[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
LESSONS LEARNED FROM WELFARE REFORMS IN OTHER COUNTRIES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 17, 2015
__________
SERIAL NO. 114-HR08
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
DEVIN NUNES, California CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois XAVIER BECERRA, California
TOM PRICE, Georgia LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida MIKE THOMPSON, California
ADRIAN SMITH, Nebraska JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota RON KIND, Wisconsin
KENNY MARCHANT, Texas BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee JOSEPH CROWLEY, New York
TOM REED, New York DANNY DAVIS, Illinois
TODD YOUNG, Indiana LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina
David Stewart, Staff Director
Janice Mays, Minority Chief Counsel and Staff Director
______
SUBCOMMITTEE ON HUMAN RESOURCES
CHARLES W. BOUSTANY, JR., Louisiana, Chairman
TODD YOUNG, Indiana LLOYD DOGGETT, Texas
KRISTI NOEM, South Dakota JOHN LEWIS, Georgia
PAT MEEHAN, Pennsylvania JOSEPH CROWLEY, New York
GEORGE HOLDING, North Carolina DANNY DAVIS, Illinois
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
C O N T E N T S
__________
Page
Advisory of November 17, 2015 announcing the hearing............. 2
WITNESSES
Douglas Besharov, Professor, School of Public Policy, University
of Maryland.................................................... 5
Melissa Boteach, Vice President, Poverty to Prosperity Program,
Center for American Progress................................... 27
Richard Burkhauser, Sarah Gibson Blanding Professor of Policy
Analysis, Cornell University College of Human Ecology.......... 42
LESSONS LEARNED FROM WELFARE REFORMS IN OTHER COUNTRIES
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TUESDAY, NOVEMBER 17, 2015
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:03 p.m., in
Room 1100, Longworth House Office Building, the Honorable
Charles Boustany [Chairman of the Subcommittee] presiding.
[The advisory of the hearing follows:]
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Chairman BOUSTANY. Good afternoon, everyone. Welcome to
this hearing. This hearing is the final hearing in a series we
began earlier this year on how we can move America's families
forward. In February of this year, I announced that the
subcommittee would undertake a top-to-bottom review of our
Nation's safety net in how welfare policies can better support
work, strengthen families, help individuals escape poverty, and
move up the economic ladder.
In the months since, we have held hearings on using
evidence to fund what works, reforming Temporary Assistance for
Needy Families to make it more successful, and protecting
taxpayers from fraud and waste. We have held our first joint
hearing in at least 20 years with our colleagues on the
Agriculture Committee to discuss how programs can better reward
work. We reviewed the complicated array of programs designed to
help people in need, highlighting how this maze makes the
welfare system confusing for States to operate, and frustrating
for families to navigate. But most importantly, we have
actually heard from real people, those who are experiencing our
safety net programs firsthand to find out what they really need
to find work, to escape poverty, and hopefully move up the
economic ladder.
In the mid-1990s, this subcommittee was instrumental in
developing and passing legislation to reduce welfare dependence
by supporting and encouraging work. The resulting 1996 welfare
reforms, passed by a Republican Congress and signed by a
Democratic President, brought about major changes in how the
Federal programs assisted those in need. As a result of those
reforms, the number of people receiving welfare declined
significantly, employment rates rose for those most likely to
be in poverty, and the percentage of children living in poverty
fell as well.
Other countries took note of these changes and many began
experimenting with ways they could reform their systems as well
to help more people move off of welfare and into work. While
welfare reform in the United States spurred other countries to
undertake their own reforms, in many cases other countries have
now gone well beyond the reforms we have made in the 1990s.
For example, other countries have implemented policies such
as requiring work or work preparation in exchange for benefits
in multiple programs, revising eligibility standards to target
benefits to those most in need, consolidating and coordinating
programs to simplify their systems, working with
nongovernmental groups to deliver key benefits and services,
and holding programs accountable for achieving real outcomes.
Today's hearing will highlight specific changes other
countries have made to modernize their safety net so more
people get the help they need to get back on their feet. We
will also hear how the lessons learned in other countries can
help us develop ideas to further reform the welfare system here
in the U.S.
So we certainly welcome our guests, our distinguished panel
today, and look forward to their testimony.
At this time, I would like to yield to Mr. Davis for the
purpose of an opening statement.
Mr. DAVIS. Thank you very much, Mr. Chairman. And I welcome
this hearing, and I certainly want to thank our witnesses for
being here with us this afternoon.
While there may be some promise in welfare, the work
experiments going on around the world, our experiences offer a
cautionary tale about declaring victory too soon. In the
Temporary Assistance for Needy Families program, called TANF,
for example, after an early burst of innovation and investment,
States began to burden their welfare block grants to fill State
budget holes instead of investing in work and getting families
out of poverty.
In 2014, only 8 percent of TANF funds were used for work
activities, and less than half supported its full purpose. TANF
continues to measure caseload reduction but didn't hold States
accountable for employment outcomes. As a result, more than
three-fourths of families in poverty got no help at all from
TANF. A recent study found that as many as 3 million American
children live on less than $2 a day. There are lessons we can
learn from other countries, and I hope my Republican colleagues
will work with us to implement them. For example, Great Britain
set a goal for cutting child poverty in half, and then they
changed their public policies to meet that goal. My Child
Poverty Reduction Act would allow us to follow their good
example.
We can also learn a lot from other nations about public
policies that support work. The United States is the only
developed country that provides zero weeks of paid, parental
leave. Just this year, our committee failed to even take up the
Family and Medical Insurance Leave Act when it was referred to
us. The United States ranks close to dead last in terms of
investment in child welfare. As a percent of GDP, Denmark
invests seven times more than we do in quality child care. The
Netherlands, five times more; Great Britain, four times more.
Last year, Republicans have blocked the funding needed to
make quality child care available to working families, leaving
millions of families on waiting lists instead of at work.
We know health care is a key work support, one that is
guaranteed around the world. But despite all advances the
Affordable Care Act brought, Republican governors in 19 States
are blocking health care for millions, and Republicans in
Congress have voted 61 times to undermine or repeal the ACA.
Democrats are serious about the work that lifts families out of
poverty. That means building on successes like our earned-
income tax credit, and it means providing real support to
working parents as they try to make a better life for their
families.
So we welcome this hearing. Thank you very much, Mr.
Chairman, and I yield back.
Chairman BOUSTANY. Thank you, Mr. Davis.
At this time, I would like to welcome the newest member of
our committee, the Ways and Means Committee, the gentleman from
South Carolina, Mr. Rice. Tom, welcome. Glad to have you on the
committee. I know we will work out subcommittee assignments,
but we certainly welcome you here today.
Without objection, each member will have the opportunity to
submit a written statement and have it included in the record.
At this point, I would like to remind our witnesses to limit
your oral statements to 5 minutes to keep us on time here with
the--but your full written testimony will be made part of the
record.
