Bryan G. Pfeifer
January 12, 2002

Wisconsin Fails

Wisconsin Works doesn't work

Report confirms failure of Wisconsin welfare reform known as W-2

MILWAUKEE, WI -- A report issued Dec. 23,2001 has confirmed what many critics of Wisconsin's welfare reform program known as Wisconsin Works (W-2) have long charged: that although carefully concealed by politicians, big business and the corporate media, W-2 has led to a catastrophic social crisis not seen in Milwaukee in decades.

On a daily basis the poor in Milwaukee, including thousands of children, face packed emergency shelters in the midst of a Wisconsin winter, bare food pantry shelves, and emergency rooms for lack of health insurance as a direct result of the failure of W-2, concludes the report Passing the Buck: W-2 and Emergency Services in Milwaukee County.

The report documents that since the implementation of W-2 on September 1, 1997, private non-profit programs and churches "are providing the only safety net for many families in need."

"Low-wage employment and problems with the W-2 program and its implementation have resulted in a growing number of persons who rely on emergency programs to meet their families' most basic needs," states the report.

Issued by the Interfaith Conference of Greater Milwaukee, the Center for Economic Development at the University of Wisconsin-Milwaukee, and the Institute for Wisconsin's Future, Passing the Buck tracks three primary areas from 1995-2000 vital to a satisfactory standard of living: food security, housing, and health care. The report concludes with numerous policy recommendations. A copy of the report can be downloaded at www.wisconsinsfuture.org.

Key findings of the study include:

Food-related referrals to community hotlines increased by 136 percent between 1996 and 2000.
A 49 percent increase in the number of people served by food pantries over the five-year period.
Referrals to emergency shelter by the centralized shelter hotline increased 53 percent between 1998 and 2000.
Overflow homeless shelters served three times as many people per night in 2000 as in 1997. Emergency shelters are operating at capacity almost constantly. The gap between demand for emergency shelter and available space has increased by 406 percent since 1997.
The amount of charitable health care provided by area hospitals doubled between 1995 and 1999 and the number of unpaid medical debts rose 82 percent.
Only 15 percent of congregations believed the situation has improved for families since 1995; 87 percent of respondents reported receiving the same or more requests for assistance in 2000 compared to 1995.

The report's authors underscore the fact that these numbers were compiled during an economic upswing. Under the current recession, officially in effect since March 2001, the authors are foreseeing a possible epidemic unless immediate action is taken.

"Despite the economic expansion of the past few years, congregations have found themselves doing more and more to meet the basic needs of low-income families," said Marcus White, Executive Director of the Interfaith Conference of Greater Milwaukee and report co-author.

"We're in a recession now, which means people will need more help and congregations will be in more of a pinch. We really need to ask ourselves if we want a society where people work hard all day at low-wage jobs and then have to ask a church for food each night to feed their kids," said White.

The implementation of "welfare reform"

Under the national Welfare Reform Bill signed by former Democratic President Bill Clinton in August 1996, Aid to Families with Dependent Children (AFDC), a guaranteed federal entitlement program in effect for over 60 years, was dismantled. AFDC was replaced by a time-limited, work-based act entitled Temporary Assistance to Needy Families (TANF).

TANF lifted most federal mandates on all 50 states thereby allowing them to develop their own workfare (not welfare) programs as they came to be popularly known. Under AFDC states were required to abide by strict federal mandates.

With TANF, up for Congressional reauthorization this year, states were allowed to create their own limits and programs with a bare minimum of federal oversight and regulation. Currently, the maximum lifetime limit for TANF benefits is five years. If a recipient uses up this time he or she is on his or her own to survive. States are allowed to choose their own limits if they are below the five year TANF one. Wisconsin's is two years.

Policies directed at altering traditional US welfare first gained a foothold in the early 1990s in Milwaukee, home of the $700 million arch-conservative Lynde and Harry Bradley Foundation. The richest and most influential of the conservative philanthropic foundations, Bradley funded the notoriously racist book "The Bell Curve," helped implement school vouchers, funded the movements that overturned affirmative action in California and Texas, and, through the Hudson Institute, underwrote the development, implementation and evaulation of W-2.

The foundation's overall objective is the complete reversal of all government programs benefiting the poor, working and middle classes, including public education.

