American Dream

by Jason DeParle

  Skeptics viewed the rising work rates of poor single mothers as the ephemera of the economy. “Wait until a recession,” they said (at times too eagerly). Downturns always hurt the needy, and the 2001 recession did, though not as much as feared. From 2000 to 2002, the incomes of disadvantaged single mothers fell about 2 percent, after rising 17 percent over the previous six years. Child poverty rates rose by a half percentage point, less than a fifth of the average rise inflicted by the previous three recessions. The employment rates of high school dropouts held up better than those of college graduates. In part this may have reflected the shape of the recession, which spread its pain further up the income ladder than recessions often do. But it also suggested that the work habits of women like Angie and Jewell outlasted the business cycle. From 2000 to 2003, even as unemployment rates rose, the welfare rolls fell another 7 percent, which may either show the enterprise of the needy or the failure of states to serve them—and probably shows some of both.

  At the peak of the Milwaukee welfare wars, I took a drive around town with one of the city’s premier eccentrics, John Gardner, a school board member and lefty labor organizer, who had long called for abolishing welfare and replacing it with public jobs. While he found much to criticize in the bureaucratic blunders of W-2—“It works despite itself,” he said, an enviably succinct summation—he reveled at the sight of so many poor women groping their way into jobs. He likened the postwelfare years to the aftermath of slavery, when dispossessed families roamed the countryside wondering what, besides more hunger, their newfound freedom would bring. I silently dismissed the comparison as wild hyperbole; no welfare program ever administered the lash. I dismissed it but never forgot it, since it underscores the challenge of recognizing success when it first appears, cloaked in havoc and doubt. In the case of Emancipation, the trajectory of racial progress took roughly a century to come fully into view. In their first half dozen years off the rolls, it was easy to feel like nothing had changed in Angie and Jewell’s lives. But something had.

  The country knows now what it didn’t know a decade ago: that antipoverty policy can enjoy a measure of success. To borrow a diplomatic term, that ought to serve as a “confidence-building” measure that encourages additional steps. Clinton predicted that ending welfare would transform the politics of poverty, and on the surface at least it has. No one runs for office, as Reagan did, deriding Welfare Queens. “Welfare mothers make responsible employees,” claimed one public-service ad—unremarkable except for the pollster who helped design it, the former Reagan aide Richard Wirthlin. When I talked to Clinton in 2004, I asked whether his prediction of a new progressive politics had proved correct. “In some ways we’ll never know,” he said. “Because Al Gore didn’t win the White House and because the economy turned down . . . and because the whole political focus of America changed after 9/11. But I will say this . . . [George W. Bush] thought in order to win the White House he had to run as a compassionate conservative. He had to run bragging on the religious programs that help poor people and inner-city kids. And he had to go out of his way to say that he wasn’t a racist.” Clinton didn’t note, though he might have, what a contrast that had been from the 1988 campaign of the first George Bush, whose supporters sought to mobilize racial fears with images of the black murderer Willie Horton.

  Yet it’s hard to picture a radically new politics of poverty when politics remains so dominated by money and the poor so lacking in power. No matter how many double shifts Angie pulled, she couldn’t close the growing income gaps that increasingly define American life. The rising inequality has grown so familiar that it has lost its ability to startle. In the salad days of the 1990s, the incomes of the poorest fifth of American households rose 8 percent; the top fifth gained 40 percent; and the richest 5 percent gained 72 percent, to $434,000 a year. That meant the top 5 percent of Americans received a greater share of the national income than the bottom 60 percent combined. It may seem as though it were ever so, but that particular milestone wasn’t crossed until 1997, Angie’s and Jewell’s first full year off the rolls. Trading welfare checks for pay stubs, they staked a moral claim to a greater share of the nation’s prosperity—and entered an economy that gave the common worker proportionally less and less.

