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Hearing Reviewing How Today’s Fragmented Welfare System Fails to Lift Up Poor Families

June 18, 2013

Hearing Reviewing How Today’s Fragmented Welfare System Fails to Lift Up Poor Families










June 18, 2013


Printed for the use of the Committee on Ways and Means


DAVE CAMP, Michigan,Chairman

PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
DIANE BLACK, Tennessee
TOM REED, New York
MIKE KELLY, Pennsylvania

RICHARD E. NEAL, Massachusetts
JOHN B. LARSON, Connecticut
RON KIND, Wisconsin

JENNIFER M. SAFAVIAN, Staff Director and General Counsel
JANICE MAYS, Minority Chief Counsel


DAVID G. REICHERT, Washington ,Chairman

MIKE KELLY, Pennsylvania
TOM REED, New York







Advisory of June 18, 2013 announcing the hearing


Jeffrey Kling, Ph.D.
Associate Director for Economic Analysis, Congressional Budget Office
Lawrence M. Mead, Ph.D.
Professor, Department of Politics, New York University

Jennifer Tiller
DC Director, America Works and Sada Randolph, Former America Works Client
Casey Mulligan, Ph.D.
Professor, Department of Economics, University of Chicago

Eric Rodriguez
Vice President, Office of Research, Advocacy, and Legislation, National Council of La Raza


Hearing Reviewing How Today’s Fragmented Welfare System Fails to Lift Up Poor Families

Tuesday, June 18, 2013
U.S. House of Representatives, 
Committee on Ways and Means, 
Washington, D.C. 


The subcommittee met, pursuant to call, at 2:02 p.m., in Room 1100, Longworth House Office Building, Hon. Dave Reichert [chairman of the subcommittee] presiding.

[The advisory of the hearing follows:]


Chairman Reichert.  I call the subcommittee to order. 

Today is the first hearing in a series on what government does to help low‑income families get ahead, whether that is effective, and how that can be made to work better.  We will start with a review of our current system and how much we spend, but, more importantly, whether that spending is effective in encouraging work and higher earnings by low‑income individuals. 

So let’s consider two facts.  Fact one:  We are spending more than ever to assist low‑income individuals and families.  According to the nonpartisan Congressional Budget Office, last year the Federal Government spent about $600 billion on just the 10 largest programs, which is over 10 times the $55 billion we spent in 1972 when half of these programs did not even exist. 

Fact number two:  Despite all that spending, it is not clear that these programs are offering real help.  For example, despite record spending, this is the slowest economic recovery in recorded history, with far too many families unemployed and living in poverty. 

Together, these facts make it hard for defenders of the status quo to say all is well, especially across the 83 programs the Congressional Research Service has identified as assisting low‑income families.  And these facts make it even harder still for the millions of American families without stable work and reliable incomes as we now enter the 4th year after the recession has officially ended. 

Today, we will ask whether there are features of today’s low‑income programs that lead to little success in helping adults go to work and increase their earnings. 

As we proceed, I note we are intentionally taking a broader view than just those programs within our subcommittee’s specific jurisdiction.  Our programs are key benefits for low‑income families, but they do not represent all that taxpayers do to help low‑income families.  To really understand what is going on, you have to look at the big picture.  So that is what we are going to do today, and that is what we are going to do in subsequent hearings. 

We are pleased to have a number of experts on these programs with us today, including someone who can provide a firsthand explanation ‑‑ and this is something I insist upon.  I always like to hear from those folks who have received help or have been seeking help and didn’t receive help.  We all can learn a lot from that kind of witness.  And so we welcome Sada Randolph, a former client of America Works here in D.C., to tell her important story.  We are looking forward to that. 

Given the broadness of our topics, one hearing couldn’t possibly do them justice.  So our next hearing will build on what we learn today by exploring what really helps families and whether that knowledge drives what we spend our taxpayer money on. 

Finally, we will consider options for reform, including how we can work with our State partners to better coordinate the current maze of government programs to better serve families in need. 

Our goal is to help more low‑income families leave poverty and achieve the American dream.  That is not the Republican goal, it is not the Democrat goal; it is the goal of every one of us on this dais and every one of us in this room, I am sure.  And the fact that too many of our fellow citizens have seen that goal slip from their grasp in recent years is our call to action. 

The status quo is simply not good enough.  Spending more money on current programs is not good enough.  Reforming programs so they spend smarter to achieve better outcomes is what we all should be working for.  That is the challenge ahead of us. 

And I thank you. 

Mr. Doggett, you are recognized for your opening statement.

Mr. Doggett.  Thank you, Mr. Chairman. 

We are all committed to making every government program work as effectively and efficiently as possible for both the beneficiaries and taxpayers.  But any attempt to label programs that are designed to promote economic opportunity or help struggling Americans as “welfare” doesn’t move us toward that goal. 

I don’t think that most folks across America believe that nursing care for seniors, Pell Grants to assure that young people can achieve their full God‑given potential, tax relief for working families, the school breakfast program, Head Start, and foster care, to which we devoted considerable bipartisan attention in this committee, that they characterize those as “welfare.”  But there are some among our colleagues who do and did during the last Congress in a call for reducing welfare spending. 

What I think we need to be focused on is a very specific conversation about how to make those programs under our jurisdiction, specifically the TANF program, actually move more people with existing resources from welfare to work.  And I am committed to trying to do that. 

The Congressional Research Service report that was referenced in the announcement for today’s hearing was put together at the request of Senator Jeff Sessions last October at the height of the Presidential campaign.  He used that report to support the false claim that the United States spends more on Federal welfare than on any other program in the Federal budget.  Now that the campaign is over with, I think we can probably leave that kind of rhetoric behind.  It does not help us resolve these problems. 

I asked the Congressional Research Service very recently, in anticipation of this hearing, to do a further analysis of the spending in the top 10 programs that some Republicans have classified as welfare.  Forty‑nine percent of that spending goes to our senior citizens, the people that have built this country, and the disabled; 28 percent supports working families and individuals; 8 percent is for education; 14 percent is primarily for medical and food assistance. 

And, of course, we know there are efforts under way this week to cut five times as much from food security as the Senate did in its farm bill. 

Of the entire total, only about 1 percent is direct cash assistance to the needy in the form of the Temporary Assistance for Needy Families program. 

The written testimony submitted by some of our witnesses here today suggests that helping Americans during tough times will stop them from finding a job.  One witness once even suggested that, if we just would have allowed more people to fall into poverty during the recession, they would be more likely to work. 

To me, that fundamentally misreads the character of the American people.  I believe they want to work.  They want to set an example for their kids and do right by their kids.  And they want to engage in the struggle each and every day to do just that.  We don’t need to push more Americans into poverty for them to want to work. 

This also ignores the many programs within the jurisdiction of our full committee, such as the Earned Income Tax Credit and the Child Tax Credit, increase the value of work for anyone moving into a job that pays low or moderate wages.  These Tax Credits increase the take‑home pay of a minimum‑wage worker.  That is not only a major work incentive, but it also lifts millions of Americans out of poverty, including over a million Texans.  Furthermore, research indicates that the efforts to make work pay, like the Earned Income Tax Credit, also help reduce generational poverty by boosting school achievement as well as future earnings. 

While the Earned Income Tax Credit and other programs designed to promote economic opportunity help Americans of every race and in every region, I am particularly pleased that Eric Rodriguez is here today from the National Council of La Raza to talk with us about how critical these programs are in supporting many Latino families as they achieve and maintain economic independence. 

And in terms of recent effort to assist people dealing with the severity of the recession, it is worth remembering that much of that assistance is already being reduced.  The temporary tax assistance, the Medicaid expansion, the duration of unemployment benefits has also been significantly reduced.  And, of course, the sequestration across‑the‑board cuts are cutting into many programs in a significant way. 

We can do more to promote and reward work, and we should, including reviewing and perhaps improving the phaseout points for some of these programs.  But we need to do it together with a realistic view of the difference between these opportunity programs and what has traditionally been called “welfare.” 

I yield back. 

Chairman Reichert.  Thank you, Mr. Doggett. 

Chairman Reichert.  And as you can see from the opening statements, there is agreement that we want to move people from welfare to work and we want to help people become successful, and there is also agreement that we need to be more efficient in our programs and maybe measure them a little bit more accurately, but some disagreement, maybe, on how we get there.  We will work on that. 

Thank you, Mr. Doggett. 

So, without objection, each Member will have the opportunity to submit a written statement and have it included in the record. 

Chairman Reichert.  I want to remind our witnesses to limit their oral statements, please, to 5 minutes. 

And I will also let you know a little bit of a secret.  At about 2:45, 2:50, you are going to hear some buzzers and bells go off.  That means we will have to vote.  So be ready for that. 