Wisconsin became known as a national leader in welfare reform by implementing a pilot program, "Pay for Performance," in 1996 as a precursor to the 1997 national legislation. This program created incentives for county welfare agencies to reduce caseloads. Much like the later W-2 program, Pay for Performance's success was predicated simply on how many people could be dropped from welfare and not on their quality of life after leaving the program.

With the beginning of W-2, Wisconsin created the most demanding workfare program whereby private agencies with multi-year state contracts replaced counties and the state in dispensing services to W-2 recipients.

The private agencies, according to numerous investigations by the Milwaukee Journal Sentinel, other media and community organizations, benefited from this because profit motives were built "into the contracts that rewarded agencies for providing minimum levels of service," according to Passing the Buck.

This, coupled with a lack of federal and state oversight, has created a program rife with heart-rending consequences for thousands say activists, critics and many W-2 recipients themselves.

W-2: A failing program

The facts presented in Passing the Buck bolster claims and similar work done by W-2 critics, who for years have stressed that privatizing social services like AFDC would result in untold devastation to Wisconsin, especially to women and children of color who live in poor Milwaukee communities.

Critics of W-2 have also argued that the program was created to secure a reserve pool of cheap labor for major corporations and non-profit service agencies. They further argue that those in power used W-2 to batter down other long-held government-controlled institutions like public education.

Passing the Buck verifies the grievances of W-2 recipients and their supporters by illuminating the onerous guidelines and other negative provisions of W-2 that, despite small concessions, have been largely ignored by the state and by Milwaukee County.

Features of W-2 include the aforementioned time-limits, a "job ready" category that enables W-2 providers to deny services to anyone deemed employable, state policies that direct W-2 agencies to divert people from applying, forcing applicants to seek help from family, friends and neighbors before processing their applications or requiring a 60-day job search, and limited options for pursuing education or skills development.

With state contracts stipulating that private agencies administering W-2 are to receive bonuses for reducing welfare "rolls," the number of Milwaukee County W-2 recipients has declined 63 percent from 36,155 in 1997 to 13,351 in 2000. Various private agency executives in Milwaukee have received six-figure bonuses and other perks such as vacation packages for moving people off W-2, despite clear evidence that these individuals needed more help.

Reducing numbers does not equal "success"

In fact, as Passing the Buck documents, many former W-2 recipients were pushed into low-wage, non-union seasonal or service-orientated jobs. In their rush to garner profits, the agencies instructed their social workers who met and interviewed recipients to deny aid such as food stamps, childcare and bus passes.

Additionally many W-2 recipients have issued grievances about the demeaning and erratic attitude of social workers - who themselves are being forced to shuffle recipients out of the program despite real and justified needs. This has been confirmed by a variety of independent sources, including the Milwaukee Journal Sentinel.

The implementation of W-2 also made it more difficult for people in Wisconsin to enroll in federal entitlement programs like Food Stamps and Medicaid. The conservative Hudson Institute itself concluded that 71 percent of former W-2 recipients (who it could identify) still live in poverty.

Most glaringly, the agencies weren't able to track all the former recipients. Thus, various research has found that, at most, two-thirds of those who've left AFDC or W-2 since 1995 have become employed; the rest are simply unaccounted for. The State of Wisconsin freely admits that it can't determine their whereabouts or well being.

W-2 proponents claim that simply reducing persons from W-2 is a success regardless of their quality of life after leaving the program.

Critics claim that this is a shallow outlook and one that ignores enormous institutional social barriers such as discrimination based on class, sex, sexual identity, and race, and the political/economic context in which W-2 was created and continues.

Passing the Buck

The report's data was compiled by conducting five confidential interviews with directors of community service agencies in the areas of food security, housing, and healthcare, and a survey of 157 Milwaukee-area congregations to determine services rendered by faith-based organizations and how emergency services changed from 1995-2000.

The report's goal "was to assess how families are meeting basic needs in the absence of AFDC, to determine whether community organizations have experienced increased need during the implementation of welfare replacement, and to evaluate the sustainability of work-based, time-limited cash assistance."

The report's findings can be summed up by congregation survey respondents and two examples.

Noting that the majority of those in need are single women with children who simply couldn't survive without help to meet basic needs, one congregation respondent said this situation was caused by,

"The disaster of the W-2 program and its lack of real success. There are many people who have received no real assistance. Expectations [of the agencies] are ridiculous in some cases. Families are doubling up and doing without especially healthcare.

