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Unemployment and access to social security: Part 1: 'Workfare' in California



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Unemployment and Access to Social Security

Part 1: 'Workfare' in California

Current Issues Brief Number 5 1986-87

Legislative Research Service Department of the Parliamentary Library

The Parliament of the Cbmmonwealth of Australia

UNEMPLOYMENT AND ACCESS TO SOCIAL SECURITY

Part I: 'Workfare' in California

C. Wildermuth Blucation and Welfare Croup Legislative Research Service

Legislative Research Service Current Issues Brief NuMber 5 1986-87

ISSN 0726-3244

Commonwealth of Australia 1986

Except to the extent of the uses permitted under the Copyright Act

1968, no part of this publication may be reproduced or transmitted in

any form or by any means, including information storage and retrieval system, without the prior written consent of the Department of the Parliamentary Library. Reproduction is permitted by MeMbers of the Pad-Lament of the Commonwealth in the course of their official duties.

Published by the Department of the Parliamentary Library, November 1986.

contents

1. Introduction 1

2. The Lead-up to a State-wide Workfare Program in California 1

(i) The California Work Experience Program and the (Federal) Mirk Incentive Program 1 (ii) The (Federal) Community Work Experience Program 3 (iii) The San Diego County Employment Preparation Program 4

3. The Greater Avenues for Independence Program 5

(i) County plans 7 (ii) Components of the GAIN program 8 (a) Provision of ancillary services 10 (b) Sanctions 11

(c)- -Protection of.participants and. existing employees 12 - Finance 15

4. Conclusion 16

Appendix: Selected Aspects of the United States Social Security System 17

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Unemployment and Access to Social Security Part I: 'Workfare' in California

1. INTRODUCTION

The term 'workfare' is a recent addition to the Australian vocabulary. It has been borrowed from the United States and is used here, as it is there, to describe a variety of programs ranging from the strict 'work with a public authority in return for continuation of income support payment' to the broader linking of the income security system with various job training, job creation and educational programs. Talk About 'workfare' is a reflection both of the growing interest in a

'work-for-the-dole' scheme in Australia and of the degree to which Australia has •urned .to the United .States for guidance is establishing Such-a- prograth "

In Australia, the idea of attaching work requirements to social security payments has focused on Unemployment Benefits and, to a lesser extent, Supporting Parents Benefit. In the United States, however, work requirements have been attached mostly to the Assistance to Families with Dependent Children program, a program Which caters primarily for single parents and, less so, to a specific group of the unemployed - those two-parent families with dependent children Where the principal income earner is unemployed. For those unfamiliar with the relevant parts of the United States social security system, the Appendix provides a brief description of the unemployment insurance and Assistance to Families with Dependent Children programs.

This paper is the first of two Current Issues Briefs addressing the issue of unemployment and particularly the unemployed and'their access to the social security system. It deals briefly with the lead-up to the establishment of the various workfare-type programs

in the United States but concentrates on the latest of these - the Greater Avenues for Independence (CAIN) program recently started in California. The second paper will deal with the issues raised by the recent advocation of a 'work-for-the-dole' scheme for Australia.

2. THE LEADUP.TO A STATE-WIDE WORKFARE PROGRAM IN CALIFORNIA

(i) The California Work Experience Program and the (Federal) Work Incentive Program

California, like the rest of the United States in the late 1960s and early 1970s, faced a welfare 'crisis' brought on by the combined effects of a recession, the liberalisation of welfare eligibility and payment rules, and a greater willingness on the part of the general public to accept welfare payments. Between 1968 and 1971 the number of

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Unemployment and Access to Social Security Part I: 'Workfare' in California

people receiving assistance under the Assistance to Families with Dependent Children (AFDC) program doubled. The then Gbvernor of California, Ronald Reagan, was successful in implementing a form of workfare (the California Work Experience Program ((EP)) under the

(State) lfare Reform Act of 1971, legislation which also tightened eligibility criteria for AFDC payments and went same way towards halting the welfare 'explosion'.[1]

In the meantime, workfare had also been taken up on a national level by then President, Richard Nixon, resulting in the 1968 establishment of a federal Work Incentive Program (WIN) which was designed to provide training programs and other employment-related

assistance to welfare recipients. Single parents without pre-school age children and the unemployed adult in two-parent families -so-called 'employables' - were required to register with the WIN program as a condition of receiving AFDC payments.

