Is the End of the Welfare Class in Sight?

Virginia’s welfare caseload has declined by more than 50 percent — to 36,000 — since 1995 when welfare reform took hold. Many former recipients still rely upon government largess such as food stamps, Medicaid, child-care subsidies and energy assistance averaging $3,700 per family per year. But they are increasingly self sufficient. Those numbers come from a JLARC study, “Self-Sufficiency Among Social Services Clients in Virginia,” reports Stacy Hawkins Adams with the Richmond Times-Dispatch.

Virginia ranked No. 1 nationally among states based on the proportion of welfare recipients who entered the workforce in 2004. But the situation is far from perfect: Virginia ranked only 48th nationally for increased earnings for welfare recipients, the study noted.

It would be wonderful if everyone in Virginia could earn enough money to climb above the poverty line and become totally self sufficient. That isn’t likely to happen any time soon. Only 54 percent of those surveyed had high school dipomas or GEDs. The occupational prospects for high school drop-outs will only get worse as occupations in the U.S. economy become more and more knowledge-intensive. But the situation is vastly preferable to what it was before 1995 when some welfare mothers never left a state of welfare dependency.

Hopefully, we’re witnessing the shrinking away of the multi-generational welfare class and, with it, a cultural change among Virginia’s poor that will better equip them to participate in mainstream society.


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10 responses to “Is the End of the Welfare Class in Sight?”

  1. Chris Brancato Avatar
    Chris Brancato

    Jim,
    Nicely done…

    You might want to look at this article:
    http://www.washingtonpost.com/wp-dyn/content/article/2005/12/12/AR2005121201515.html

    Here’s my conflict: if our Commomwealth’s Medicaid population is increasing at a rate of 8% per annum, I can’t see how the study can conclude the number of dependant people of the welfare class are less. I seem to recall those numbers are increasing at near double digit rates…

    I guess it’s a matter of definition but on first pass, it doesn’t add up. Figures lie and liars figure? It still doesn’t pass my smell-o-meter.

  2. Jim Bacon Avatar

    Chris, You raise a good point, and I don’t know the answer. I’m only guessing here: If the Medicaid population is increasing at 8 percent per year, that increase is coming from the elderly indigent population, not the working-age poor. Also (just guessing) when the JLARC study speaks of a decline in welfare rolls, it might be referring specifically to Aid to Families with Dependent Children. Apparently, people working for minimum wage can still qualify for social benefits such as Medicaid. Therefore, the ADC rolls could shrink even if the Medicaid rolls are not.

    Perhaps a blogger with a more intimate familiarity with these issues can illuminate.

  3. SouthoftheJames.com Avatar
    SouthoftheJames.com

    Jim – On a technicality, AFDC was done away with during welfare reform, and TANF was the new program (Temporary Assistance to Needy Families). TANF applied the 5/2 time limit (5 years total over a lifetime, 2 years consecutive max), and instituted the work requirement. AFDC/TANF is what most people commonly think of as welfare for the “welfare class.” However, if you look at the totality of government social supports, it’s more complex. Medicaid & CHIP (child insurance) are for poor families, many of whom are actually working poor. Elderly are primarily covered under Medicare, with most also being on Social Security. The Medicaid roll increase is partly due to the prevalance of low-wage jobs without health coverage. Food Stamps is also a program available on a sliding income scale, and a lot of elderly folks are on Food Stamps.

    One of the newer criticisms of Wal-Mart (one that has actually some hint of truth), is that the jobs of that firm and others like it often don’t provide health insurance and pay just enough to keep folks off TANF. Combine that with the lower-end wages offered in retail, and increased cost of living in most metro areas, and you get a lot of working families – 2 parents working retail for minimum wage – that are on Medicaid, Food Stamps, CHIP and other programs. However, they aren’t on TANF, thus they aren’t considered “welfare class” folks.

    It would also be interesting to see the concentration of welfare recipients who live in rural VA. Because of the tanking rural economies, many people with skills (yours’ truly) left rural VA behind for better opportunity. I would venture to guess that the welfare declines are also related to people moving to better opportunities.

    Welfare reform shifted the economics of poverty away from multigenerational dependency to more of a fluid model. As such, the program, as currently constructed, is a much better model that is more closely aligned with notions of self-sufficiency in the context of our capitalist market structure. We will always have poor people – deserving and undeserving. The key is to get to the point where poverty is not permanent for a particular class of people.

    — Conaway

  4. Virginia Centrist Avatar
    Virginia Centrist

    Woah woah woah guys, hold your horses.

    The Medicaid rolls aren’t growing by 8% a year – the payouts are growing by 8% a year. And that’s because of skyrocketing healthcare costs.

