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Evidence Counters CEA Claims on Work Requirements

July 30, 2018 at 4:15 PM

Several recent studies counter the Council of Economic Advisers’ (CEA) recent claims that proposals to take away people’s SNAP (food stamps), Medicaid, or housing assistance if they don’t meet rigid work requirements would “be a beneficial way to increase work participation among non-disabled working-age adults receiving assistance from non-cash welfare programs.” Those studies also cast real doubt that work requirements will boost employment.

That’s because the CEA report mischaracterizes several highly regarded academic studies, ignores the realities of the low-wage labor market, and paints a misleading picture of basic assistance programs, the people they serve, and the ability of proposals that take away people’s basic assistance to increase work.

Contrary to CEA claims, multiple recent studies find that many people who are most likely to need assistance from programs to help them meet their basic needs are workers, but the low-wage labor market is characterized by job volatility, higher unemployment, and less job stability.

  • In a new analysis, economists Kristin F. Butcher and Diane Whitmore Schanzenbach find that a large share of the people who would face SNAP or Medicaid work requirements already work, but they also experience high levels of job displacement and unemployment, and their wages have grown little. A related brief explains that these findings suggest that some workers may struggle to find jobs that are stable enough to enable them to meet such work requirements on a consistent basis.
  • In another study, Economic Policy Institute (EPI) researchers find that the CEA paper’s key assumptions underlying work requirements — including that all adult participants in programs like SNAP and Medicaid who would face work requirements can find stable employment — don’t reflect the low-wage labor market. Like Butcher and Schanzenbach, the EPI researchers find that low-wage work is unstable, with 1 in 10 workers who earn $10 an hour moving between employment and unemployment or out of the labor force each month (compared to 1 in 25 workers who earn $20 an hour). They identify several job characteristics — low wages, lack of benefits such as paid sick leave and health coverage, limited flexibility or control of work hours, and unpleasant or dangerous working conditions — that contribute to employment volatility.
  • Urban Institute researchers also find that the labor market’s changing nature — stagnant wages for less-educated and low-wage workers, less access to employer-sponsored benefits, fewer safeguards for workers, and variable or non-standard work hours — means that work alone doesn’t always create economic security and keep poverty at bay.

Data from Arkansas’ first month with Medicaid work requirements show that they create bureaucratic barriers for individuals who already work or qualify for an exemption, and they do little to encourage work.

  • More than 7,000 of the 8,000 beneficiaries required to report work or work-like hours through the state’s online portal in June didn’t report and will lose coverage if they have two more months of non-compliance. (Another 18,000 were determined by the state to be exempt from reporting because they have a dependent child or had recorded earnings of at least 80 hours times the minimum wage or they self-reported an exemption.) Many of those who didn’t report were likely working or qualified for an exemption, but they couldn’t navigate the complex program rules, didn’t receive notice that they’d be subject to the work requirement, or struggled to report through the problem-riddled portal.
  • Just 94 beneficiaries successfully navigated the online portal and reported 80 hours of work or work-like activities for June. That implies that the work requirement influenced just 94 beneficiaries (assuming none of them were already working, which is unlikely) to participate in work or work-like activities in June.

Finally, the Niskanen Center described the CEA’s case for work requirements as “unconvincing.”

  • Niskanen’s analysts say they find the CEA claims troubling in part because its report pays no attention to benefit recipients who don’t qualify for disability benefits but who report illness or disability as their reason for not working. A recent Brookings Institution report lends support to this concern: employment among individuals reporting a disability is low only 40 percent of all people and 31 percent of people with a high school diploma or less reporting a disability report any work over the course of a year, Brookings researchers find.
  • Niskanen also shows that the CEA oversells the accomplishments of the 1996 welfare reforms, noting three key facts that the CEA ignores: (1) employment gains were modest; (2) when wage increases occurred, they often were more than offset by a decrease in benefits; and (3) positive results only occurred when work requirements were backed by the intensive efforts of public agencies to provide often costly training and other supports. (Of note, the Trump Administration has approved Medicaid waivers that provide no employment, training, or work supports to beneficiaries subject to the requirements.)

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