tv Heritage Foundation Hosts a Discussion on Welfare Reform CSPAN August 17, 2016 5:10am-6:31am EDT
we are going to have to fill in. here --ou are all >> i was. --when we began yesterday's yesterday seem so long ago. when we began yesterday president clinton encouraged us to think about alternative views of the future and i came yesterday because i wanted to get a feel for this. i'd never been to a cgil that and i learned so much and i wrote a little story that is a we've of many things that i heard and then kind of my own imagination. i'm going to start taking us into the future. imagine it is somewhere 2020, 2025. here's tamika brown who works at detroit wire and steel. she leads a team that designs
and fabricates precision fittings for companies like shine nola, harley davidson, toyota, delta. she never imagined she would enter advanced manufacturing when she was a high school dropout she managed to get her diploma online and she started out at detroit wire and steel in a reasonably good job and entered their training program and learn advanced manufacturing. carlos rodriguez at mercy hospital in the dietary division . pretty lower-level frontline worker but he became concerned about the patient's that were not getting nutritious food, not getting their meals at times it made the most sense for the patients. he teamed up with the i.t. department at mercy hospital. he had the courage and ingenuity to do that and they created an app for the hospital for patients to be able to get food
on demand. that became a business that grew to hundreds of hospitals across the united states. dana hopkins, who lives in eastern kentucky. dana joined -- had an idea to become part of the coworkers hub. she hatched this idea of suitable, platform she developed with theming up national diaper bank she build a customer base of very -- of those who were kind of labeled serve, high to barrier employees, and created an online on-demand attire for business coaching and job matching service that is now all over the country. dana used the idea of this -- the idea of platforms in this rural eastern kentucky community that is now connecting people to jobs all over the country. so what do these people have in
common? what could they possibly have in common? summary and manufacturing, developing a platform company. they all in 2020+, they all love their jobs. moreover, they feel really confident in the jobs of a habit -- in the jobs that they have that they can put food on the table that they can put a roof over their head, that they can provide health care for their kids not just now in the job , that they have now, but throughout the trajectory that will have twists, stops, starts, on ramps and off ramps. they love their jobs, they feel confident in their jobs, they feel competent to navigate the twists, turns, and bends, they have the confidence to navigate that career, and they are not alone. the tide turned somewhere around 2018 where the conference board reported for the first time in the job satisfaction survey that
the majority of americans like their jobs, are satisfied with their jobs, and that was a big shift around 2018. the labor market participation really started to skyrocket, people felt great about what they were doing. this happened, a new generational shift, they had a different view a refreshing idea , of what business is and what accomplish.ld it made all sorts of things possible that were not possible before. the wealth gap that had been melting in america threatening our very social and economic fabric could not continue. we had to do something about it. the sum total of thousands and thousands of innovations, business operations, strategy innovations with companies like shinola showing us that good
business and good jobs really equate, and labor market organizations, they created a very different and very powerful approaches to provide more of a voice and consumer choice, really aggregating that and moving the whole structure of incentives that drive a lot of business practices, and finally -- not finally, but another piece is public policy, where our 20th-century industrial policies were retrofitted to fit a 21st century environment where that core compact of ensuring fair labor, worker safety, worker health, was not only secured but was strengthened in the context. framed by flexibility, mobility, very different framing. ensuring that security. finally, fundamental shifts in capital markets where investors, lenders, bank of california --
are you still out there? -- were looking at businesses, looking at the level of risk and the level of potential for businesses by virtue of the kinds of labor force practices that they maintained and were investing in companies to create good jobs because that was good for business and good for their bottom line. so these were the changes that happened. this is where we were, this is where we will be. i am going to dial it back now to the present. that is a little story about the future. dial it back to the present and look at one of the companies that in my little story about the future was influential in that future, and ask you, tom kartsotis, tell us now about shinola, why you created the company, give us a sense of the company, and then i will ask you another question after that.
mr. kartsotis: when i was in my early 20's in the 1980's, i started another company and took it public in 1993, and i continued to work there for a total of 26 years, and i had not really thought about what i was going to do when i left that job. i sat with my wife and my kids were teenagers and i asked her, do you really want to leave all this money to al these kids. ? [laughter] mr. kartsotis: the answer is no. sec. perez: your kids are watching, tom. don't forget. [laughter] mr. kartsotis: one of the things we thought was if we could build a watch factory in detroit and train 100 workers, it would create 100 jobs, and it would be a wonderful thing. we started to train be workers.
we had to actually build the factory before we had the concept that we could make a competitive product. march of 2013, proof of concepts. watch movement that we were making by quality. we needed to make watches to show our customers, the quality of what we could make. so we bought parts for 2500 of our original watch that would be coming in four months, and we run an ad in the newspaper asking customers to pay $550, four months in advance, for a watch nobody has ever seen before. it said shinola on it. so we did not really feel like we were going to sell a lot of watches. what we thought is that the parts would come, if the factory would go live, the workers would start working, and we would have something to show people the
kind of quality we could make. we were surprised when the watches sold out in a matter of a few days, and we abandoned the idea of making watches for other people and just started making -- started looking for other product categories that has some small, defined market where we could capital on innovation and perhaps expand and create more jobs. ms. dyer: so this was a big risk for you, tom. you had no idea where it was going to end up, but here you were, creating those watches with a bigger vision, which was to bring manufacturing to detroit and create good quality jobs. can you tell us a little bit about, would you describe a worker that is in your company, to give us a more concrete picture? i made up these workers, but a concrete picture of what a good worker looks like. from the point of view a worker. mr. kartsotis: the security guard in the building where our factory is is one of our line leaders. when you visited there was a pizza delivery guy that you met.