Chairman BOUSTANY. On the panel today, we have three very
distinguished witnesses. We have Douglas Besharov, the Norman
and Florence Brody Professor at the School of Public Policy,
University of Maryland. Welcome. Melissa Boteach, vice
president of the Poverty to Prosperity Program, Center for
American Progress. Welcome. And Richard Burkhauser, Sarah
Gibson Blanding Professor of Policy Analysis, Cornell
University College of Human Ecology.
We welcome all three of you.
And, Mr. Besharov, thank you. You may begin your testimony.
Please turn your microphone on.
STATEMENT OF DOUGLAS BESHAROV, PROFESSOR, SCHOOL OF PUBLIC
POLICY, UNIVERSITY OF MARYLAND
Mr. BESHAROV. There we are. Sorry about that.
Thank you very much for having me. This is an important
topic, because I think there is a great deal to learn from
other countries. It is a tricky process, because some people
like this part of a program, some people like that part of a
program, and to get a fuller picture is extremely difficult,
especially in 5 minutes. So I am going to pick one topic, and I
am going to do what my wife suggested, which is no numbers.
I think you have heard that although unemployment is down,
labor-force participation in all its ways is also down. It is a
process that started long before the recession. In fact, for
African-American men and for low-skilled white men it started
in the 1970s. It is partially a function of our safety net, and
the question is, what we do about it as the numbers get larger.
The Europeans face a similar situation. They have a much
more generous safety net, or at least they did until recently.
Unemployment benefits were for 5 years in some countries, in
some countries unlimited. And what they found was,
unfortunately, human nature being what it is, the temptation of
unlimited unemployment benefits was a great attraction, even
for the most productive members of our society. So starting
about 15 years ago, they systematically started changing their
social welfare system.
Now, as Melissa is going to point out, there is a little
bit of a difference here, because their systems start more
generously than ours do. But I think that is part of the lesson
here, which is, you can't make our system more generous without
addressing its negative effects on labor-force participation.
It is a little bit like the immigration problem, do we close
the borders first and then go to legalization and citizenship?
Do we do them both at the same time? And that is for the
politicians. What the Europeans had was a system of very
generous benefits and decreasing labor force participation. So
in my testimony--and I have a picture, nice little chart, with
all the countries that do it--they have basically done three
things: Number one, they have synchronized benefits. And this
is both a left and a right issue.
In our country, someone runs out of unemployment benefits
and it is a second step and often a different step to get on
TANF. It is a second step and often a different step to get on
food stamps and so forth. So what they are doing in return for
limiting unemployment benefits, is making it easier to get on
the equivalent welfare, and in welfare, imposing work
requirements, what we call work requirements.
The second thing they are doing--so that is
synchronization. The second thing they are doing is imposing
across almost all of their programs, and you can see the
countries that are doing it. France is actually close to doing
it already, and that is mandating some kind of work-related
activity in return for benefits.
The third thing they are doing is they are giving greater
authority to localities, and they are allowing a greater use of
private contractors. It is quite striking. I was in England
when labor--when the government was labor, and labor was part
of the process of contracting out to nonlabor--nonunion
activities.
So three things: Synchronizing benefits, mandating some
kind of work, and devolving authority. Each one extremely
difficult in this country, I want to say, so please don't hear
me saying this is a piece of cake. The worst problem, I think,
is the committee structure of the Congress, I am afraid to say.
I was so glad, Mr. Chairman, that you mentioned a joint hearing
with Agriculture. My own view of SNAP is not where our major
welfare program--I have a chart in my testimony that shows how
SNAP recipiency is way up. That is our major welfare program.
If it is not coordinated with TANF, we will never make any
progress in my opinion.
In terms of the ability to devolve, we are a Federal
system. We don't exactly trust the States. Sometimes the
States, whether led by Republicans or Democrats, are very good
at milking the Federal Government for whatever they can, and I
think that is a reality as well.
However--and I have 9 seconds. However, I think this points
to the direction we have to take; synchronize benefits, mandate
work, and devolve authority. There are loads of lessons in this
country as well as abroad on how to do that.
Chairman BOUSTANY. Well, thank you.
[The prepared statement of Mr. Besharov follows:]
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Chairman BOUSTANY. Ms. Boteach, you may proceed.
STATEMENT OF MELISSA BOTEACH, VICE PRESIDENT, POVERTY TO
PROSPERITY PROGRAM, CENTER FOR AMERICAN PROGRESS
Ms. BOTEACH. Thank you, Chairman Boustany, Congressman
Davis, and Members of the Subcommittee for the invitation to
appear before you today. My name is Melissa Boteach, and I am
the vice president of the Poverty to Prosperity Program at the
Center for American Progress.
As I am sure we can all agree, the surest pathway out of
poverty is a good job. Unfortunately, over the past four
decades the gains from rising profits and productivity have
gone mainly to those at the top of the income ladder, while
low- and middle-income Americans have seen their wages stagnate
or decline. Even in good economic times, events such as job
loss, disability, or birth of a child are common triggers of a
spell of poverty or hardship. In fact, four in five Americans
will experience at least one year of significant economic
insecurity during their working years.
Economic inequality and family income shocks are not unique
realities to the United States. Yet, the U.S. consistently
ranks among the worst compared to other developed economies on
comparable measures of poverty. As we look to other OECD
nations to determine how we can learn from their experiences, I
will make two key points today.
First, we must take care not to cherry pick lessons from
these countries as to the context of the broader policy
framework. And second, there are important lessons that we
should take from other countries; namely, stronger labor
protections, more modern work-family policies, and more
adequate income security programs. Both of these points have
important implications as we seek to strengthen work and income
supports in the United States.
On the first point, some have lifted up examples such as
the universal credit in the United Kingdom as the inspiration
for efforts to consolidate or block grant multiple anti-poverty
programs in the United States. Yet, the universal credit
guarantees benefits to all eligible low-income people and is
administered centrally by the national government.
In contrast, we have seen what happens here when you block
grant a program and send it to the States. Temporary Assistance
for Needy Families, as discussed more fully in my written
testimony, only serves one in four poor families with children,
has been unresponsive during recessions, and requires virtually
no State accountability for results.
In fact, recent data shows that States only spend an
average of 8 percent of the block grant on work-related
activities. It would be a terrible mistake to view TANF as a
model for any of our vital income security programs.
Moreover, one of the main problems that the United Kingdom
is trying to address, financial penalties for work, is far less
of an issue in the United States in part due to our earned-
income tax credit. Together, the earned income and child tax
credits reward work and lifted approximately 10 million people
out of poverty last year. That is one of the reasons why it is
so important that as Congress considers tax extenders that we
build upon what works and not make any business tax breaks
permanent without also making permanent parts of the EITC and
child tax credits set to expire in 2017.
