Michigan: Surging Unemployment Shrinking Safety Net

June 26, 2009 | Huffington Post |  Link to article

Welfare rolls are swelling in states across the country as unemployment rates surge -- except in Michigan.

With an unemployment rate of 14.1 percent, Michiganders are the most out-of-work people in the nation. But unlike their peers Oregon (12.4 percent unemployed), South Carolina (12.1), and Rhode Island (12.1), fewer and fewer Michigan residents are receiving welfare benefits. What gives?

"There's something terribly wrong with Michigan's welfare program," said Peter Ruark, a planning and research associate with the Michigan League for Human Services, in an interview with the Huffington Post. "There are a lot of families that should be covered, but aren't."

The Wall Street Journal reported Monday that welfare caseloads in Michigan had declined 4.8 percent in April from the same time last year, while other states with high unemployment saw increases of more than 20 percent. The main problem in Michigan, said Ruark, is that Michigan's eligibility requirements for cash assistance have not been adjusted for inflation since the 1990s, when Bill Clinton made good on his pledge to "end welfare as we know it."

Before the reforms of the 1990s, the federal government ran a uniform welfare program with little variation among states. In 1996, the Aid to Families with Dependent Children program was replaced with Temporary Assistance for Needy Families (TANF), a funding stream for states to use in implementing their own cash assistance schemes.

For the last 12 years state welfare agencies have seen it as their goal to discourage people from receiving welfare assistance, said Elizabeth Lower-Basch, a senior policy analyst with the Center for Law and Social Policy. She called Michigan a "worrying" case and said that although welfare rolls are increasing in other states, in Michigan, "the percentages are still low."

"Welfare is supposed to be a safety net of last resort but it's not working that way because we were so successful at moving people off the rolls," Lower-Basch said. "We're not meeting people's needs, and that is on purpose."

According to a February report authored by the Michigan League for Human Services, in 1993 a Michigan family of three would have qualified for $459 a month in cash assistance as long as it earned no more than $774 a month. Those numbers didn't budge until 2005. Today, if a family of three earns no more than $814 a month, it qualifies for $492 in benefits.

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But if the original amounts had kept pace with inflation, that family would have benefited from $670 a month, so long as it earned less than $1,138.

"Many families whose purchasing power would have qualified them for [cash assistance] in 1993 are being denied such assistance now," the report said.

Other obstacles are the requirements that those seeking cash assistance go through job screening before cases can be opened, and that recipients provide a birth certificate or passport in addition to regular identification.

The poverty rate in Michigan has increased from 10.1 percent in 2000 to more than 14 percent today. Over the same period of time, the number of Michigan welfare cases has decreased, from 36 to 32 percent of poor families.

The Urban Institute runs a Welfare Rules Database to track changes and differences between state welfare programs (as of 2007). The Huffington Post compared Michigan's welfare policies to those of unemployment-plagued Oregon and South Carolina, where welfare rolls are up 23 percent and 27 percent, respectively.

Michigan also has tougher sanctions for welfare recipients who fail to comply with work conditions attached to welfare money. In the worst case scenario, a Michigander can be cut off from benefits for a full year, whereas recipients in Oregon and South Carolina are permitted to reapply in a shorter time frame.

But the maximum monthly income a South Carolinian family of three can earn while retaining eligibility is $670, and an Oregonian family can earn $616 -- limits that are less generous than Michigan's. Michigan also allows cash assistance for a family of three with up to $3,000 in assets and an unlimited number of cars, whereas Oregon and South Carolina limit assets to $2,500 and one car per license in South Carolina and $10,000 worth of cars in Oregon. Oregon offers more to welfare recipients with zero income than Michigan does, but South Carolina offers less.

It could be that Michigan's welfare rolls will surge as laid-off workers lose their unemployment insurance. The state provides up to 79 weeks of unemployment benefits.

Sandra Danziger, a research professor of public policy at the University of Michigan, is skeptical that Michigan's declining welfare rolls are really a reflection of onerous eligibility requirements.

"I don't think that Michigan is particularly extreme in any of these things," said Danziger. "In all the states, it's extremely difficult to get on and stay on and it's not necessarily worth it, given the benefits."

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