03-10-2001
WELFARE: Untested Safety Net
Baltimore-On a wall in the waiting room of the Dunbar Family Investment
Center hangs one of those framed motivational posters that are ubiquitous
in welfare and self-help offices all over the country. It shows a scenic
photo of a snow-capped mountain and reads, "Success: It's easier to
go down the mountain than up, but the view is best from the
top."
That notion-that hard work should be encouraged-fueled the federal welfare
reform act of 1996. Congress voted to replace the system of cash
entitlements that had been in place in one form or another since the Great
Depression with one that provides only temporary cash assistance, plus
other support services-such as child care and job training-intended to
help recipients find and keep a job.
And by most accounts, the reforms have been hugely successful. Some 6.5
million Americans have moved off welfare since 1996, reducing the rolls by
half. But the new system is untested in a recession-something that could
change if the current economic slowdown worsens. Among the questions: Can
a welfare system focused on work function adequately when there is a lot
less work to be had? If more money must be paid out in temporary cash
assistance to people who lose jobs, will there be enough money to fund the
support services for working-poor families who still have jobs? And more
broadly, is today's safety net strong enough to withstand a
recession?
Interviews with national, state, and local officials, as well as with
outside analysts, suggest some tentative conclusions. Among them:
* The government's main cash assistance program-Temporary Assistance to
Needy Families-has plenty of money now, but during a recession it could be
forced to siphon funds from job training, child care assistance, and other
support services designed to keep people off welfare.
* The nation's unemployment compensation funds appear healthy enough to
weather an economic downturn-which is good news for established
workers-but workers who have recently left the welfare rolls may not have
been working long enough to qualify for the aid.
* Poor children who need health insurance are getting it now, and they
very likely will in bad times as well. But their parents could have an
even harder time getting coverage.
* The Earned-Income Tax Credit, an increasingly important part of the
safety net, may not be as effective as it has been in the past at raising
income levels, because during a recession, fewer people would probably be
eligible.
* Federal housing assistance for low-income renters, already unable to
keep up with demand, is likely to find itself strapped even more.
* The food stamp program, the last defense against hunger, is in disarray
and would face further strains.
Wendell Primus, director of income security at the Center on Budget and
Policy Priorities, a left-leaning think tank, said he doesn't "want
to overstate the case that things are going to fall apart." But he
added: "If you just focused on the safety net for ... the nonworking
poor, clearly the safety net has eroded."
Primus said he wishes more attention were being paid to the subject.
"Right now, we have a lot of resources we could use to strengthen the
safety net. The question is whether we have any political will to make it
stronger. I don't see a lot of evidence of that right now."
Jared Bernstein, an economist at the liberal Economic Policy Institute,
sounded a similar note. The new welfare system, Bernstein warned, may be a
fair-weather ship. "It does OK in calm waters. [But] my feeling is
that in a storm, it won't do as well."
More-conservative experts, however, aren't as worried. Welfare reform,
they say, has safeguards that should keep it running well, even if a
recession hits. For example, the 1996 law contains a rule allowing states
to exempt 20 percent of their caseloads from the time limits for receiving
cash assistance.
Ron Haskins, who helped write the welfare law as an aide at the House Ways
and Means Committee and who is now co-director of the Brookings
Institution's Welfare Reform & Beyond initiative, predicts that states
will easily be able to absorb additional welfare recipients, even in a
recession. He notes that although welfare caseloads have fallen since the
reforms were passed, the federal government has continued to allocate
funds to the states based on 1994 and 1995 levels of spending, when
caseloads were at their peak. Many states have used the money for other
social services (such as child care), while others have left large
portions of their welfare dollars unspent. In a recession, Haskins says,
the funding would be sufficient to meet the needs of people coming back
into the system. "If they brought all that money back, from child
care and job training, from transportation and so forth, we wouldn't be
worse off than we were in 1996."