Moreover, there is growing bipartisan support, including
among members of the panel testifying today, for expanding the
EITC for childless adults. So what lesson should we draw from
other wealthy nations to cut poverty and promote economic
mobility? First, other developed nations recognize that
supporting people in work means adopting stronger labor
standards. In the United States, the Federal minimum wage is a
poverty wage. Low-wage workers often face unpredictable or
inflexible schedules, and only about 7 percent of private-
sector workers belong to a union.
In contrast, even as the United Kingdom's conservative
government is implementing the universal credit, they are
moving forward to increase their already more generous minimum
wage with a goal of reaching 60 percent of median earnings by
2020. Workers in the United Kingdom also enjoy a right to
request flexible and predictable schedules. And in Denmark,
collective agreements between trade unions and employer
organizations are the norm and not the exception.
Second, other OECD nations have more robust work-family
policies that support women's labor force participation such as
paid sick days and paid family leave. In contrast, the U.S. is
the only developed Nation in the entire world that fails to
provide paid family or parental leave.
Finally, other OECD nations tend to have much more adequate
income insurance policies than the U.S. for the income shocks
that can rock a family. Nearly all OECD nations guarantee
healthcare coverage to their citizens. Nearly all OECD nations
provide a child benefit that significantly reduces child
poverty. And most countries offer significantly more adequate
unemployment insurance than the United States, for only about
one in four unemployed workers currently receive benefits.
Even with recent disability reforms, countries such as the
United Kingdom, Australia, and the Netherlands, these countries
still have higher recipiency rates, more adequate benefits, and
spend more of the shared GDP on their disability programs than
we do here in the U.S. These ideas are not just international
standards. Policies such as raising the minimum wage and
enacting paid family leave command the support of the vast
majority of Americans across the ideological spectrum. Not only
that, they are proven methods to reduce usage of the safety net
in the first place. Raising the minimum wage at $12 an hour by
2020 would save $53 billion in nutrition assistance over the
next 10 years.
We must build on this body of evidence from both the U.S.
and abroad to advance these types of policies with the proven
track record of cutting poverty and boosting the middle class.
Thank you.
Chairman BOUSTANY. We thank you.
[The prepared statement of Ms. Boteach follows:]
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Chairman BOUSTANY. Mr. Burkhauser, you are recognized.
STATEMENT OF RICHARD BURKHAUSER, SARAH GIBSON BLANDING
PROFESSOR OF POLICY ANALYSIS, CORNELL UNIVERSITY COLLEGE OF
HUMAN ECOLOGY
Mr. BURKHAUSER. Thank you for the opportunity to speak to
you today in this iconic American room.
I have one figure, which I would like to put up here that
comes from my co-authored work with Mary Daly and Nicholas
Ziebarth, that shows the dramatic growth and eventual decline
in disability caseloads of a working-age person in Germany,
Netherlands, and Sweden over the past 40 years and the rise in
the United States especially since 1990.
We argue that neither changes in underlying health nor in
population characteristics can account for this cross-country
difference. A systematic look at the policies in place during
the growth years in these European countries and in the United
States today, reveals disability programs focused on providing
cash assistance rather than full-time work. This policy design
was based on several assumptions.
One, people with disabilities are unable to work. Two, it
is easy to determine who is and is not disabled, and three, the
behavior of individuals, program managers, and employers is not
affected by program rules or incentives. None of these
assumptions are correct. The single most important factor in
reducing caseloads in all three European countries was a shift
to work-first policies. These policies slowed the movement of
disabled workers onto the rolls by ensuring the accommodation
and rehabilitation were first tried before workers were
considered for long-term disability cash payments.
Germany accomplished this by substantially increasing the
bar for entry onto their disability program and reducing
benefits, but also by requiring employers to implement a
workplace integration program. This ratcheting up of
eligibility criteria, of government disability benefits,
resulted in major growth in private disability market. In 2012,
for instance, 61 percent of employed men and 42 percent of
employed women were covered by the private disability insurance
system, more than twice that in the United States. Because
private disability payments are experience rated, this
encouraged workers and employers to look to rehabilitation and
accommodation first, since they now more directly bear the cost
of the movement onto the disability rolls.
In the Netherlands, disability standards were also raised
and benefits reduced, but an even larger shift to workforce
policies took place. Employers are now mandated to provide the
first 2 years of disability benefits to their disabled workers.
In addition, employers must demonstrate an effort to provide
accommodation and rehabilitation to their works, and these
workers must show a willingness to use them. This policy change
also resulted in major growth in private disability markets,
and these experienced-rated payments further ensure that
accommodation and rehabilitation are tried before workers move
on to disability rolls.
In Sweden, the government merged their sickness program
with their disability program and began a series of changes to
standardize and enforce the administration of these now joint
systems. Most notably was the centralization of screening
processes. This allowed policymakers to better regulate the
gatekeepers and enforce the strategy of promoting participation
in work before offering cash benefits.
So what lessons can the United States learn from these
experiences? European policy outcomes show that it is not the
case in the absence of benefits individuals with disabilities
would remain out of the labor force dependent on other forms of
public or private assistance for support.
Disability reforms over the last decade provide evidence
that employment will increase and the pro-work policies replace
policies that had the opposite effect. People with disabilities
would otherwise have moved on to long-term cash benefits were
able with reasonable levels of support to return to work.
Critics of these reforms argue that the disability insurance is
especially important in economic downturns or individuals with
limited work capacities are more likely to be laid off and less
likely to find a job.
Past experience, especially in Germany and the Netherlands,
who choose this logic to turn their long-term disability
program into unemployment programs suggest that it can be a
very expensive and untimely and ultimately ineffective policy
decision.
The key message from the EU experience is that exclusively
divorcing long-term unemployability insurance, from disability
insurance, is critical to effectively targeting resources for
its old populations. The experience of the EU nations suggest
that it is possible to balance competitive goals of providing
social insurance against adverse health shocks and maximizing
the work effort of all working-age adults.
Past disability policies in both the United States and EU
countries have focused more on the former than the latter
resulting in rapid growth of disability caseloads to outpace
growth in the economy. Efforts to shift to more pro-work
policies in Europe suggests that fundamental disability reforms
that can lower long-term costs for taxpayers, that can make the
job of disability administrators less difficult and approve the
opportunities of Americans with disabilities to work. Thank
you.
Chairman BOUSTANY. We thank you for your testimony.
[The prepared statement of Mr. Burkhauser follows:]
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Chairman BOUSTANY. Now we will move on to questions. And I
will begin by starting with Mr. Besharov.
On page 6 of your testimony, you have a chart summarizing
the types of changes European countries have made to their
safety net programs in recent years. And the most common one,
just in looking through the whole collection of them, appears
to be requiring individuals to work or prepare for work in
exchange for receiving benefits. And in our subcommittee
hearings, we have talked about the importance of having welfare
programs, a system of programs focused on work, trying to put
work first, but often times we focus on the government
implementation of this policy. And it struck me over the course
of the year, as I have tried to understand this, and I have
spoken to recipients, you know, beneficiaries of programs and
some of the trials that they have had in getting into
meaningful work, that one of the most important viewpoints that
we are missing, as we look toward reform, is looking at the
viewpoint of the employers, and how do you bring the employers,
who will provide jobs, into line with these government
programs, you know, Federal, State, and so forth?
