Workfare: true and false | Mormon integralism, pt 5

Caseworker discretion advised

The following is the fifth and final part of “Mormon integralism,” a series on learning from the institutional success of the LDS church. To catch up, see parts one, two, three and four.

We left off by observing the success of the LDS social welfare system and its interaction Utah’s state government in their joint war on multigenerational poverty. The question remains whether this success can be replicated elsewhere.

At first blush, the approach to work-relief pioneered by the LDS Church and Deseret Industries seems deeply compatible with the emphasis on work favored by many conservative policymakers. Yet work-based approaches to poverty reduction must be distinguished from statutory work participation requirements, such as those enacted as part of President Clinton’s 1996 welfare reform.

Not all work-based welfare reforms are made equal. Under the Trump administration, for instance, states were granted permission to impose work requirements on Medicaid’s able-bodied and non-elderly working-age population. Twelve states were approved to do so, but only Arkansas implemented them, and only for about a year. As Nia Johnson, Peggah Khorrami and Benjamin Sommers explain,

During this period, the uninsured rate in [the treatment] group rose from 10.5 percent to 14.6 percent. After a court order halted the work requirements in spring 2019, coverage losses largely reversed. But even then, there were notable differences in health care for adults in Arkansas who lost Medicaid compared to adults in Arkansas who maintained continuous Medicaid coverage. Those who lost coverage faced significantly higher barriers to medical care and had more trouble affording care.

Conditioning access to basic medical services on work is always a risky proposition, not least because untreated health issues can be a primary barrier to employment. Medicaid work requirements can thus create an ugly Catch-22: you need to work to access health care, but need health care to access work. As such, it’s not surprising that the main empirical evaluation of Arkansas’s experiment found the policy had adverse consequences with no discernible impact on employment:

We have four main findings. First, most of the Medicaid coverage losses in 2018 were reversed in 2019 after the court order. Second, work requirements did not increase employment over eighteen months of follow-up. Third, people in Arkansas ages 30–49 who had lost Medicaid in the prior year experienced adverse consequences: 50 percent reported serious problems paying off medical debt, 56 percent delayed care because of cost, and 64 percent delayed taking medications because of cost. These rates were significantly higher than among Arkansans who remained in Medicaid all year. Finally, awareness of the work requirements remained poor, with more than 70 percent of Arkansans unsure whether the policy was in effect.

Statutory work requirements are thus a relatively blunt instrument, requiring careful targeting, significant agency buy-in, and a host of wrap-around services to be effective. This isn’t new information. From 1991 to 1999, the U.S. Department of Health and Human Services (HHS) ran 11 real-world work relief experiments across seven cities, known as the National Evaluation of Welfare-to-Work Strategies (NEWWS). Each trial compared a group of single-parent welfare recipients newly subject to work requirements with a control group that faced no such requirements. Importantly, as economist Ed Dolan notes, “the work rules imposed on the program groups and the help given in finding and retaining jobs differed somewhat among the 11 experiments,” allowing us to learn from the variation between locations:

The highest rate of employment was achieved in an experiment in Portland, Ore., where 85.8 percent of those in the program group found work during at least one of the 20 quarters of the study period. But fully 81.7 percent of those in the control group also found jobs in at least one quarter. In the experiment that generated the lowest employment rate, in Riverside, Calif., 66.9 percent of the program group worked, compared with 61.9 percent of the control group. Moreover, in 5 of the 11 experiments, the positive impact of work requirements on employment was not even statistically significant…

In the most successful of the NEWWS experiments, the one in Portland, case workers worked intensively with individual participants to cajole them into jobs or training programs, or to coerce them to make greater efforts by threatening withdrawal of benefits. But that modest success suggested that welfare programs are generally ill-designed in this regard. The HHS report directly attributed poor results in Oklahoma City and Detroit to limited staff and program funding.

The 1996 welfare reform replaced the old welfare system with TANF, causing both a substantial disenrollment and an unprecedented increase in workforce participation among single parents. Yet it’s important to not over-learn from this one episode. The old welfare program, AFDC, experienced a major increase in enrollment in the years leading up to its reform, and offered benefits that clawed-back at rates exceeding 90% — a classic poverty trap. By the mid-1990s, there were several million single parents in the program who likely would have been working if not for the active disincentive. Time limited benefits, explicit work requirements, and a carrot in the form of the newly expanded Earned Income Tax Credit all helped break the benefit trap, but saliency mattered too. Welfare reform was a national debate that communicated a clear message to current welfare recipients, even if they didn’t know all the details: find a job before we pull the rug. As the new rules came into effect, caseworkers reinforced this message to their clients, and helped raise awareness of the availability of work supports like the EITC. Along with the tailwind of the booming late-90s economy, single parent employment rates thus witnessed a step-function increase.

