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Getting Americans back in the labor force

Monday , June 11, 2018 - 12:00 AM

WALL STREET JOURNAL EDITORIAL BOARD

The low U.S. labor force participation rate has several causes, but a major one is the disincentive to work created by government programs. The Republican Party's growth wing has spent years developing ideas for addressing these incentives not to work and rise up the economic ladder, and the results are starting to show.

Last month to almost no attention the House Ways and Means Committee moved a bill from Chairman Kevin Brady that would update the Temporary Assistance for Needy Families program, known as TANF. This program is the result of the Newt Gingrich-Bill Clinton 1996 welfare reform.

The American Enterprise Institute's Robert Doar noted recently that TANF on the whole is a success. The program has declined as a share of 1996 spending while Medicaid and food stamps have exploded. One big reason is because TANF is a block grant to states, unlike the Medicaid racket that allows states to draw down more federal dollars for every new enrollee. The program even survived attempts at sabotage by the Obama Administration like expanding waivers for work requirements.

The current system requires states to engage 50 percent of families in work activities. But that means states can write off some of the tougher cases. And gimmicks like a "caseload reduction credit" allow states to buy down the 50 percent rate to a much lower benchmark or even 0 percent of families. Mr. Brady's bill would require that 100 percent of recipients engage in work or training as a precondition of receiving benefits.

More broadly, the bill moves from a measure of participation in work to new metrics that will try to tilt at questions such as: Did this recipient get and keep a job? Health and Human Services will manage a dashboard that grades states. States have flexibility on setting goals and targets, which can dilute accountability but is an improvement over the status quo.

Some changes aren't about the folks receiving benefits but the people who run the programs. State benefit offices are too often places to pick up a check and little else. The plan would toughen up case-management practices, which is essential for helping folks, say, making a career transition.

The bill also says that states must direct the funding toward families below 200 percent of the poverty line. Governors and state legislators have shuffled money around into other priorities that aren't aimed at low-income individuals, and TANF funding has become a popular pot for state lawmakers to raid in a pinch.

Attacks from Democrats will not be nuanced — or accurate. Mr. Brady's bill maintains current levels of funding. It isn't "slashing" or "gutting" or other descriptions that are sure to appear in the coming weeks. For now the bill looks like a long shot in the Senate thanks to flight risks like Susan Collins of Maine, but welfare reform is popular. The House is also moving as part of the farm bill on work requirements for food stamps, which are a much larger share of spending on income transfers.

The timing is right for these reforms amid a 3.8 percent jobless rate and worker shortages across the country. Paying people to make it easy not to work — and thus languish for a lifetime in poverty — is not compassionate. It's destructive of human dignity and leads to more inequality. Republicans are right that welfare reform will assist American upward mobility, and they should take the case to the public.

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