The numbers of poor and working poor have jumped substantially. People are moving out more often leaving in their wake chaos and unpaid bills simply because they can't pay for utilities, etc.,"

Many of the report findings are actually worse than described.

One example is evictions. Because evicting tenants can be costly and time-consuming, most landlords find other means to evict them, thereby overriding the legal process. Tenants also leave apartments when they can't make the rent. Therefore housing stability is difficult to quantify. Even the rather conservative Apartment Association of Southeastern Wisconsin, a local association of landlords, admits in a 1999 handout that the number of tenants that vacate immediately prior to a formal eviction process at four to eight times the number of actual evictions recorded.

Another area that keeps the poor in debt is the hospital emergency room, documents Passing the Buck. Lacking insurance or denied Medicaid or other healthcare relief by a W-2 service provider, a recipient has no choice but to use the emergency room, not only for crises but for basic medical care, especially if one has children.

This leads a poor recipient with a low-wage job, or no job at all, mired in an often-unrecoverable cycle of debt causing untold social and psychological consequences for the individual and society, a subject that has not yet been adequately quantified by any study.

Perhaps the most shocking statistics in the report fall in the area of housing, which is especially critical in wintertime here in Wisconsin.

"Since January 1997, the American Red Cross and Interfaith Conference of Greater Milwaukee have operated an Emergency Overflow Shelter for women and children. In 2000, the shelter opened four times as many nights in 1997, and the number of women per night nearly tripled. The difference between demand for and availability of emergency shelter increased 406 percent between 1997 and 2000." states the report.

Furthermore, on a freezing mid-December night last month, the Milwaukee Rescue Mission, an overflow shelter often used only as a last recourse, was completely full for the first time in its decades-long history.

"This research shows how changes in the welfare system have affected

Milwaukee's communities," said Dr. Kathleen Mulligan-Hansel, of the Institute for Wisconsin's future and report co-author.

"Since welfare reform was implemented, communities have stepped in, investing more in programs to support low-income families. We should be asking if this system is sustainable or if there is a natural limit to how much community organizations can do."

A human face and solutions

Passing the Buck concludes with a call for immediate and long-term solutions on the state and federal level beginning with a restoration of a government safety net and, eventually, an end to privatization of government services.

"Observers and policymakers should question the sustainability of a system in which private organizations take responsibility for providing basic support to low-income families and families in crisis. As the experiment with welfare reform evolved, the government 'passed the buck' to community services. Evidence in this study demonstrates that it is critical for the government to reclaim responsibility for maintaining a safety net for families in crisis," concludes Passing the Buck.

The report's recommendations include:

Improving access and removing barriers to existing support programs such as Food Stamps and Medical Assistance;
Fully funding existing work supports, and removing onerous user fees and co-payments for working poor programs like BadgerCare;
Modifying or eliminating time limits, especially for families that are in compliance. Saying time limits are "arbitrary" and "punitive" and don't take into account recessions and depressed labor markets, the authors demand that time limits must be relaxed especially for those in compliance and those with multiple barriers;
Strengthening education and training provisions. Because education and training are critical to a satisfactory standard of living and "prevent a lifetime of low-wage work, federal TANF policy should provide support for them [W-2 and other state workfare recipients] to increase their skill levels so they can move out of poverty."
Ensuring access to work supports. The authors state that since fully funded work supports like healthcare, childcare and Food Stamps are vital to the working poor they need to be adequately funded. They argue that this in turn will relieve pressure on community services and organizations that are now overwhelmed by attempting to meet the basic needs of the poor.
Restoring benefits for legal immigrants. Under TANF, legal immigrants are denied access to Medicaid and Food Stamps. The authors demand that this racist provision be rescinded immediately.

In a press release announcing the findings of Passing the Buck, Pamela Fendt, of the Center for Economic Development at UW-Milwaukee and report co-author, stressed the need for urgency in implementing these recommendations.

"At the state level it is critical to make it easier for families to access basic supports. When W-2 was implemented many families lost their Food Stamps and Medicaid-the very programs that were meant to ease their transition to work or augment low-paying jobs," said Fendt.

"In addition, the safety net features within the W-2 program need to be improved."