I mean, just looking at the testimony and some of the other
things I have read, other countries have tested different ways
of partnering with employers to help welfare recipients move up
as well as to help employers get the types of employees they
need. Of course, we know in certain areas there are--their job
availabilities are not being filled by Americans who could be
looking at this. And I am convinced that we can't solve a lot
of our economic problems until we address this issue of how do
you get those who are not working who can work into work and
meaningful work?
So what have other countries done in this area, looking at
that side of it from linking the employers to these programs so
that we have, you know, a system that actually helps the
beneficiary get into work? And are there lessons that we can
learn in working with employers here in this country, lessons
that we can learn from our partners in Europe as to how they
have been successful with this?
Turn your mike on.
Mr. BESHAROV. Yeah, sorry. A small detail first. The
initial implementation of TANF was very exciting, and it was
almost purely work first, which is look for a job. Many of us
hope that there would be work experience, but the caseloads
went down so quickly and, frankly, the Clinton administration
was not interested in work experience, which is on-the-job
training of some sort. So that whole process disappeared from
our welfare procedures.
What the Europeans do is they take advantage of the fact
that there are all these small blue-collar jobs. Notice I said
blue collar, because it is extremely difficult to get a welfare
recipient who has dropped out of high school and so forth into
a serious white-collar situation. So in the U.K., in Germany,
there are processes with working with small employers, not just
the large ones. And if you ask me what the American connection
there would be, it would be either in legislation or in policy
to make it easier for work experience and under TANF or SNAP or
whatever, to be with individual employers--we don't have to be
with the GEs or the whatever, the Amazons. Get credit for that
and accept the fact that it is blue-collar work, not white-
collar work and not limit work experience to non-for-profit
firms, which is the case--or organizations, which is the case
in many parts of the country.
Chairman BOUSTANY. Yeah. It seems to me that that is how
you get people on that ladder to where they can move up. And
one of the things that has been missing, as I have reviewed it,
you know, clearly, you spend, you know, a long time studying
this, but as I have looked at it over the course of a year, it
seems that we just have these disconnects.
We have a Federal program, States basically operate the
program. The metrics we are looking at really are not as
helpful as what we really need. What we really need is, okay,
who is getting into work? What kind of wages are they starting
at? What is happening, 3 months, 6 months later, a year later?
Are they really into a meaningful job? But linking those small
employers and the job availability to the beneficiary and just
putting two and two together just seems like it ought to be
simple, but yet, it doesn't happen.
Mr. BESHAROV. I see the time. At the risk of creating a
minor tremor here, one of the problems is going to be the
minimum wage. Most of these programs have an exemption to the
minimum-wage programs. If the minimum wage is actually $15 an
hour, I think it is going to be extremely difficult to see
current welfare recipients untrained being hired for those
jobs.
Chairman BOUSTANY. Thank you. My time has expired. I am
going to go to Mr. Davis.
Mr. DAVIS. Thank you very much, Mr. Chairman.
Ms. Boteach, I have a bill called the Child Poverty
Reduction Act that draws on the successful effort in the aid to
set measurable national benchmarks for child poverty reduction.
Within the first decade of enactment, Britain's child poverty
rate decreased by 50 percent. In contrast, in the U.S., as many
as 3 million children are living in families with less than $2
a day in cash income.
Is there a similar trend in extreme child poverty in other
developed countries? And if not, why not?
Ms. BOTEACH. There is not. You have looked since 1996, as
welfare reform has been implemented, and you have seen an
increase in deep poverty. And one of the lessons I think that
is core to draw from the United Kingdom is they did it
through--they set a national target which again mobilizes
people on a common goal and can bring different actors
together, but then the policies that flow from that did the
basic labor standards, they enacted the minimum wage, they
expanded their paid family leave. But they also expanded child
tax credits, family allowances, and they made sure that there
was a floor underneath which people should not fall.
And so that combination of both rewarding and encouraging
work, and at the same time ensuring that there was an adequate
social insurance system in place so when people fell down means
that in countries like the United Kingdom and other countries,
you don't see the same degree to which you have $2-a-day
poverty here in the United States.
Mr. DAVIS. So we do see some precedent if we want to follow
the pattern that might help us move more of these families out
of poverty?
Ms. BOTEACH. Right. We can look across the pond and see not
just in the United Kingdom, but in many other OECD countries,
this combination of raising the minimum wage, there is higher
union densities in these countries, which already means that
wages tend to be higher. Policies that enable women to more
fully participate in the labor force.
If we were to close the gender wage gap in this country we
would cut poverty for working women and their families in half.
And so policies that seek to ensure that women can both
participate in labor market as well as earn similar to their
male counterparts are going to have dramatic increase on
poverty.
And then, finally, for example, our child-tax credit in
this country, a single mom working full time under minimum wage
under current law will get about $1,800 from the child-tax
credit. But if Congress fails to make permanent the 2009
provisions, that single working full time at the minimum wage
with two kids would get about $57.
So we need to think how we get things like our child-tax
credit and all of our safety-net programs more fully available
to all of those who qualify.
Mr. DAVIS. Let me ask you. Several of the countries we are
discussing today have a particularly strong history of
collective bargaining. A strong labor movement in the
Netherlands is one of the reasons that their disability policy
did not lead to widespread age discrimination and wages in
Denmark are consistently higher than in the U.S. because
collective bargaining is the rule, not the exception.
We know that union membership have benefits for workers,
but what are some of the benefits that researchers have found
for children who live in union households as many in Denmark
do?
Ms. BOTEACH. There are very strong associations between
union density and children's economic mobility. For example,
union density, it has about the same association as dropping
out of high school in terms of the opposite effect on
children's economic mobility. High school graduation is widely
seen as a very important variable in determining children's
life outcomes. An analysis by Center for American Progress and
our colleagues at Harvard has shown that there is a similar
premium that unions provide in terms of children's economic
mobility.
Another thing that unions do, is unions are associated
controlling form many other factors with marital stability,
through the increased premium of wages, stability of schedules,
et cetera. And so in terms of thinking about families, in terms
of thinking about children, beyond just the benefits to the
economy, unions benefit children and families strongly.
Mr. DAVIS. Well, let me thank you very much. And so it
seems that union membership does, indeed, have value for
children as well as for their families?
Ms. BOTEACH. Absolutely.
Mr. DAVIS. Thank you very much.
And I yield back, Mr. Chairman.
Chairman BOUSTANY. I thank the gentleman. We will now go to
Mr. Meehan.
Mr. MEEHAN. Thank you, Mr. Chairman. And I thank each and
every one of you, not only for your testimony here today, but
the work professionally you have put into studying these issues
so that we can have the greatest impact.
And I am interested in this, finding this right balance.
