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Policy Note 1998/4 Small Business and the New Welfare

By Oren M. Levin-waldman and George W. Mccarthy

Abstract

To what extent have small businesses hired former welfare recipients and what might induce them to hire more? The Levy Institute conducts a national survey of small firms in many industries to find out. During the summer of 1996 the federal government enacted the most sweeping welfare reform since the law's inception in 1935. For the first time the duration of welfare benefits is limited and those qualifying for benefits are required to work or participate in some type of educational or training program. Although the federal government has established minimum criteria, the specifics of the "new " welfare are defined and implemented at the state level. Among the more critical reforms are the end of welfare's federal entitlement status and the offer, at least temporarily, to the states of block grants to develop their own programs. States are free to develop programs as extensive as they would like, which might include training or other job service programs. And they are also free to develop programs as limited as they would like, which might entail little more than channeling former recipients into the low-skill labor market. The new welfare rests on certain assumptions. The first is that states are better able than the federal government to establish welfare programs that best meet their own needs. Block grants to the states will enable them to do that. The second assumption is that welfare recipients need to be moved into the labor market, and the best wa

Year: 2010
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