there is a girl and crystal who -- a girl named crystal who joined us in may of 2012 when we opened our factory, and she worked night spirit she was the janitor, and she cleaned the floors. president clinton was going to visit the factory, and we asked the president's handlers if we could get him a watch, and the marketing person told us yes, we could give him a watch. so which if we could we be honored to give the watch, and everybody was like crystal. i did not know her. evidently, she took the test to see if she could make the watches, a test that measures vision, patience, dexterity. she did well and became a line leader. they said, "you really do not know this story?" "no, i don't." they took me to a room that is probably 1500 square feet. at that time, there were 14 employees, and all these people now report to crystal, so in a matter of a few years, three years to be exact, she went from cleaning the floors at night to
now she has 26 employees and is an integral part of the company. so with the tour with president clinton at the end of it, i was , like crystal, tell him your story. so she goes through her story, and it was just the president and myself, and i could see that he was moved by the story, and it hit me that this brand is being built by the inside. there are plenty of stories just like that. ms. dyer: the brand is being built from the inside with this incredible talent you were being able to unleash. otherwise, people might have written crystal off, right? but here you are building this brand, and you recognized something in crystal that really made this all possible. secretary perez, you have been traveling across the country. you are active in all sorts of ways. you are active in the conscious capitalism movement. you have been looking at companies that have been doing the kinds of things that we see
at shinola. can you give us your picture of what you've seen in your travels of good companies, good jobs, what they look like, and why they do what they do? sec. perez: barbara, here is the bottom line -- you talked about a futuristic world, and other was listening to you, the future is now. i see this in my travels all across america. i was in pikeville, kentucky. coal country, we met 15 coal miners who had lost their jobs and probably were not getting them back, and they worked at a company called bitsource. it is a startup. we helped fund the training for these employees. i met people there who had never turned a computer on of their life. one was offered another coal mining position, and he said no. another guy had a screensaver shot of his one-year-old and he
said, when this little boy grows up and says "daddy, i cannot do , i'm going to you to look them in the eye and say "yes you can, because now i am a coder." another was born into poverty grew up in foster care, went , through the foster care system into the criminal justice system. she had a stick-to-itiveness about her. she got into an apprenticeship program and a stir test. they said she kicked butt. in a man's world, she got a job er and sheentice labor is building the light rail in crenshaw. when she went there, there is a photo of all the local labor building this light rail, and her son, and she sat in a box with the first lady a couple of years ago with the state of the union, and she took her kids to the site of where she works and
saw her picture, and her three-year-old said, "wow, mommy, you must be important," and the answer is hell yeah, she is important. what was the most important -- the most for filling thing, i after. she said, "my kid just turned 15, and i was able to get him a present." that is the dignity of work. i meet employers, not only time in detroit but go to detroit manufacturing systems. this is a place founded by a woman, a single mom, native american, she went from zero to 1200 employees, and she is now the largest provider. they make the consuls for the ford f-150's, the best-selling truck in america -- this is not an ad for ford, just a statement of fact. [laughter] sec. perez: some of her workers are veterans, some have a
criminal history -- all of them have talent. it really embodies the value of stick-to-itiveness. it embodies the values i see in the businesses i mean. -- businesses i meet. i was with farmers on the west coast, a project called the equitable form initiative, and i met with farmers, growers, i met with folks from costco and whole foods. it is a partnership between folks who understand the stakeholder model of governance. stakeholders are best served -- shareholders are best served when all stakeholders are well served, so when i go to costco, and my costco card is so old -- i had hair when i had that card! [laughter] sec. johnson: and when i buy strawberries at costco, i am excited about the fact that the person who picked those strawberries was treated fairly,
can feed his or her family, is not breathing pesticides. that is the stakeholder model of governance. [applause] sec. perez: so we need to scale it, barbara because while i see this, like the woman i met in the fight for $15 movement in detroit. the night before i met her she , had three kids in her car because her apartment was declared uninhabitable. so i see america at its best and there are days i see america at its worst, but i have unrelenting optimism. the wind is that our back. we need to make sure that results in shared prosperity for everyone. that is why the commitments that i see from businesses from , emerging people like rock and the domestic worker's reliance -- workers alliance and labor unions working in partnership ,ith the big three automakers so when they were at the existential crisis of 2008 they
, came together around shared sacrifice, and they has led to shared prosperity. i see it all around america, so that is why i am relentlessly optimistic, because i have met the workers that tom has talked about. ms. dyer: how do we lock it in, scale it up? what is in our way? sec. perez: in a little bit, tom. [laughter] ms. dyer: i know he would not have any problems. sec. perez: first, i think our public policy has to keep up with the changing times. i speak to so many people who rent or mortgage is less than the child care bill. i speak to so many women who are making remarkably unconscionable choices between the child that they love and the job that they need. i met a woman who is a bus driver in connecticut. i was with a congresswoman one
-- she had just given birth to her daughter, and two weeks after she gave birth to her daughter, because there is no federal paid leave in this country she had to go back to , work, so she got on her school bus with her two-week-old, strapped her in, and all the other little kids with the sniffles their moms and dads had to go to work. , we can do better than that. our public policy has to catch-up. we are doing every thing we can to make sure the people who work overtime get paid overtime, to make sure that people get a minimum wage because you know what, nobody who works a full-time job in this country should have to live in poverty. [applause] sec. perez: and what we are doing also, and the conscious capitalism movement, barbara, i spend a lot of time in business school. i spent time with the ceo of the
