NO MORE PITY FOR THE POOR YES, THE WELFARE SYSTEM IS BROKEN. BUT THE G.O.P.'S "TOUGH LOVE" REFORM WILL NOT REDUCE THE POVERTY RATE UNLESS IT CONFRONTS THE MYTHS ABOUT THE POOR.
By DENISE M. TOPOLNICKI REPORTER ASSOCIATE: LESLIE MARABLE

(MONEY Magazine) – If we have learned anything from the 30 years of frustration since we declared war on poverty, it should be this: You can't fix the problem if you don't understand it. Strategies founded on oversimplifications and outright myths about the poor not only don't work, they tend to do more harm than good.

Unfortunately, we seem destined to learn this painful lesson all over again. As it stands today, the Personal Responsibility Act, the welfare reform package that Republicans pushed through the House in late March, will increase the nation's poverty rate, not decrease it. Granted, the bill mirrors the concerns of taxpayers weary of flinging billions of dollars at apparently futile poverty programs. The bill's message is undeniably seductive: Guaranteeing benefits to the poor locks them into a cycle of dependency; now it's time for the poor to take responsibility for themselves. However, like other well-intentioned prescriptions before it, this new initiative rests on widely held but mistaken myths about the poor. Take a closer look at the bill's false premises:

The Great Society's war on poverty only made the problem worse. Not true. The poverty rate in 1964, the year President Lyndon Johnson formally promised to end poverty in America, was 19%. It's now 14.5%. True, the rate has risen from its historical low of 11.1% in 1973, but that's for understandable reasons: Since 1973 the value of both cash welfare benefits and wages paid to low-skilled workers has dropped sharply. The Personal Responsibility Act would do nothing to reverse those fundamental trends.

Welfare dependence passes from one generation to the next. For the most part, it doesn't. A 1994 study that followed 700 families from 1968 to 1988 found that nearly two of every three kids whose parents collected welfare benefits did not receive them as adults.

Welfare costs are a major tax burden on the middle class. They're not. A family earning $50,000 annually typically contributes roughly $615 a year-a mere $1.69 a day-to federal programs that support poor people, including the elderly and disabled.

Work is a guaranteed way out of poverty. In fact, people on welfare who do find jobs usually earn too little to support a family. Rebecca M. Blank, co-director of Northwestern University's Urban Poverty Program, notes: "Changes in the wage structure of the economy during the 1980s have made it increasingly difficult to escape poverty through hard work."

Case in point: welfare recipient Julie Turner of Kansas City, Kans., 28, a high school dropout (who later earned a GED) and single mother of four, who is pictured on page 130. To pull above the poverty threshold of $17,449 for a family of five, Turner would have to find a full-time job that pays at least $8.38 an hour. The problem is, she earns only $4.46 an hour working part time at a Salvation Army shelter. The most Turner has ever earned was $6.15 an hour at a cassette tape factory for about a year until she injured her back in 1994.

For resolving dilemmas like Turner's, the Personal Responsibility Act is a hopelessly blunt tool. Among other features, it would require welfare recipients to work (which, of course, Turner already does), cut off Aid to Families with Dependent Children (AFDC) payments after five years, prohibit legal aliens under the age of 75 from receiving most welfare benefits, slash Supplemental Security Income (SSI) benefits for mentally disabled children in low-income families and deny cash welfare benefits to unmarried mothers under age 18 and their children. The Congressional Budget Office estimates that the House bill would cause 2.8 million families to lose some or all of their welfare benefits.

Chances are, such strict rules would punish more people than they would prod out of poverty. Robert Haveman, a professor of economics and public affairs at the University of Wisconsin, estimates that only 10% to 15% of the families that would lose benefits under the bill would become self-sufficient. Another 75% or so would cope by moving in with relatives or friends. The remaining 480,000 to 720,000 families, the least capable of the poor, would end up swelling the already bloated homeless population of 350,000 or so to staggering levels.

Before we blunder into another doomed campaign against poverty, perhaps we should step back and ask ourselves some basic questions: Who are the poor? How much help do they get from the government? And what do they actually need to do to lift themselves out of poverty?

WHO ARE THE POOR IN AMERICA TODAY?

