Last summer, as the election approached, President Clinton and congressional leaders gathered on the White House lawn to celebrate legislation to “end welfare as we know it.” While it is unlikely to receive the same ceremony, the budget deal quietly ends welfare reform as we know it.
Under pressure from organized labor, President Clinton threatened to veto congressional provisions that would have overturned a Labor Department ruling. Previously, the Labor Department had ruled that workfare participants were entitled to all the labor law protections of regular employees. Congress’s proposal overturned that budget‐busting provision. But Republicans — ultimately unwilling to risk Clinton’s displeasure, even on an issue central to their entire agenda — meekly acquiesced to the Clinton veto threat and withdrew their objection to the Labor Department policy. As a result, states will be required to pay minimum wage to workfare recipients, which will raise program costs enormously. States might also be required to pay unemployment, workers’ compensation and FICA taxes on behalf of workfare recipients. Potentially, the Davis‐Bacon wage law could also apply, which means that some workfare recipients would have to be paid, not just the minimum wage, but the prevailing union wage. Workfare recipients would be entitled to overtime pay, would have the right to join unions and would even be able to take family and medical leave.
But workfare was never intended to be a job in any traditional sense. It is designed to be a transitional program to assist individuals until they are able to get real jobs. Almost as important as the benefits people on workfare receive are the skills they learn that will allow them to enter the real world of work. Critics of workfare warn that, if poorly implemented, welfare‐to‐work programs could simply become a source of government‐guaranteed jobs. The Labor Department’s ruling makes that far more likely.