  “People who work shouldn’t be poor,” Clinton said. They shouldn’t have their lights shut off. They shouldn’t run out of food. They - shouldn’t have their wages garnished when their ulcers bleed. But low-wage workers have vanished from a domestic agenda that’s been dominated by a tax-cutting frenzy, mostly aimed at the same upper-income families who have enjoyed such outsized gains. (Congress cut dividend taxes.) Health care, child care, wage supplements, transportation aid—the rudiments of a package of workers’ aid aren’t hard to imagine. Just hard to enact, and even harder with the deficits the tax cuts helped create. Angie and Jewell finally got health insurance, through a Wisconsin program called Badger Care. In subsidizing families up to twice the poverty line, it’s an admirable example of helping needy workers and one that other states should follow. But the typical state Medicaid program cuts off adults well before they reach the poverty line. The number of child-care subsidies doubled, but between 50 percent and 85 percent of eligible families still receive no help. While Angie’s tax credits kept her afloat, Wisconsin’s state program was unusually generous; forty states have none. At $5.15 an hour, the real value of the minimum wage is lower than in 1950 when Hattie Mae was still picking cotton.

  The remarkable thing about programs of workers’ aid like these is how unremarkable they are: there’s nothing untested, nothing (except a minimum-wage hike) even politically controversial. The major impediment is cost. In 2001, Isabel Sawhill and Adam Thomas of the Brookings Institution came up with a plan for more child care, larger tax credits, and a $1 an hour raise in the minimum wage. They estimated it would lower the poverty rate by 2 percentage points. It would reach 20 million families. And since all the money would go to workers, it couldn’t be derided as welfare. Was it unrealistically expensive? Yes and no: at $26 billion a year, it cost less than half of what Congress spent to eliminate the inheritance tax, a benefit that almost exclusively accrues to the families of multimillionaires.

  The ultimate goal isn’t a safety net but a reduced need for one—to give families like Angie’s a chance at real upward mobility. Elevators are harder to design than safety nets, but there are obvious places to begin. The work-first emphasis on entry-level jobs outperformed earlier programs of lengthy, up-front study. But the bias against training has probably swung too far, especially in an economy that pays the unskilled so little. An Oregon program that mixed job search and training raised earnings twice as much as those that stressed immediate work. What if Mercy Rehab (which is owned by a chain, Extendicare, Inc., with 275 facilities and revenues of nearly $2 billion) let experienced aides spend part of the week training for better jobs? What if the government subsidized the cost? Another item for the mobility agenda involves literal mobility, helping inner-city residents physically get away—to the army, to Job Corps, to better neighborhoods. The famous Gautreaux program in Chicago quietly spirited inner-city families to subsidized homes in the suburbs, where their kids went on to college at twice the rate of those who stayed behind. Its successor, Moving to Opportunity, brought families better health, less crime, and improved behavior among girls. The success of the New Hope boys shows what a difference even a few hours of the right after-school program can make. A serious attempt to help the inner-city poor would also include the men. Some experimental programs have tried to raise their earnings and strengthen their ties with their children, and mostly the results have been disappointing. But so were those of welfare-to-work programs for women a generation ago. If calls to aid the ghettos once sounded dreamy, there’s a difference now: something finally worked. Or at least worked enough to encourage new attempts.

  Funding for the Personal Responsibility Act expired in 2002, setting up a long-awaited reauthorization debate. There were a
ll sorts of fights that George W. Bush could have led as a “compassionate conservative,” especially with the welfare surpluses gone and state budgets reeling. He could have brought health insurance to needy workers, increased on-the-job training, or extended a hand to inner-city men. He could have offered federal money for more after-school programs. (He tried to cut them.) If he was serious about helping the working poor, he could have created subsidies for states to create tax credits like Wisconsin’s. Instead, the debate that unfolded was both rancorous and obscure. Concerned that too many people on the rolls were idle, the administration sought to increase the “participation rates,” the share of recipients required to perform some sort of weekly activity. (Because of adjustments for caseload reduction, most states no longer had to meet a meaningful federal standard.) Idleness was certainly one problem, and federal standards may be part of the solution. But the Bush proposal was so extreme—with new caps on education and training and a 70 percent work rate that few states could meet—it left the debate paralyzed. Arguing, rightly, that more work would require more child care, the Democrats sought more money. The value of the block grant had eroded 30 percent, but the White House was adamantly opposed. As of 2004, the issues remained unresolved, and the states were operating on short-term extensions, adding uncertainty to their fiscal woes.