And, Professor Besharov, you seem to be talking about this
place where I am trying to understand where this place is,
where there is the--we want to increase workforce participation
by people who are, you know, in programs like this. And what
have you seen with respect to anything overseas or others that
you have studied--where is the right balance for financial
incentives to get people to stay in the workforce versus the
opposite impact, which is at the certain point you begin to
say, you know, I may not work? Has anything worked to find that
right balance, or where is that balance?
Mr. BESHAROV. It is always difficult to say what a
particular program works. It is much more a question of the
expectations that permeate the agency and the society. What the
Germans have succeeded in doing, what the French are trying to
do, is change the public ethos about the receipt of public
benefits. What they are trying to say is across all these
programs, we will support you, maybe not as much as you would
like, maybe not as much as the left, although many of these
programs have been proposed and adopted by the left. We will
support you, but we expect you to look for a job.
Are there penalties for looking for a job--for not looking
for a job? Yes. In some places, the welfare-type benefits are
reduced in steps. In some places they are terminated. And what
is really quite striking, and I don't mean to turn to a
colleague, but what is striking about some of the disability
reforms is that unlike our system, we not only encourage people
on--they not only, in some countries, encourage people on
disabilities to work, they reward them financially. They think,
as I think many disability advocates do, that there is no such
thing as a person who can't work.
Mr. MEEHAN. I am not troubled by that concept, but let us
flip that. Because one of the things we often talk about is
discrimination against somebody who is disabled. So how do you
treat two classes of people, a person who is--well, you know,
how do you treat two classes of people, somebody else who is
just in the workforce versus how do you give a higher salary to
somebody who has a disability to do effectively the similar
work?
Mr. BESHAROV. The way they do it in Europe--in some
countries is, there is a disability payment. And if that person
gets a job, we don't reduce the disability. They don't reduce
the disability payment dollar for dollar.
Mr. MEEHAN. Right.
Mr. BESHAROV. It is just the way we changed welfare a
little bit, but not enough. Which is they disregard some of the
income to create an incentive. Now, it is expensive to do that,
and it is a little bit of a gamble. Your idea here is, if I do
this, will the caseloads go down. In this country we seem to be
hammer locked not to even try.
The recent budget agreement takes us a step further away
from that kind of solution in disability. I think it belongs in
disability. I think it belongs in TANF. I think it belongs in
SNAP. I think it belongs in all the welfare programs that we
create, an incentive to go to work and we not penalize people
for being in work.
Mr. MEEHAN. Would there also be similarities to other kinds
of supports that would not be used as penalties, say, for
instance, there was discussions about women who need child care
in order to be able to stay in the workforce?
Mr. BESHAROV. There is research on this by the MDRC, the
New York City research unit, which is, I think, widely regarded
on both sides of the aisle. I am not endorsing the policy
prescription here, but the research was about whether people in
public housing should be required to work or at least engage in
work first. And the finding--this is post TANF. This is about 7
years ago. The finding was very clear that requiring recipients
in public housing to look for work increased their work.
And the MDRC recommendations are pretty clear about this.
Yes, you can do it in a range of programs. My own sense is, I
would love to see it happen in the mainstream programs first,
TANF, SNAP. Let's do it there before we get it to housing and
child care, which raise a host of other questions about the
well-being of children. But the research suggests that any time
you ask someone receiving a benefit to do something in return,
or almost any time, you get a result. You get a behavioral
change.
Mr. MEEHAN. Thank you, Mr. Besharov.
Does anybody else have a comment with respect to those
issues before I yield back?
Ms. BOTEACH. If you don't mind, I would like to make a
clarification. In the U.S., our Social Security disability
insurance system is not mutually exclusive with work. People
who receive SSDI can, in fact, go back to work and without
getting knocked down on their disability benefits for up to a
year. And at any point after that, if they are able to earn
above a very minimal threshold, they can expedite a return back
onto SSDI if their disability worsens. And so work and
disability are not mutually exclusive as has been painted in
the previous comments is one clarification that I wanted to
make.
In fact, our SSDI system not only has the strictest
disability standard in the developed world, but it encourages
work in that way for those very few SSDI applicants who are
able to work.
In terms of barriers to work, child care is a very serious
one, indeed. Only about one in six people who are eligible for
childcare systems in this country is able to access it, which
can result in people either not being able to go to work or
turning to low-quality care, which can reduce their ability to
stay in the job and it also has long-term consequences on
children's outcomes, because those early years are so important
for brain development. And so speaking about child care as a
work support is vitally important as part of this conversation.
Thank you.
Chairman BOUSTANY. I thank the gentleman.
Mr. Lewis.
Mr. LEWIS. Thank you very much, Mr. Chairman, for holding
this hearing.
Ms. Boteach, I would like you to follow up. In our country,
when you compare America to Denmark, Netherlands, United
Kingdom, we have little paid leave. But when you have young
children, mothers and fathers without child care, it is very
hard for people to be employed and remain employed. Someone,
someplace, somewhere must care for the child, care for the
children. Will you elaborate?
Ms. BOTEACH. Absolutely. I mean, I think this is very
relevant for the conversation we are having today on our
overall system of work and income supports. Because when women
have access, and when families have access, including fathers,
to paid family leave, you see greater attachment to the labor
market. Women don't have to leave their jobs in order to take a
short period to stay at home with young children. You see they
have higher earnings over time, more workforce participation
over time. And, in fact, a study of New Jersey's paid family
leave program--they are one of the three States that
implemented one--shows that women who were able to take the
paid family leave had 40 percent less usage of public
assistance in the year afterwards.
And so there is a direct relationship. It is very difficult
to talk about the safety net in isolation, because it is tied
very closely to our basic labor standards and our work-family
policies. And when we look to other countries and the reforms
that they are making, they have those crucial building blocks
in place.
This is important not just as a work support, it is
important speaking to intergenerational poverty. Because when
women are able to have access to paid family leave, when we are
able to close the gender-wage gap, those have effects on
children's early experiences. And the first few years of life
are so crucial for children's health, earnings, educational
outcomes in the long term, and when we make investments in
those children up front, we see dividends for years down the
line.
Mr. LEWIS. Thank you. If you could have young children
growing up in a family seeing their mother and father working,
supporting them, can that help to break the cycle of poverty?
Ms. BOTEACH. It is very important. It is important, because
income in those early years makes a huge difference. There was
a study that showed just $3,000 more for a poor family in
income resulted in that child earning 17 percent more later on
down the line.
And in addition, you want to make sure that people, as they
are breadwinning, they can balance those caregiving
responsibilities. You know, in the past 50 years, women have
gone from being about a quarter of breadwinners or
cobreadwinners in families to being two-thirds of mothers are
breadwinners or cobreadwinners in families, and yet, our system
of policy to support women's labor-force participation is so
out of date that we are, again, the only country that does not
have paid family leave. In not just the developed world, but
with very few exceptions, in the entire world.