The first year after welfare reform was also the peak year for TANF funding, as inflation has eroded the program’s $16.5 billion block grant substantially overtime. In addition, funding allocations to states were frozen in time based on AFDC’s old matching formula. Matching grants are when the Feds give money in proportion to what a state spends, which naturally rewards the richest states with the fiscal capacity to spend the most. To this day, rich states like New York and California receive 5-10 times more in TANF funding per-child than poorer states like Idaho or Mississippi.

Rich State, Poor State: The Case for Reforming Federal Grants

In short, work requirements often fail to encourage work, but can be moderately successful when paired with a salient cultural message and the staff and funding needed for intensive case management. Notably, the LDS approach to work-relief suffers much less from this problem, both because those enacting the programs have significant personal buy-in, and because the Church provides a comprehensive suite of supportive services alongside those directly related to employment. Importantly, those services and the Church itself are funded through revenue sharing, ensuring wards in poorer areas still have ample resources. TANF’s designers thus have much to learn from the LDS approach to fiscal federalism, as discussed in Part 4.

Rules versus discretion

Contrast Deseret Industries with American Job Centers, the Federal government’s poor attempt to copy the German model of Arbeitsamts or employment offices. In Germany, such offices help connect unemployed workers with job search services and apprenticeships through a job exchange. American Job Centers are likewise supposed to be a “one-stop shop” for our own panoply of employment programs, but the experience is closer to that of a DMV. America has upwards of 43 different Federal employment and training programs, of which few to none have passed rigorous evaluations. In turn, when customers enter a job center, they end up “frustrated filling out applications in what they viewed as redundant paperwork requirements for multiple programs with varying eligibility criteria.”

Employment offices: the German way

More recently, a randomized controlled trial of Nevada’s “Reemployment and Eligibility Assessment” (REA) program found large benefits from merely requiring UI claimants to meet with a job counsellor to develop a personal reemployment plan. Claimants who went through the program found jobs significantly sooner, and experienced a 15-18% increase in earnings over the study’s 18 to 36 month follow-up period.

As discussed in Part 4, Nevada’s REA program parallels the in-take process at Deseret Industries, in which participants are first interviewed by a Development Counselor to assess their needs, and once accepted, have immediate access to a Job Training Coach. While it’s not known whether Nevada’s results can be extrapolated to Deseret Industries and the Church’s Development Counseling and Self-Reliance services, such findings at least suggest they’re on the right track.

But the true secret to the LDS’s success lies in the trust and discretion they invest in those closest to the ground — what I’ve called “embedded autonomy.” Whereas counsellors at American Job Centers are chastened from recommending any specific program or career path, Deseret counselors have the discretion to make real judgment calls and tailor their advice to individual needs.

Replicating the LDS’s success elsewhere thus suggests reforms based on the following core principles:

• Ensure Federal funding to states is allocated on the basis of need, not spending power. Poorer states need proportionately larger grants to equalize their fiscal capacity and provide comparable services to the poor. Right now, TANF, Medicaid, and most other major federal grant programs do the opposite, exacerbating the inequities between rich and poor states.

• Maximize local autonomy and discretion. Block grants are a step in the right direction, but can still come with too many strings attached. In Canada, the federal government funds provincial health care and social services through unrestricted, per-capita block grants that track inflation, allowing provinces to run their social services however they see fit. In lieu of consolidating existing federal-state programs into a single block grant, the US could make much more liberal use of demonstration waivers and related tools to hack away the red-tape.

• Allow program dollars to flow through local community organizations, including churches and benefit societies. But don’t think the Potemkin civil society of professionalized NGOs is a suitable replacement. For example, to the extent possible, dollars earmarked for early childhood education and child care should be equally accessible to faith-based groups and informal providers like homeschool collectives and babysitting co-ops as they are to professional pre-k programs with highly compensated CEOs.

• Enforce a culture of accountability and experimentation. That means sunsetting programs that don’t work while scaling-up programs that do — learning that can come through both rigorous RCTs and a bottom-up discovery process of trial-and-error experimentation.

These lessons may be relatively high-level, but are at least actionable in a way that religious conversion is not. Nevertheless, the LDS approach only works as well as it does because it integrates these principles with the thick forms of social capital that religion seems uniquely capable of providing, as discussed in Part 2.

Thus, while government can crowd-out civil society, the history of the LDS Church demonstrates that government funds can also be used to crowd civil society back in. Yet proving that the economies of scale of government can be reconciled with the trust and efficacy of thick, decentralized communities matters for much more than social welfare policy. Indeed, it’s a microcosm for understanding the potential paths out of our crisis of modernity writ-large.