. Under .cwg p l . ' employable' AFDC recipients, were required to register. for WIN in order- tä receive public assistance; Participation

in a CWEP work assignment was compulsory only if WIN did not have services available and clients were unable to find regular employment or training opportunities. In practice, shortages of staff and funds have meant that two-thirds or more of those Who register for WIN receive no services, ending up in an 'unassigned' pool. While sanctions can be imposed on those who could have accepted job referrals or training positions generated through WIN (by virtue of their having adequate child care and transport), these have been rarely applied. Thus many Californian AFDC recipients were eligible to participate in (EP. .

CWEP functioned as a work relief Cum job search program. Clients were required to work off their grants, the number of work hours being determined by the size of the grant. A ceiling of 80 hours per month, however, was established to allow sufficient time for job search activities. Slots were set up on an ad hoc basis to meet the needs of participating government agencies, and it was intended that participants would be rotated frequently to expose as many clients as possible to work experience. Wrk-related expenses were to be paid by the employing agency and the county welfare department. State

Employment Development Department (EDE:) staff were responsible for the assessment of employability and assignment to a work activity, while county welfare staff, physically located within EDD and also paid by it, were responsible for technical eligibility and the provision of social services.

CWEP was intensely controversial in California and experienced same serious implementation problems from the start. It was designed to be mandatory in 35 California counties, but some were

1. Wiseman, M., 'Workfare', California Journal, July 1985.

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Unemployment and Access to Social Security Part I: 'Workfare' in California

reluctant to participate, partly because no additional administrative funds were provided. Only seven counties started programs in the first six months; at the end of the first year of the three-year demonstration, sixteen counties were operational. Legal challenges; competition with WIN services; opposition from county administrators, welfare directors, welfare rights groups, and community organisations; and loss of support in the State legislature also undermined operations. Staff also resisted by treating the program as voluntary instead of mandatory or by defining employability very narrowly in order to exempt a large number of clients.

This opposition resulted in low participation rates in the program. According to the State Auditor's Report, during the three years of its operation 9627 persons, instead of the anticipated 30 000, were assigned to CWEP worksites. During 1974, when the program was operational, 182 735 persons were determined to be potentially eligible out of a caseload of 2.3 million; 5712 were assigned to worksites• and 4760. actually.worked in a CWEP slot. In other.words,

from' the Already limited group, a participation rate of only 2.6 per cent was achieved.

EDD's evaluation of the CWEP program found no difference in the level of AFDC grants, the rate of AFDC applications, or the number of cases closed in the CWEP counties compared with other California counties not operating CWEP. However, because of the low participation

rate and the inability to match the demographic or economic differences between the control and experimental sites, the results should be interpreted cautiously. EDD's evaluation also determined that the cost of serving the 9627 clients assigned during the three

years (including staff, transport, and child care costs) was about $45 per assigned client. The State Auditor-General's Report, however, seriously criticised the methodology used, casting doubt on these figures. t2]

(ii) The (Federal) Community Work Experience Program

Prior to 1981, workfare-type programs also operated in about twenty States for non-federally funded welfare programs (usually the State-funded General Assistance (GA) Programs). Congress had thus far resisted efforts to attach workfare requirements to federally-funded 'welfare payments but Ronald Reagan, now President, renewed pressure

for a nationwide mandatory workfare program. The successful Omnibus Budget Reconciliation Pct of 1981, and the 1981 amendments to the Food Stamps and Commodities Distribution Act, provided the States with an

2. The preceding description of CWEP is from Gueron, J.M. and R.P. Nathan, 'The MRDC work/welfare project: objectives, status, significance', Policy Studies -Review, vol.4(3), February 1985, pp.421-2.

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Unemploynent and Access to Social Security Part I: 'WOrkfarel in California

option to establish workfare programs (Community WOrk Experience Programs) for those recipients of AFDC and Food Stamps deemed to be 'employables'.

