House Republicans have passed a bill to reduce federal spending as a condition for raising the debt ceiling. While not exactly the slash-and-burn budget cuts portrayed by Democrats, the Republican plan does include some controversial measures that deserve further debate. Specifically, work requirements for food stamps–formally the Supplemental Nutrition Assistance Program (SNAP)–and Medicaid place new burdens on recipients. Although there is a certain logic to work requirements, it is unclear that imposing them will save money for the government or make the recipients self-sufficient and thus better off. While reducing the national debt and reforming welfare are both important topics for congressional action, trying to shoehorn them together is unlikely to achieve any meaningful goal.
There is a certain predictability to Republican focus on cutting programs for the poor while joining Democrats in irresponsibly making middle-class entitlements like Social Security and Medicare sacrosanct. Those middle-class entitlements are not only the largest federal spending programs, but will also shortly become the biggest factors driving our ballooning national debt. As a debt reduction measure, then, the bill is pretty thin gruel, reducing deficit spending by slightly under $500 billion annually over the next 10 years. Under the GOP proposal, the national debt would increase by another $16 trillion through 2033, rather than the currently projected $21 trillion.
That said, there is plenty of evidence that our investment in fighting poverty could use a substantial overhaul. After all, federal, state, and local governments currently spend roughly $1.8 trillion combined each year to fight poverty, with debatable effectiveness.
Certainly, individuals on public assistance ought to take steps toward becoming self-sufficient. And there is a modest but real work disincentive built into most extant welfare programs that policymakers ought to remove. For example,someone leaving welfare for work can face an extraordinarily high marginal tax rate. That is, the combined costs of taxes, loss of benefits, and employment expenses such as childcare, transportation, and clothing can remove much of the short-term benefit of taking a low-wage job. Work requirements are an imperfect way to counter this disincentive, but they will at least nudge recipients into the labor force. And with unemployment low and continued shortages in the labor market, now would seem as good a time as any to strengthen work requirements.
But whatever the merits of additional work requirements in helping to encourage self-sufficiency, it is hard to see them significantly reducing the cost of welfare programs, which is ostensibly the reason for including the mandate as part of the debt ceiling negotiations.
Most of the research to date on the effectiveness of work requirements has focused on cash welfare, the Temporary Assistance for Needy Families (TANF) program. Relatively little has been done to study the impact on programs like Medicaid and SNAP, and what has been done has yielded mixed results, with some showing a positive impact and others coming to the opposite conclusion.
SNAP already has work requirements. Recipients between the ages of 16 and 59 must work at least 30 hours per week, unless they are taking care of a child under age 6, have a disability that prevents them from working, or are enrolled in school or a work training program. There are additional work requirements for able-bodied 18–49-year-old adults without dependents, requiring them to work, volunteer, or participate in a job training program if they receive SNAP for more than three months over a three-year period. Under these existing requirements, roughly three-quarters of families receiving SNAP have at least one member of the family working and one-quarter have two family members working. It is hard to imagine a realistic proposal that is going to sweep up large numbers of currently non-working recipients.
As for Medicaid, there is no general work requirement, but 15 states applied for waivers allowing for work requirements during the Trump administration and five actually implemented a work requirement. All eventually dropped the idea in the face of the COVID pandemic. Currently, no state has a Medicaid work requirement, though Georgia is in the process of implementing one, pending litigation. Under existing rules, roughly 63 percent of non-elderly, non-disabled adults on Medicaid are working, in line with national labor force participation rates. And, evidence from those pre-pandemic experiments suggests that Medicaid work mandates do not increase employment or save significant amounts of money.
Work requirements can also be costly to enforce and add yet another layer of complexity to an already labyrinthian welfare system. Imagine trying to navigate different work requirements for each of the more than 70 welfare programs that provide benefits to individuals.
That is not to say that any new work requirements should automatically be ruled out. But the issue deserves a much more detailed and critical look. After all, there may be better solutions to the work disincentive problem, including reducing and smoothing the phase-out of benefits or possibly even some sort of universal basic income that does not penalize recipients for earning additional income.
Sorting out these proposals should take time, entailing significant committee work, public hearings, and bipartisan input. What we got instead was a proposal cobbled together in the middle of the night to garner the bare minimum of votes needed to pass.