container store, a publicly traded company, who understands the stakeholder model of governance. i meet company after company, leaders like tom who understand that when my workers do well, i do well. and you can have shared prosperity. in fact, when you look at the best places to work in america, the fortune best 100, you look at the publicly traded companies that are there, they outperform their competitors by 2-1 and 3-1 because they understand that when you take care of your workers, you take care of your bottom line as well. we are building a movement. i may civil rights lawyer and a labor advocacy person, and this is about building movements. we build movements one community at a time. we marshal -- the collective power of we -- and i have seen this growing across this country, the conscious capitalism movement, and the understanding that we can do better. ms. dyer: what are the real forces and the incentives that
are going to drive the movement? we have seen a decline in labor unions, for example. they have been a major source in the last century for quality jobs. what is going to replace that? what is replacing that? you mentioned outperformance. capital markets, though, the noise that we hear, it really has not grown to a scale level, investing for the triple bottom line, but ultimately capital markets need to shift. how do you see that happening, and what are the forces that are going to drive this movement? sec. perez: the collective power of we. i have not given up on the labor movement. the labor movement gave us this the middle class in america, and we are fighting undeniable headwinds because places like wisconsin, they go after public sector labor unions. people like governor walker, his parents told him if you blow out your neighbors' candle, it makes yours shine brighter, so if i take way the teacher's pension,
then my neighborhood does not have a pension i have created an , equal playing field. you know what i say? if your neighbor does not have a pension, let's work to get them one, let's not take away my neighbor's pension. we have to work hard at that. in addition, we need to shine a light on people like tom, on companies like the container store, on companies like costco. if i had bought $1000 in costco stocks 20 years ago, i would be far wealthier than i am now because they understand the stakeholder model of governance. and our missing panelists, i feel obligated to speak to her, there is remarkably innovative organizing going on. she organizes the restaurant opportunity center, and what they are doing is shining a light on employers who understand that the high road is the smart road.
they are also marshaling the value laden judgments of millennials so that people can make informed choices. i know where i live if i know if restaurant a is mistreating its workers, and restaurant b is treating workers fairly, that is a data point that would inform my decision. as a result, they are marshaling that collective power of wisdom and empowering consumers to be conscious consumers. so i see that everywhere, and the fight for $15 movement, people laughed at that. "$15, that is pie in the sky!" we now have 20% of the nation's living in states or localities that have passed or will soon pass a $15 minimum
wage. it is more than a number. it is about the fight for dignity, it is about the fight for workers' voice, it is about making sure they have a seat at the table because if you are not at the table, you will be on the menu, and you have got to understand that. ms. dyer: i will have to remember next time to ask you a question about something you actually care about. [laughter] [applause] ms. dyer: i want to broaden the picture a little bit, and we have been in a number of settings together where the topic was the digital economy and the big economy and the independent worker economy, and i do not want to exclude you because i would love to hear what you have to say. but i think we would not have completed this conversation unless we brought that into the picture. what is a quality job in that world? so much of the context still is about the singular relationship between the employer -- like
shinola. give us your perspective on that future, which i try to paint in my picture. sec. perez: we had a three-day conversation called "the future of work," last december, and we have been doing a lot of work, senator mark warner has been doing a lot of thinking about this. the one thing about this is it is important to understand the current so-called gig economy is about the 1%, 1.5% of the overall economy. it is a conspicuous 1% to 1.5%. to keep inimportant mind that gig work did not just begin three years ago. anyone who was in the construction industry, it has been kind of a gig economy for a long time. it seems to me that the question presented is -- how do we accommodate the desire -- and it is an understandable desire -- for people to have flexibility and control over their own
destiny? what is the need for the social safety net because it is great to have flexibility and independence until you get in a car wreck, and then if you do not have workers comp or health care, you are kind of in a world of hurt. and that is why i have always been befuddled at republican opposition to the aca, because the formal care act is a linchpin of the gig economy because you can have portability. and i have been really appreciative of efforts that people like alan krueger of princeton and people like that who are talking about things like portable benefits. how do we build that social compact 2.0? i have more questions than answers about proposals out there, but it is a conversation that is important to have your
me, what we need to do is figure out what are our values, because we can have a conversation about whether we need an independent contractor versus dependant contractor -- i think what we ought to do is figure out what are our shared values, and then values can drive public policy. to me, the most important value is we welcome and embrace innovation. that has been who we are as a country since the beginning of time. what we to make sure is that the innovation that we are observing now in the on-demand economy benefits everybody, and if we don't have inclusive innovation, and just have innovation that benefits a few investors, then that feels more like a gilded age, which is not a golden age. ms. dyer: i am getting in serious trouble because they are saying please wrap. tom, one last -- secretary perez
talked about values, and i would not want to leave without acknowledging and appreciating the values represented in your endeavor with shinola and the idea of moving to detroit, bringing manufacturing into detroit, this huge risk that you have taken. so thank you for that. thank you all. i guess we have to stop. we could go on. [applause] >> a pastor who was arrested and released by zimbabwe's government this summer talked about political activism and government protests in his country. it is at 10:30 a.m. eastern. one announceson, he is seeking presidential pardon for his father's 1923 mail fraud conviction live at 1:00 p.m. eastern.
