Work Requirements Can Help Solve Pa.'s Workforce Challenges

The mismatch between job openings, workers’ skills, and workers’ expectations is a hot topic in the national and state media. As our CEO Charles Mitchell pointed out in Investor’s Business Daily last December, creating jobs isn’t the problem in the Keystone State—it’s finding the workers.

It’s a stark contradiction: Pennsylvania is experiencing record-low unemployment and near-record high enrollment in programs like Medicaid and Food Stamps (SNAP). Online job openings rival the number of unemployed, yet employers routinely cite lack of job applicants as a major factor holding back business growth. How can we have both a shortage of workers and a growing demand for income supports?

The answer is a well-meaning, but dysfunctional maze of assistance programs that meet immediate needs yet fail help individuals move to family-sustaining jobs.

More than 20 years ago, the federal government enacted the first work requirements in the Temporary Assistance for Needy Families (TANF) program. This dramatic change to a cash assistance program improved the living standards for tens of thousands of families.

Poverty scholar Robert Rector sums it up this way:

“Within five years of the enactment of TANF, caseloads dropped by approximately 50%. . . Employment of never-married mothers increased by 50%, employment of single mothers with less than a high-school education increased by two-thirds, and employment of young single mothers between the ages of 18 and 24 approximately doubled. Child poverty among the demographic groups most affected by the new policy also fell dramatically.”

The first serious attempt to connect welfare with work worked like a charm. However, over time work requirements were watered down.

Pennsylvania is a perfect example of this slow fade. The Keystone State abuses SNAP loopholes to exempt most healthy adults without children from work. In 2017, Pennsylvania exempted adults in 42 counties. Today, despite lower unemployment rates, 63 counties (94 percent!) are exempt from work requirements.

In the TANF program, the five-year lifetime limit has been waived for well over 5,000 Pennsylvanians. In fact, in 2016 nearly one in four families across the nation receiving TANF benefits beyond five years were from Pennsylvania.

In Medicaid, a 2015 expansion to healthy adults earning up to 138 percent of the federal poverty level (about $16,750), added nearly 800,000 participants, at least half of whom report no income.

Waivers and expansions have made it easier for Pennsylvanians to stay on the sidelines while employers struggle to fill jobs, but that’s beginning to change.

Recent congressional attempts to strengthen work requirements in SNAP through the Farm Bill stalled, and now bureaucrats are proposing reform through regulation. Changing waiver rules to account for record-low unemployment rates, and prevent states from “gerrymandering” communities to maximize exemptions could exempt just 10 percent of the healthy adult population from work—versus 44 percent today.

Arkansas began enforcing work or community engagement requirements on Medicaid for healthy adults without dependents last summer. That experiment is being loudly attacked despite already producing evidence of poverty alleviation.

In Pennsylvania, lawmakers have passed legislation to establish a limited work requirement for healthy adults on Medicaid, but Governor Wolf has vetoed the proposal twice. Undeterred, Rep. Dowling has reintroduced a version in the state house, and Senators Argall and Martin are working on a version in the state senate. In a recent appropriations hearing Senator Argall noted, “Sending bill after bill to the governor to be vetoed isn’t helping the people that we are all trying to help.”

In the spirit of increasing the number of Pennsylvanians with good-paying jobs, here are three areas where lawmakers and the governor could work together to create a work requirement that is both effective and well-targeted.

 1. Clear and carefully-designed work requirement exemptions. Opponents of work requirements insist there are many barriers to employment that fall outside the traditional definitions of disability, substance dependence, or childcare. The administration should help lawmakers define those situations to maximize employment, putting action behind the governor’s statement that, “my administration wants more people, not fewer, to have meaningful careers.”

2. Make administration of work requirements as simple as possible. Creating rules identical to SNAP work requirements and streamlining that system is another way to address concerns of unintended consequences. Reporting work or volunteer hours should not be a burden for the worker or the administration, given technology and the variety of documentation (pay stubs, signed letters, time cards, etc.) that could be used for verification.

3. Create an enforcement system that rewards work. States have experimented with a variety of “lock out periods” to enforce work requirements. Arkansas enforces a lock out period for Medicaid based on the calendar year. After three consecutive months of failing to report work, the individual forgoes Medicaid benefits until the next calendar year. In contrast, Michigan’s waiver allows an individual to reenroll in Medicaid after one month of compliance following three months of non-compliance. Last year’s HB 2138 gradually increased the lock out period to nine months. Ideally, penalties should be structured to first and foremost reward work.

Today’s status quo ignores the talents and gifts healthy adults across the state can contribute. Our broken system requires single parents in poverty to work more than a single man collecting food stamps, or a single woman utilizing Medicaid. If work is good for families, it’s good for the individual.

It’s time to incorporate work requirements in our major assistance programs so we can more effectively connect un- or underemployed Pennsylvanians with jobs and the experience necessary for long-term prosperity.