But, without objection, all the written testimony that you have will be made a part of our permanent record. 

And on our panel this afternoon, we will be hearing from Dr. Jeffrey Kling, Associate Director for Economic Analysis, Congressional Budget Office; Dr. Larry Mead, professor, Department of Politics, New York University; Jennifer Tiller, D.C. director, America Works; and Sada Randolph, former America Works client; Dr. Casey Mulligan, professor, Department of Economics, University of Chicago; and Eric Rodriguez, vice president, Office of Research, Advocacy, and Legislation, National Council of La Raza. 

Mr. Kling, you are recognized for 5 minutes.


Mr. Kling. Mr. Chairman, Ranking Member Doggett, members of the subcommittee, thanks for inviting me to testify. 

I am going to do a review of what the spending has been on some of the major means‑tested programs and tax credits, how it has grown over time, and what the Congressional Budget Office projects it is going to be into the next decade. 

The Federal Government devotes about one‑sixth of its spending to 10 major means‑tested programs and tax credits.  They provide assistance for health care, cash payments and help obtaining food, housing, and education to people with relatively low incomes and assets. 

In 2012, Federal spending on those programs and tax credits totaled $588 billion.  Medicaid accounted for more than 40 percent of that spending, followed in size by the Supplemental Nutrition Assistance Program, or SNAP. 

Total Federal spending on those 10 programs rose 6 percent per year faster than the rate of inflation, or about a tenfold increase in the 4 decades since 1972, when half of those programs existed.  As a share of the economy, Federal spending on those programs grew from 1 percent to almost 4 percent of gross domestic product over the period. 

Roughly half of that growth came from increases in spending for healthcare programs, Medicaid, and, to a far lesser extent, subsidies to help low‑income people pay for prescription drugs under Part D of Medicare.  That spending grew about fifteen‑fold over the 1972 to 2011 period, from $20 billion to $305 billion.  People who were elderly or disabled accounted for about two‑thirds of the Medicaid spending and all the Medicare spending in 2011. 

The primary reason for the growth in healthcare spending, which averaged about 7 percent a year above the rate of inflation, was increased spending per participant.  General growth in healthcare costs, shifts in the composition of beneficiaries, changes in the services covered by the program, and the availability of supplemental payments to healthcare providers all contributed to that growth. 

Had the amount of spending per participant in Medicaid remain unchanged over those 40 years, total spending on healthcare programs discussed here would have been about $88 billion in 2011, or less than a third the actual amount. 

In addition to the increases in spending per participant, the number of participants increased from 17 million in 1972 to 53 million in 2011 because of population growth and policy changes that increased eligibility for Medicaid. 

Growth in programs that provide cash assistance and programs that help people obtain food, housing, and education were about equally responsible for the other half of the total increase in spending over that period for those programs. 

Spending on cash assistance programs and tax credits, the largest of which is the refundable portion of the Earned Income Tax Credit, rose from $18 billion in 1972 to $151 billion in 2011, nearly 6 percent a year above the rate of inflation. 

Spending on programs that help people afford food, housing, or education, the largest of which is SNAP, rose from $17 billion to $172 billion, also about 6 percent a year above the rate of inflation in their growth.  Unlike growth in spending on Medicaid, which stemmed primarily from greater spending per participant, growth in those programs resulted primarily from increases in the number of participants. 

If current laws don’t change, total spending on these programs will grow faster than inflation over the next decade.  But the differences between programs are pretty large. 

Spending on means‑tested healthcare programs are projected to more than double, an average annual increase of 8 percent above the rate of inflation.  That rise reflects expected growth in the cost of providing medical care.  It also reflects expanded eligibility for assistance and new types of assistance to be provided under the Affordable Care Act.  That law will not only make more people eligible for Medicaid but will also allow many low‑ and moderate‑income people who do not qualify for Medicaid to purchase federally subsidized health insurance. 

In contrast to spending on healthcare programs, total spending on the cash assistance programs and tax credits I have discussed is projected to fall over the next decade.  That expected decline mainly stems from changes in the Earned Income Tax Credit and Child Tax Credit, which have changes that are scheduled to occur under current law. 

CBO also estimates that spending on nutrition and education programs will decline in the next 10 years, partly because spending on SNAP is projected to drop substantially as the economy continues to recover. 

There are additional details on these programs in a report that we issued in February of 2013, and I would be happy to answer any questions that you have about it. 

Thank you. 

Chairman Reichert.  Thank you, Mr. Kling. 

[The statement of Mr. Kling follows:]

Chairman Reichert.  Mr. Mead, you are recognized for 5 minutes. 


Mr. Mead.  Thank you, Mr. Chairman.  I appreciate this opportunity to testify about Federal welfare programs. 

And the question we are asking is what we can do to make these programs more effective in moving low‑income Americans ahead.  I think that largely means what can we do to promote work in welfare, because it is through employment that most Americans get ahead. 

I think the welfare reform of the 1990s showed essentially how to do that.  In the Personal Responsibility Act, we enforced work more firmly than before, but at the same time we provided new benefits in the form of wage subsidies and child care to make it possible for people to go to work.  So we combined help and hassle.  We enforced work; we also promoted work. 

Equally important, the politics of reform was quite constructive.  It was strongly bipartisan.  Both parties contributed to the outcome.  And the upshot was really not to downsize welfare but, rather, to change its nature so that it did indeed promote work. 

And I think my central message today is that we need another welfare reform that will do the same thing in some other programs.  I recommend three steps, primarily. 

One is that we need to strengthen the work test in TANF.  It does have some weaknesses, and especially the fact that States can sanction families that don’t comply only partially and allow the mothers who are not working to keep most of their benefits.  I think that is a mistake.  We should require that the case be closed in those instances, and I think we would have higher work participation if we did. 

We ought to have a firmer work test in the SNAP program, or food stamps.  Food stamps has some requirements on the books, but they are not very strong and they are not well‑implemented.  We need to be more serious about that and require that States achieve certain activity levels, as they have to do in TANF.  I would certainly require one parent in a food stamp family, if it is a two‑parent family, to be employed. 

We should also consider similar requirements in housing and even in EITC, where we commonly think that the credit produces higher work levels.  Actually, I don’t see persuasive evidence for that.  EITC creates incentives both for and against work.  I think we should consider an hours threshold, as we do in TANF.  We should require, for people who get the EITC credit, they should have to work 20 or 30 hours a week rather than just whatever hours they choose.  And if we did that, I think we would see more impact on work levels. 

The second thing we should do is institute a work test for men.  Well, how do you do that when the men are not usually on welfare?  Well, what we can do first of all is have a higher wage subsidy for single workers without children, most of whom are men.  They should get a better subsidy. 

But, at the same time, we should enforce work for groups that are supposed to be working.  And I am thinking particularly men who owe child support and aren’t paying and also men leaving prison on parole.  These groups are supposed to work; they often don’t do so.  And States have begun to institute work programs to enforce work for those groups.  So, again, the combination of help and hassle, of benefits with requirements. 

The single best thing this committee could do to promote that development is to allow the funding for child support work programs to be reimbursable under Title IV‑D.  This is, I think, an essential change which I hope you will consider. 

The third thing that we should do is rein in the disability programs.  They are growing too rapidly.  We have too many people on both Social Security Disability and especially SSI.  We need to reconsider the idea that disability is open and shut, that either you are disabled or you are not.  It would be better for the recipients and for society if we had partial disability, partial benefits, coupled with some activity requirements, where we expect people to work to a certain extent or engage in community service. 

We can’t simply create a massive disincentive to work by giving people a pension where they never have to work for the rest of their lives; indeed, they can’t work.  We have to get away from that and both tighten up the rules for eligibility but also have some kind of activity requirement for those on these benefits.  The Europeans, by the way, are ahead of us in this.  They are starting to do this, and we need to do it, as well. 

Another thing they have done in the Netherlands is to require employers to be the initial funders of benefits for disabled people.  So they don’t have an incentive, as they do now, to shift their workers onto SSI rather than unemployment insurance because they don’t pay anything for SSI and they do for UI.  We need to consider requiring the employers to get some skin in the game. 

So I think disability programs are also important. 

In my written testimony, I consider a number of other impediments to people working that are often cited, disincentives lack of jobs inequality, a couple of others.  And I want to emphasize that I think none of these are really very important, and we shouldn’t be distracted by them.  We can talk further about disincentives.  You are going to hear from Professor Mulligan about that.  I don’t think it is very important.  And we should focus instead on building an administrative work test where we actively tell people, you have to work, and we oversee to make sure they do it. 

Thank you. 

Chairman Reichert.  Thank you, Mr. Mead. 

