Making welfare work

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making-welfare-work

Jason Turner is an interesting person. He was in charge of welfare reform in New York under mayor Rudi Guiliani, and before that he designed Wisconsin's history changing welfare reforms. He has a chapter in the new report Paying for Success from Policy Exchange,  and was speaking to a few of us at the Institute of Economic Affairs. The fact that I was there as well indicates the degree of cross-think-tank interest there is in the Wisconsin experience.

Wisconsin, Turner told us, cut its welfare rolls dramatically – and reduced poverty and increased employment at the same time. That's because they started from a set of clear principles about what welfare should be for, rather than trying to fiddle with the existing system. The key principle, which struck a chord with taxpayers, legislators, and the working poor, was that everyone who is able to work should be expected to work, and get paid for it, either in the private or the public sector. It's what Turner called the 'time commitment' – sitting idle while drawing benefits is not an option. That appeals, he said, to everyone's sense of fairness – particularly that of the working poor, who do not enjoy the luxury of being able to sit at home while getting paid for it.

The other innovation in Wisconsin was to get private agencies, charities and companies, to handle the task of supporting and training welfare recipients and helping them get back into work. These independent intermediaries did very well out of the plan – but then they were saving taxpayers huge amounts of money. That, of course, led to some criticism, and Turner believes there are important lessons from how that criticism was handled. Well-motivated private agencies can work wonders – the important thing is to keep them working wonders, and not rush to prune back your contracts at the first hint of disquiet.

Another key point learnt from Wisconsin is to keep your targets and your benefits simple. The target in Wisconsin was to reduce the number of people dependent on welfare – a simple target. And complicated benefits were scrapped in favour of simple, flat-rate ones – like a wage. Otherwise, as Frank Field MP sorely noted, you tend to get people worsening their circumstances in order to qualify for the particular benefits. Not what you want at all.