipients.

• An article in the April 3, 2001 Washington Post, describes a District of Columbia subsidized employment program for welfare recipients nearing their time limit on assistance. According to the article "The city is targeting people who have received cash assistance for the longest periods and have been unable to find work on their own." The goals of this program seem at odds with your statement (pages 10-11) that "research conducted during the 1980's on several work experience programs demonstrated that in every site but one there were no positive employment and earnings impacts that resulted from participation in the programs." Is there reason to believe that some of the past work on this topic may be dated, especially in the post-reform world? How many states offer subsidized employment or workfare programs?

The statement you quote from my testimony references research that was limited to a set of programs that focused on Community Work Experience programs operated during the 1980's (prior to passage of the Family Support Act). These programs all involved performing community service activities in exchange for the family's welfare grant. My testimony did suggest that a new set of programs that involved wage subsidies to employers or intermediary organizations and offered wage-paying jobs to recipients held out more promise, in my view, for improving the skills and employability of recipients. It is this latter sort of program that is being established in the District of Columbia. As indicated in my written testimony, these programs not only pay wages and create more realistic expectations consistent with those experienced in a regular job, but they also make available various supports and provide access to skill development activities to supplement the work experience and help boost employability. CLASP has been actively engage in helping develop these programs throughout the country during the past several years.

Research on such programs in the past has been extremely encouraging. For example, the National Supported Work Demonstration made available temporary, subsidized jobs in supportive settings, to several groups of adults and youth with significant barriers to employment, including AFDC recipients. Subsidized jobs in nonprofit agencies lasted 12-18 months. Participants received intensive supervision, and there were gradual increases in workplace expectations over time. The program yielded very strong results for AFDC recipients. After three years, AFDC participants earned an average of $1,076 (or 23 percent) more than control group members, and the increased earnings effects held up over a long period. ⁽³⁾

• Your testimony indicates that education and training activities are counted as participation only to a very limited extent. Since many States have no work requirement for the first 18 to 24 months, would you agree those individuals generally have at least this amount of time for education and training activities?

As noted in my answer to question 1, I think there are actually few states that do not require participation in work-related activities of some sort immediately, and typically this activity is job search and or job readiness. To the extent that states do not require broad participation in work experience ore community service programs, that does not necessarily mean that they encourage or even allow participation in education or training activities. One of the principal effects of the limitations on counting participation in education and training activities toward the federal participation requirements has been to signal state and local administrators and staff that these are disfavored activities and generally to be discouraged. According to data reported to HHS for FY 1999, only 2.7% of all families receiving assistance included an adult engaged in education or training.

• What do we know about the effect of strong work requirements on reducing caseloads?

There are several possible definitions of "strong work requirements." Table 2 compares caseload reduction between January 1999 and June 2000, and the extent to which adults are engaged in either work experience or community service, and the extent to which adults are engaged in any federally countable activity during FY 1999. There does not appear to be a strong relationship between caseload decline and either of these two sets of data. It seems likely that a broader set of conditions may influence caseload decline including general program administration, local economic conditions, etc.

• What is the effect of caseload reduction on the funds available to help remaining welfare recipients - who often have special challenges - go to work? Did States under the former system focus on the most needy and design special program to help them go to work?

The combination of declining caseloads and the block grant structure has made funds available to states that would not have been available had there been no change in federal law. States have used the funds made available by these two factors for a range of activities, some of which have involved providing a range of supports and services to families that do not receive cash assistance, for example child care for low wage workers, and states have also shown greater interest than in the past in working with individuals who have significant barriers to employment to help resolve those barriers. However it is difficult to ascertain from available federal data how much is actually being spent on services for the group you reference, or the extent of efforts to link people with relevant services funded outside of TANF. The availability of Welfare-to-Work block grant funds through the Department of Labor has also made a contribution on this issue.

Under the JOBS program many of the adults with significant barriers would have been exempt from participation in work activities. However, beginning in 1992 states began to receive waivers of various AFDC requirements, and many states sought and received waivers to broaden the participation requirements under JOBS and began to work with adults to address some of the barriers that prevent employment.

Along with the increased interest in this area we also are seeing evidence that many of the people you reference are losing access to assistance because of sanctions. A number of studies have found that sanctioned families are less likely to have graduated high school, less likely to have recent work history, more likely to report health or mental health problems. Families terminated due to sanction consistently display poorer outcomes than families terminated for other reasons. They are less likely to be employed after leaving assistance, and if employed, likely to have lower earnings than other leavers. ⁽⁴⁾

In sum, the picture that emerges about the impact of the 1996 changes on families with significant barriers appears to be ambiguous up to this point, and, in most states, it remains to be seen how time limits will affect this group.

Thank you again for inviting me to participate in these proceedings.

Sincerely yours,

Steve Savner

Table 1
Percentage of Adult Recipients in
Unsubsidized Employment, Work Experience, and Community Service

FY 1999 ⁽⁵⁾

Table 2
Comparison of Caseload Decline to Engagement in Various Countable Activities

1. However, if one reviews the data in Table 1, attached, the actual percentages of participants reported as being engaged in those activities in those states does not always appear to be as high as one might expect.

2. A number of states allow broad discretion to counties in determining the range of activities to which recipients will be assigned and it is difficult to ascertain county activity from these statewide data.

3. Summary and Findings of the National Supported Work Demonstration, (MDRC, 1980).

4. A number of these studies are summarized in Goldberg and Schott, A Compliance-Oriented Approach to Sanctions in State and County TANF Programs (Center on Budget and Policy Priorities, October 2000), available at http://www.cbpp.org/10-1-00sliip.pdf.

5. "TANF Program - Third Annual Report to Congress," (HHS, August 2000), Table 3:3.C.

6. HHS, http://www.acf.dhhs.gov/news/stats/case-fam.htm

7. "TANF Program - Third Annual Report to Congress," (HHS, August 2000), Table 3:3.C.

8. Id.

Community Voices Heard, New York, NY, statement and attachments

National Employment Law Project, New York, NY, Maurice Emsellem, statement

NETWORK, statement

Noble, Deborah, Willimantic, CT, statement

NOW Legal Defense and Education Fund, New York, NY, statement and attachments

Wider Opportunities for Women, Diana Pearce and Jennifer Brooks, statement and attachments