[The statement of Mr. Mead follows:]

Chairman Reichert.  Ms. Tiller and Ms. Randolph, you are recognized for 5 minutes.


Ms. Tiller.  Good afternoon, Mr. Chairman and members of the subcommittee. 

America Works started in 1984 as the first for‑profit welfare‑to‑work company in the United States.  Operating for 12 years before welfare reform, America Works placed welfare recipients into private‑sector jobs. 

Armed with knowledge and data, we lobbied Congress for nationwide welfare reform.  After almost 30 years, America Works has broadened beyond welfare recipients to include returning prisoners, food stamp recipients, noncustodial parents, homeless individuals and families, veterans, those with HIV‑AIDS, and the disabled on Social Security Disability Insurance. 

Over the years, we have worked to get 350,000 people working in different States and cities throughout the country.  As you can see from the document that was submitted on Friday, in New York City we are measured against all competitors and are consistently ranked as the number‑one performer.  We know that following is essential to our success. 

Over the years, America Works has taken on tough social problems which cost the taxpayers billions of dollars, with the belief that if a job is provided, dependency on the government diminishes and disappears. 

To that end, we have rapidly attached ex‑offenders to work, therefore reducing recidivism to crime.  We have taken people with a lifelong benefit of SSDI and gotten them employed and independent.  America Works has taken people out of homeless shelters and showed that by providing jobs we vastly decrease the cost of homelessness.  If work were the central social policy through which each problem is examined, we could create productive citizens and lower our expenses. 

America Works pioneered the work‑first model.  This has been critical to erasing years in which welfare recipients spent in and out of education and training programs which seldom led to jobs.  When the regulations were being written for welfare reform, States were limited to a very small percent of people allowed to be in education and training programs.  This forced employment first and training later for upgrading and improving prospects. 

America Works pioneered performance contracting, meaning you only get paid when and if you get someone a job and they actually keep the job.  This technique forces greater productivity and outcomes.  Unfortunately, most efforts still reimburse employment activities based upon line‑item budgets, not job outcomes.  Again, in the attached document submitted on Friday, you can see comparisons between America Works and various States’ one‑stop centers. 

America Works has operated with voluntary and mandated programs.  When we began, everyone was voluntary.  In 1996, with the Welfare Reform Act, all of that changed for welfare recipients.  Productivity and outcomes vastly increased.  Over the years, in New York City we have seen an expansion into mandatory requirements not just for welfare recipients but also for noncustodial parents, food stamp recipients, and homeless shelter residents. 

America Works recommends the committee to undertake an expansion of work requirements for the growing group of people who receive transfer payments and public subsidies. 

Thank you for your time and consideration. 

And I introduce Sada Randolph. 

Ms. Randolph.  Good afternoon. 

I attended America Works last year, May of 2012.  During that time, it was the same time that I had a terminally ill dad and also was a single parent with a son. 

When I attended America Works, the staff members really helped me in so many ways, as far as interview skills, resume building, the way to properly fill out an application for a job. 

And in doing so, with their efforts and also my own determination, I became employed with Jemsek Specialty Clinic as a medical records clerk.  I have been there for a year, and also I have purchased my first brand‑new car. 

So I am forever grateful to America Works. 

Chairman Reichert.  Thank you both for your testimony. 

And congratulations on your first brand‑new car. 

[The statement of Ms. Tiller follows:]

Chairman Reichert.  Mr. Mulligan, you are recognized for 5 minutes. 


Mr. Mulligan.  Chairman Reichert, Ranking Member Doggett, members of the committee, thank you for the opportunity and honor to discuss with you today how public policy has changed the reward to work. 

A basic economic principle is that the monetary reward to working has important effects on how many people are employed and how much they work.  People without jobs or otherwise with low incomes sometimes receive benefits from social safety net programs.  The benefits are rarely called “taxes” by laymen, but economists understand the benefits to have many of the characteristics of tax rates because a program beneficiary loses some or all of her benefits as a consequence of accepting a new job. 

I have illustrated the reward idea in Figure 1.  The left bar measures the resources available when working, and the right bar measures the resources the same person would have if not working, including subsidies received net of taxes paid.  The difference between the two bars is the monetary reward to working. 

Now, consider adding a new safety net program or expanding an old one.  Exactly because it gives more help when not working, the new program reduces the reward to working.  The combined effect of taxes and subsidies on the reward to accepting a new job can be summarized as a penalty ‑‑ the effective amount that is lost from paying taxes and replacing benefits associated with not working. 

I like to express the penalty as marginal tax rate, namely as a percentage of employee compensation.  If there were no penalty, then the marginal tax rate would be zero.  Thanks to a labyrinth of tax and subsidy programs, the marginal tax rate can sometimes equal or exceed 100 percent, which means that at least as many resources are available when not working as when working.  In such cases, a person might have more resources available to use or save as a consequence of working less. 

Legislation that cuts or credits taxes can nonetheless reduce the reward to working and increase the marginal tax rate if it cuts taxes more for those who work less than it cuts taxes for those who work more.  High marginal tax rates are associated with small incentives to seek, create, and retain jobs.  The consequences of high marginal tax rates are felt all over the economy, even by persons whose individual rates might not be all that high. 

At the same time the safety net programs implicitly tax job acceptance, they also implicitly subsidize layoffs, because the programs absorb some of the income and production an employer and employee together lose when an employee stops working.  Layoff subsidies give employers and employees less incentives to take steps that might avoid or delay layoffs. 

America absolutely must have taxes and safety net programs even though they reduce the reward to working and even though they subsidize layoffs.  But if this Congress wants to understand what is happening in the labor market or to the budgets of social programs, it would be counterproductive to approximate marginal tax rates as zero or to assume them to be eternally constant regardless of what incentives are embodied in new legislation. 

Of course, unemployment insurance program benefits are now available longer into unemployment spells than they were 6 years ago, but also don’t forget the new modernization provisions now provide unemployment benefits in a variety of circumstances, when they were formally unavailable.  The food stamp program expanded in a variety of dimensions.  The Recovery Act helped unemployed people pay for their health insurance. 

Figure 2 shows my estimates of 10 years of marginal tax rates coming from tax and subsidy programs, taking into account that some of the poor and unemployed do not participate in all or sometimes even any of the safety net programs.  The combined effect of these and other changes through 2013 was to reduce the reward to work ‑‑ that is, increase marginal tax rates for most of the non‑elderly population. 

The reward to work will be further eroded beginning in January, when several significant provisions of the Affordable Care Act take effect.  The new work disincentive provisions include:  the sliding scale that sets premiums for people who buy health insurance under new marketplaces, a scheme for premium assistance that essentially resurrects the Recovery Act’s COBRA subsidy in a more comprehensive form, employer penalties, and hardship relief from the individual mandate.  The cumulative effect of all of this legislation is to increase average marginal labor income tax rates by 10 percentage points over what they were in 2007. 

A presumably unintended consequence of the recent safety net expansions has and will be to reduce the reward to working and thereby keep unemployment and poverty rates high and keep national spending low longer than they would have been if safety net rules had remained unchanged. 

Thank you. 

Chairman Reichert.  Thank you.

[The statement of Mr. Mulligan follows:]

Chairman Reichert.  Mr. Rodriguez?


Mr. Rodriguez.  Thank you, Mr. Chairman, Ranking Member Doggett, and distinguished members of the committee.  For 20 years I have worked on antipoverty issues.  It is a great pleasure to be here just to share our perspective. 

I would just like to make a few key points in my testimony. 

The first is that many of the Federal programs that we are talking about here that are designed to assist low‑income families are doing what we have asked them to do and what was intended, in many ways. 

The second is that some of the tax credits that have already been mentioned in particular really stand out in terms of their impact on rewarding work and stand out as a Federal policy to reward work over time.  And it is well‑documented and there is really substantial research to support that. 

Finally, there are a lot of ways that we can lift up families out of poverty through Federal initiatives if we choose to invest more in those key particular areas. 

So the great recession has been devastating, I think as we all know.  The national unemployment rate now is 7.6 percent, down from 10 percent in 2009.  You have to go back to the early 1980s to see a nationwide rate at that level.  Today, there are still more than three unemployed workers for every job available. 

At the same time, we have had a housing crisis that took a devastating toll on working families.  Substantial declines in household income and wealth, particularly among Latino and African‑American families, have eroded financial security for all American working families. 

The Federal social safety net includes a range of programs that we have mentioned here that serve nonworking elderly, of course, the disabled, children, but also working families ‑‑ and increasingly working families.  Programs such as SNAP, Medicaid, and TANF are designed to provide basic security and, in the aggregate, help provide broadly shared financial stability during difficult times. 