The policy experts agree that the real challenge will be how individual
states will cope in a recession. One of welfare reform's most radical
changes was shifting the onus of administering the safety net from the
federal government to the states. As a result, some states will be well
equipped to manage a recession while others may not.
In Maryland, a state with a generous safety net, state officials are just
beginning to grapple with the possibility of a recession. And some are
worried.
Perhaps the biggest concern is finding a way to maintain funding for the
secondary services that help keep people in the workforce-the programs
providing day care, medical assistance, and job training. The state has
diverted money from its federal welfare block grant, which normally would
have gone to cash assistance, to the support programs, and it has made
these services available to some low-income working families who have
never been on welfare.
In a recession, when fewer people are working and more people need cash
assistance, the state plans on using a "rainy-day" welfare fund
to make up the difference. Should that reserve run out, however, the state
would likely have to scale back its support services. State officials
worry that such shifts would erode the safety net for low-wage earners who
manage to keep their jobs and for people on welfare who are required to
work.
"We're no longer asking, what are the wonderful things we can do with
the welfare money, but what things do we want to sustain and how can we
manage it?" said Linda Heisner, executive director of the child care
administration at the Maryland Department of Human Resources.
And a Maryland family's ability to get cash assistance is no longer
guaranteed-the state has a five-year time limit as mandated under the 1996
law. The clock will run out for some welfare recipients in January.
Maryland legislators and administrators are confident that the 20 percent
exemption will cover the first wave of families who hit the limit, but
they say it won't cover the second wave. "We're trying to figure out
exactly who's going to hit the limits, who should be exempt, and how much
it would cost," says Republican state Sen. Martin Madden, co-chair of
the joint committee on welfare reform. "These are tough
decisions."
What follows is a more detailed look at the current state of the major
safety net programs-and how they might fare in a recession.
Unemployment Insurance
Recipients: 7.2 million (2000)
Funding source: State payroll taxes paid by employers
Administered by: State labor departments
2000 state spending: Estimated $20 billion
No federal money
Unemployment insurance is the first layer of the safety net during
economic downturns. Administered by the states, it enables laid-off
workers to collect a weekly check while they look for a new job, for up to
26 weeks in most states.
The current financial condition of the unemployment insurance program is
very strong. Employer payroll taxes that are placed into trust fund
accounts finance the program. Wayne Vroman, an economist at the Urban
Institute, says that most states "have quite a bit of money" in
their trust funds-so much so that they have accumulated about a $35
billion surplus nationally. (But the financial condition of the trust
funds in a few states, such as New York and Texas, isn't as good.)
Still, unemployment insurance is not available to all of the unemployed.
To qualify, workers must be part of the labor force for a certain period
of time, which varies from state to state. Maryland, for example, requires
workers to have been working in four of the past five quarters. On
average, most states require workers to earn a combined $2,000 over the
previous four quarters. Vroman estimates that only about a quarter of the
welfare-to-work population would be eligible to receive unemployment
insurance if they lost their jobs. During the previous recession, in
1990-91, just 40 percent of all unemployed workers received unemployment
compensation, and only a third receive it now. Workers who are fired for
misconduct or who quit voluntarily are not eligible.
"It is not a needs-based program," says Thomas Wendel, the
executive director of unemployment insurance in Maryland's Department of
Labor, Licensing, and Regulations. "It is a merit-based program. If
you're a new worker, you're never going to get unemployment
insurance."
Another problem is that part-time workers, an increasingly large component
of the labor force, often don't qualify. "Today, if you're working
part-time, 20 hours a week, and you get laid off by a hotel chain or some
sort of service industry, you can't get benefits in a lot of states,"
Primus said.
Earned-Income Tax Credit
Recipients: 19 million (1997)
Funding source: U.S. Treasury and state governments
Administered by: Internal Revenue Service
1997 federal spending: $30 billion
2000 state spending: Estimated $1 Billion
The Earned-Income Tax Credit is the country's fastest-growing and most
politically popular safety net program. But it helps only working people.