for our campaign 2016, c-span continues on the road to the white house. >> we need serious leadership. this is not a reality tv show. it is as real as it gets. >> we will make america great again. >> ahead, live coverage of the presidential and vice presidential debate on c-span, the c-span radio app, and c-span.org. monday, september 26, is the first presidential debate. on tuesday, october 4, vice presidential candidates mike pence and tim kaine debate at longwood university. on october 9, washington university hosts the second presidential debate leading to the third and final debate between hillary clinton and donald trump taking place at the university of nevada on october 19. live coverage of the presidential and vice presidential debates on c-span.
freen live on the c-span radio app or watch live or anytime on-demand at c-span.org. >> 20 years since president bill clinton signed the bill into law. a look back at the 1996 measure. the heritage foundation and the american enterprise institute posted this event -- hosted this event. >> good afternoon. welcome to the heritage foundation and our auditorium. for those online, we remind our internet viewers you are welcome to send questions and comments at any time. you can e-mail the speaker. check our cell phones and other mobile devices.
they have been silenced as a courtesy to our presenters. we are pleased to go host this program with our friends at the american enterprise institute and thank them for their special participation in this 20 year anniversary discussion. hosting our guests is jennifer marshall, vice president for the institute for families, community, and opportunity. to be a fellow here at heritage. she oversees our research on a variety of issues to determine the strength and character of american society. she edits our annual index of culture and opportunity, copies of which are available in the foyer for you that tracks key economic trends and indicators of economic opportunity and if america and whether they are on the right track. join me in welcoming my colleague. [applause] jennifer: thank you, john, and
thanks to you who could be here with us today in mid-august. we appreciate you making your way over. next monday, august 22, march the 20th anniversary of welfare reform. on that day back in 1996, president bill clinton signed the fiscal responsibility and work opportunity act based on a policy proposed by the republican congress in a 1994 contract with america. welfare reform has been widely hailed as one of the most significant domestic policy successes in the last half-century. participation in the temporary assistance to needy families program affected by the reform dropped by more than half. poverty rates among single to historic lows. for decades before the reform welfare dependence grew without , significant reduction of party rates. contrary to what president lyndon johnson hoped for when he enacted the original war on poverty programs back in 1965. welfare reform in 1996 was an
important milestone in the ongoing effort to help more americans overcome poverty and dependence on government welfare. recently, some have asserted welfare reform actually increased the number of people in the most dire straits. for example, authors catherine eden and luke schaeffer's a after reform more than one million families are surviving a lesson two dollars per person per day in america. today, our panelists will evaluate those assertions and explain why getting the facts right and learning the right lessons from the 1996 welfare reform are essential to building on its success for the good of more people. understanding the nature of poverty in america is essential to effectively help those in need, particularly those in the most extreme need. our panel today includes three leading experts on the subject.
robert rector is the senior research fellow here at the heritage foundation. he is a leading national expert on welfare in poverty and he played a major role in the 1996 reforms. his work focuses on a range of related issues including how the erosion of marriage has contributed to poverty. dr. bruce meyer's mccormick foundation are better at the university of chicago school of public policy studies. he holds a phd in economics from m.i.t. and his research focuses on poverty and inequality, tax policy, and government safety net programs such as unemployment insurance, food stamps, and medicaid. he evaluates the accuracy of various government surveys relevant to our questions here today. we are particularly grateful dr. meyer was willing to rearrange his vacation plans to make a detour and be with us today. robert is the fellow in party poverty studies at the american
enterprise institute. before joining, he was the commissioner of new york city's human resources administration. the largest local services agency in the united states. he administered 12 public assistance programs. prior to that he was the new , york state commissioner of social services and helped to make the state a model for welfare reform implementation. his comments will help us focus on what this debate means for the pilgrimatic level. without further ado, really you join me in welcoming robert rector. [applause] mr. rector: ok. 20 years ago next week bill , clinton, president bill clinton signed the welfare reform act that changed the program and notably imposed work requirements on some of the
recipients for the first time in the history of the welfare state. at the time the act was signed, the left basically said it would cause an immediate and drastic increase in poverty in the united states. they predicted 1/5 of all families with children would have substantial drops in income. some 2.5 million people would quickly be thrown into poverty. senator daniel patrick moynihan at the time infamously predicted this act would leave children sleeping in the streets, scavenging in garbage bins, and being picked up frozen in the morning. those doomsday prophecies were quickly put to rest when the act very soon produced record drops both in black child poverty and poverty among single mothers. that sort of clamor has remained quite silent for many years now.
close to two decades. very recently in the last two or three years, essentially the moynihan claims have been resurrected. there is a new group, particularly the book "two dollars a day" by catherine eden and mark luke schaeffer planning claiming that while poverty may have gone down, there is a group of the very bottom that is in very dire conditions with 3.5 million children living on less than two dollars a day. that is the third world global poverty level. 4% of families in any given month are down in these dire conditions. bloomberg goes as far as to say they are millions of american families whose incomes are lower than disabled beggars and in ethiopia. we will examine the truth of that assertion during this panel. let's start by getting the slide .