  For the most part, the discussion has occurred off center stage, with the country understandably focused on war and terrorism. The one Bush proposal to gain broad attention was the “marriage initiative,” a plan to redirect $300 million a year of welfare money into marriage-promotion efforts, ranging from advertising campaigns to courses on budgeting and conflict resolution. Much of the Left responded with derision, and the obvious criticisms were true: it was totally untested, the decision to marry is deeply personal, some communities lack marriageable men. But similar things could have been said about teenage pregnancy, which government and civic campaigns in the 1990s helped cut by 30 percent. Rather than dismiss it, why not see it and raise it one—with an equally large “fatherhood initiative” to help inner-city men find jobs and reconnect with their kids. One congressman did push such a bill a few years ago, and he was scarcely a starry-eyed liberal: Republican Clay Shaw, the House author of the 1996 welfare bill. (To skeptical Republican colleagues he asked, “Does anyone have a better idea?”) The lives of poor single mothers are too hard, the prospects for their kids too bleak, to write off the low-income family like a chunk of bad debt.

  The welfare revolution grew from the fear that the poor were mired in a culture of entitlement—stuck in a swamp of excessive demands, legal prerogative, social due. There certainly was a culture of entitlement in American life, but it was scarcely concentrated at the bottom (as anyone following the wave of corporate scandals now knows). What really stands out about Angie and Jewell is how little they felt they were owed. They went through life acting entitled to nothing. Not heat or lights. Not medical care. Not even three daily meals. And they scarcely complained. When welfare was there for the taking, they got on the bus and took it; when it wasn’t, they made other plans. In ending welfare, the country took away their single largest source of income. They didn’t lobby or sue. They didn’t march or riot. They made their way against the odds into wearying, underpaid jobs. And that does now entitle them to something—to “a shot at the American Dream” more promising than the one they’ve received.

  On a frigid afternoon in December 1999, Angie followed through with her plan to put Opal out. Opal’s mother took in the three older girls, and Opal and Brierra moved to a room in Bo’s cousin’s house. While Angie and Opal patched up their friendship, Opal’s luck expired. After an early labor, she delivered her fifth daughter, Myerra, and they both tested positive for cocaine. Opal acknowledged that she was essentially homeless and had been smoking crack for a decade, and the state took the kids. Myerra left the hospital for a foster home, and Angie took legal custody of Brierra to spare her the same fate.

  Losing one’s kids is the ultimate sanction, the death penalty of social work. So it held out the hope of shocking Opal straight, as her other calamities had not. The court told her that to regain her girls, she had to make regular visits, find a home, complete a treatment program, and pass drug tests. She failed on every score. Then she got pregnant again. Opal did go to an outpatient program, but the boy she dubbed “Little Bo” had cocaine in his blood, and Opal seemed especially dejected when the state took him away, too. In early 2004, the state was moving to sever her parental rights.

  With the loss of her kids, Opal finally lost her welfare check. She still had $5,000 a year in food stamps and, until he got caught with a stash of cocaine, she had Bo. As a repeat offender, he drew four years, leaving Opal to drift here and there, staying with whoever would have her. She has withdrawn from everyone, including me, but we did talk briefly after the birth of her son. At her request, I contacted a residential program that specialized in central city women. The director pledged to find her a spot, saying that Opal fit the profile—mid-thirties, lost kids—of many clients who turned their lives around. But Opal didn’t follow through. “I guess she’s just gonna be out here”—on the streets—“till somebody kill her, or she overdose.” Jewell said. “Is she hurting inside? If she’s alone, do she cry about it? I don’t know.”