If you're not working, you don't get the credit.
In a recession, it could theoretically help a low-income family stay
afloat if one family member lost his job but another family member kept
hers. Because the credit is paid on a sliding scale according to income-it
goes down as income goes up-a family that lost a wage earner would
actually receive a bigger credit. The higher credit wouldn't be enough to
replace the lost wages, but combined with unemployment compensation, it
could help a great deal. A family's EITC could also rise if one of the
wage earners was forced to work fewer hours.
Created in 1975 and administered by the IRS, the EITC works like a super
tax refund, with elements of a government transfer payment, because wage
earners can actually get more back than they paid in annual income taxes.
A working parent with two children and a low income can get a maximum of
$4,000 annually from the EITC; a working parent with one child can get
nearly $2,400. To qualify for the credit, a single taxpayer can make no
more than $10,380 a year, while a taxpayer with one child can earn no more
than $27,413.
According to the Clinton Administration, which successfully worked to
expand the program, the EITC was responsible for lifting 4.3 million
Americans out of poverty in 1998. In a recession, with fewer people
working, its reach could be less extensive. The reason for its growth and
success is simple, explains the Economic Policy Institute's Bernstein.
"It is politically popular-here is a program that is totally keyed to
work."
Welfare: Cash Assistance
Recipients: 6.3 million (1999)
Funding source: U.S. Treasury and state governments
Administered by: State welfare departments
1999 federal spending: $13.4 billion
1999 state spending: $11.3 billion
When people talk about welfare, they're usually referring to the
government's main cash assistance program-Temporary Assistance to Needy
Families, or TANF for short. Under the program, the federal government
gives block grants to the states to provide cash assistance to poor
people-typically out-of-work mothers and their dependent children. Under
the 1996 welfare reform, there's a lifetime five-year time limit on
benefits.
Although welfare reform has largely been working to date, some problems
remain. Many of the people left on welfare are the most
unemployable-people with substance abuse problems or mental illness, or
inadequate educations. And many people leaving welfare are filling
low-wage positions and not progressing to higher-paying jobs.
What will happen if they lose their jobs and return to welfare, only to
find that they're facing the five-year limit on their cash assistance
benefits?
The welfare reform law allows each state to exempt 20 percent of its
caseload from hitting that wall. But is 20 percent high enough? Perhaps
not, say state officials, particularly if a recession is severe. Another
concern is whether states and cities that have shifted funds into support
services will have enough money for cash assistance if the welfare rolls
start to explode. Baltimore, for example, has transferred $90 million of
its federal TANF money since 1996 to child care and other services that
support families with low-wage jobs.
Haskins, who is advising Health and Human Services Secretary Tommy G.
Thompson on welfare matters, says that there's plenty of money in the
system to handle such contingencies. "States could take a 100 percent
increase in caseload and go back to where they were in 1996," Haskins
said.
Mark Greenberg, senior staff attorney at the Center for Law and Social
Policy, disagrees, contending that the world of welfare has changed. He
said it would be a "significant disruption" to take away support
services for working families and use the money for cash assistance for
those not working.
Liberal lawmakers agree. "In TANF, if there's a deep recession,
there's not enough money to handle it," said Rep. Sander M. Levin,
D-Mich., who is on the Ways and Means Human Resources
Subcommittee.
As part of the welfare reform act, Congress designed three programs to
assist states in maintaining their cash assistance programs during tough
economic times. But it's unclear whether any of them will be
effective.
To qualify for the first program-a federal contingency fund-states must be
spending at least as much on welfare programs now as they were in 1996.
Currently, most states are spending only about 75 percent of what they
were in 1996. It would be difficult for most states to boost their welfare
spending enough to qualify for the contingency fund.