More than one of seven americans lives in poverty (39.6 million out of 253 million), including more than one of every five children. They do not earn enough to feed, clothe and house their families at a level defined as adequate by the federal government. The minimum income needed to meet these government standards ranges from a mere $7,363 for singles to $14,763 for a family of four to $29,529 for a family of nine or more.

Beyond these insufficient incomes, what unites America's poor is a set of stereotyped images that blend fact with myth. Three major assumptions are largely true:

The poor are less educated than other Americans. Only 56% of poor household heads are high school graduates, compared with 81% of all household heads.

Most of the poor don't work. Only 9% of poor working-age adults work full time, year round, compared with 42% of all working-age adults; 40% of the poor do work part time or part of the year, compared with 69% of all adults.

Most of the poor live in single-parent households headed by women. Just over half of the poor families (52%) in America are headed by single females, compared with only 18% of all U.S. families.

But four other typical characterizations are largely false:

The poor have too many kids. The average poor family receiving AFDC consists of 2.9 people. The typical American family: 3.2 people.

Most of the poor live in inner-city ghettos. Only about one in eight poor Americans lives in census tracts with poverty rates of 40% or higher.

Most of the poor are black. Although blacks are overrepresented among the poor, whites make up 67% of America's poor, compared with 83% of the overall population. Blacks, who represent 13% of the population, make up 29% of the poor. The black ratio has barely budged since the mid-1960s.

Poverty is a lifelong affliction. Studies show that while about a third of the poor are elderly or disabled and thus unlikely to climb out of poverty, one of every five poor people in a given year isn't poor the following year. Isabel V. Sawhill, a senior fellow at the Urban Institute, a nonpartisan think tank, estimates that roughly a third of the nation's poor remain impoverished only temporarily, owing to job loss, illness or divorce.

WHAT THE POOR RECEIVE FROM THE GOVERNMENT

Surprisingly, roughly a quarter of the poor don't collect any government benefits at all. Also, fewer than half collect the cash benefits most people think of as welfare: AFDC, which covers poor families with children, or SSI, which goes to the low-income aged, blind and disabled and is administered by the Social Security Administration. About half of the poor receive food stamps, 47% are covered by Medicaid and only 18% live in public or government-subsidized housing.

AFDC families tend to get the most benefits from the system. Although the average family of three collects only $414 a month, most also get food stamps and Medicaid. Each state, which shares the cost of AFDC with the federal government, figures out how much a family needs to live on by considering the local cost of food, clothing, housing, utilities and other necessities.

In theory, states are supposed to set benefits high enough to eliminate the gap between a family's resources and what they need to live an adequate existence. In practice, however, only a dozen states meet that standard. Average monthly benefits for a family of three range from $950 in high-cost Alaska (100% of local need) to $164 in Alabama (24% of need). All told, the average AFDC check today covers only 63% of what the states say their own poor families need for basic necessities, down precipitously from 92% in 1979. Therefore, it seems inescapable that handing states more control over welfare programs and cutting federal spending on such programs is likely to widen that gap. Says Sawhill of the Urban Institute: "States that are hard-pressed fiscally will have no option but to cut back welfare benefits."

WHY TODAY'S REFORM BILL WILL NOT HELP THE POOR

Should a bill resembling the personal responsibility Act pass both chambers of Congress (and also escape a presidential veto), here's what you should expect:

Few of the welfare recipients who work their way off the dole will also work their way out of poverty. Requiring welfare recipients to work is hardly a novel idea. For example, the Family Support Act of 1988, which was generated by a Democratically controlled Congress, called for slightly more than half of the nation's AFDC recipients to participate in state-run Job Opportunities and Basic Skills Training (JOBS) programs (those caring for children under age three, among others, were exempted). Four years later, however, only 16% of those eligible were participating in JOBS, chiefly because the states could not--or would not--allocate their 40% share of the expense to run the training programs. Despite the states' previous failure, the new House bill requires them to put half of adult AFDC recipients in single-parent families to work by 2003--and 90% of adult recipients in two-parent families to work as soon as 1998.

