April 14, 1999
Next Steps In Welfare Reform
Welcoming Remarks and Introduction
HENRY OLSEN: Welcome to this conference on the “Next Steps In Welfare Reform,” sponsored by the Manhattan Institute’s Center for Civic Innovation. I'm Henry Olsen, the Executive Director of the CCI. We’re going to kick off this morning’s session with some observations about where welfare reform should be heading from one of the nation's most thoughtful and acclaimed urban innovators, Mayor Stephen Goldsmith of Indianapolis.
He's well known for his path-breaking accomplishments in the areas of privatization, urban governance and partnerships with faith-based and public sector organizations through the Indianapolis Front Porch Alliance. He was named Governing magazine's Public Official of the Year in 1995, and he's recently been in the news as an adviser to Governor George W. Bush's nascent campaign.
I present to you Mayor Stephen Goldsmith of Indianapolis.
MAYOR STEPHEN GOLDSMITH: Thanks, Henry. I'm pleased that the Manhattan Institute has sponsored this conference. The Center for Civic Innovation, with which I'm associated, has done a lot of good work in looking at urban and community problems in new ways. Because you will hear from different panels of experts later, I thought that I might just reflect on what I see as the next set of problems, and let everyone else solve them.
I began working on what we have come to call welfare reform about 20 years ago when I was first elected prosecutor-district attorney in Indianapolis, and decided that I wanted to make enforcement of child support laws the cornerstone of my administration. It was quite curious in Indiana, where people campaigned on issues like murder and robbery and pestilence and such things and not child support. While I was prosecutor I spent a lot of time with AFDC moms. During my tenure, collections went from $900,000 a year to $38 million, so I got to know the moms pretty well. In fact, they began to use my name as a verb describing what they did to the men to exact revenge.
It also gave me an opportunity to understand that most of the women I represented, the AFDC moms, were rationally evaluating their choices. And their choices at that time deterred them from work. Obviously we've had a sea change in our thinking since then.
Leaving out the extraordinary accomplishments of some of the other speakers, what we’ve done nationally so far is really the easy part of welfare reform. After all, it has never been difficult to get people off welfare. You just stop paying them. It’s a managerial issue. Maybe as a political issue it's more problematic, but as a managerial issue, removing people from welfare is quite a straightforward process.
About a year ago I met with a few of Indiana’s county welfare directors, who are actually state employees. I was curious about what was happening since I left the world of child support. I said to them, “This is really extraordinary. Indiana had a dramatic run-up in welfare cases for a few years in the early 1990’s. Then we had this dramatic reduction a few years later. How did you accomplish this?”
One of them looked at me and said, "It wasn't very hard. In the early years the Governor told us to maximize the number of people we signed up in order to increase the amount of federal reimbursements. Then a couple of years later he came back and told us to tighten up the way we interpret the eligibility standards, and that it was important for us to get as many people off the rolls as possible. And we did it, and look what happened.” So just removing people from welfare is a fairly straightforward procedure.
Indianapolis, America’s 12th largest city, with a population of about 900,000, has one of the lowest unemployment rates in the country, about 2.5 percent. According to most guesses, we have 40,000 to 60,000 unemployed or substantially under-employed individuals. They don't show up as unemployed in the statistics because they're not looking for work. But they aren't working, at least in the traditional economy.
This, I think, presents us is with a challenge--the post welfare reform challenge. It has several aspects to it.
First, welfare reform essentially targets moms on welfare, because AFDC was essentially a program for moms. Welfare reform generally ignores dads. So getting dads employed while dealing with all these complicated and strange funding formulas is a substantial challenge. We have to deal with the under-utilization of men. We have to do something about their inability to access the labor market. We have to rethink our whole approach to welfare reform as it applies to men, generally, and dads, in particular.
This issue of dads has a whole range of sub-issues. One is how to keep young men from being dads in the first place, either until the mother is older or until the couple is married. The second is, once men have a child, how to establish paternity. The third is how to collect child support. The current system is somewhat arbitrary. We make sure that the mom with the young kids goes to work, but there’s a great incentive to ignore the dad. This is especially curious for those of us who are moderate or conservative. It’s perverse. But the system is carefully skewed in this direction. So we need to make sure that we're able to get the dad to work, and the money to the child. And that is a problem.
A related issue is how we also assure there is social interaction between the dad and the child. So there are a whole range of issues involved: connecting the dad to work; connecting the dad to the child; connecting the dad's money to the child; and connecting the dad personally and socially to the child.
People are experimenting with different ways to deal with these issues. We have a demonstration project called the Father's Resource Center, where the object is to get the dad into work and connected with the child at the same time.
But I think dealing with dads represents a substantial challenge. And I would argue that no matter how much money the federal government dumps into these programs, as long as they continue to do it with these strange categorical funding mechanisms, it's very difficult to make these programs work.