The second program provides federal loans to states at market interest
rates-which states say is not a very attractive choice. The third program
allows states to create so-called rainy-day funds. Rather than lose
unspent federal TANF dollars, states can get something akin to an IOU from
the U.S. Treasury for them. But members of Congress have repeatedly
attempted-so far unsuccessfully-to raid the surplus TANF money for other
spending purposes. Rep. Nancy L. Johnson, R-Conn., and other advocates of
welfare reform have written letters urging governors to spend the money
rather than risk losing it.
Maryland has creatively rearranged its funds to get around the problem.
The state has set up a "dedicated purpose account" with its own
money. When Maryland had federal TANF surpluses the first year, it decided
to take the money and use it for other state spending purposes, then take
money from its general fund and place the dollars into the dedicated
purpose account. Some members of Congress don't like this maneuver, but
Maryland so far has managed to do it in a way that is legal, according to
Rich Larson, director of Maryland's Family Investment
Administration.
Child Care Assistance
Recipients: 2.2 million (2001)
Funding source: Child Care and Development Fund
Administered by: State departments of human resources
1999 federal spending: $5.2 billion
1999 state spending: $2.9 billion
Child care assistance was one of the last pieces to be added to the modern
safety net. The framers of welfare reform knew that if welfare
recipients-many of them single moms-were to go back to work, they would
need someone to mind the kids.
Over the past five years, state and federal child care spending has
increased by 127 percent, according to a recent study of 42 states by the
American Public Human Services Association. About 2.2 million children are
now being served, compared with 951,000 in 1996.
States can get federal funds for child care from two major sources: a
Child Care and Development Fund created as part of welfare reform, and
TANF. The welfare reform law allows states to provide child care
assistance to families making up to 85 percent of the state's median
income for a family of four, although most states haven't been that
generous.
Maryland has transferred $14.5 million of its federal TANF funds-the
maximum amount allowed-into its child care fund, and has set the ceiling
for eligibility for child care assistance at 45 percent of its state
median income. The additional $14.5 million has allowed the state to meet
the child care needs of every eligible family that has sought assistance.
"We've finally had the funds to provide child care," says
Heisner, of the Maryland Department of Human Resources. "We haven't
had a waiting list since the beginning of welfare reform."
But Heisner says she is troubled that the state cannot afford to provide
subsidies to families making more than 45 percent of the state median
income. "In Maryland, it's really difficult for the solid middle
class to pay for child care, especially when they have more than one child
who needs care," Heisner said.
Nationwide, only 12 percent of all families making up to 85 percent of the
state median income receive government help, according to the Health and
Human Services Department.
But conservatives say that assistance is there for poor families who need
it. "If states have the money, and they want to subsidize people
making up to $40,000, we'll give them a certain amount of money, but they
have to make up the difference," Haskins said. "The 85 percent
guideline was to give states flexibility, but we got snookered. We didn't
think HHS was going to put out a press release saying it was serving 10
percent of eligible children."
If a recession hits, the ability of Maryland and other states to pay for
child care could be affected. As the need for cash assistance goes up,
states may not be able to divert their extra TANF welfare dollars into
child care. Haskins argues, however, that the impact would be small. With
fewer people working, more parents would be at home and able to take care
of children, he said.
Elaine Ryan, acting executive director of American Public Human Services
Association, disagrees. She said that people laid off in a recession will
be obligated under welfare reform to look for, or to get trained for, new
work. Someone will need to watch the kids while they do. "As long as
there are expectations that people who are on cash assistance work, that
means that there will continue to be need for child care," she
said.
Food Stamps
Recipients: 18 million (1998)
Funding source: U.S. Treasury
Administered by: U.S. Agriculture Department
2000 federal spending: $15 billion
No state money
What could be more basic to survival than food? The food stamp program
guarantees that anyone who sinks into or near to poverty can get help
buying food.
Indeed, food stamps are intended to be one of the strongest safety net
programs for the poor. While time limits restrict the use of cash
assistance and unemployment insurance, food stamps are supposed to be
available to anyone who is poor for as long as they are poor.