By 1983, thirty-six States had authorised and implemented same form of workfare requirement for either the GA program (19), the AFDC program (25) or both (8).. The majority of States, however, had restricted their programs, either to pilot programs or by giving counties within the State the option to apply the requirement or otherwise. Seven States had restricted coverage by making participation in their programs optional to recipients, or by targeting only selected groups of recipients. Only nine States

(Hawaii, Idaho, Kansas, Maine, New Jersey, New York, Oklahoma, Rhode Island and Utah) applied the requirement in all counties and to all 'employables', and only three (Idaho, Oklahoma and Utah) had made participation in their programs mandatory. (3]

(iii) The San Diego County EMpioyment Preparation Prograp

A series of Republican-sponsored pieces of legislation aimed at introducing a State-wide workfare program in California had failed to pass the California State Legislature in the decade to 1985. One exception to this had been the passage of 1982 legislation authorising San Diego County to implement a pilot workfare program - the Employment Preparation Program (EPP).

The San Diego program involved about 7000 welfare recipients Who came into the AFDC program between October 1982 and November 1983. All were eligible to participate in WIN - single parents with no children under six and the unemployed wage-earner in a two-parent

family - and, of the total, about 1900 were randomly selected as a control group that was to receive only WIN services. The remaining 5100 went into a mandatory program and were told that payments would be reduced or refused if they failed to meet the requirements of the program. This group was then divided into two, the first being

required to participate in a three week program that included training in interview preparation and supervised job searching. The second group were also required to participate in this program but were additionally required to work for a government or non-profit agency

for up to 13 weeks if they had not found a job by the end of the training/searching program.

A later assessment of the pilot program made by the Manpower Demonstration Research Corporation (ODRC) of New York showed some

3. Sklar, Tollett, Lawlor and Hollis, 'States cautious in adopting workfare; advocates report abuses', jobswatch, February 1983.

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Unemployment and Access to Social Security Part I: 'Workfare' in California

interesting results. Those Who went through training/job search alone did as well at finding subsequent employment as those who went through the additional workfare requirement, and the workfare component made no difference to the recipients' ability to find a job. A significant

number of recipients failed to conduct a job search or perform their work requirement and consequently had benefits reduced or refused -2.7 per cent lost benefits for not participating in the job search component and 17 per cent lost benefits for refusing to participate in

the workfare component.

There were, however, striking differences between the experience of the single parent group versus the unemployed parent in a two-parent family group. Single parents in the mandatory program showed consistently higher success in finding jobs than their counterparts in the control group - by the third quarter of the program, for example, 37.6 per cent of those in the mandatory program were employed versus 28.7 per cent of the control group - although they got the same types of. jobs as. those in the control group. Single parents in thecontrol group averaged higher earnings,'though this'wes' attributable to their finding employment faster than those in the control group. For the unemployed adults in two-parent families, in contrast, neither those in the training/job search program only, nor

those in the training/job search/workfare program, fared any better in their employment rate or earnings than their equivalents in the control group. See Table 1 below. [4J

In financial terms, savings on expenditure due to the application of sanctions. were not sufficient to cover the additional costs of running the program. However, when a (conservative) estimate of the value of labour involved in the workfare component was included

in the calculation, a email net savings was shown. According to the report of the Manpower Demonstration Research Corporation, the pilot project proved that it is administratively feasible to run a workfare program; that such programs can improve recipients' earnings; and that welfare costs decline as benefits are cut or terminated because of non-participation.

3. THE GREATER AVENUES FOR INDEPENDENCE PROGRAM

The apparent success of the San Diego pilot program, along with the rise in concerns over welfare spending and welfare dependency created a climate in California in 1985 that was far more receptive to the idea of workfare than it had previously been. This is not to say that

there was no opposition to the introduction of workfare. Indeed, the history of negotiations leading up to the introduction of Assembly Bill 2580, the Greater Avenues for Independence Program legislation, makes interesting reading, particularly for the political compromises

which were made between Republicans and Democrats during its drafting.

4. GUeron, M., 'Interim Findings of a major MRDC study show the potential of state employment programs', PUblic 10M.fare, Winter 1986, pp.7-12. The table, from GUeron is after Galdman et al., Preliminary Findings from the San Diego Job Search and Wbrk Experience Demonstration, MRDC, New York,

1984.