    As far as falling welfare rolls go – I’d give some credit to reform (changing the culture) but most credit to the booming Virginia economy. Has any other state in the union grown as Virginia has over the past 10 years? You’ve got huge IT growth in NOVA, huge expansion of the Federal Government…

  5. James Atticus Bowden Avatar
    James Atticus Bowden

    If a minimum wage worker kept the full 12.6% of the social security tax in a private savings account, making one per cent less than the average increase of the stock market, that worker – even if he never get more than minimum wage – would retire with a nest egg over $400k (constant dollars) and three times the annual pay out that he would get on socialist, ponzi-scheme social security.

    Maybe our Congressional caucus could get a Virginia exemption for up to a certain wage income – like the Galveston exception to SS.

    It doesn’t solve the medical problem but goes a long way to solving the senior poverty problem

  6. SouthoftheJames.com Avatar
    SouthoftheJames.com

    The reality of welfare is that for most people, it’s a time-limited option. There were very few “welfare queens” from the get-go, but their stories were trumped up by the media and politicians. The problem for Virginia’s economy is that the economic growth is so heavily concentrated in NOVA. Even in Metro Richmond and Hampton Roads, the economic growth isn’t astronomical. In rural VA, the economic trends are flat (at best) or downward (at worst).

    As for Medicaid, I was talking to a banker today who agreed with me that the health care crisis will only be averted (and by extension avoiding a socialized, nationalized system) if the corporate community bands together to push innovation and demand change for health insurers and pharma firms. This must be coupled wiht a focus on prevention (granted, the HSA post is the better venue for that piece) and lifestyle changes, particularly among the poor, that can be helped by better education of all forms.

    — Conaway

  7. Medicaid eligibility is a complex issue, see, http://www.cms.hhs.gov/medicaid/eligibility/criteria.asp for a complete description of eligibility criteria.

    There are some groups that must be included in state plans for the plans to be eligible for federal funds (SSI recipients, children under 6, pregnant women, some Medicare recipients, etc) ans some that may be included, the “categorically needy.” Then there is the option to include “medically needy.” This is where the CHIPS program falls (children under 18 and pregnant women who but for income/resources would be categorically needy).

    The complexity of the rules is why a significant percentage of the cost of Medicaid is eaten up by administrative costs.

    But, let’s be clear, Virginia’s reimbursement rates for providers in the program are low, and Virginia’s spending on Medicaid is not what anyone would call excessive.

    Here’s what the Virginia Hospital and Health Care Association says about Virginia’s Medicaid spending:

    Virginia is a prosperous state. It has the 7th highest median family income, the 8th lowest percent of population in poverty and the 11th lowest unemployment rate among all the states. Yet its support of health care for its most vulnerable citizens is among the worst in the country. Specifically, it:

    · Has the 44th lowest spending per Medicaid recipient, because its rates are so low.

    · Has the 40th lowest average growth in spending per Medicaid enrollee.

    · Has the 50th lowest percent of total health spending attributed to Medicaid.

    · Has the 44th lowest number of Medicaid recipients as a percent of population.

    More at http://www.vhha.com/index.cfm?fuseaction=Page.viewPage&pageID=220

    Now that we will have a nurse/hospital administrator as our Secretary of Health and Human Resources, perhaps we’ll have a more informed debate about the realities of the program and our spending vs. the expectations of Virginians when it comes to health care.

    As the Hospital and Health Care Association has reported:

    “there is a major “disconnect” between the value that Virginia’s citizens place on health care and the value that its state government places on these services. Simply put, Virginians rank health care as the second most important issue facing the state (only education ranks higher), yet Virginia consistently ranks 47th or below in health care funding per capita. If budgets are our clearest statements of priorities, then Virginia’s budget does not reflect what its citizens are saying.”

  8. James Atticus Bowden Avatar
    James Atticus Bowden

    CG2: The disconnect between 7th richest and 47th on spending is based on the good judgment of Virginians. Healthcare is not a core function of limited government.

    Can’t find it in either Federal or Commonwealth Constitutions. Limited governments don’t fund healthcare. Good governments can promote the the common welfare by taxing less and letting contributions for voluntary communities of family, faith, work and neighborhood to one another’s healthcare be tax write offs.

    Supporting lifelong HSAs and what I call “Commonwealth Trust Accounts” to empower citizens to save (and enjoy the voluntary contributions of loving, caring others) for their own care using their own free will -should be a goal for Virginia.

  9. Lucy Jones Avatar

    Mr. Bowden,

    Are you saying that your idea of what Virginia should do is to not fund healthcare and let the poor receive health services by depending on voluntary contributions of loving, caring others?

  10. James Atticus Bowden Avatar
    James Atticus Bowden

    Lucy Jones: I propose a series of safety nets. The last one is the government.

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