there we go. this is the case load in blue. the line on the left, the second line is welfare reform in 1996. at the height of that program we had roughly one in seven children in the united states enrolled in it. welfare reform comes along and by imposing work requirements onto the caseload, they caseload -- the caseload quickly drops by 60%. the left said that would result in a disaster. let's look at that, at what the consequences were. before that if you have a handout, we need to review very briefly three concepts about poverty we will be talking about today. the first is normal, official poverty which for a family of three is around $19,000 in
income or expenditure per day, which translates to $17.44 per person per day. we also have a convention called deep poverty, which is having the income around $9,000 per year and around $8.75 per day. finally, we have the concept that has recently been introduced into the debate of extreme poverty, which is roughly 1/10 of the official poverty level. it is less than $2000 per year and about two dollars per person per day. the claim before us is that 4% of all families with children in any given month have incomes that are down at this extreme poverty level, which would be considered poor by a global un standard.
we can look at a simple official poverty based on income over the last 20 years. the columns on the left in the red is pre-welfare party. -- poverty. those are families -- let me back up for a 90% of the second. caseload in the population are single parents. if you want to judge the impact, you have to look at the impact on the poverty rate of single parents. that appears on the left of the chart. we see over the last 20 years it , based on income that the official poverty as a client -- has declined welfare by about 3% for this group, after welfare by about 4.5%. the right-hand column is interesting because these are households without children, . this is based on the normal current population survey. over the last 20 years in households without children, a group completely unaffected by welfare reform, official party
poverty has gone up both before welfare and after welfare. sort of exactly the opposite of the normal narrative which is that somehow welfare make things worse. welfare seems to have made single parents better off than the rest of the population. now, eden and schaeffern take a survey called the survey participation. they look at that and find in that survey they can find a population that appears to have less than two dollars per day per person in income. that same survey also provides a lot of other data. the next thing i did was to take the exact population that allegedly lives in extreme poverty on less than two dollars per person today and look at what the same survey tells us about how those families actually live.
what we find is when we look at the population that they defined as living in extreme poverty, we see in the survey 86% of the households in extreme poverty have air-conditioning and their -- in their houses or apartments, two thirds own a computer, 90% have a cell phone, and about 88% have a dvd player or digital media recorder or some similar device. we go to the next chart, and we see in the same survey, if you ask these families who are allegedly subsisting on less than two dollars per day, at any time during the previous four months did you often not have , enough food to eat? 1% of the population in extreme poverty says they often did not have enough food to eat. despite the fact they allegedly have two dollars per day in income, only 1% of them were evicted from their houses or
apartments during the previous year. if we look closer at food consumption, this is the survey. that tiny orange sliver. 1% said they often didn't have enough food to eat in the previous four months. 8% said they sometimes didn't have enough food to eat. over 90% said they always had enough food to eat during the previous months. purple says we would've liked to have better food, but they certainly had enough food eat. what is this? how can these households have income less than two dollars a day, but they all have air-conditioning and computers and dvd players and enough food to eat? the answer to that is the government survey measures income very badly. they have done this all along. they particularly measure badly at either tail of the income distribution.
when you are talking about a group that allegedly in extreme poverty, they are way down in the tail of the distribution. the simple fact of the matter is that when the surveys asked income and the family is getting welfare or is off the books earnings, they don't tell you about it. on the other hand, you could ask them how did you spend money? , they tell you something very different. they will tell you in every government survey for decades when you look at poor people, they report spending at least $2.40 for every dollar of income they apparently have. why should the expenditure data be better than the income data? the expenditure data is very detailed. they don't just say how much did you spend this month? how much did you spend on tunafish? it is very detailed. they spent several hours making these expenditures. when you look at the families in
extreme poverty, what you find is they are in fact spending $25 for every dollar of income they have. what we did was go to another survey called the consumer expenditure survey. we looked at every record of every family with children for the last 30 years based on their quarterly reported expenditures. this was 270,000 observations. on the basis of those 270,000 observations, we found 60 that reported spending less than two dollars per day. 60 out of 270,000. based on self-reported expenditures, although they are trying to tell us one in 25 families tries to live on two dollars a day, based on their reported expenditures the
, number looks like that. one family out of every 4400 are spending less than two dollars a day. most of those families reside in public housing where they did not have to pay rent. why is there this huge disparity? the part of the reason schaeffer eaton get large numbers they have is when they say 3.5 million children, they basically don't count any welfare as income at that point. food stamps are not counted. tax credit is not counted. once they count income, it falls down to about 1.2 million children who have less than two dollars a day. the problem is they are using this data which is fairly normal. when you look at the data, what you see is like most government surveys, welfare benefits are grossly underreported.
on a typical month, the survey is missing over 20 million benefits per month that we know are paid out by administrator tive records but are not being picked up as benefits received. what they are doing is using a survey which is missing 20 million welfare benefits every month and concluding there are roughly 1.2 million children who don't have any welfare that month. it makes absolutely no sense at all. you can't possibly use a survey that has gross reporting gaps to try to make these very tiny calculations about people, the number of people that don't have welfare. it is more or less as if you took what they are reporting as not conditions in the real world, but simply gross underreporting gaps in the survey. it is like someone who is a pair -- has a pair of glasses with
cracks in it. they look out on the world and they confuse the cracks in their lenses with reality. they look up and say this guy is -- the sky is full of figures sures and it looks like it's about the fall. it is not out there in the sky. it is right there in the survey instrument. another way of characterizing this is if you use the instrument for the services, it is like trying to use a fork lift for brain surgery. it is radically cannot do this with the survey. when you go to the consumer expenditure survey, which is much better about picking up the actual resources of the families it shows you a very different , picture. very briefly, i will go to that. this is consumer expenditure survey data going back to the late 1980's. the red line is welfare reform. the green line is the official poverty rate based on expenditures for single-parent families. the group affected by welfare reform.