SNAP participation grew, as we have already mentioned, 27 percent between 2007 and 2009, but as a result of the recession.  These programs and efforts are not designed to remedy macroeconomic or labor market issues, but rather to help families deal with the fallout from these macro trends. 

One of the most valuable and effective responses we have seen comes in the form of tax credits.  In 2011, just by way of example, the EITC prevented 6.1 million people, including 3.1 million children, from slipping below the poverty line.  The credit has also been proven to have other positive effects for working families.  And, again, extensive research is there to support that. 

Expansions of credits and programs that assist low‑income workers have been a central piece in economic recovery, as you have seen.  In fact, the safety net reduced poverty by almost half in 2010 by accounting for the positive effect of programs like SNAP as well as the low‑income tax credits. 

Yet some argue that these programs discourage work.  In general, benefits decrease as earnings rise, and we know this.  But, as in the case of the tax credits, policymakers can mitigate those effects through properly designed phaseout rates. 

But, by and large, increasing employment, boosting wages, lifting up income and earnings, and improving levels of wealth for families, as we all want, can be best achieved when jobs and economic opportunity are plentiful.  Stabilizing families during an economic downturn is certainly a sensible first step, and needed. 

The evidence is clear that means‑tested antipoverty programs have served as foam on the runway that Main Street needed to soften the harsh effects of our financial crisis.  But American businesses are still hesitant to hire.  It may take years for the labor market to return to help without further interventions. 

Targeted efforts to create jobs, such as funding for infrastructure repairs and rebuilding in low‑income neighborhoods, are smart, commonsense solutions.  Raising the minimum wage, expanding access to paid leave, affordable child care, are also all important at rewarding work and important during this time. 

However, policy does seem to be moving in a different direction, and let me just give you three quick examples. 

The Federal budget sequester, of course, has been devastating on complementary programs.  An estimated 270,000 people will be cut from Federal job training programs that serve youth.  Latinos will lose about 25,000 slots in Head Start programs. 

The recent version of the farm bill also raises great concerns.  SNAP has been proven to be highly effective, yet we are seeing $4 billion in the Senate and possible cuts of $20 billion in the House version of the farm bill ‑‑ again, issues that we are really concerned about. 

And the Budget Control Act, recently signed, made permanent a lot of the tax credits that were put in place in 2001, but the EITC was only expanded or extended for 5 years and not made permanent, so a major concern.

So, in summary, most of the programs that we are talking about have served the purpose that they were intended to serve.  Tax credits remain crucial in this regard.  And policy options are in front of us if we can invest in those areas. 

Thank you very much. 

Chairman Reichert.  Thank you, Mr. Rodriguez. 

[The statement of Mr. Rodriguez follows:]

Chairman Reichert.  Well, now we will move into the question‑and‑answer phase.  And I would like to begin by asking Ms. Randolph a couple of questions. 

Have you testified before Congress before? 

Ms. Randolph.  No. 

Chairman Reichert.  Isn’t this fun? 

Ms. Randolph.  Yes. 

Chairman Reichert.  Well, good.  I am glad you have having fun.  So we are just going to have a conversation, okay?

Ms. Randolph.  Okay.

Chairman Reichert.  We just want to learn from you, because I think it is really important.  You have been there, done that.  You have been through the system. I mean, all these guys are smart guys and gals that are sitting here, but you are the one with the wisdom and the experience, as far as I am concerned, okay?

Ms. Randolph.  Okay.

Chairman Reichert.  So you went to the Department of Human Services in New York, right? 

Ms. Randolph.  No, in D.C.

Chairman Reichert.  In D.C. 

Ms. Randolph.  Yes.

Chairman Reichert.  I am sorry, in D.C.  And you were provided with some benefits ‑‑

Ms. Randolph.  Yes.

Chairman Reichert.  ‑‑ right?  And then you went to America Works. 

Ms. Randolph.  Yes. 

Chairman Reichert.  What was different?  What was your experience?  What is the difference in the two?  How did you find yourself becoming successful through what America Works does versus the Department of Health? 

Ms. Randolph.  Basically, the support from America Works, both as far as finding employment but also in personal.  Because, at that time, I was going through a personal matter. 

They helped me with so much as far as building my confidence, helping me with finding employment and staying determined, staying on track.  Even though I had all this going on in my personal life, I had them to come to every day to talk to, also for them to support me in any way possible. 

When I got there, it seemed it was just great.  I loved it there.  I really did. 

Chairman Reichert.  What didn’t you get at the Department of Human Services in D.C.? 

Ms. Randolph.  Just the benefits. 

Chairman Reichert.  Just benefits. 

Ms. Randolph.  Yes.  So what you really were looking for was someone who could tell you, you know what, Sada, you can do this ‑‑

Ms. Randolph.  Yes.  Yes.

Chairman Reichert.  ‑‑ to build your self‑confidence, you can get a job like this, you can have a dream.

Ms. Randolph.  Yes.

Chairman Reichert.  So how did they help you build that confidence?  What were some of the things that they did?

Ms. Randolph.  Every day I would come in, they would sit down and talk with me.  If I had any personal issues as far as transportation or anything that would keep me from getting to America Works, they would help me with that.  Also, helping me with my resume, my interview skills, whatever I needed help with.  Also, searching jobs with me.  One‑on‑one time was most important to me, and I received that when I got to America Works. 

Chairman Reichert.  And when you were working with Human Services, how did you feel?  I mean, you were just getting benefits.  Were you frustrated?  Were you anxious?  Were you looking for work? 

Ms. Randolph.  I was looking for work, because I know I am a smart girl ‑‑

Chairman Reichert.  Yes.

Ms. Randolph.  ‑‑ and I knew that was not where I wanted to be.  But I also had a child feed.  So, I mean, with them I did become frustrated, but I also was grateful ‑‑

Chairman Reichert.  Sure.

Ms. Randolph.  ‑‑ because I had a way to feed my son. 

Chairman Reichert.  Right. 

Ms. Randolph.  Yeah, so I just became a little frustrated, but ‑‑

Chairman Reichert.  You would rather be where you are today ‑‑

Ms. Randolph.  Yes.

Chairman Reichert.  ‑‑ with a job versus ‑‑

Ms. Randolph.  Yes.

Chairman Reichert.  Yeah.  Good. 

Ms. Tiller, what would you say to someone who might look at Ms. Randolph and say she represents a few people who are easy?  She is obviously a very bright young lady, someone who may be easy to find work for, as opposed to many other people on benefits who can’t be put to work right away without years of education or training or similar services.

Ms. Tiller.  Generally, everyone who comes to any of our America Works offices are people who, before they met us, were not believed in.  So regardless of the duration on TANF or any types of services before, it is building that confidence that Sada referenced. 

It is advocating on their behalf when it comes to their housing situation or additional benefits needed or childcare subsidies.  It is making sure that anyone who walks into our office is matched appropriately to a job.  You know, work first works best. 

So we make sure that any individual ‑‑ we look at their wraparound services that are needed.  We offer them a comprehensive approach.  But, really, it is just building their confidence. 

Chairman Reichert.  Yeah.  Well, thank you so much for what you do and America Works does. 

And congratulations to you, Ms. Randolph. 

Ms. Randolph.  Thank you. 

Chairman Reichert.  You are welcome. 

Mr. Doggett, you are recognized.

Mr. Doggett.  Thank you, Mr. Chairman.

And thanks to all of our witnesses. 

Mr. Kling, I know that the CBO has studied a number of times the Earned Income Tax Credit, I think most recently in your November 2012 marginal tax rate report. 

Does the research indicate that the EITC has helped pull people into the labor market by increasing the value of work? 

Mr. Kling.  Yes, Congressman, it does.  We have a report that was specifically on the refundable tax credits that is even more recent, from January.  And that is clearly spelled out there. 

Mr. Doggett.  The report I looked at said it makes work more appealing and that studies have found that expansions of the EITC between 1986 and 1996 significantly increased the movement of single mothers into the workforce. 

Mr. Kling.  Those are our findings, yes, sir.

Mr. Doggett.  And by boosting the value of work, has the EITC also reduced poverty rates for Americans in low‑wage jobs? 

Mr. Kling.  That is correct. 

Mr. Doggett.  Thank you. 

Mr. Rodriguez, what will be the effect on poor families of significantly changing the Earned Income Tax Credit? 

Mr. Rodriguez.  Well, if the changes are meant to lessen the credit in some way or ‑‑

Mr. Doggett.  Yes.

Mr. Rodriguez.  ‑‑ cut back on eligibility in some particular way, I think it would be devastating.  I think as many of you know, the effects of the credits, I think, are proven to reduce poverty. 