People receiving cash assistance automatically get food stamps, and
working adults with few assets and incomes that are under 130 percent of
the federal poverty level (the poverty line is about $14,000 for a single
mother with two children) also qualify. The average benefit is $75 a
month, although a family of four might qualify for as much as
$450.
But experts warn that the program is failing many eligible people, and
they cite a recent sharp decline in participation. Half of eligible
individuals don't get food stamps, says Robert Greenstein, executive
director of the Center on Budget and Policy Priorities.
Connie Thompson is one of those people. The 50-year-old grandmother from
Baltimore walked away from food stamps in December out of frustration with
the program, even though she's eligible and says she could use the help.
"I'm not dealing with them no more," she says with a sigh of
resignation.
In December, the thrift store where Thompson had worked for six months
closed, and she lost her minimum-wage job. Thompson applied for food
stamps and, after waiting several hours to meet with a caseworker, got $20
in emergency food stamps. If she wanted a regular benefit, she would have
to-among other things-"go to all my old employers going back two
years and ask them for a letter saying the day I stopped work and how much
I got paid." Thompson had worked for short periods in several jobs,
and she didn't know how to reach her old thrift-store boss, so she gave
up.
Thompson's story is not uncommon. Food stamp applicants must produce 11
pieces of eligibility verification, including a birth certificate
(sometimes the original), a Social Security card, a housing lease
(sometimes the landlord must complete a form), utility bills, pay stubs
(sometimes multiple employers must complete forms), medical bills, and
child-support verification. In Maryland, recipients must recertify their
eligibility every four months. (It's three months in many states).
Peter Sabonis, a lawyer at the Family Investment Program Legal Clinic in
Baltimore City, calls food stamps a "bureaucratic disentitlement. You
end up spending a lot of time in a government office resubmitting birth
certificates, proof of residency, finances, things that you already
submitted three months prior, and the agency acts as if it lost all of its
memory of you," he said.
The paperwork requirements are a result of the 1996 welfare reform act,
which sought to cut down on fraud and abuse. The federal law mandates
fines for states that make more than an average number of errors in
determining eligibility for food stamps. About half of all states are
being penalized.
"It's a perverse kind of situation," said Larson. "The
rules tend to favor a state or place where they are very, very
tightfisted." And the more successful the state is in putting welfare
clients to work, the more paperwork that low-income applicants have to
fill out. And the more paperwork required, the greater the likelihood of
errors.
Haskins acknowledges the problem. "The cases with the highest
probability for error involve anyone who works. So we have one
program-TANF-that demands work, and the other one that fines states at a
higher level if the people work."
The threat of federal penalties has led most states to require frequent,
in-depth recertifications. Before 1998, Maryland required recertification
every six to 12 months. Now, it's four months. In the two years before
1998, the participation of working people in the food stamp program
increased by 36 percent. In the 21 months after the change, participation
declined by 25 percent.
Meanwhile, demand for emergency assistance from food banks increased 18
percent from 1998-99, the largest increase since 1992, according to a
recent survey by America's Second Harvest, a hunger relief organization.
Some policy experts argue that the growing demand on food banks and
churches is a sign that the food stamp program is failing many
people.
John Wells, director of the food program at the Wayland Baptist Church in
West Baltimore, reports that people are standing in line for several hours
to get a bag of groceries, and that many of them don't apply for food
stamps. "Parents are taking their kids out of school early to come
eat. Parents sometimes ask us to prepare food for their kids and set it
aside."
Congress is likely to consider the administrative troubles plaguing food
stamps when the program comes up for reauthorization in 2002. Haskins
wants Congress to cut down on the red tape by making food stamps a
block-grant program and by giving states more discretion to administer it.
But Democrats, worried that the program could suffer under state control,
are likely to fight such a proposal in 2002, just as they did,
successfully, in the 1996 welfare reform debate.