what you see is quite contrary to conventional wisdom. the official poverty rate, about $17 per person per day, drops dramatically after welfare reform and continues downward until the great recession which is the gray bar on the left. where it starts to go up again. that is largely due to the weak economy and not welfare reform. interestingly, the blue and red lines at the bottom, the red line is married families with children, a group largely unaffected. their poverty rate is largely unchanged during this period and the blue line is households without children. again, their poverty rate measure is largely the same. this does not seem to be a general economic factor. it does not seem to be anything in the consumer expenditure survey. it seems in the group affected by welfare reform, you have a substantial downward trend in
poverty. the final chart, this is deep poverty. we can't measure extreme party because it is 60 out of 270,000 observations. it is effectively zero and you cannot have trends in zero. you can look at this list of the conditions which is families that don't have two dollars a day, but they have about $8.50 per person per day. about half the party level. -- about half of the poverty level. the red line is welfare reform. the green line is single parents with children. what you see is a steady and substantial decline in deep poverty for single parents with children that starts with welfare reform and the overall deep poverty rate is substantially lower and continues downward until the great recession, where it kind of levels off and grows up slightly.
a very substantial decline. that can be compared to the red and blue lines that are two groups unaffected by the welfare reform, the deep poverty rate for those groups has essentially remained unchanged in the same period. this is exactly the opposite story you are getting from the left at the present time, which is that somehow after welfare reform, deep or extreme poverty went up in particular for the group affected by welfare reform, single parents. when you look at the consumption is exactly the opposite. to summarize, when you look at the survey data that is being used to proclaim children live with less than two dollars per day the actual living conditions , in those families in no way resembles anything that would be considered extreme deprivation. they look like fairly ordinary poor families.
when you look at consumption, you see these families are spending over $20 for every dollar of income. when you look at 30 years of consumption data, you can virtually find no families whatsoever that spend less than two dollars per day. when you look at the trend lines, what you see is in the group that is supposedly victimized by welfare reform, both regular party and deep poverty have been going down relative to the rest of the population. the key idea of welfare reform was that welfare should not be a one-way handout. able-bodied adults who receive benefits from the government should work or prepared to work as a condition for receiving aid. over 90% of the american public agrees with that assessment. when it was put into effect 20 years ago it not only reduced
dependency but it also produced poverty. -- reduced poverty. the problem is we reformed only one program out of 80. it is time to take the same principles and apply the more broadly. jennifer: thank you, robert. >> you are going to hear that i'm going to echo many of the themes that robert has emphasized. i will have a little bit of a different take in terms of what were the policy changes. i need to get my presentation up.
ok. great. so we are here to talk about the 1996 welfare law and extreme poverty. i want to begin by putting the 1996 law in perspective. it was part of a long list of policy changes that i have put on this slide roughly in chronological order. one will have a distorted view if you look at just the single program because the safety net is constructed from a large set of programs. those that were previously on one program now are often on different programs. now, as a result of these changes, changes in the ei gc, medicaid expansions, food stamps replaced by staff, general
assistance expanding. as a result of these changes we are spending more than ever. here we go. we are spending more than ever on those at the bottom. this slide indicates expenditures in 1996 and 2011. those were the years that are emphasized in the eden and schafer work. they say welfare is dead. by that they mean there isn't much being spent on welfare. well, if you take a look at these numbers, you see that we
used to have a bunch of $20 billion programs. now snap is three times that big. ssi has doubled. unemployment insurance at the time they were looking is more than four times as big as it was in the earlier years. eitc has more than doubled. i didn't put down numbers for the child tax credit, or medicaid, child tax credit one from zero to $30 billion. medicaid went from about $150 billion to $300 billion. i think it is fair to say that the reports of the death of welfare is greatly exaggerated. when the popular press and even my academic colleagues look at poverty, they tend to look at income. to measure income we rely on the current population survey or
cps, or the survey of program participation. the cps is the source of our official party numbers. it is the source of the data used by eden and schafer. these surveys are so flawed for poverty measurement that they should be abandoned and less linked to a ministry of data. you heard a version of that from robert rector and i will emphasize that as well. using a slightly different analogy than he did, income surveys are measuring costs riddled with holes. the holes are the benefits and other transfers that are not reported in the survey. and if water is leaking, it often makes a family appear poor , even though they really aren't. inill go into these claims
detail shortly. let me launch into some good news. the consumer expenditure survey provides actual living standards and indicates what people are actually spending on things like food and housing. it reflects cash transfers from others in savings. in work i have done with jim sullivan, we find strong evidence that low consumption is more closely associated with deprivation and low income. looking at consumption gives you a better idea of people's living standards. what i am going to show you is what we call well measured consumption, rent, utility, gasoline, percentage of the value of cars and rental of homes. rent and food at home, that they consume it home, are the ball and those are fairly easy to
report. people know the rent. people know about what they spend each month on groceries bills. here is the pattern of spending by single mothers. we focus on single mothers since they are most affected by welfare reform. here i am reporting the spending by households adjusted for inflation and family size. this figure shows the changes since 1990, when welfare reform was just getting started at the state level. what you see is that consumption at various percentiles, the top two percentiles here are the fifth and 10th percentile.