Our state is awash in job training money, and we actually have to go knocking on doors and dragging people into the programs. But at the same time we have these young dads who don't qualify for any of the programs. So we have this mismatch on the funding formula.
The second issue that has to be addressed is how to get urban residents interested in working. It's always been assumed that the reason people were poor and on welfare is that there weren't jobs for them. However, there are many individuals who choose not to work, right? Often it’s because the first job is not the first step on the ladder of success; it's just a demeaning experience.
So how do we create what we call the “marketable character” identifying what young people need to deal with in order to succeed in the workplace? Creating interest in work, and thinking about how we form character and instill responsibility are worth concentrating on. Our goal is not to make people poorer by getting them off the welfare. The goal has been to get people off welfare in order to motivate them to get to work, because work is an activity that gives people self-respect and a sense of fulfillment.
Getting people into work involves figuring out how to motivate them. We now have neighborhood-based projects in which people are going door to door, and dragging people out, well not literally. But they are saying, “We have a job for you, would you please come to work? These programs will help you get the transportation and the childcare and the rest of the activities that go with it.”
The third major issue reflects my own bias and approach. My administration has been pretty active in opening the provision of city services to competition, and in decentralizing and privatizing. I think it's absolutely essential for existing bureaucracies to be more responsive and compete with the private sector. No matter how well managed they are, I don’t believe they can be successful unless they face competition.
And although I'm enthusiastically in favor of devolving authority to statehouses, there are only so many Tommy Thompsons in the world. If you're a mayor, working with a state bureaucrat is not much more exhilarating than working with a federal bureaucrat, right?
It’s easy to see bureaucracy’s limitations in a range of issues. Every family's problems are different. It may be childcare, it may be transportation, and it may be job training. The mom may be beat up at night by her live-in boyfriend. Her 16-year-old may be selling dope, or she may have a child who has a disability. So each family has some obstacle, some barrier to work. But control-and-command, rule-driven bureaucracies, whether local, state or federal, cannot respond to the different needs of families. Decentralizing services, cashing out the money, working through neighborhood-based organizations, all seem good ideas to me.
And the barriers are everywhere, right? There are federal, state and local barriers and public/private barriers. There are federal/federal barriers, because even the federal programs don't work well with each other.
I think it's at least worth noting that child welfare bureaucracies are even worse, particularly in the way the child protective service system reaches into families’ lives with its arbitrary approach and rule-driven systems. The weekly New York Times story about some tragedy in New York City in the child welfare system is reflective of what's happening in every other big city as well. So bureaucratic reform is necessary.
I’ll mention one last issue that’s probably even more difficult to address. The evolving form of the labor force makes it very difficult for entry-level, working poor families to make the economy function correctly for them. The combination of having lots of jobs in a year, and lots of jobs at a time, makes it very difficult for a lower income person (a) to succeed, but also (b) to match their health benefits and solve their transportation problems and their child care problems.
What we see, of course, is that the career ladder that existed at Chrysler is not a model that’s applicable to very many of the individuals that we're trying to get into the workforce. I visited with a custodian in our arena/convention center. It was a couple of years ago when we were hosting the NCAA Final Four, and I went over to thank all these men who had really done a wonderful job cleaning up the place. One of the TV camera crews accompanied us because they thought it was interesting that we were talking to these men.
During the interview, one guy had sounded great, he had all the right stuff. So when the camera was turned off I said, “Do you really believe what you said? I mean, do you really like your job, and why?” He said, “Mayor, I do like my job. And I'm proud of the fact that this is the best-looking dome in the country. But they're only letting me work 25 hours a week, because if I had to work any more time they'd actually have to pay me benefits. That means I have to run home in order to relieve the babysitter, make sure the child daycare worker is there, and then take the bus back to the restaurant where I work at night.” And he went on. It was just bewildering. I can't imagine how anybody would be able to piece together his life in the way that this gentleman was trying to do it.
I use this as an example, because I think we're going to have to look at umbrellas, labor pools, external career ladders and other mechanisms to help the individual who wants to succeed, given the transitory nature of entry-level work and the mobility of employers.
Perhaps we should look closely at the initiatives that Pew and others have written about. Under such an initiative, a group of employers inside an industry -- we have one in the tool and die business -- come together to train and nurture individuals, and then help them as they move through different careers inside that industry.
I think that all of us who have been doing this for some time are impressed with the success of the welfare reform movement. But if you are working in a poor neighborhood, in a community development corporation, or as the mayor of a city, it’s apparent that the challenges ahead are very substantial. They require lots of innovation and sharing of ideas that seem to work, and lots of encouragement to the risk takers who are at the neighborhood level trying to reach out to individuals.
My goal as mayor has been to improve the quality of life in my community. That means not just getting people off welfare; it means helping them find productive work so they can set an example for their children and feel good about their own participation in society. We’ll hear about many successful initiatives today, and I hope to learn from them as well. Thank you very much.