Greenstein said that Congress should simplify the application process,
improve participation by reducing penalties, raise benefits, and ease
restrictions on legal immigrants who are eligible. He complains that
lawmakers arbitrarily instituted many of the 1996 changes as a way of
saving money. "The goal was to balance the budget by 2002, and the
food stamp program took some of the biggest cuts," he said.
In a recession, food stamp costs would certainly rise. During the economic
slowdown of 1991-94, food stamp participation increased by 43 percent,
from a low of 20 million people to almost 29 million. If a similar rise
occurred now, federal spending could jump by $6 billion or more.
Job Training
Recipients: About 1 million in 1998
Funding source: Labor Department and state governments
Administered by: State labor departments
1998 federal spending : $3.7 billion
1998 state spending: $71 million
Before welfare reform, recipients with poor job skills and little
education were placed in training classes for several months before being
steered into employment or more-intensive job-training courses. The new
welfare philosophy, however, promotes work first and training and
education second.
Here's how it works in Baltimore: Hard-to-employ welfare recipients are
referred to one of several welfare-to-work programs. One of those is
called Peoples Alternative Service System, or PASS, which provides job
placement and some training. PASS arranges for local employers, such as
Metropolitan Health and Fitness, a health club, and Union Memorial
Hospital, to hire welfare recipients to work 25 hours per week. But PASS
pays a participant's salary-$6.10 per hour. So the employer is, in effect,
getting free labor. PASS also offers 15 hours of skills classes on the
side. The arrangement lasts for six months. The goal is that the
participant's employer will offer him or her a full-time job at the end of
that time. Once the recipients are employed full-time, they can become
eligible for more job training or education.
PASS is funded from a $2.7 billion federal welfare-to-work grant that was
authorized in 1998 and is available to states over five years. The grant
is administered by the Labor Department. The emphasis on jobs first and
training second has also been applied to separate job-training programs
within TANF, and to most Labor Department placement and training programs
under the Workforce Investment Act, which is separate from welfare.
Although this approach has been able to get working experience for people,
it has not necessarily resulted in full-time jobs.
"Most of the time, employers don't hire our clients," says Don
Hillman, executive director of PASS. "They may say they will, but
more often they just want that free labor for a while.... We also see the
client getting fired or quitting after four months."
Proponents of the work-first model insist that on-the-job work experience
is the best type of training welfare recipients can receive-better than
extensive training or education-if they want to get and keep jobs. They
also note that, historically, most job-training programs have had little
impact on participants' ability to get jobs or to raise their
incomes.
Many experts, however, say that the work-first approach is certain to
suffer during an economic downturn. "In a recession, unemployment
goes up for those groups we worry most about-those without diplomas, those
on welfare, the ones who are last hired in good times, and first fired in
bad times," says Julie Strawn, a policy analyst specializing in
welfare reform and workforce development at the Center for Law and Social
Policy.
Health Assistance
Recipients: 40 million (2000)
Funding source: U.S. Treasury and state governments
Administered by: State health departments
1998 federal spending: $113.7 billion
1998 state spending: $82.6 billion
Recession or not, the safety net provides health insurance for poor and
near-poor children. Children are covered through Medicaid if they're poor
or near-poor, or through the Children's Health Insurance Program if
they're in families earning up to 300 percent of the federal poverty
level. Both programs are state-run but receive federal dollars.
Adults, on the other hand, have it tougher. Insurance help for low-income
working adults is minimal; in a recession, the number of uninsured could
swell. Currently, 42 million Americans have no health insurance. About
half of them are low-income adults. Many are people who have left welfare
for work and either aren't in jobs that provide health insurance or can't
afford to pay their portion of the cost. Yet they make too much money to
qualify for Medicaid.
"Poor parents who work are twice as likely to not have health
insurance, compared to poor parents who don't work," said Steve Hill,
director of the Maryland Budget and Tax Policy Institute, a nonpartisan
research organization. "As soon as they get a job and get income,
they're still in a crummy job that doesn't offer health insurance, or it's
not affordable." A recent Urban Institute study found that two out of
three families that left welfare between 1997 and 1999 lost Medicaid, and
that only one-third of that number wound up insured.