But, also, on an individual level, many families, you know, they go to work.  They look forward to their tax refunds at the end of the year.  They use it to pay off bills and other basic necessities.  The notion that we will be reducing refunds in some way, I think, could have a very, very devastating impact and certainly set us back with respect to the recovery. 

Mr. Doggett.  And, Mr. Kling, on the issue of food security and the SNAP program, I believe that CBO projects that the overall spending on SNAP will drop substantially in real terms over the next decade under existing law, if we just maintain the existing law. 

Mr. Kling.  That is correct. 

Mr. Doggett.  And this is based on the premise that the program grew when the recession was the deepest, and we think that is changing.  And it accounts for the fact that the food stamp benefit levels will drop some this fall because of changes that are already set to take effect in the SNAP law. 

Mr. Kling.  Yes, sir.  We think that the economy is on a path toward recovery.  And, over the next decade, that will have a substantial impact on reducing the amount of expenditure in the SNAP program.

Mr. Doggett.  Thank you. 

And, again, Mr. Rodriguez, in terms of what the impact will be on Latino families and other families if the House were to enact the bill that is before us this afternoon ‑‑ in fact, that is what the bells were ringing about, to bring that up ‑‑ that involves five times as much of a cut in the SNAP program as that made by the Senate. 

Mr. Rodriguez.  Yeah, as we discussed, SNAP and the EITC work pretty closely together to assist families who are working.  And, as you know, the State and local impacts of the EITC, SNAP payments are tremendous on local economies.  You know, in Texas alone, 2.7 million households claim the EITC.  That is over a million families that are receiving those benefits.  I think SNAP has very similar overlays, and so you are looking at deep impacts in similar places.  And I think we should be very concerned about that. 

Mr. Doggett.  We have heard substantial criticism of some of the existing programs today from some of the other witnesses.  What do you believe are some of the strategies that we need to pursue in order to get long‑term reductions in poverty? 

Mr. Rodriguez.  Well, I certainly think, you know, looking at the EITC, for those who may be concerned about some of the work incentives or discouraging, again, I think the phaseout rates offer some, I think, pointers in that direction. 

I think further work support investments ‑‑ transportation subsidies, childcare subsidies ‑‑ that help workers either stay in the workforce or expand their hours seems to me to be a good direction to go in, in addition to some of the job‑creation and job‑growth elements that I have mentioned before.  And they are in my testimony.

Mr. Doggett.  And is early education and avoiding these across‑the‑board cuts in Head Start a part of that also? 

Mr. Rodriguez.  Absolutely.  Part of the research that we have seen talks about intergenerational poverty and how that affects families.  And we certainly have seen research that shows that children of recipients of the tax credits do better in terms of educational outcomes and college attainment.  And so I think we would be definitely concerned about the effects on the longer‑term implications for families, as well. 

Mr. Doggett.  Thank you. 

Thank you Mr. Chairman.

Chairman Reichert.  Thank you, Mr. Doggett. 

Mr. Young, you are recognized for 5 minutes.

Mr. Young.  Thank you, Mr. Chairman, for holding this important hearing. 

I thank all of our panelists. 

Ms. Randolph, your testimony was incredibly inspiring to me.  And I think the idea here is to try and figure out ways to reform the programs at issue today so that our social safety net does not become a cage for many Americans; instead, it becomes what it was intended to be, to my mind:  a springboard to go out and realize your capabilities, put those to use, and make a better life for yourself and your family.  And you certainly embody that, so thanks for being here today. 

Times are tough.  Some of the solutions I have already heard put forward today with respect to improving the lives of people on the margins of our society involve greater expenditure.  I know that argument can be made, but I would like to invoke the old British saying which is, “Now that the money has run out, we shall have to begin to think.”  It is time for us to think creatively about how a number of these programs are structured.  And to do that, I think in some cases it would be helpful to have more information. 

Prior to 1988, it was impossible to determine what percentages of AFDC recipients were actively engaged in workfare, job search, training, or other efforts to reduce dependence.  States actually competed with each other in disseminating misleading data, which implied that most of those who made up their caseload were engaged in serious efforts to leave the government rolls. 

With the passage of the 1988 welfare reform legislation, States were required to report accurately the activities of their AFDC recipients.  It was soon revealed that only a tiny fraction of recipients were actually engaged in job search and training.  And that information, garnered through those 1988 reforms, led to the intellectual foundation for later welfare reforms which incorporated a work requirement, to the benefit of people like Ms. Randolph. 

So my questions pertain to evidence‑based policymaking, and they will directed toward Mr. Mead and Mr. Mulligan. 

In terms of other Federal programs, such as SSI or SNAP, which programs currently require States to report on the activities of government benefit recipients? 

Mr. Mead.  To my knowledge, TANF is the only program that has detailed requirements of reporting on what recipients are engaged in.  I don’t believe we have that in food stamps or SSI. 

Mr. Young.  Mr. Mulligan, would you agree with that assessment, to your knowledge? 

Mr. Mulligan.  The SNAP program has a quality control sample that I believe comes from each of the States.  I don’t know exactly the administrative role of the States in that, but each of the States is represented there.  The Department of Agriculture makes it available every year.  It is a yearly sample of people who are actually on the SNAP program, the type of household they live in, whether they are working ‑‑

Mr. Young.  Right.

Mr. Mulligan.  ‑‑ those sort of issues. 

Mr. Young.  So we have 83, by my last count, what some call welfare programs.  Others characterize that as an unfair term, although I think just about every panelist used that term.  We will call them means‑tested Federal benefit programs. 

Just about all of them require no sort of work requirement or even requirement that there be some reporting on the activities related to work or job search of the recipients. 

Should the Federal Government extend these reporting requirements to other means‑tested government programs, in your estimation?  And if we should extend these requirements, should we also apply rigorous evaluations to determine the effectiveness of these programs on benefit recipients? 

Mr. Mead? 

Mr. Mead.  Well, in principle, I would favor that, but let’s remember there are administrative costs associated ‑‑

Mr. Young.  Sure.

Mr. Mead.  ‑‑ with this kind of reporting. 

I don’t know that all the programs need it.  It seems to me that the major programs are those that most of the recipients are likely to be on, including food stamps, TANF, EITC.  We should content ourselves with getting good reporting on those programs.  And if, in those connections, people are working, fulfilling the requirement, then that is going to take care of the others.  So I don’t think we need to see this as a general problem ‑‑

Mr. Young.  I will interject, due to limited time. 

And, Mr. Mulligan, I believe we have spoken offline about this issue, and you share that perspective; we should focus more on where most of the money goes, frankly, on reporting requirements for those programs.  Is that correct? 

Mr. Mulligan.  Yes, start with the big pieces.  And I also recommend that ‑‑ the Census Bureau runs some surveys of the population, especially the poor population, the SIPP and the Current Population Survey.  Those could be cleaned up and improved for the purpose of measuring program participation more completely.  And that would be made administratively more cheap and valuable for research.

Mr. Young.  And, finally, based on these findings, this information gathered, should the Federal Government incorporate evidence‑based funding criteria into these well‑intentioned programs?  Yes or no, if you can, because my time has expired. 

Mr. Mead.  In principle, yes.  But we have to sometimes carry out studies to determine what the effects are. 

Mr. Mulligan.  Yeah, I would say yes. 

Mr. Young.  Thank you. 

Chairman Reichert.  Okay.  Thank you, Mr. Young. 

Mr. Lewis, you are recognized.

Mr. Lewis.  Well, thank you very much, Mr. Chairman. 

I want to thank each and every one of you for being here. 

Except for the Associate Director of CBO and Ms. Randolph, have any of you been without a job or known someone without a job after 2007, known someone that didn’t have a job or couldn’t find a job?  Make it brief, please.

Mr. Mead.  Yes.  I have friends who have been unemployed. 

Mr. Lewis.  Okay. 

Ms. Tiller.  Yes, I have had friends who have been unemployed. 

Mr. Lewis.  Okay. 

Yes, sir?

Mr. Mulligan.  My wife was laid off at the beginning of the year.  She is still unemployed.

Mr. Lewis.  Okay. 

Mr. Rodriguez.  Likewise, yes.  Not my wife, but, you know, I have had ‑‑

Mr. Lewis.  Thank you.  Did any of the people that you know, any of your friends try to take relief or seek relief from any of these Federal programs? 

Mr. Mead.  In the cases I know, I don’t know, but I don’t believe so. 

Mr. Lewis.  Okay. 

Ms. Tiller.  I wouldn’t be made aware. 

Mr. Lewis.  Okay. 

Yes, sir? 

Mr. Mulligan.  I am not sure I understood your question.

Mr. Lewis.  I think my question is, did anyone you know try to seek out benefits of these Federal programs? 

Mr. Mulligan.  Well, my wife looked at unemployment insurance, which is a State program. 

