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The New Welfare: How Can it Be Improved


  • Oren M. Levin-Waldman

    (The Jerome Levy Economics Institute)


The Personal Responsibility Act, recently enacted in to law, effectively transforms the American welfare system from one of entitlement to a decentralized hodgepodge of programs intended to move people off of welfare. No longer is federal funding guaranteed, but it is subject to the annual congressional appropriations process. States receive their allocations in the form of block grants and are afforded greater flexibility to devise their own programs aimed at transitioning their caseloads into the labor market. As much as the states have the flexibility to devise their own programs, they are nonetheless required to operate within a set of narrow constraints that many may not be able to afford. For in addition to cumulative time limits, the denial of public assistance to legal immigrants, and the reductions in food stamps spending, the new law mandates that recipients will participate in work programs that states may devise any way they please. This paper examines the new welfare in the context of offering recommendations for improvement. As deficient as the new law may be, it nonetheless contains the potential to develop meaningful cooperative partnerships between the public and private sectors. The new law actually presents us with the opportunity to create new institutional structures aimed at generating greater employment. This would involve no less than breaking down bureaucratic distinctions between traditional welfare programs and employment programs. Rather the opportunity this legislation offers to the states to effectively create employment programs is an opportunity they should also seize to streamline programs already in place for assisting the unemployed with those for assisting welfare recipients. At the present time, bits and pieces are spread out among several different programs targeted towards different populations. As the new welfare requires the development of work-based programs the old distinctions between poverty and labor market, which have only served to stigmatize the poor, are no longer useful. The opportunity this legislation offers for improvement is perhaps an opportunity to move in the direction of a comprehensive employment policy if we as a nation are finally willing to make the commitment to pay for it.

Suggested Citation

  • Oren M. Levin-Waldman, 1997. "The New Welfare: How Can it Be Improved," Macroeconomics 9711006, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9711006
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 43; figures: included

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    References listed on IDEAS

    1. David Card & Alan B. Krueger, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 151-200.
    2. Hungerford, Thomas L, 1993. "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 403-417, December.
    3. Phelps, Edmund S, 1994. "Low-Wage Employment Subsidies versus the Welfare State," American Economic Review, American Economic Association, vol. 84(2), pages 54-58, May.
    4. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
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    JEL classification:

    • E - Macroeconomics and Monetary Economics


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