Table 1: Summary of impact on AFDC Recipients

of the San Diego Pilot Program

Job Search followed by CWEP Job Search

Outcome and Follow-up Period Experimentals Controls Difference Experimentals, Controls Difference

Percentage ever employed during

Quarter 2(a) 32.4 25.6 + 6.8*** 35.6 25.6 +10.0***

Quarter 3 37.6 28.7 + 9.0*** 36.3 28.7 + 7.6***

Quarter 4 40.7 33.4 + 7.3*** 38.8 33.4 + 5.4*

Average total earnings during

5

rt-15

quarters 2-4($)(a) 1783.37 1392.29 +391.08** 1898.69 1392.29 +506.40***

• • rt

_

Percentage who

ever received any' AFDC payment during

6 E p-,

n CD

al LA

Quarter of random

ass ig anent (b) 77.0 81.3 - 4.3* 79.3 81.3 - 2.0 •-• rt 0

Quarter 2 64.7 69.0 - 4.3* 66.1 69.0 - 2.9

Quarter 3 54.2 58.7 - 4.5* 51.9 58.7 - 6.8**

Quarter 4 47.8 48.6 - 0.8 45.8 48.6 - 2.8 '" rh

0 1-0-1

Average total AFDC

payments received, 0.1

quarters 1-4($) 2555.98 2761.56 -205.58* 2577.06 2761.56 -184.50

rr

Notes: These data include zero values for sample members not employed and for- saMple members not receiving 6elfare payments. There may be some discrepancies in calculating experimental-control differences due to rouniing. A two-tailed t-test %us applied to differences between experimental %and control groups. Statistical significance levels are indicated as:

10 per cent; • - 5 per cent; 6" = 1 per cent.

(a ) Rir unemployment insurance earnings quarters, random assignment may occur in any of the three months of 010 calendar quarter of random assignment. Par this reason, quarter 1, thelquarter of random assignment; may contain same earnings frcm a month or two before random assignment, and it is theret0C0 nOt CUUnt,0 a camplete follow-up quarter for employment and earnings impacts. itg The first month of the quarter of random assignment is the month in whLch an ladividall as riiiihmd:,

assigned.

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Unemployment and Access to Social Security Part I: 'Workfare' in California

The Republicans had long professed support for the introduction of workfare in California; the Democrats had (successfully) opposed it. The beginnings of compromise were seen in the caning together of Democrat Assemblyman Art Agnos and Head of the State Department of Social Services, David Swoap, an appointee of

RepUblican Governor George Deukmejian. During the months that followed Agnos and Swoap, having agreed on a common theoretical starting position, set about refining and detailing the Bill that would eventually pass through the Legislature. The negotiations included

input from many interested organisations - trade union leaders, welfare advocates and civil rights groups - but the passage of the Bill was not assured until the final days of the 1985 sitting. Even then it was conditional upon the passage of another Bill, Senate Bill

303, authorising additional funding for child care.

Assembly Bill 2580 was signed by the Governor on 26 September 1985 and immediately took effect as an urgency statute. Senate Bill 303 was signed in conjunction with AB 2580- and was also effective hMmediately:

(i) County Plans

The GAIN legislation requires each of California's 58 counties to submit, within two years from SepteMber 1985, a GAIN implementation plan for assessment and approval by the State Department of Social Services (KISS). These implementation plans are to include:

a detailed geographic study of potential participants in the program, providing such information as age, family composition, current and preferred child care arrangements, education and employment history, physical

limitations on employment including both disabilities and transport problems, and primary language; and highlighting any preferred target groups;

a child care needs assessment, to be conducted with local child care resource and referral agencies, to detail current child care provision and assess anticipated need under the program;

a labour market needs assessment, describing amongst other things, the general condition of the economy and what restraints on growth are anticipated, population growth rates, unemployment rates, relative growth of public and private sectors, anticipated changes in demand for products and services and technology and/or business practices and employment opportunities for

targeted individuals;

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Unemployment and Access to Social Security Part I: 'Workfare' in California

an inventory of employment, training and support services Which are currently available within the county, including estimated data on current capacity, current usage and vacancies, to be drawn up in conjunction with local agencies;

a projection of unmet service needs, drawn from comparing participants' needs assessment with inventory of services; and

a plan for delivery of servicing including details of case management procedures, phase-in arrangements, targeted populations, which GAIN components will be provided and how, co-ordination with other agencies, contracts to be let to meet demands identified, child care arrangements, formal grievance procedures, data collection methodology and a budget proposal. [5j

As. of 3.1.,JUly 1986, eleven countY plans had beep received and one County, Fresno', had already begun its phasing-in stage. It is expected that all counties will have their programs in operation by 1988/89.

