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Study: Welfare reform worked

By M.D. Kittle 

Wisconsin Spotlight | Oct. 27, 2020

MADISON — Work requirements tied to a Wisconsin welfare program have expanded the state’s workforce, according to a new study by the Wisconsin Institute for Law & Liberty. 

Wisconsin’s 2015 FoodShare reforms that mandated able-bodied adults without dependents either look for a job or enroll in a job-training program have increased labor force participation by nearly 0.6 percent — since 2015. 

“Working with a reform-minded Legislature, we enacted bold policies in Wisconsin that led to more people working than ever before, and public assistance that was more like a trampoline and less like a hammock,” said former Gov. Scott Walker, who helped lead the welfare reform measure. “This serves as proof that there is no limit to what hard-working families in Wisconsin can do when they are given the dignity of work and a chance to be part of a growing economy.”

The Republican-led 2013-15 biennial budget included the reform package that required FoodShare (Wisconsin’s food assistance program) recipients to seek 80 hours per month of work or receive job training to be eligible for benefits beyond three months. 

WILL’s study, titled “Back on Their Feet: The Success of Welfare Reform in Wisconsin and Other Midwestern States, analyzed 10 Midwestern states using data from 2008-2019 to determine the effect of work requirements on state-level unemployment rates and labor force participation. The analysis used control variables such as the size of the labor force in the state, the population, the number of African Americans, and the average age of residents of the state.

The study found four Midwest States — Wisconsin, Iowa, Missouri and Indiana — that enacted welfare reforms experienced, on average, more than half a percentage point decline in unemployment. 

Other findings include: 

  • Work requirements brought a significant number of people back into the labor force. This study estimates more 28,000 in Wisconsin entered the workforce, as a result of the reforms, between 2015 and 2019. The study also estimates 15,324 people rejoined the labor force in Iowa, 29,885 in Missouri, and more than 32,623 in Indiana due to similar reforms.
  • Work requirements led to an increase in labor force participation. The four Midwest states (Wisconsin, Iowa, Missouri, and Indiana) that enacted welfare reforms experienced, on average, a 0.62% increase in labor force participation. 

“The evidence in this study suggests that policymakers can successfully tailor government policy to incentivize increases in labor-force participation and transition people back to work,” said Will Flanders, director of Research for the Milwaukee-based Institute for Law & Liberty.  “As the threat of the virus hopefully shrinks, policymakers should keep these lessons in mind to incentivize work and spur recovery.”

As Flanders notes in the study, Gov. Tony Evers rolled back Wisconsin’s FoodShare reforms during the 2019-21 budget cycle. Using his expansive line-item veto power, he nixed the requirement that individuals with school-aged children seek work in order to receive benefits. 

“This veto rolled-back a later Walker reform that added parents to the list of those required to seek work, but the requirement from the 2013-15 budget that those without children work remains in place,” he wrote. WILL’s research, Flanders concludes, provides evidence that rolling back the welfare reform provision would have a negative impact on the long-term health of the state’s economy. 

“Getting people back into the work force after the coronavirus will be challenging, and the food stamp system should not represent a roadblock between employers and potential workers, but instead aid in getting people back to the daily grind,” the report asserts. 

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