Mr. Lewis.  Okay.  That is okay.  I think some of the resources come from the Federal Government. 

Mr. Rodriguez.  The answer is yes, but ‑‑ yes.

Mr. Lewis.  Well, let me ‑‑ are any of you taking the position that we should just de‑fund these programs and get rid of them and let people fend for themselves? 

Mr. Mead.  I am not in favor of that.  My concern is that we require people to work in return for benefits, but I am not in favor of cutting the benefits.  We still need to help people. 

Mr. Lewis.  So you are not in favor of abolishing the program, that the Federal Government get out of the business of helping people, throwing people a lifeline. 

Mr. Mead.  I don’t think the problem in welfare is that we are helping people.  The problem is sometimes that we are not expecting people to help themselves. 

Mr. Lewis.  Okay. 

Mr. Chairman, I would like to yield the balance of my time to Mr. Davis. 

Mr. Davis.  Thank you very much, Mr. Chairman. 

And thank you, Mr. Lewis. 

Chairman Reichert.  If I could just interrupt, Mr. Davis, very quickly.  We have 2 minutes to get over to vote.

Mr. Davis.  All right.  Then I will just say that the line of questioning I think that we are seeing pursued in some way is this whole business of, are people likely to not seek work because of the benefit that they might be receiving? 

The benefits that I have seen people receive generally were not enough to be the kind of reward that might say to a person, I don’t really need to go out and seek work as assiduously as someone thinks because I am receiving a benefit that is rather minimal. 

And I will continue to pursue that.  Our time is obviously up, and we have to run and vote, but when we return.  So thank you, Mr. Chairman. 

Chairman Reichert.  Thank you, Mr. Davis. 

Thank you, Mr. Lewis. 

And I apologize to the witnesses.  We are going to disappear for a few minutes.  We will be back as soon as we can.  If you could please remain, we have just a few more Members to ask questions, so I would ask your patience. 

The committee hearing now will be in recess. 


Chairman Reichert.  The subcommittee will come to order, please. 

So thank you for your patience. 

We will begin questioning again, and we will recognize Mr. Renacci for 5 minutes.

Mr. Renacci.  Thank you, Mr. Chairman. 

I want to thank the witnesses for your testimony. 

Ms. Randolph, I want to congratulate you for what you have been able to do.  I think that is one of the positives of these programs, and we need to have more of those.  So, congratulations. 

It is interesting because, in my previous history, I used to always have staff come up to me and say, well, the more money we spend, the better off we will be.  And I used to try and tell them that there comes a time when the more money you spend sometimes, you are just wasting it. 

And I think what we really need to do is make sure that the programs that we are spending money on, that the return is there and that we are getting people back to work.  That has to be the key, just like Ms. Randolph was able to do.  Those are the keys to these type of programs. 

Mr. Mead, I want to direct a question to you.  In December of 2011, approximately 193,000 individuals received TANF benefits in my home State of Ohio.  Although shocking to me at first, this number was small in comparison to the 2 million individuals receiving SNAP benefits. 

In your testimony, you mentioned that other programs could benefit from similar work tests used in the TANF program.  Can you tell us more about some of the benefits of a work‑first approach to our welfare system, just a little more in detail?  Because I think that is the direction we should go in. 

Mr. Mead.  In order to get welfare recipients to work, you have to have an administrative structure where you say to them that they must work and you arrange it.  You help them get it together by arranging child care, finding a job, actually working, staying at the job, et cetera.  It has to be mandatory, it has to be a condition of eligibility that they do this. 

And it is not as if ‑‑ I am not suggesting they don’t want to work.  They do.  But, typically, they have to get organized to actually do it.  And so you need to have a program structure that brings that about. 

We have that structure in TANF, but we don’t have it in food stamps.  That is the big difference.  In food stamps, there are formal requirements on the books, but we don’t actually have a program standing behind it.  We don’t actually have in most localities ‑‑ there are some exceptions ‑‑ but we don’t have an actual program on the ground where people are faced with an operational requirement to do something.  That is the big difference.  And we need to move that way in SNAP. 

Mr. Renacci.  Sir, do you believe that we are providing the real help necessary to get to that point?  Or, do we have to revise the system? 

Mr. Mead.  I think we have to revise SNAP to provide a program structure like what we have in TANF.  Now, I don’t mean the rules would be identically the same.  Food stamps covers a wider population, with many different types of families.  We have to think seriously about who exactly would have to work and how much and so on.  So there are issues there that you wouldn’t face in TANF. 

But we need to do that, we need to set up a structure.  That is what is now missing.  And then you can combine practical help, which people need and I am in favor of, like the benefit, with a requirement that people also help themselves.  So you have this joint effort where the government and the recipient together work on going to work. 

Mr. Renacci.  Ms. Tiller, if you speak to those out of work, most will tell you they want a chance to earn more money, help their family, improve their situation in life.  Getting individuals back to work really must remain the goal of the public assistance programs. 

You have assisted a variety of individuals in your organization.  Do you come across individuals who are not willing to work? 

Ms. Tiller.  Of course we do, but it is all about rebuilding confidence and making folks more self‑aware and then helping them with the tools to get them to a point of employability. 

Mr. Renacci.  What are some of the things your organization does to help people realize the benefits that they can gain from working? 

Ms. Tiller.  We show them mathematically that work pays; it pays more than receiving TANF benefits.  We do countless trainings that focus on rebuilding their self‑awareness, including talking about family structure.  Then, also, pre‑employment initiatives: resume building, confidence building, presentation, aesthetic presentation, things of that nature. 

Mr. Renacci.  Ms. Randolph, your goal, it sounds like, and I just want to confirm that, was really to get back to work.  You wanted to get to work. 

Ms. Randolph.  Yes.

Mr. Renacci.  So you were just looking really for the tools to help you move in that direction and be able to find a job and find employment for yourself and your child; is that correct? 

Ms. Randolph.  Yes.

Mr. Renacci.  Very good. 

Thank you, Mr. Chairman.  I yield back. 

Chairman Reichert.  Thank you. 

Mr. Reed, you are recognized. 

Mr. Reed.  Thank you, Mr. Chairman.

And thank you to the panel. 

I am very interested in having a conversation this afternoon about an issue that is very important to me, and that is to focus on the working poor. 

Because, to me ‑‑ and, Mr. Rodriguez, you kind of talked about it a little bit in the phaseout situation ‑‑ is that we have policies now, in my opinion, at the Federal level that don’t reward the people that are going to work, the ones who we want to stand with that are pulling themselves out of the turmoil that we all agree that we want to address here from Washington. 

So, Ms. Tiller, from your experience, what are the barriers to re‑employment that you come across on a regular basis? 

Ms. Tiller.  Some of the barriers include limited experience, limited education, limited knowledge of current events.  So we work to work with our participants to make sure that they are trained in pre‑employment initiatives to get back to work, and then we address additional education and whatnot.

Mr. Reed.  So are we talking about, when you say education, are we talking about, like, skill sets ‑‑

Ms. Tiller.  Uh‑huh.

Mr. Reed.  ‑‑ workforce development ‑‑

Ms. Tiller.  Soft skills, hard skills, yes.

Mr. Reed.  Soft skills and hard skills.  Now, when you say that ‑‑ because I have heard that numerous times, and I am interested in getting it on the record ‑‑ soft skills, what are you referring to? 

Ms. Tiller.  Presentation, how you articulate.  Also, your overall being, your self‑awareness.  That is what I would consider soft skills.  Your communication skills, are you organized. 

Mr. Reed.  And when you say that, have you ever asked anyone that you have come across in your experience in that situation where you are helping them develop those skills why they didn’t have those skills to begin with?

Ms. Tiller.  Sure.

Mr. Reed.  And why was that?  What was their response?

Ms. Tiller.  A variety of reasons.  Household composition, limited education.

Mr. Reed.  Okay, household composition, limited education.  That is a nice D.C. term.  What do you mean by that? 

Ms. Tiller.  How they grew up. 

Mr. Reed.  How they grew up, their home environment.

Ms. Tiller.  Yup, what their family structure was like.

Mr. Reed.  Okay.  And then have you ever come across folks that maybe have a drug problem or an alcohol problem?

Ms. Tiller.  Uh‑huh.

Mr. Reed.  Is that something ‑‑ if you could verbally state for the record that you have?

Ms. Tiller.  Yes, we have.

Mr. Reed.  And is that something that is a big issue, or is that a relatively small, insignificant issue, in your experience dealing with ‑‑

Ms. Tiller.  Well, it is an issue.  Again, we look at work as the central activity, and then we focus on all of the other barriers that need addressing.  And we make sure to warmly refer participants to the appropriate services so that they get complete wraparound services.