  W-2 remained troubled, too. As the program imploded with scandal at Maximus and Goodwill, Tommy Thompson left for Washington and a job as secretary of Health and Human Services. Having shown so little oversight of his own program, he gained oversight of the welfare system nationwide. A commission arose to study the problems he left behind, but little became of its work. From 2000 to 2003, the unemployment rate in Milwaukee surged to 9.7 percent (compared with 5.3 percent when Angie and Jewell left the rolls), and the caseload nearly doubled to nine thousand—still just a quarter of what it had been a decade earlier. The agency heads demanded more money, amid the embarrassing news that they were paying themselves up to $200,000 a year. Despite the handsome pay, half the Milwaukee agencies failed to meet the modest new performance goal—moving 35 percent of clients into jobs—and a years-long academic study found that people who entered W-2 fared no better in earnings or employment than a similar group who did not. By its very presence, W-2 served as welfare deterrent. But for the average client, its services made no difference.

  Bleeding red ink, one agency (the YWCA) exited W-2, and another (UMOS) ran up multiple fines for casework failures. With only three Milwaukee agencies left, the regions were redrawn, and the Opportunities Industrialization Center—where I first glimpsed Opal spoofing the job interview—became the largest in the state. Then $270,000 of its funds were traced to the bank account of a disgraced politician. Former state senator Gary George pleaded guilty to federal conspiracy charges after acknowledging that he took the money (disguised as legal fees and routed through an attorney) while serving in a position to influence the awarding of welfare contracts. In OIC’s case, those contracts totaled about $140 million. In March 2004, the OIC president, Carl Gee, was indicted for his alleged role in the kickback scheme. Gee pleaded not guilty, and other OIC officials denied any wrongdoing, but the state stationed a full-time monitor on the premises. Like a gang-ridden school, Wisconsin’s largest welfare agency was being run with a cop in the hall.

  Jason Turner, W-2’s designer, moved on to the top welfare job in New York City and contracting problems of his own. Eager to put his stamp on the city’s giant system, he had the welfare agency issue a half-billion dollars in job-placement contracts through an expedited bidding procedure. The largest single piece, more than $100 million, went to Maximus, where George Leutermann was part of a corporate team that included one or two others with ties to Turner and that critics charged had gained an inside edge. The city comptroller challenged the contracts on the grounds of “corruption, favoritism, and cronyism,” and, with the process tied up in court, The New York Times reported that Leutermann, while seeking the New York business, had put Turner’s father-in
-law on the Maximus payroll. (He was a contractor on an unrelated project.) Upholding the contracts, an appeals court found that the city had shown “no evidence of favoritism” toward Maximus. But in letting family ties develop with a corporate suitor, Turner damaged his reputation and added to a controversy that shadowed the rest of his term. Amid the outcry and delay, Maximus wound up with a diminished role and was eventually eased out of the city, and Leutermann soon left the company. Turner finished four years in office that cut the rolls in half but raised, even more pointedly than in Wisconsin, the concern that his tactics—diversion and strict work rules—drove the needy away. He is now a consultant based in Milwaukee, with clients as far away as Slovakia and Israel; the latter country is setting up a version of W-2 called “Israel Works.”

  Farther down the bureaucratic chain, Michael Steinborn remained at Maximus, though he stopped working directly with clients. Burned out on their crises, he moved into a job trying to line up prospective employers. With his personal life in disarray, Michael saw welfare from yet another angle. He split up with his girlfriend, Jai, after they had a second child, who was born with severe medical problems and needed months of hospitalization. As a single mother with a disabled infant, Jai no longer felt able to work, and she went on W-2 herself. Michael said he felt ashamed to have his own children on welfare. But he also said the checks, with his child-support payments, helped nurture their daughter to health. “The irony kills me: I’m telling people this isn’t the way, and my own family ends up on the system,” he said. It was a fittingly equivocal thought from a man so ambivalent about the program he helped run.