Since President Donald Trump released his budget, the left and the media have shifted into overdrive decrying his proposed welfare program cuts and work requirements. But if the country is ever going to see economic growth of 3 percent or more, we need people entering the workforce. And one place to find them is on the welfare rolls.
While the U-3 unemployment rate—the one most people are familiar with—is down to 4.3 percent, that only counts those who are actively seeking a job. If people have quit looking—and there’s a lot of them—they aren’t considered unemployed.
The St Louis Federal Reserve Bank’s labor force participation (LFP) rate tracks the percentage of the population working. The LFP remained about 66 percent or above throughout most of the 1990s, but peaked in February of 2000 at 67.3 percent.
It began declining with the 2001 recession, but leveled off at about 66 percent from 2004 to 2008. Then it began a precipitous decline to under 63 percent.
Economic growth rates during those higher LFP periods, excluding the recessions, remained equally strong. As Statista shows, the lowest rate of economic growth between 1996 and 2001 was 3.8 percent in 1996; 1997-2000 were all above 4 percent. And both 2004 and ’05 were above 3 percent—the last time we’ve seen that level.
It is significant to point out that those 1997-2000 economic growth rates came right after President Bill Clinton signed the welfare reform legislation that created a work requirement. As a result, those receiving cash assistance dropped from 12.6 million in 1996 to 4.6 million in 2012, according to the Washington Post.
However, several other welfare programs have grown dramatically.
If we are going to regain those stronger levels of economic growth, the country must have more workers. Immigration reform could provide them, but that effort appears to be stalled, which is why we need to turn to able-bodied Americans on welfare.
To be clear, no one wants the disabled and those with real challenges kicked off welfare.
But there are millions of people who could work but don’t because of various and sometimes multiple welfare benefits—perhaps combined with some off-the-books income.
When Oregon implemented a welfare-to-work demonstration project in Klamath Falls in the 1990s, administrators found that when welfare applicants were informed they would have to work for their benefits, roughly a third would leave, saying if they had to work, they’d find their own job. That opened up social worker time and resources to help those who really needed it.
More recently, the state of Alabama experienced an 85 percent drop in food stamp participation after re-implementing a work requirement.
We need to reincorporate “workfare” elements in welfare for those who do not have a job. The country and the economy need more workers who are paying taxes, not taking them.
June 6, 2017