The Economy Nosedives, The Poor take the ‘Hit’

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A story in today’s New York Times comports to something many Sacramento poor and homeless people are experiencing or are well aware of: As the economy contracts, the poor are taking an inordinate and unconscionable share of the ‘hit.’

The article, “Welfare Aid Isn’t Growing as Economy Drops Off,” begins with these words: “Despite soaring unemployment and the worst economic crisis in decades, 18 states cut their welfare rolls last year, and nationally the number of people receiving cash assistance remained at or near the lowest in more than 40 years.”

What is the culprit for this contra-intuitive development? Welfare rolls getting cut as the economy tanks!? Answer: State and local discretion in how to respond to growing hardship. Or, more simply, the lack of political influence poor people and their advocates have.

Temporary Assistance for Needy Families [formerly, “welfare”; aka, TANF], which provides cash assistance to indigent American families with dependent children, is supposed to be a vital social safety net. Rules were tightened by legislation a Republican congress passed in 1996, and which President Bill Clinton signed into law. It is only now, with the economy in a tailspin, that we see the true effect of the harsh legislation from 13 years ago.

Quoting the Times article,

Even some of TANF’s staunchest defenders are alarmed.

“There is ample reason to be concerned here,” said Ron Haskins, a former Republican Congressional aide who helped write the 1996 law overhauling the welfare system. “The overall structure is not working the way it was designed to work. We would expect, just on the face it, that when a deep recession happens, people could go back on welfare.”

“When we started this, Democratic and Republican governors alike said, ‘We know what’s best for our state; we’re not going to let people starve,’ ” said Mr. Haskins, who is now a researcher at the Brookings Institution in Washington. “And now that the chips are down, and unemployment is going up, most states are not doing enough to help families get back on the rolls.”

The program’s structure — fixed federal financing, despite caseload size — may discourage states from helping more people because the states bear all of the increased costs. By contrast, the federal government pays virtually all food-stamp costs, and last year every state expanded its food-stamp rolls; nationally, the food program grew 12 percent.

The clashing trends in some states — more food stamps, but less cash aid — suggest a safety net at odds with itself.

It is hard to parse data from the article and other online sources for just California – but here is what SacHo found:

According to a graphic display that ran alongside the article, California’s foodstamp program saw an increase from Oct07 to Oct08 that was between 10 and 20%, whereas with cash disbursements, where the state had discretionary control, there was only a 6.3% increase using the same periods of comparison.

In the county of Sacramento, basing information on the 11th page of this county document, state aid to the county for welfare programs will decrease from over $900 million in the 07-08 Budget to $872 million in 08-09, a decrease of 3.2%.

Meantime, federal aid will increase from $613 million to $652 million, an increase of 6.2%.

The information that we find supports the Times article's thesis that state and local government load the pain of an economy in decline onto the poor, who have little political clout. Even as the poor are increasing in number, it is they who take a forehead-whacking, inordinate 'hit.'