consumption at each of the percentiles went up steadily. at the bottom, it went up by 50%. leveled off around 2008 and it is at 50% higher than what it was in 1990, when welfare reform at state level was getting started. we see clear evidence that those at the bottom are not being left behind. there is strong evidence that the numbers that they relied on are probably wrong. when i showed you is consistent with evidence from other sources. if you look at the biggest expenditure of households, housing, you can do that with the american housing survey. if you look at the bottom 20% of single mothers, which is a group
well below the poverty line, their living unit has more rooms, or square feet, more bedrooms and more likely that their conditioning and other appliances than it did when welfare reform was passed. leaks and peeling paint are down. we see that living conditions in very clear objective measures show that those at the bottom are doing better than they were when welfare reform was passed. what are the problems with the income data i am telling you to dismiss? well, if the people know longer want to report their income to household surveys, so if you look at the cps, the source of official income data, 63% of
general assistance recipients to do not report that they receive. 44% of those getting general assistance in the report, 61% of getting pension income do not report. unfortunately, we do not have comparable sip numbers. probably a lot of people that report. 43% of recipients do not report in the cps, and a substantial share of other program recipients do not report since becoming program participation. these problems are getting worse, which is important because one of the emphases in the eden schafer work is how the number of people who are living on two dollars a day is going
up. what i think the evidence indicates is going on is that there are bigger holes in the data. since 2000, on average, we missed about 36% of tennis dollars, 39% of unemployment insurance, 46% of workers compensation program in the sip and the trend is that about seven percentage points, in addition, our missed every 15 years, and this has been a long-term trend going on for about 30 years. 15 years is the period in which eden schafer are looking. those numbers that i just reported are including dollars
that the census bureau imputes or guesses at, and that has doubled for most programs since 1990. if you look at tanner -- our main welfare program, i have already told you that about one third of people do not report their benefits at all. of those that are reported a recorded in the survey, 40% of those dollars are guessed at the census bureau. only 41% of the dollars reported en and survey that ed schafer use or reported directly by recipients. the others were either completely missing or made up by the census bureau. the evidence i just went through
shows a failure to capture government programs, but what about informal transfers from families and friends? those are harder to capture. let me quote from the introduction to kathy eden's first book. "making ends meet shows that almost all poor singles mother supplement the regular income with some combination of off the books employment and money from andtives, lovers, the fathers of their children. few keep a record of such income, even if they knew the annual total, it were not necessarily reported to the census bureau." so those are sources of income that we really are not ever going to get with income data, but with consumption data, you have a chance of looking at something that reflects those
sources of income. when people in the past looked at the bottom of the distribution, they tended to ignore the data, at least for the bottom few percent, so blank and cheney, for example, argued that those data are likely to be errors and we should ignore them. if you do a calculation similar to what robert prechter did, but you look at the bottom 5% of the income distribution of single mothers, and you look at their spending, this is not going down quite as far in the distribution as he did. you find that their spending average is 6.3 times their income. their spending is about the 40th percentile, even though their income is in the bottom 5%.
now -- eden and schafer do? they used income data that i have already told you you should ignore and robert has emphasized as well. they repeatedly make choices that exaggerate extreme poverty, and let me go down the list. first, they do not count any kind of transfers. they used a short time period in the worst month and the compare a boom. to the bottom of the worst recession since the great depression of 2011. the use of price index that overstates inflation, so the income cutoff if it rises too fast, and they do not look to see whether low income means low
spending means really a low standard of living, and most importantly, they use broken income data that is beyond repair. so where does that leave us in terms of reform? let me just mention this briefly, existing block grants may be insufficiently responsive to economic downturns and provide states too much spending latitude, but that is an open question. worker requirements probably could be improved. besides family living standards and work, we should also be thinking about nonmarital fertility, which is way too high. unfortunately, we lack good evidence that making welfare more work centered decreases nonmarital fertility.
but even small reductions would be important given the costs of nonmarital fertility that are so high. ok. concluding, i think we could cap productive discussion about how the safety net, including the program, should be reformed, to ensure that work is encouraged, but statements about the rise in extreme poverty are based on faulty data and should be dismissed. conservatives should acknowledge that our programs have reduced deprivation, but liberals should knowledge that we are spending more and more and not all are -- not always spending it well. let me stop there and that robert continue. >> thank you.