Moreover, two decades of experimentation have shown that it is extremely difficult to put AFDC recipients to work, and even harder to get them into jobs that can eventually lift them out of poverty. The fact is, about 60% of the women who leave the AFDC rolls do so because they marry or get back together with their husbands, not because they find jobs.

Under reform, states will skimp even more on welfare benefits. The House bill rolls dozens of welfare programs into four federal block grants that the states could spend more or less as they wish. Under these provisions, benefits including cash welfare payments, child-care subsidies for low-income families and foster care, as well as school lunches and other nutrition programs, no longer have to be made available to anyone who qualifies. Instead, states could turn down welfare applicants rather than increase funding for programs. Also, states would no longer be required to put up their own money to obtain federal funds, and federal allocations would no longer automatically increase if more people suddenly qualified for help owing to, say, a recession. Result: States would have little incentive to match their current levels of aid, let alone increase benefits.

Some children will lose disability benefits. Among the more controversial welfare benefits are SSI payments for children with mental disorders--about 61% of all children on SSI. While two out of five of those children are mentally retarded, many of the rest claim afflictions that are difficult to diagnose with certainty, such as attention deficit hyperactivity disorder. Aiming to eliminate families that are gaming the system, the Personal Responsibility Act will affect 225,000 children on SSI next year, either reducing their benefits or removing them from the rolls altogether. The Congressional Budget Office claims these cuts will slash spending by $10.9 billion over five years.

However, separating the deserving from the undeserving is extremely difficult, as President Reagan discovered when he unsuccessfully tried to slash the SSI budget in 1981. Says Christopher Jencks, a professor of sociology at Northwestern University: "The Reagan Administration didn't make an effort to find out who should be kicked off the rolls; the press publicized horror stories of deserving people who had lost their benefits, and the Administration looked terrible."

The teenage birth rate will not decline dramatically. The House bill orders states to deny cash AFDC benefits paid out to mothers under the age of 18, a move that would affect only 1% of AFDC recipients, some 47,000 women nationwide. The provision may not survive the Senate, however; it has already triggered protests among conservatives who claimed such actions would motivate more women to consider having abortions. In any event, there's no evidence that welfare policies significantly affect teen pregnancy rates, or birth rates. Under the present system, the teenage pregnancy rate rose by 23% between 1972 and 1990, but the birth rate actually fell by 2%, largely because of a doubling of the abortion rate among teenagers.

WHAT THE POOR SHOULD DO

No matter what happens in washington, if you are poor you can take these two positive steps to improve your life:

If you work, take the Earned Income Tax Credit. Enacted in 1975 to help offset Social Security taxes for low-income working families with children, the EITC was expanded and extended in 1993 to include childless low-wage workers. If the credit you are due exceeds what you owe the government, you get a check for the difference. In 1995, taxpayers with two or more children who earn up to $26,000 a year are eligible for the credit. (The maximum credit is $3,033 for those who make $8,425 to $11,000 and have at least two children.)

Get a solid education. Don't waste your time on vocational training or college courses that aren't likely to lead to a well-paying job in a promising field. Instead, learn from the efforts of Derek and Erica Weltz, both 22, of Scottdale, Pa., who are pictured with two of their three children on page 128. At 19, Erica became pregnant with twins. Derek, a student at Pennsylvania State University, considered dropping out of college in order to support his family, but he was persuaded by Erica to remain in school, even though it meant going on welfare. This month Derek graduates from Penn State with a degree in industrial engineering, a field in which starting salaries average $35,244. "We've made our mistakes," says Erica. "But we're taking care of ourselves so we can get off welfare."

Face it. If you're poor, the escape from poverty is in your hands, whatever shape welfare reform takes--or if the system hardly changes at all. You must do whatever is necessary to get the skills needed to support your family at a level beyond what the government says is adequate. By far the most important step is to further your education.

For the rest of us--those who want to assist the poor without dooming them to a life of dead-end dependency--the nature of the welfare reform we ultimately impose matters very much. For all the current welfare system's undeniable failings, says sociologist Christopher Jencks, "It's the cheapest system yet devised for taking care of children whose parents do not live together and whose mothers have few job skills." Before we throw that benefit out completely, we as a society ought to be absolutely certain we have a better idea.