(ii) Components of the GAIN program

The legislation also details how the GAIN program will operate and a brief summary is given below.

While it is mandatory for all recipients of AFDC to register with the program, certain groups of recipients have been exempted from actual participation (these

groups include, for example, single people with a child under 6, or those Who are ill). In addition, people Who are exempt from participation may volunteer for the program.

An initial assessment is made to reveal any special problems that an individual registrant might be experiencing in entering the labour force. Where a need for remedial education or for

English-as-a-second-language assistance is identified, registrants are referred to appropriate service providers. People Who are already in an educational or training program can continue in that program for up to

two (academic) years.

5. California State Department of Social Services, GAIN County plan Guidelines, March 1986.

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Unemployment and Access to Social Security Part I: 'WOrkfarel in California

Registrants are first required to undertake three weeks of supervised job search. For people who have had no employment within the two years prior to registering for GAIN (and optionally for others), this three week period

includes one week of intensive training in how to look for a job, how to prepare applications and resumes, and how to be interviewed.

For those who do not find a job during this initial three weeks, a more detailed assessment of their aptitudes, skills and labour force goals is undertaken. After this and detailed discussions with County Welfare Departments' staff on the various options under GAIN available at this point, a contract is drawn up between

the individual and the Department, setting out the expectations and obligations of both parties in achieving the goals set. Apart from a short-term (3 month).. traditional workfare *option (that is, unpaid work

with )a .publ-ic aUthority in return for continuation, of. payment), options available to registrants include:

• on-the-job training;

• vocational training;

• grant diversion - whereby a portion of an individual's cash grant is diverted as a wage sUbsidy, to an employer willing to train and hire a recipient upon successful completion of the training program; and

• supported work - a training component in which the least employable participants are provided with intensive support services, training and transitional counselling during the early stages of employment.

These options can continue for up to two years.

Those who have completed training but who have been unable to find immediate enployment are re-assigned to supervised job search for 90 days and, if still unemployed at the end of this period, will be re-assessed and assigned to long-term workfare positions. All long-term workfare participants are reviewed every six months and reassessed every year.

STA

JOS.

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Unemployment and Access to Social Security Part I; l rkfare' in California

The following flow chart illustrates this process:

GREATER AVENUES FOR INDEPENDENCE (GAIN)

440.11RESOLVED DURING INITIAL INTERVIEW PROCESSEM*

NEMEDIAL EDUCATION ENGLISH AS A sic oho caoaueüa

HIGH SCHOOL

LASON mrsiKeT

ON AID MORI THAN TWICE IN I YEARS

SHORT TERM P. R.I.P. SAM OR ADVANCED

014,101ITTNAINING

F

VOCATIONAL . TRAINING

II

cOreoecytdie .tedee THAN

JO*CLUS.. Lal-betL

•

GRANT • . DIVERSION .

_ ErarnormENT • . • ••.•

• 90.0nY

YEATIS

.

JOE SEARCH 04

EXEMPTION

EMPLOYMENT

SUPPORTED .----I---- WON% LONG TERM PREP,

BASIC OR

ADVANCED

OTHER TRAINING AND EDUCATION

LATION MARKET CONNIC TIEIN 11111 THAN 2 YEARS

JOS SEARCH

LEGEND:

* Options based on Job History. Disputed assessments resolved by 3rd party arbitration

Three further aspects of California's GAIN program are noteworthy, particularly in view of the issues that have been raised in the Australian debate over a 'work-for-the-dole' scheme.

(a) Provision of ancillary services

Amongst the obligations of the SDSS (through its County lfare Departments) is a duty to provide to registrants of the program a number of supportive services, which must include, but not necessarily be limited to, the following:

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Unemployment and Access to Social Security Part I: 'Workfare' in California

child care for every participant with a child under the age of 12 years who needs it in order to participate in the program component to Which s/he is assigned;

transport costs for every participant to and from her/his job or training assignment;

ancillary expenses, including the cost of books, tools, clothing, fees and other necessary costs ofa work or training assignment; and

. personal counselling and/or therapy to help the registrant and her/his family to adjust to her/his job or training assignment.[6]

In addition, some of these services continue to be available after the participant has found employment. Child care, for example, may continue to be subsidised for , up to ,three months after finding amploytent; equivalentofthe

Australian Pensioner Health Benefits Card, may continue for up to 12 months after finding employment.