Mr. Reed.  And just so I have a sense for the record, is that something that you occasionally come across or is that something that you regularly come across? 

Ms. Tiller.  Regularly.

Mr. Reed.  Regularly? 

Ms. Tiller.  Uh‑huh.

Mr. Reed.  Because I am finding that, talking to my workforce development directors and others in the district and to employers, that that is a real issue to re‑employment.  And so I am glad to hear that verified by you here today. 

Ms. Randolph, I want to talk about ‑‑ your story is really ‑‑ you know, we could spend a lot of time with the experts here, but your story is really something I want to explore. 

Clearly, you are setting an example.  You are out there doing it right.  How does what you do impact your son?  Could you state that for the record? 

Ms. Randolph.  It impacts him greatly.  I want to set an example for him to show him that the sky is the limit.  He can do anything he puts his mind to.

Mr. Reed.  And have you had a conversation with him along those lines, or is it ‑‑

Ms. Randolph.  Yeah.  Well, not ‑‑

Mr. Reed.  ‑‑ just, not do what I say, but do what I do? 

Ms. Randolph.  ‑‑ not quite because he is only 2. 

Mr. Reed.  Okay.

Ms. Randolph.  So we haven’t got there yet.  We haven’t got there yet. 

Mr. Reed.  Well, I would tell you, you know, I am the father of a 12‑ and 14‑year‑old, and I can tell you ‑‑ and I am the youngest of 12, so I have 11 other older brothers and sisters.  And I can tell you that I remember the adage, it is only about 2 percent of what your parents say that you do; it is what they do that you incorporate and become. 

And, Ms. Tiller, you talked about it on household composition and being reflected in the next generation that is coming down. 

And, Ms. Randolph, could you describe your household composition when you were growing up? 

Ms. Randolph.  Well, I grew up in a single‑parent home with just my mom.  I had my dad in my life, but it wasn’t a marriage or a two‑parent home. 

I grew up kind of rough, but I always knew that education, and keep pushing, that I will be okay, I will be fine.  So I never let my surroundings discourage me or turn me around from what I wanted to do and the dreams that I wanted to come true.

Mr. Reed.  And who taught you that education was key? 

Ms. Randolph.  My mom.

Mr. Reed.  That is what my mom taught me. 

Ms. Randolph.  Yes.

Mr. Reed.  She was a single mother after my father passed when I was 2.  And she taught that lesson to me very, very directly.  So I appreciate that. 

Because that is an issue, I think, that gets lost in our conversation.  We talk a lot about the benefits and the cash that we could give to individuals, but we are not talking about the cycle of dependency, the cycle of poverty, and how you break that. 

And I am very interested in ‑‑ and, Ms. Randolph, I applaud you because you are setting an example for that 2‑year‑old that I can assure you, in my humble opinion, will pay huge dividends not only for him but his kids and your grandkids.  So God bless you.  Keep up the great work. 

And, with that, I yield back.

Ms. Randolph.  Thank you. 

Chairman Reichert.  Thank you, Mr. Reed. 

Mr. Davis, you are recognized. 

Mr. Davis.  Thank you very much, Mr. Chairman. 

And I want to thank all of our witnesses for being here this afternoon. 

Ms. Randolph, let me congratulate you for the progress that you have made.  It seems to me that I know thousands of individuals like yourself.  I have lived and worked in the inner city of Chicago all of my adult life, and so I have seen individuals. 

Do you have friends and family members, perhaps, who had similar experiences and are having similar success to yours? 

Ms. Randolph.  No. 

Mr. Davis.  No? 

Ms. Randolph.  No. 

Mr. Davis.  Ms. Tiller, let me ask you, do you know other agencies and organizations that are having the kind of success that you are having with your programs? 

Ms. Tiller.  I can only speak to America Works. 

Mr. Davis.  So you don’t check other programs and how effective they are or read literature about what they do? 

Ms. Tiller.  Sure, I read about them.  I know of others in existence.  But today I am only speaking to America Works. 

Mr. Davis.  Okay.

Mr. Kling, I note that spending for the kind of programs that we are talking about has increased tremendously over the years.  Are there any societal conditions that may have spurred some of this?  Or do we see any results, like a difference perhaps in life expectancy since 1972, since much of this has gone to health care? 

Mr. Kling.  There are some important societal trends.  Population growth is a big driver of why the number of participants has gone up in many programs.  In the healthcare programs, there is a general rise in healthcare costs per participant that affects the Medicaid program that reflects a societal trend, yes, sir. 

Mr. Davis.  And I note that in some communities, especially where there have been certain kinds of programs, that the infant mortality rates, for example, have been reduced ‑‑ that is, that people not only live perhaps longer but they live a bit better.  And so I am thinking that some of that might be accounted for as a result of the increased expenditures. 

Dr. Mulligan, let me thank you for being here.  You come from one of my favorite, most favorite institutions.  One of the things I bemoan a little bit sometimes is that the University of Chicago is not in my congressional district, although I have a large number of other colleges and universities, but not the University of Chicago. 

Let me ask you if you have observed the impact of the availability of work opportunities on whether or not people are employed.  Or what does opportunity have to do with unemployment in some settings? 

Mr. Mulligan.  Maybe a good way to answer your question would be the Figure 1 in my testimony, where I view the reward to work as a comparison between what you can get when you are not working and what you get when you are working. 

And I think what you meant by “opportunity” is what would happen if you could get more while working, if you could get a better job or a more high‑paying job.  And that increases the reward.  And, on average ‑‑ not every single individual responds this way, but, on average, when people have a bigger reward, they respond to it by working more.  That is fairly clear as an average proposition. 

Mr. Davis.  On the availability of work, in my mind, I am reminded that when I came to Chicago and the community that I live in, there were solidly good‑paying manufacturing jobs all over the place.  I can name at least 20 major corporations and companies that were located there.  And so the individuals in the community where I lived basically had jobs.  Hotpoint, Motorola, General Electric, International Harvester, Sears ‑‑ you name it, they were there. 

And so my question really was about the impact of job availability.  I see that my time has expired, Mr. Chairman, so ‑‑

Chairman Reichert.  Thank you. 

Mr. Kelly is recognized. 

Mr. Kelly.  Thank you, Chairman. 

And thank you all for being here. 

I think, Ms. Randolph, what you said was probably the most important thing.  And I know that you are actually the person doing these things.  You have actually been through it, you have been through the programs.  Because I think what Ms. Tiller did ‑‑ when you said, they gave me confidence, I think that is the key to it.  I can’t imagine waking up in the morning and having no reason to get out of bed. 

Now, I know we come up with programs, and they are well‑intentioned.  But when you disincentivize people to go after something, when you take away their hopes and dreams, you are kind of reinforcing that we are going to give you enough money to stay where you are. 

These programs were not designed to keep people in poverty.  They were designed to lift them out of poverty.  The skills that you learned, though, gave you the confidence to go in and apply for a job. 

The town that I am in now has seen heavy, heavy unemployment.  And I have young people coming up to me all the time saying, you know, “Mr. Kelly, are there any jobs that you know about?”  I say, “Go to the workforce people.  Talk to them.”  “I don’t know how to do those jobs that are available.” 

So you wonder about what are we doing with folks, because if the idea is to help them, give them a bridge from where they are to where they want to be, that works.  I mean, that is what worked for you.  I can see it in your eyes.  You are a confident young lady.  You said, “I knew I was a smart girl.”  And so you had the confidence, but then they helped you build it so you could go when you were seeking a job and speak with confidence and get the job.  And that is really ‑‑ I mean, you are doing it. 

How many more people would you say fall in that category but they just don’t have that confidence yet to go out and look for a job or to interview for a job?  Either one of you, because you are both working with great numbers of people.  You created 350,000 jobs, or at least got people jobs, right?

Ms. Tiller.  Uh‑huh.

Mr. Kelly.  Okay.

Ms. Tiller.  So, thousands.  Thousands per month in offices nationwide. 

Mr. Kelly.  Okay.  All right.

See, I get the confusion, because sometimes we think, well, you know what, our hearts are willing, but sometimes our wallets are weak.  And we talk about how we want to help people, but then we say there is only so much we can do.  See, I don’t believe for 1 minute by disincentivizing people that you are helping them.  I don’t want to give people enough money to stay where they are.  I want to give them an opportunity to dream again. 

Mr. Mead, availability of jobs.  Are there not enough jobs out there for folks?  Or where are we with that?

Mr. Mead.  There is no definitive proof, but I would say jobs of a low‑skilled, low‑paid variety are widely available in America today.  The indications are that low‑income people can get jobs quickly.  The problem is more keeping the jobs.  Their problem is far more obtaining an adequate wage to enter the middle class. 

