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Reichert Opening Statement: Hearing on Subsidized Jobs Programs and Their Effectiveness in Helping Families Go to Work and Escape Poverty

July 30, 2014

Thank you to our guests and witnesses for joining us today for this important hearing to review what we can do to help more parents go to work and help families escape poverty.

We clearly have lots of work to do, as we enter the sixth year of the so-called “Obama recovery.”  Not only has this been the worst recovery for jobs and growth ever, but record numbers of Americans are not working, or working only temp jobs.  More people dropped out of the workforce during this “recovery” than during the recession that preceded it.  And the median household income is down over $2,000 since this “recovery” started.  All of which may be why nearly half of Americans think the U.S. is still in a recession.  Over five and a half years after Democrats’ trillion-dollar stimulus plan, Americans are still asking “where are the jobs”?  

Make no mistake: work is not only what parents need and what they are looking for, it is the only real path out of poverty.  We know this implicitly, and the data confirms it.  Less than 3 percent of full-time workers are in poverty, while the poverty rate for people who don’t work is 10 times higher.

Work also addresses inequality.  Of households in the bottom 20 percent of the earnings ladder, less than one in five had a household member working full-time, and more than 60 percent had no one in the household who was working at all.  In contrast, households in the top 20 percent of earners had on average two workers in the household, with almost all of them working full time.

Looking back, we see the 1996 welfare reforms confirmed the centrality of work to reducing poverty.  Since the work-based 1996 welfare reforms were enacted, the employment rate of welfare recipients more than doubled, and child poverty rates fell dramatically and are still below the level in the early 1990s.  And welfare caseloads declined by 60 percent.

Still, in many places, loopholes have allowed states to keep welfare recipients on the rolls too long without working, reducing their income and increasing their dependence on taxpayers.  States now spend only a small share of their TANF funding— just 6 percent in FY 2013—on activities designed to get welfare recipients jobs.  The most recent data from States (for FY 2011) shows almost 60 percent of adults on TANF who were required to work had no reported hours in any work or work-related activity.  So the question is this: How can we get more low-income adults into jobs so they can better support their families and move up the economic ladder?

As we will learn in the testimony today, one approach to achieving this goal is through supporting subsidized jobs.  For years, some States have placed welfare recipients in subsidized jobs, providing payments to public and private employers to hire welfare recipients so they earn a paycheck instead of just collecting a welfare check.  

The goal of this approach is for the job to continue even after the subsidy ends, but it doesn’t always work out that way, raising concerns about effectiveness and cost of such efforts compared to other approaches.  We hope to review those sorts of issues today to determine how these types of programs can help low-income families escape poverty.

The bigger picture is important, too.

If we want to promote subsidized jobs or any other way of helping welfare recipients go to work, we simply will not make any progress while the Administration continues to insist it can waive precisely these sorts of policies.  The irony is, when the Administration announced its TANF waiver policy two years ago, we were working together across party lines to close loopholes that weakened welfare to work rules.  Those loopholes remain wide open today.  We can and should revisit ways to close those loopholes – along with discussing ways to implement ideas like promoting subsidized jobs – in the months ahead.  But if the Administration continues to insist it can simply waive any of the rules Congress creates, it is very unlikely to happen.   

I look forward to today’s testimony, and our continuing to work together on ways to help low-income parents find the work they need to get ahead.