(b) Sanctions

Provision is made in the legislation for penalising non-participation in the program. Sanctions can be imposed on an individual who has failed or refused to participate without 'good cause' (see (c) below) in a program component to which s/he is assigned, and where s/he continues to refuse to participate after a period of informal and

formal conciliation between herself/himself and the county.

For an initial failure or refusal to participate, the recipient is placed on 'money management' for a maximum period of three months - money management being a system of payment that allows any. payment to the participant to be made either directly to retailers or to a substitute payee who will manage the grant on behalf of the recipient. 17)

If the participant continues to refuse to participate after the three month money management sanction period, stiffer financial sanctions can be invoked Which include, at last resort, permanent cancellation of payment. The possibility of sanctions is complemented by the establishment of a formal grievance procedure.

6. Assembly Bill 2580, pp.24-5. 7. Dbid., pp.34-5.

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Unemployment and Access to Social Security Part I: 'Wbrkfare' in California

(c) Protection of participants and existing employees

The legislation establishing GAIN is explicit on the matter of protection of both participants and existing employees. In the former case, 'good cause' for non-participation has already been alluded to. In more detail, 'good cause' for failure or refusal to participate in a program to Which a participant has been assigned can be invoked Where the employment, offer of employment, activity or other training for employment: [8]

discriminates in terms of age, sex, race, religion, ethnic origin, or physical or mental handicap;

• exceeds the daily or weekly hours of work customary to the occupation;

requires travel to and from one's home that exceeds a total. of two hours in round trip time, exclusive of the time necessary-to EránspOrt .faMily membets to-a School or place providing care, or when walking is the only available means of transport, the round trip is more

than two miles, exclusive of the mileage necessary to accompany family members to a school or a place providing care;

involves conditions and specific responsibilities that impair the individual's physical or mental health or are not related to the individual's capability to perform the task on a regular basis;

involves conditions that are in violation of applicable health and safety standards;

• does not provide for worker's compensation insurance;

• has been created in violation of the Section dealing with protection of existing workers;

• is not within the scope of the employment plan as contained in the contract [made between the participant and the SDSS];

• if accepted, would cause the individual to violate the terms of his-or her union membership;

• if accepted, would cause an interruption in an education or job training program in progress, excluding community work experience assignments, or would prevent the individual from returning to his or her regular job within a reasonable time, unless the job offer provides either of the following:

8. The following description of sections protecting

participants is from ibid., p.35-7.

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Unemployment and Access to Social Security Part 1: 'Workfare' in California

- employment and sufficient income to lead to self-support and the job offer is within the scope of the employment plan; or

- temporary employment while the individual is waiting for re-employment in his/her regular job; or .

is not accompanied by the supportive services agreed to under the contract entered into.

In addition to 'good cause' as specified above, no sanction can be applied where:

the individual is absent or tardy for periods up to 10 per cent of the weekly hours required for any component (this time shall not accumulate);

. the individual is temporarily physically incapacitated •or Suffers .temPorary-physiCal illness; .

the individual is required to appear in a court proceeding or is incarcerated;

the individual is suffering a family crisis, or changed individual family Circumstance as evidenced, for example, by the death of a spouse, parent or child, or an illness of a spouse, parent or child which requires the individual's immediate attention;

• inclement weather or other act of nature precludes individual. and other persons similarly situated from travelling to an activity;

• there is a breakdown in transport arrangements with no ready access to alternate transport;

• the individual needs any other necessary social service not specifically mentioned in his or her contract;

an individual refuses to accept major medical services even if the refusal precludes participation in the program;

licensed or exempt child care is reasonably unavailable, or unavailable during the individual's hours of training or employment including commuting time, or arrangements

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Unemployment and Access to Social Security Part 1: 'Workfare' in California

for child care have broken down or have been interrupted. (For purposes of this section, 'reasonably' includes having at least two choices of child care arrangements. This exemption includes the unavailability of suitable special needs child care for identified special needs children, including children with disabilities, chronic illnesses, or other special needs);

an individual is engaged in employment or training that is consistent with the employability objectives of the program, and prior notification and approval from the worker has been received; or

at the discretion of the county, any other substantial and compelling reason other than those specified.