That has been true for decades.  This is not a new problem.  But the major difficulty, though, for this group is not that they are working at low wages.  Two‑thirds of the poor didn’t work at all in last year.  And it isn’t because they can’t get a job.  It is that they are doing other things.  Their lives are preoccupied with other concerns. 

They are not saying in survey studies that I can’t get a job.  Only 12 percent of the nonworking poor adults in 2011 ‑‑ or 2012 ‑‑ no, well, but the latest year, anyway ‑‑ 12 percent say that the reason is they can’t find a job.  Vastly more important are concerns in private life.  They are retired or taking care of the family, they are ill, they are in school.  Those are much more important. 

So people are not saying they can’t get a job. 

Mr. Kelly.  Okay. 

Now, going back to Ms. Randolph, okay, you have a little boy? 

Ms. Randolph.  Yes. 

Mr. Kelly.  All right.  Two years old? 

Ms. Randolph.  Yes.

Mr. Kelly.  See, when I was growing up ‑‑ I mean, the central part of who we are as a people has always been the family.  It has always been centered around the family, the family unit, the ability of the mother and father to work together to provide a future for their children, to provide wellbeing for them. 

And I look at some of these programs and I am saying, well, why are we telling people that, you know what, if you are married, we are going to penalize you for being married?  It seems to me like we don’t reward good behavior, but we make people think about, well, maybe it is better if I am not married, I can benefit more from not being married.  I would just say maybe short term but not long term. 

Ms. Randolph.  Uh‑huh.

Mr. Kelly.  I heard you talk about your family and the way your family was structured.  So, I mean, you all see it every day.

Ms. Randolph.  Yes.

Mr. Kelly.  We see it in this country.  As our families continue to crumble, as we don’t have that family nucleus, we lose what it is that is uniquely American, and that is to provide for those coming after us with a great deal of heart and a great deal of passion. 

Is that not happening? I can’t believe the numbers that we are looking at now of unmarried people with children.  It is a tough row to hoe even when you are married, but unmarried?  Unless you incentivize it. 

Could we change it?  Would that help? 

Mr. Mead.  I don’t believe, as I have said, that incentives are the core problem.  The core problem is the lack of a structure that promotes and enforces work connected to these welfare programs.  We need to have a program in which there are case managers who make sure that those who want to work actually do it and help them sort out the problems and so on. 

It is not going to happen automatically, and it is not going to happen in response to incentives.  Incentives are, I believe, a distraction from the main difficulties, which are actually administrative. 

We need to do with food stamps and these other programs what we have already done with TANF.  Set up a structure where, if you get support, you are reliably required also to work.  We have to do that.  And when we do that, we will see results.

Mr. Kelly.  Getting up with a purpose every morning is the key to it.  You have to have that, whether it is that 2‑year‑old little boy who is driving you or just wanting to part of a society that continues to make things better for those coming after us. 

I have used up my time.  Thank you all for being here, and thank you so much for what you are doing.

Congratulations.  Keep up the good work. 

Chairman Reichert.  Mr. Crowley? 

Mr. Crowley.  Thank you, Mr. Chairman. 

Ms. Randolph, it is a pleasure to have you here before us this afternoon, and congratulations to you on all your success.  And I wish you nothing but more success in the years to come for you and your little boy and for your family, your overall family. 

I just have a couple of questions for you, though, if I could, just to get a better sense of your situation and how we can apply that to others. 

Ms. Randolph.  Okay.

Mr. Crowley.  When you were moving into your position last year, you apparently were aware of the Earned Income Tax Credit; is that correct? 

Ms. Randolph.  Yes.

Mr. Crowley.  And how did you find out about that? 

Ms. Randolph.  For the tax year?  I found out about it once, I guess, I applied for my taxes. 

Mr. Crowley.  Okay.  So did your accountant tell you or did ‑‑

Ms. Randolph.  Yes. 

Mr. Crowley.  So they told you.  Did you receive any information about continuing medical coverage under Medicaid, if needed? 

Ms. Randolph.  Did I receive any information? 

Mr. Crowley.  Yeah, that if you needed to continue health care, that you would have access to Medicaid if you needed it?

Ms. Randolph.  Yes, I did. 

Mr. Crowley.  And did you receive any explanation about getting any help with daycare expenses for your child? 

Ms. Randolph.  Yes. 

Mr. Crowley.  Are you now receiving any of these supports like EITC or transitional Medicaid or childcare subsidies? 

Ms. Randolph.  Yes.

Mr. Crowley.  You are receiving those subsidies.

Ms. Randolph.  Yes. 

Mr. Crowley.  Thank you. 

Ms. Tiller, when one of your clients leaves the TANF program for a full‑time job but receives assistance with child care or transitional Medicaid or, in fact, gets EITC, do you think of that person as a welfare recipient or as a worker? 

Ms. Tiller.  As a worker.

Mr. Crowley.  As a worker. 

Ms. Tiller.  Uh‑huh.

Mr. Crowley.  I appreciate your response because I think that gets, in part, to the crux of what we are talking about here, those who would imply that EITC or even on transitional Medicaid or receiving even childcare subsidies so that they can work and their child can be in an enriching environment, that that is a form of welfare.  Some on this committee believe that that is another form of welfare. 

I don’t believe so, Ms. Randolph.  I think what you are doing is more than admirable; it is heroic.  It is heroic, what you are doing.  And I hope that there are millions more like you out in the world.  It is what makes America great.  So thank you. 

Ms. Randolph.  Thank you.

Mr. Crowley.  Mr. Rodriguez, in your testimony, you mentioned some of the benefits of EITC, including long‑term gains in education and earnings by recipients. 

Can you elaborate a bit more on the broader economic benefits of the EITC program and other tax credits for working families?  When families receive these credits, what impact does their resulting spending have on our overall economy? 

Mr. Rodriguez.  Yeah, sure.  Thank you. 

I mean, I think there are, as I mentioned, some really good studies out there that really show, not to mention the anecdotal evidence of people who are working directly with families to get tax credits each year, it pumps millions of dollars, billions of dollars into the economy, millions of dollars into local economies; as well, these help families to certainly pay off bills but also do employment‑related things like buy cars that take them to work and pay for other transportation, childcare costs, other kinds of things that I think have tremendous employment effects, as well. 

And I think the research that we cited around long‑term effects on families and kids in families who are receiving the tax credits I think stands for itself. 

Mr. Crowley.  Thank you. 

So it seems that we are talking about programs that not only strengthen the individual but strengthen all of us, lift all boats, and also improves the overall economy of our country. 

I hope that the benefits of these valuable programs and the very real need for these resources are not overlooked in a rush to claim credit for cutting so‑called “welfare.”  Don’t forget, our Constitution has in it to provide for the general welfare.  When did the word “welfare” become so maligned?  When did it become a negative and a pejorative, as opposed to something positive, as apparently our Founding Fathers had thought so when they included that line in the preamble of our Constitution? 

I particularly want to thank Ms. Tiller for your comments when I asked the question about whether you thought that those programs, as applied to Ms. Randolph, were for welfare and you said they were not.  And I think that is a very honest answer, and I appreciate that very much.  Because I think it goes to the heart of what we are talking about here today, that these programs are not forms of welfare.  They are helping lift people up who are struggling, who are working in this country and trying to make ends meet. 

That is what Ms. Randolph is doing every day.  She is working in this company, this healthcare company.  And I applaud her, and I applaud you for your forthright answer. 

Thank you.  I yield back. 

Chairman Reichert.  I thank the gentleman. 

Thank all of you for being here today, and thanks for your patience as we left for a few minutes to vote. 

I would like to especially thank Ms. Randolph for her appearance here today.  Sometimes Congress can be a little intimidating for any of us, but especially for someone who has not been here before. 

We are excited about your progress.  People have mentioned that.  You have been sort of the focal point.  You are sitting in the center, and everyone is kind of drawn to you and your smile and your success. 

And, the Federal Government, I think we would all agree, does have a role in helping people get back on their feet.  We must be there. 

And I hope that you continue to receive these benefits and you continue to move on in your life and look for promotions and not only buy your first car but end up buying your first home.  And I can see you are already planning that, by nodding your head. 

So we are just honored to have you here and appreciate all the work that all of you in the panel have done.  We want to get this right.  We want to be able to be here as a help to people, but we want to have people like Ms. Randolph, who stand up, too, and take responsibility, who want to move forward with their lives. 

And the government is here to help you move forward.  And maybe one day you might even work for the Federal Government and you can say to people, “I am from the Federal Government, and I am here to help.”  Maybe not. 

Thank you all very much. 

The hearing is adjourned.

[Whereupon, at 3:56 p.m., the subcommittee was adjourned.]

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