Mr. LEWIS. Let me ask other members of the panel. If you
raise the minimum wage, provide a family, provide a mother, a
father with more income, could they afford to provide child
care, to help in providing child care?
Ms. BOTEACH. Yes. Those are complementary policies. Because
when you raise the minimum wage, when you enact things like
paid family leave, even in a minimum wage of $12 or $15, people
are still going to struggle to afford child care. CAP has
proposed, actually, a high-quality childcare credit, which
would not just ensure that families could afford on a sliding
scale to both pay into, but be able to receive child care, but
that it would be high-quality and safe and be held to certain
standards. Because it is important both to have the access to
child care, but also both for children's long-term outcomes and
for parents' peace of mind and ability to work for that child
care to be high quality as well.
Mr. BESHAROV. You asked about the other members of the
panel. If you look at my graph, figure 2 on page 4, what you
will see, and I don't think anyone would disagree, that over
the last 40 years, women have increased and mothers have
increased their workforce labor participation a ton. And male
labor-force participation has declined. That was what was
happening in Europe as well.
We can have a conversation about child care, and I think
that is an important issue, but I think the topic for the
hearing here should focus on the fact that we have a broader or
another problem, and that is declining labor-force
participation of men, white, black, and Latino. It is connected
to their opportunities. It is not just the minimum wage. It is
connected to their schooling. It is connected to the
availability of other benefits for them and other forms of
support. And if we are going to address the problem of low
labor-force participation, we will have to go far beyond child
care. And I think we have to address these benefit programs and
how they support men getting back to work.
Ms. BOTEACH. Can I----
Mr. LEWIS. I yield back--I am not quite out of time.
Do you want to respond?
Ms. BOTEACH. No. I mean, I wanted to underscore that I
don't think it is mutually exclusive to encourage men's labor-
force participation and women's labor-force participation. And
many of the policies set forth in my testimony, whether it was
raising the minimum wage, the earned-income tax credit for
workers without dependent children that would help low-income
men as well as low-income women to have bipartisan support.
These are things that we can undertake that reward work, and
tackle poverty, and also address men's labor-force
participation alongside women. But we need to encourage both,
not focus on one at the expense of the other.
Mr. BESHAROV. If I may. This committee has all the
resources to do everything. I think we can have that
conversation. But the Congress sets priorities. So I would say
that we have an issue for the welfare of the country that we
address. I think if you look at the graphs that I have
presented, a problem requiring immediate attention is what is
happening to the men. We have had a recent report about high
death rates for middle income men, white and black. And we know
there is a problem there, and it requires concentrated
attention.
Our only handles are these support programs, and we should
be looking at them. So I am not saying don't look at child
care. I am just saying it is very important that we understand
that the decline in labor-force participation is among men, not
among women. And it has been, except for the last few months,
it has been growing over the last 30 and 40 years. That is what
triggered European action. That is what triggered European
action, which was to try to get those men back into the labor
force.
Mr. LEWIS. Mr. Chairman, can I have just another----
Chairman BOUSTANY. Very quickly. Because we want to move
on.
Mr. LEWIS. I don't quite understand what you are suggesting
here. Are you suggesting that because women are working, and
they have child care, men, or something happening to them is a
psychological thing? What is it?
Mr. BESHAROV. Oh, no. No. No. Mr. Lewis, no, I don't mean
that. What I mean----
Mr. LEWIS. Are they giving up on work because their wives
are working and their children are being taken care of?
Chairman BOUSTANY. I think what Mr. Besharov is describing
is statistically, we are seeing low labor-force participation
among men across all----
Mr. LEWIS. Well, you are not suggesting that women are
taking men's jobs? I know you are not suggesting that.
Chairman BOUSTANY. No, I don't think he is suggesting that.
Mr. BESHAROV. I would never suggest it at a hearing like
this. Sir----
Mr. LEWIS. Well, you need to make it plain, make it clear,
rather than just throwing out something.
Mr. BESHAROV. So I think the issue here is, these men have
fewer opportunities. I am sure you have given speeches about
the decline in manufacturing jobs. I am sure you have given
speeches about the decline of the kind of jobs that high school
graduate men used to have. Those jobs are disappearing from
this country, and it has become a lot easier for those men to
either go on unemployment or disability or be supported by
other members of their families.
I hope it doesn't sound like a radical idea to say we
should help them as well as helping the women, and it is a
different set of benefits that we have to attach and deal with.
And I started my conversation by saying, I would love better
high schools, because part of this problem is going to get
worse if those young men continue to graduate from high school
without the skills they need for the modern world.
Chairman BOUSTANY. I am going to have Mr. Burkhauser
quickly respond, and then we will move on.
Mr. BURKHAUSER. So I would just like to bring a couple of
facts into this issue of whether minimum wage is an answer to
anything. The Congressional Budget Office scored the proposal
of the Obama administration to raise the minimum wage to
$10.25, estimated it would cost a half million jobs. Those jobs
mean less income for low-income people.
My work has shown that there is no relationship between
increases in the minimum wage and reductions in poverty. No one
can show that relationship. And the reason is that while it is
true that those people who continue their jobs have more wages
and income, those people who lose their jobs, their families
drop back into poverty.
Ms. BOTEACH. Just to clarify----
Chairman BOUSTANY. Thank you, Mr. Burkhauser.
We are going to move on now to Mr. Dold.
Mr. DOLD. Thank you, Mr. Chairman, and I want to thank you
for hosting this and holding this hearing. And I want to thank
our witnesses for coming.
And I think one of the interesting things that we are
trying to deal with is as we look at the situation around our
country, we have got 46 million people that are living in
poverty; we have too many people, as we look at our labor-force
participation rate, that is a decade's low. And, again, we want
to talk about how do we get people back to work, how do we get
people off of welfare rolls and back to work.
In your research, in your studies, as we look around the
world, what country is doing a particular program well that we
should be looking at right here? Can you just give me a country
and a program that we ought to be looking at for our own
research? Start over here.
Mr. BESHAROV. Well, there are many possibilities.
Conceptually, whether it is Germany, the U.K., Netherlands, and
I think Denmark as well, the idea that after a set period of
unemployment benefits, the amount of benefits goes down after a
set period. And after another set period of time, that person
goes on public assistance, and that public assistance also has
a work requirement. That conceptually, is what I would advocate
to you.
There are programs that grow out of that concept, but the
concept is government aid assumes workforce participation over
time. That is the concept I would propose.
Mr. DOLD. Great. Next, Ms. Boteach, do you have a
particular country, and a particular program?
Ms. BOTEACH. Sure. In the United Kingdom, for example,
their child allowance and family tax credit, they give to--they
have work tax credits that encourage workforce participation
similar to our EITC, but the child benefit in those countries
is not contingent upon work. And in part, that is because when
you have these--you know, the early years of children's lives,
the long-term economic prospects are largely dependent on those
income in those early years.