Additionally, a participant is not required to accept any offer of subsidised or unsubsidised emplOyMent.where a net loss ofjncamle.wouhl occur. Net loss of income is deemed to occur When current income is greater than the post-employment income would be if the job offer were

accepted. 'Post-employment income' means any unearned income plus the gross earnings from the job offered, less all of the following: mandatory and legal deductions from the proposed salary; the cost to the participant of health insurance premiums offered by the prospective employer or, if none is offered, the cost of purchasing health insurance coverage based on the competitive market rate; child care, transport and :other mandatory work-related expenses; and the cash equivalent value of the difference between the assistance food

stamps and the non-assistance food stamps for which the participant is eligible. Dor purposes of computing, the post-employment income disregards the regional market rate for child care, transport and other mandatory work-related expenses.

Similarly comprehensive provision is made for the protection of existing employees. No pre-employment preparation position nor any employment or training position can be created as a result of or result in:

the displacement of current employees, including overtime currently worked by these employees;

the filling of positions that would otherwise be promotional opportunities for current employees;

the filling of a position, prior to compliance with applicable personal procedures or the provisions of collective bargaining agreements;

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Unemployment and Access to Social Security Part I: 'WOrkfare' in California

the filling of a position created by termination, lay-off or reduction in workforce caused by the employers intent to fill the position with a subsidised position under the scheme;

a .strike, lockout or other bona fide labour dispute, or violation of any existing collective bargaining agreement between employees and employers; or

. the filling of established unfilled positions, unless the positions are unfunded in a public agency budget. [9]

(iii) Finance

The legislation setting pp the GAIN program in California appropriated $15.8 million of new funds (half State, half federal) to meet the estimated $47.3 million total cost of the program in the financial year 1985/86. This was in addition to $10.6 million appropriated for child_Care 'under the GAIN Bill and:a.further$22:5 million for.child, care (required for the GAIN program) under the cognate Bill (SB303).

According to the SDSS, the program is projected to cost $304.0 million in a full year (with an additional $100.4 million cost for child care); total savings are projected at $272.3 million for a net saving over new costs of $114.3 million in a full year.

The estimated total savings of $272.3 million includes, of course, savings attributable to participants finding employment and moving out of the program, but interestingly (and contentiously) three further components :(a dollar breakdown of each is not available):

(1) savings attributable to people refusing, after registration, to participate in the program;

(2) savings attributable to people deterred from applying for AFDC because of the existence of the program (reflecting the fact that the program is essentially voluntary at the point of application for AFDC but not beyond that); and

(3) savings attributable to the minimisation of fraudulent claims (since participants in the program are supervised at all points there is theoretically no potential for claims for false. identities and little time for

supplementing income Which is subsequently undeclared).

9. Ibid., pp.27 -8.

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Unemployment and Access to Social Security Part I: 'WOrkfare' in California

4. CONCLUSION

Since GAIN has been operating in only one county, and there for less than three months, it is too soon to make any detailed assessment of its effectiveness, although preliminary results show that relatively

large numbers of people are caning off the AFDC rolls during the initial three week job search component of the program.(10]

While the people responsible for setting up the program are understandably optimistic about its success, others have expressed their reservations. These reservations fall broadly into three categories.

1) issues related to the GAIN program specifically - Is the job search component an appropriate first step? Should provision be made for sanctioning counties Which do not provide the services they are required by law to provide? Is the AFDC recipient really in a bargaining position. in the. drawing A/15:1)f..contrapts?::.Do :.the provisions protecting participants and existing employees act rather to restrict the program's effectiveness?

2) issues related to workfare programs generally -Compulsory or voluntary? Will they save money? Will they act to decrease welfare dependency? Who should participate?

3) issues related to the interaction of workfare-type programs and the labour market - Can workfare-type programs do anything to resolve the structural and other problems in the economy Which are responsible for unemployment? can the present labour force structure accommodate single parents? Do workfare-type programs

institutionalise a lower-paid and potentially exploited alternative workforce? What link should exist between workfare-type programs (which [re]train, [releducate and provide work experience) and labour market programs Which essentially do the sane thing?