People leaving welfare for work may qualify for transitional medical
assistance-an extra year of Medicaid. But that's not always the answer.
"For a single mom with two kids, who makes $7 an hour, whose employer
doesn't offer health insurance, her best chance to get insurance is to
quit her job or reduce her pay," said Jocelyn Guyer, policy analyst
for health at the Center on Budget and Policy Priorities.
Medicaid enrollment has also been dropping, in part because of enrollment
troubles that are similar to the problems facing the food stamp program.
Congress did not intend for welfare reform to decrease enrollment in
Medicaid. But that's what happened initially. In some cases, eligible
people did not know they qualified. In other instances, caseworkers were
failing to enroll eligible people or were mistakenly booting eligible
people out of the program. Most states are working to correct the problem.
In most states, people no longer need to submit their Medicaid
applications or recertify their eligibility in person. They can do both
things by mail.
Housing and Homelessness
Recipients: 4.1 million (1999)
Funding source: Housing and Urban Development Department
Administered by: Local housing authorities
1998 federal spending: $26.8 billion
1998 state spending: $2.6 billion
One of the side effects of the economic boom of the 1990s has been to make
it harder for poor families to find affordable housing. Federal programs
are in place to help, but their funding is limited.
So-called Section 8 housing vouchers represent the federal government's
biggest assistance program. The vouchers can go toward rents that are no
more than 40 percent of the median rent paid in an area. But in tight
housing markets, the vouchers often aren't very helpful. In some cases,
the rents are too high for vouchers to be used. In other cases, landlords
won't accept the government vouchers. Many people eligible for the
vouchers simply return them to the government.
Another Section 8 program, known as "project-based," pays
landlords directly in return for a promise to rent to low-income families.
But with rents rising, more and more landlords have decided to opt out of
their contracts.
Traditional government-funded public housing has been the third leg of the
housing assistance structure. Many public housing units, derided as
incubators of crime and welfare dependency, are being torn down in hopes
of revitalizing poor communities. But the rate of demolition is outpacing
the rate of redevelopment. Today, nationwide, there are 1.3 million public
housing units, 1.3 million "project-based" Section 8 units, and
1.5 million Section 8 vouchers. Even in a good economy, the resources do
not meet the nation's housing needs. Housing aid goes to only about 25
percent to 30 percent of those eligible. Families can spend years on
waiting lists.
Even if a recession halted the increase in rental prices, low-income
families could still be hurting. "The gap between low incomes and
housing costs is very substantial in every jurisdiction," says Sheila
Crowley, president of the National Low Income Housing Coalition, a
Washington-based advocacy organization. "In a recession, there would
have to be a real drop in housing costs and no drop in incomes to narrow
that gap. What's more likely is that the number of people with worst-case
housing needs will increase, as they lose jobs and their incomes go down.
The number of people competing for the housing assistance resources will
grow."
The lack of affordable housing is one reason why homelessness increased
during the 1990s, most experts say. To help the growing homeless
population, Congress last year approved-through a variety of programs and
legislation-an additional $13 million for health care for the homeless,
$10 million for new homelessness addiction services, and $6 million for
transitional assistance. The largest form of assistance is the $1.02
billion in annual homeless assistance grants that are channeled through
the Housing and Urban Development Department to local community,
nonprofit, and faith-based groups that provide a variety of services,
including shelter and counseling, to the homeless.
Policy experts agree, however, that spending more money on services for
the homeless does little to address root problems. "You can fund all
the shelters you want in the world," says Crowley. "But what
does that matter, if people continue to not be able to find affordable
places to live?"
Reporting Intern Erin Heath contributed to this story.
Mark Murray, Marilyn Werber Serafini, and Megan Twohey
National Journal