It is important to have work incentives. It is important to
have to have work incentives like the EITC that has been wildly
successful in this country, but in other countries, their child
benefits tend not to be contingent upon low-income families'
earning. So, for example, in this country, the lowest income
families are the ones who miss out on a portion or all, in some
cases, of our child-tax credit. And I think, as I said earlier,
I think we would all agree that a good job is the surest
pathway out of poverty----
Mr. DOLD. Right.
Ms. BOTEACH [continuing]. But that ensuring that children,
especially in their youngest years, have the resources for
their parents to be able to purchase diapers, be able to
purchase infant hygiene products, et cetera, is very important
for children's long-term outcomes.
Mr. DOLD. Mr. Burkhauser.
Mr. BURKHAUSER. The Netherlands used to be known as the
sick country of Europe, because it had more people on their
disability rolls than any other country in Europe or elsewhere.
The reason for that is because the government was interested in
keeping unemployment rates down, and they made a deal with the
unions and with the corporations to allow people to come onto
disability rolls, therefore, not be in the labor force and,
therefore, keep the unemployment rates down.
But the foolishness of that eventually became so great
because of the share of the populations coming onto disability
changed the system and recognized that what you want to do is
send signals to employers to provide accommodation and
rehabilitation to workers and keep them in the workforce. So
what they did was mandated employers be responsible for the
first 2 years of disability benefits.
Immediately, a private insurance system came up in the
Netherlands, because employers didn't want that risk. And now,
an experience rated private insurance system ensures that
people don't go onto the disability rolls to hide them, hide
them from the unemployment rate. They only go on there when
they can't work. These sorts of things of playing around with
the system to make the numbers look better is a rampant kind of
problem. And what you need to do is figure out what exactly it
is you want to do.
So I will just give you an example of the poverty rate we
have been talking about. You know that the poverty rate, the
official poverty rate that we now use doesn't include earned-
income tax credits as income to measure about whether you are
in poverty; they don't include the food stamps. We have a
supplemental poverty measure, that when you look at that
measure, you see the poverty rates have fallen substantially in
the United States. So we should get our numbers right, at
least.
Mr. DOLD. Well, I certainly appreciate that. And one of the
things that we do know in terms of how we combat this, we want
people to get into a good job. So the question is, what role do
the employers play or have you seen the employers play over--in
other countries, and what can we be doing?
One of the things that we do know, and we have seen, we
have had people testify before is that once you reach to a
certain level of income, the benefits drop. And it is, in
essence, like a cliff. And we can argue whether the recipients
know where the cliff is. I would argue they know exactly where
the cliff is. So we need to try to provide that off-ramp. Are
there countries out there that are providing that off-ramp to
allow them--again, we want to encourage them to get that raise,
encourage them to excel in the workforce and still not just cut
off benefits.
Mr. BESHAROV. It is extremely difficult, because when you
try to make the off-ramp gentle, you include many more people
in the program, and it gets extremely expensive, more expensive
than, I think, both sides of the aisle.
Mr. DOLD. Is there a country out there that does it,
though? Is there a country out there that is doing it well?
Mr. BESHAROV. The U.K. is trying very hard to do it and
having great difficulty doing it. And we might have a
disagreement about how successfully they are doing, but the
U.K. is doing it. And the countries that try to synchronize
their disability, and their UI, and their welfare, come close
on those benefits, not the benefits for child care and so
forth, which are, in this country, often a cliff.
Mr. DOLD. Thank you, Mr. Chairman, for your leniency on the
time.
Chairman BOUSTANY. I thank the gentleman.
Mrs. Noem.
Mrs. NOEM. Thank you, Mr. Chairman.
Mr. Burkhauser, I wanted to ask your opinion on something.
The United States has a patchwork of programs that benefit
people in poverty or in hardship situations. Different ones for
housing, for food, social services, health care. And while it
is a patchwork of systems, we believe they can be streamlined.
And in your observances of other countries, do they have a
similar situation, or have they reformed their programs in such
a way that would be an example for the United States to look at
or suggestions we could follow in how to make our programs more
effective and streamlined?
Mr. BURKHAUSER. Well, I think the big difference between
Europe and the United States, is that we don't have a first-
tier cash transfer program which is an entitlement. So what we
do have is----
Mrs. NOEM. How does that operate?
Mr. BURKHAUSER. The way it operates in the Netherlands and
other places is there is just some minimum guarantee. What the
Netherlands discovered, however, and this is what Doug has been
talking about, is when you give an entitlement to people with
no expectations of work, you don't get any work. And I think
what the European countries have discovered is that you can't
have this permanent minimum standard entitlement program
without expectations for work, and that is what they are trying
to do now they are trying to----
Mrs. NOEM. Have they changed some of their programs?
Mr. BURKHAUSER. It has changed them in the sense that now
there are requirements to work even for these cash transfer
programs. What we have, unfortunately, in the United States is
the only cash transfer program that we actually have, which is
a remnant of the original attempt to reform welfare in the
1970s and make it income tax, is the Supplemental Security
Income program. That program is a cash program for people who
have disabilities. The problem is, it is very difficult to
decide who has a disability and people who liked a negative
income tax system have been pushing hard to expand that program
by loosening the criteria for eligibility.
It is also the problem we have this TANF system that tries
to get States to reduce their roles by getting people to work.
That is a great idea. I fully support it. But if a State can
get their single moms onto the SSI adult program, they keep the
block grant, and the Federal Government has to pay for it. The
same is true with SSI kids. So that puts tremendous pressure on
the gatekeepers because of a mismatch between State policy and
Federal policy.
We need to coordinate these systems. One way to do it would
be to in fact recognize that people with disabilities can work.
The States have been pretty good at getting people, single
moms, off the rolls and into the workforce. We ought to think
about devolving SSI to the States also.
Mrs. NOEM. Is there specifically a country that would set a
good example of how to coordinate our programs better, that you
can think of?
Mr. BURKHAUSER. Well, I think interesting enough, Sweden
and the Netherlands offer two alternatives. Sweden basically is
very much a government-centered country, but at least they
coordinate their work policies and their transfer policies in a
single system that can do a workforce policy.
In the Netherlands, they decided, the government couldn't
do either. And what they did is put incentives in front of
employers to say, if you can't get your worker back to work,
you are going to have to pay for the first 2 years of his
disability benefits, and you are going to have to pay higher
payroll taxes, effectively, because your workers are getting
onto the rolls more than others.
Mrs. NOEM. Mr. Besharov, is there something you would like
to add to this?
Mr. BESHAROV. Well, I think this idea of work for
expectation is giantly important. As an aside, I would mention
that Saudi Arabia has just adopted a welfare-to-work program
for Saudis, because they are very worried that their men aren't
working.
What I would add here is, as you have sensed from I think
all three of us, the conditions that prevent Americans from
working, men or women, are intertwined. We call it disability,
but in some respects it is just low earnings capacity,
inability to get a job, which encourages unemployment. We call
it welfare, and we call it aid to dependent children, but it is
parents who can't either find jobs or earn enough. And so the
wisdom here is to find a way across the committees to let the
States or encourage or require the States to address these
problems for what they are, which is unitary problems.