>> thank you very much for having me. it is a great honor to be here and i want to thank you, robert, for your work on this over many years. as jennifer said, i would like to bring the perspective of the practitioner, the former welfare commissioner of new york, and how to react between back-and-forth between scholars and data and poverty rates? i will tell you it plays a large role in our life. that welfare commissioners like myself and in new york have to worry about conventional wisdom the common wisdom, the media , wisdom, about the data. to the extent that there is a misleading perception driven from one important work, it can be a real problem. it is important that we have work like bruce's and robert's and others and have called into question this perception that
those at the very bottom and in the wake of welfare reform are worse off than they were. my conclusion after looking at it is that a fair reading would conclude it is not true. that welfare reform to not increase poverty among the very poor and single household homes in the united states. allowing that perception to be part of the dialogue severely undermines credibility of people who in other circumstances would want to say we have to file the evidence, a attention to the data, have evidence-based policymaking. from my perspective, it is important that we get fair, careful, the role -- thorough readings of this not driven by ideological objective to tarnish or undermine the undoing of the cash entitlement that came with welfare reform in 1996, and i think to some degree that is what it is about. that there is an element that was never happy with the ending
of the cash welfare entitlement and they would like to find ways to bring it back. the second point i went to mention is one that was echoed in both presentations, and it is sometimes not clearly understood, and that is the role in the broader statement. it is a small program among many others. as bruce said, we assist people in need through jobs programs, snap, public health insurance, child care tax credits, subsidies, the long list, and in understanding or discussion of safety net policies for the poor, the very poor, need to take into account the role that all of those play. in most of the time, commentators on both sides, when they want to reduce material hardship or increase work, will talk about how all of the things have led to reduction of poverty, except when their
objective is to tarnish the program. all of a sudden, all of the burden of responding to recession falls on the temporary assistance for new families program, which is only a small program affecting certain population. that reminds me. when i was commissioner in new york city at the beginning of the great recession and i remember one of those meetings where the deputy mayors called together the key players and wanted to know, what are you going to do? things are getting bad. what are you going to do to respond to the need that is going to come because of the recession? we went around the room and those who talked about unemployment insurance talked about that, the person who did me, talkedstamps, about that. and i talked about what we would do in public health insurance, we talked about that, and someone said, what about the program? i said, we will see because part of what happens when a recession
hits is people seek assistance for the need they have at that time given their circumstances, so many people go to unemployment insurance first and that is all they need. then they might need snap and then they might need public health insurance or they might get a tax credit benefit that allows them to muscle through a difficult time. it takes a long time to have to turn to the cash welfare program. the use of the data where people say in the wake of the recession, it barely budged, therefore, it was unresponsive or the safety net was unresponsive but it is false. it is not consistent with the way the programs work. people work through these programs to the extent that they need them and the program is the last stop on the bus and not necessary because of the programs rush to their aid in their wake. i do have one small quibble with robert rector and i hesitate to say this, but one of the distinct missions in the language we use, did you notice robert says post welfare poverty
and pre-for welfare -- pre-welfare poverty. word welfare to apply to all forms of assistance. that is correct. in the world i come from, there is a distinction between what we would call cash welfare and what we would call work support. the theory is, whether you buy it or not, is that something is welfare and has a negative connotation when it doesn't support working people, when it supports able bodies that not working. when it supports them, that is cash welfare and that is what we reform as welfare. the other forms of assistance are work support. they may also undermine the work incentive. they may have consequences that are not necessarily good, but the idea of other forms of assistance that increase wages, call not what we often welfare. i did want to make that point because in the distinction, we need to understand that we reformed one program and we
expanded a lot of others. bruce made that point. some of those do not promote work to the extent that they should we should be talking about that. we should not be talking about undermining or changing the program that helps lead a lot of people into work and out of poverty. the next one i want to make has to do with a term called disconnected moms. in the language, the popular language that comes out of works like cathy eden's and schaeffer's, there is a lot of misinterpretation. in some respects, i think intentional. two dollars a day, when you read book, they're talking about cash. they are not counting the various forms of other assistance. the connotation that comes with that when you talk about disconnected mom is that they are out there somewhere, not earning are having no source of income with children in the house come -- in the household
no one is caring for the and there is no connection to the safety net or to caregivers or government officials, and the fact is it is not true. every single one of the disconnected moms is on snap. they are on a large federal program on the state or local level the issues that the card to buy groceries, with which they can buy groceries, and it comes every month and there is engagement with the caseworker, and virtually all of the children are on public health insurance, which requires the same sort of connection to a large part of our safety net. the tragedy is not that they are on their own and attended to. to.n the 10th -- unattended the tragedy is that the programs to which they are connected is turning a blind eye to the fact that they say i have no means, i have no other income, just give me food stamps. to me, that is tragedy and we ought to be talking about why those programs do not respond to
that situation, which is very easy to discover by going out and reaching out and talking about ways we can get them into the labor force. instead, the common response among some is that let's fix that program so they can get cash, too. it will be still be in as bad shape but certainly not disconnected in any case. let me put that in more detail. i ran the tanf program in the state and city of new york. it would be very easy for me in new york and easy in my judgment for virtually any administrator of the food stamp program to ask their data people, produce a list, working age, nondisabled, households with children in them, adults that report no earnings. give me the list by zip code. give me the list by city, county, any kind of subdivision, and then you would have in your
hand this list of disconnected moms, these folks who are apparently far worse off, and he would know and you would have their address, phone number, and you could go out and do something about it. even better, perhaps, you could report your activities to the federal government and say, what have we done? now, it is not a requirement are encouraged and we do not know to what extent agencies that have a connection to the families and people that are worried about this group to the extent that they exist could do something about it and i think that is a shame. we could do a lot more there and we will be listening to the language and we are not clear about what it really means. public has a different perception. about how ant problematic person -- system
would react to this. it has to do with the successes of the welfare act of 1996. people on the left and right all agreed that for large personnel -- portion of the recipients in single-parent on the cash welfare system, and robert deserves a lot of credit for making it happen. the introduction of those requirements led to them, going to work, increasing income and reducing poverty. they chunks, so even when you -- a chunks -- big chunks so , even when you read in literature from progressive left, big knowledge. yes, our program has to a lot to help the working poor and the working poor's poverty rates have gone down, so they'd acknowledge it knowledge that, and then they turn to this issue concerning the other group.
that happens a lot because a new design a program, you will often have the person there, deeply compassionate, as i am, helping people in need as people in this this is definitely have, who will say what about this definitely have. and you are designing a program to make sure that nothing bad happens at the lowest common denominator. when you do that, when you subsidize or design a program that provides an entitlement without expectation, you'll get more people taking advantage of that entitlement without expectation. and you will get less work and all of the benefits that you derive them introducing the workplace program will be gone, and you have to be careful about that. one of the greatest aspects of welfare reform that i do not think it's enough attention, if said in the weight the previous cash in a way that the