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In their drive to overhaul social safety net programs, Republicans are increasingly citing a new issue—the drop in the labor force participation rate, which has been on a steady decline for years.
While economists, including the nonpartisan Congressional Budget Office, blame the declining rate on the aging population and retirement of the Baby Boom generation, some Republicans see tying work or work training requirements to federal anti-poverty benefits as a way to get more workers back into the job market.
But there’s skepticism such requirements would work as intended and concern they could simply cause the impoverished to fall off of relief rolls.
“Right now, we have a workforce issue,” Rep. Jim Jordan (R-Ohio) said recently. “The employers I talk to in western Ohio and north central Ohio tell me they can’t find people for the jobs they have. So we better have people who are able-bodied and in our welfare system move from the welfare system to the workforce. That’s critical.”
Jordan was one of the founders of the House Freedom Caucus, a group of conservative and libertarian House Republicans that has often bucked GOP leadership on fiscal issues. As Republicans mull how to get to consensus on a fiscal 2018 budget outline, the Freedom Caucus has pushed for two of Jordan’s ideas to be linked with overhauling the tax system: requiring some recipients in the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Families (TANF) to work or be in work training as a condition for benefits.
Specifically, under Jordan’s bill (H.R. 2832), states would be penalized if they did not cut off SNAP benefits to able-bodied recipients without dependents who fail to meet new requirements—working in a job, subsidized or unsubsidized, or job training activities for 100 hours a month. For TANF recipients, there would be a similar requirement of 30 hours a week of “work preparation activity.”
Proponents say the moves would address the labor force participation rate decline. That rate measures the proportion of the population older than 16 and not in an institution—such as schools or jails—that is either working or seeking work. The long-term trend growth rate of the economy depends largely on the size of the workforce and how productive workers are, so more workers means more hours worked and a larger economy.
But the rate has been falling steadily since about 2000, when it peaked in February at 67.3 percent. It fell during the two recessions since then and has seen a general downward drift, hitting a recent low of 62.4 percent in September 2015. Since then, it has bounced up and down narrowly, never going above 63.0 percent.
Proponents of the work requirements say the alternative is to allow for more immigration, even as potential American workers sit on the sidelines.
“’We can’t find anybody to work. We need to change the immigration process to bring in more people,’ when we’ve already got the lowest labor force participation rate in 40 years,” said Rep. Dave Brat (R-Va.), describing arguments for greater immigration. “No! You’ve first got to get the people who are able-bodied back in the workforce, skill them up,” Brat, a former economics professor, said.
But Brat and others have also said the level of federal benefits discourages work.
Rep. Todd Rokita (R-Ind.), said at a June 7 House Budget Committee hearing, that a local recreational vehicle dealer in his district who paid workers between $13 to $15 an hour has had trouble hiring. Rokita asked if that might be because federal benefits offered what he said was an equivalent income of about $30,000 annually.
“It seems to me that we have programs, safety nets, that I think have become hammocks and go on for too many and for too long,” Rokita said.
Brat said the equivalent income figure for benefits was higher, estimating it to be about $50,000. “So this country has got to make up its mind—which way do you want it? You’re going to import more people to do the work and then more people opt out and go on the welfare system and it doesn’t work,” he said.
In January, the Congressional Budget Office estimated the participation rate would gradually edge lower in coming years, slipping to 61.0 percent in 2027. It cited the aging population, along with a rising share of the population receiving disability benefits and a decline in marriages rates, which leads to more unmarried men who participate in the labor force at a lower rate than their married counterparts. Mostly offsetting those factors were more educated workers, who participate at a higher rate in the workforce, a changing demographic mix that favored increased participation and increased longevity.
LaDonna Pavetti, vice president of family income support at the liberal Center on Budget and Policy Priorities, said it was incorrect to think federal aid made recipients less willing to work.
“The evidence doesn’t support that at all,” she said. “The benefit levels are so low that they’re not providing a level of income that is even at subsistence.”
“When you put in work requirements, it’s not uncommon to have the rolls go down. But that doesn’t mean people went to work,” Pavetti said. “Often you’re cutting off people with mental health problems, you’re cutting people off who have a low level of education, you’re cutting people off who are racial and ethnic minorities. So you’re cutting people off who are the most in need, but they’re not necessarily able to meet those requirements.”
Pavetti said in most states able-bodied workers can draw benefits for no more than three months in any 36-month period. Rather than institute new requirements, she said, expanding the earned income tax credit would do more to bring aid recipients back into the workforce.
Jordan’s proposals come as Republicans are also wanting to overhaul the federal tax code. As part of that, congressional Republicans have said they want to eliminate the tax on inherited wealth, also known as the estate tax.
Asked if that would have an impact on heirs’ willingness to work, and specifically on President Donald Trump’s son, Barron, who would be likely to benefit, Brat said, “No, because my guess is he will work every day of his life.”
“Because there’s a dignity inherent in work and God commands you to work, like God did, the first six days,” Brat said. “The Left can use all the rhetoric they want, but in the Judeo-Christian tradition, work itself is part of human dignity. Most people want to do it. Everybody in this city screams about it. You’ve got to train people in, you’ve got to help people work. Good. That’s what we want. We want everybody to work.”
To contact the reporter on this story: Jonathan Nicholson in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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