It isn't just a problem of unemployment for most of the
people who are unemployed. I think the number in my testimony,
25 percent of the unemployed today are long-term unemployed. We
don't know how to get them out of the system. The
administration, I believe, does not have a proposal. I don't
think there is a proposal. We don't know what to do. But the
fact that we don't know doesn't mean that we shouldn't be
looking. And these are problems that are festering.
Politically, we like to aim at the 5 percent unemployment rate,
which is half of what it was after the recession, and that is
great. But there are these festering problems, which to make
America great, they have to be addressed across income groups,
across income and racial and ethic groups, and right now none
of our programs, I think, do a good enough job.
Mrs. NOEM. Thank you.
I yield back, Mr. Chairman.
Chairman BOUSTANY. We will now go to Mr. Crowley.
Mr. CROWLEY. Thank you, Mr. Chairman. Thank you, in all
sincerity, for this hearing today.
I agree that there are important lessons that we can learn
from other countries. Particularly when it comes to improving
and strengthening our social safety net. So I do thank you, Mr.
Chairman, for this opportunity.
I think an important part of this is looking at all the
ways these countries support their workers and their families.
Many of the countries we have been talking about have put in
place a broad framework of social policies in a variety of
different areas. I think there is a lot to embrace from these
eliminations in areas like child care, paid leave, and health
care. And I hope that my colleagues on the other side of the
aisle will join us in embracing these critical policies as
well.
And on the other topic, I was personally very encouraged by
the United Kingdom's efforts to create universal child savings
accounts in 2005. I have introduced legislation actually today
to create universal child savings accounts here in the United
States as a part of a strategy to help people be able to save
at every stage of their lives. These accounts get children
started saving from a very early age, actually, from the get-
go, and teach them the importance of saving, not to mention
providing a critical financial asset for them and their parents
to draw on as adults.
The U.K. had done the same in 2005, and at the 5-year
point, over 85 percent of families were participating in that
program, remarkably successful. So, yes, I do think we have a
lot to gain by looking at other countries and learning from
their experiences, but, again, we need to look at the whole of
what the countries are doing.
Ms. Boteach--is that correct?
Ms. BOTEACH. You got it, yes.
Mr. CROWLEY. All right. You touched on this in your written
testimony, how context is important when looking at how
countries reduce poverty and strengthen the middle class.
One area that struck me is how, in the countries that we
are looking at today, collective bargaining and labor movements
have had such a positive impact, not only on countrywide
policies like labor protections and wages, but also on
individual workers and their families.
Mr. Davis mentioned the positive impact unions have on
families and children, but I know in your testimony, Ms.
Boteach, you wrote about how labor unions also lead to better
wages and health benefits and less need for the safety net
programs overall.
You also discussed how raising the minimum wage can reduce
the need for nutrition assistance in programs like SNAP. Can
you elaborate more on how having these supportive programs in
place actually helps the overall system?
Ms. BOTEACH. Sure.
Mr. CROWLEY. Your mike, please.
Ms. BOTEACH. Sure. Thank you for that question. Because I
think, again, as I mentioned earlier, it is very difficult to
have a conversation about reforming the safety net without
thinking about the labor market with which it is interacting.
And when you only have 7 percent of workers, private-sector
workers, in a union in this country, and we know that unions
raise wages; we know that unions help their workers get health
benefits, that is something that happens in other countries in
terms of raising wages that can help take pressure off of
safety net programs.
In other countries, universal healthcare coverage is a
right; it is not a privilege. It is actually something that
helps people get to work, because, number one, people are more
likely to undertake entrepreneurship or to be able to move jobs
to something better if they don't have to worry about losing
their health insurance. And in some cases, a health-related
issue might be one of the barriers to work, and by giving them
health insurance, you are able to help them address that
barrier and get back into the labor market.
So, number one, unions can help take pressure off some of
these social safety net programs and improve children's long-
term economic mobility. And minimum wage wise, there have been
studies showing that minimum wage dramatically reduces poverty.
In fact, research by Arin Dube and his colleagues has shown
that raising the minimum wage would lift up to 4.5 million
people out of poverty. And research looking at across county
lines of one State that raised the minimum wage and one State
that did not but shared job markets showed that there were not
adverse job effects, little to none.
And so I think it is important that as we speak about union
membership, as we speak about the minimum wage, as we speak
about paid family leave, as we speak about scheduling, because
that is the other thing unions can help with, in terms of the
workers' time. And right now, about half of workers don't
always know when their next shift is going to be, when they are
going to be scheduled for. It can wreak havoc on their ability
to find child care, transportation, to get education and
training to move up the income ladder. And so it is very
important that workers be able to engage in collective
bargaining to achieve these and other ends.
Mr. CROWLEY. Speaking of time, I know mine is almost, just
about out, I want to thank you for that. I have been concerned
that in recent years we have seen a lot of political attacks on
unions and collective bargaining, and the minute wage increase
keeps being dismissed primarily by my colleagues on the other
side of the aisle.
I just wanted to give you an opportunity just to respond
to, I believe it was Mr. Burkhauser's comments about the CBO's
report last year in terms of the effect of raising minimum wage
on jobs.
Jason Furman has dismissed that same comment by saying it
is not reflective of current consensus views of economists. Can
you comment on that?
Ms. BOTEACH. I mean, that is exactly it. There are much
more updated measurements that have--or studies that have been
undertaken using better methodologies that show, looking at
minimum wage increases, there has not been adverse job effects.
So I think it is important to set the record straight on that
front that some of the most up-to-date research in that regard
is not the same as CBO's estimates.
Mr. CROWLEY. I appreciate it.
I yield back the balance of my time. Thank you, Mr.
Chairman.
Chairman BOUSTANY. Mr. Burkhauser, did you want to comment
on that?
Mr. BURKHAUSER. Yeah. Jason Furman has never worked on
minimum wage issues. Has no publications in that area. I have.
Newmark and Wascher's book shows a documentation of many
studies on the minimum wage that show the traditional finding
that increases in the minimum wage decrease employment. To say
that there has been no studies, there is no other side to this
is just silly.
Chairman BOUSTANY. I thank the gentleman.
This concludes all the questions, I believe, on both sides.
So I want to thank you all for joining us today for this
hearing on the Lessons Learned From Welfare Reforms in Other
Countries. The testimony we heard today will certainly help us
as we move forward on policies to improve our system, safety
net system, to help more people escape poverty and to move up
the economic ladder.
You did a terrific job. We appreciate what you provided to
the subcommittee. You certainly helped us better understand how
we can move forward in these regards.
If members have additional questions for witnesses, they
will submit them to you in writing, and we would appreciate
receiving your responses for the record within the next 2
weeks.
Chairman BOUSTANY. And with that, the subcommittee now
stands adjourned.
[Whereupon, at 3:11 p.m., the subcommittee was adjourned.]
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