Will Welfare Rolls Rise Following Record Low?

The graph from the Human Resources Administration is as remarkable as it is unmistakable: The number of New Yorkers receiving welfare, after peaking in 1995 at more than 1.1 million, plunged steadily to 343,000 at the end of 2008 – the lowest number in 45 years.

It's a drop that the Bloomberg Administration has cited as a mark of the city's success at moving people off the welfare rolls, mostly via "work first" policies geared toward getting individuals into paid employment. But as in other states, the falling caseload numbers come at a time of rising unemployment, record homelessness, and after years of soaring patronage of soup kitchens and food pantries. It's a contrast that puzzles many longtime observers of welfare policy, leading them to wonder whether local government is doing enough to respond to the economic crisis – and when the other shoe is going to drop.

It's certainly reason for concern, argues policy director Bich Ha Pham of the Federation of Protestant Welfare Agencies, which is preparing a study on welfare reform implementation in New York for release next month. During economic downturns in the early '80s and especially the early '90s, city records show, the welfare caseload jumped dramatically. By contrast, during the post-9/11 recession in 2001 and 2002, notes Pham, levels of welfare receipt rose only slightly, then immediately began their downward trend. (In New York, "welfare" incorporates both the federal Temporary Assistance to Needy Families program, and the state Safety Net program for unmarried individuals and those who've exhausted their federal benefits.) And as the current downturn escalated, there's been no corresponding rise in those getting public cash assistance. "In the first half of 2008, the number of New Yorkers without jobs increased by 56,000, yet the welfare caseload dropped by over 10,000," says Pham.

One explanation, say welfare experts, is that there's typically a lag time between an economic downturn and more people applying for welfare, in part because newly laid-off workers typically access other benefits like unemployment insurance – or look for lower-wage jobs – before resorting to welfare.

"We are in some respects the end of the line," said HRA commissioner Robert Doar, who projects only a "slight increase" in welfare caseload in 2009. There are many other public benefits that people short on income can apply for, Doar noted in a recent interview, pointing out that both food stamps and public health care have seen increased enrollment.

David Hansell, the former HRA chief of staff who in 2007 took over for Doar at the state Office of Temporary and Disability Assistance, agrees that it will likely take time before the effects of the economy are seen in the welfare numbers. But, he says, that time may already be at hand: "In the last quarter of 2008, [the state] actually saw the first quarterly increase we've seen in many years – up about 2.7 percent." That may presage a continued rise in the rolls, he says: "We may have begun to see the point where we've bottomed out."

Back to work?

If so, the next question is what to do about it. The long decline in the welfare rolls has gone hand-in-hand with the introduction of a "work first" model, which most recently has included “work supports” like the earned income tax credit and an expanded child care tax credit to make it easier for the working poor to get by. "Our view is that the best way out of difficult times is employment, even low-wage employment," says Doar, "and then taking advantage of our various work support programs like food stamps, Medicaid, earned income tax credit, other ways of grossing up the wages that they earn."

To use work supports, though, one still needs work, which may be harder to come by as the recession worsens. Doar insists that hasn't yet become an issue, and that HRA actually placed more people in jobs in 2008 than in 2007. "Entry-level positions are still hiring," he says, citing the retail and service sectors as examples. "People are often trading up, or doing that for a while and then the next thing. And when that happens, those jobs open up."   

But Omari Gay, director of workforce development for the low-income housing nonprofit Phipps Houses, tells a different story. "Without question" the economic downturn is affecting both the number of people applying for work and the ability to place them into jobs, says Gay. In 2007, he says, his program saw a total of 209 participants in Back to Work, the city program instituted the previous year in which anyone applying for welfare is placed into job search and workfare even before their benefits are approved. "We placed into employment 93 of them. Last year we saw over three times that amount, and placed around the exact same number. No question, it was a scary feeling."

Gay says he believes there were "many more applicants" for welfare benefits last year, adding that "because of the stagnant job market, there were more people staying on welfare for a longer period of time, because they couldn't find the work." The question then becomes: If more people are applying, why aren't more people receiving benefits?