Part II of this series of Current Issues Briefs - A 'Work-for-the-dole' Scheme for Australia - will address these questions.

November 1986

10. Jo Fredericks, GAIN Oversight Committee, personal communication, 31 July 1986.

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Unemployment and Access to Social Security Part 1: 'WOrkfare' in California

Al:Tendix

SELECTED ASPECTS OF THE UNITED STATES SOCIAL SECURITY SYSTEM

1. Unemployment Insurance

Unemployment insurance programs, a federal-State initiative financed primarily through a tax on employers, provide payments to members of the labour force, who became involuntarily unemployed and who are willing and able to accept suitable employment. The programs cover approximately 97 per cent of wage and salary earners.

Mbst States impose . a standard. tax rate of 5.4 per cent of taxable payroll., but actual tax . paid 'may vary:1rom 'zero . t6 10.5 per- cent, dependent on the employer's record of employment stability. Up to 90

per cent of the tax paid b3 the State may be offset against a national payroll tax subject to certain federal requirements regarding fair administration and financial security.

Each State has responsibility for the content and development of unenployment insurance laws. The States decide the rate and duration of payments, coverage and contribution rates, eligibility requirements and disqualification provisions. Hence these details may vary between

States.

Unemployment benefits are available to unemployed workers Who have demonstrated an attachment to the labour force by a specific amount of recent work and/or earnings in covered employment. The rate payable varies with the worker's past wages within certain weekly minimum

($5 to $62 as at September 1984) and maximum ($105 to $278) levels. All States provide for payment at a reduced rate Where earnings exceed a specified amount. Most States require a one week waiting period before payments can be made, and all States limit the duration of payment to 26 weeks (30 weeks in one State, September 1984), although

this period can be extended for up to 13 weeks under special conditions.

2. Assistance to Families with Dependent Children

The Assistance to Families with Dependent Children program provides assistance to children in families Where need arises because of the incapacity, death, continued absence or (in same States) unemployment of a parent.

- 18 -

Unemployment and Access to Social Security Part I: 'Wbrkfare' in California

Federal, State and local governments share the cost of the program, with federal matching grant rates varying with the per capita incame of the State up to a ceiling level. The Federal Government may pay up to 75 per cent of administrative costs under certain circumstances. To receive federal money, the States must camply with broad federal guidelines but otherwise can determine independently who is assisted, how much and how assistance may be given.

Rates of payment vary with the State assessed needs standard and States may pay up to 100 per cent of the difference between the needs standard (for example, $286 per month or $474 per month for a family of three in Mississippi and New York respectively) and actual income. Eligibility is generally limited to those whose gross income is less than 185 per cent of the State needs standard, and federal law requires that same earned income should be disregarded, at least for certain periods, in determining the amount of payment. Assets held by applicants are also considered in determining eligibility.

. ' • .-.. ..

As 'well ' as providing assistance in cases of the inCapacity, death or continued Absence of a parent, States may optionally extend assistance to pregnant women during the last four months of pregnancy Who would otherwise be ineligible for assistance, and to families with children Where the principal income earner is unemployed (23 States in 1986).

Claimants are required to assign any maintenance in excess of $50 per month to the State.

Source: Social Security Programs in the United States, SOcial Security Bulletin, vol. 49 (1), January 1986.

US Department of Health and Human Sciences, SOcial Security Programs Throughout the World - 1983, Research Report No. 59, US Gbvernment Printing Office, 1984.

Current Issues Briefs recently published by the Legislative

Research Service.

1985

No. 1

No. 2

No. 3

No. 4

No. 5

No. 6

1985-86

No. 1

No. 2

No. 3

No. 4

No. 5

No. 6

1986-87

No. 1

No. 2

No. 3

No. 4

Brown, G., 'A Short Guide to Nuclear Weapons and Warfare Terminology'.

Beyer, M., 'The World Sugar Market and Prospects for a New International Sugar Agreement'.

Marker, A., 'Industrial Robots in Australia: an introduction'.

Makinda, S., 'The Coup in Sudan: internal and international implications'.

Angley, J., 'The New South Wales Doctors' Dispute'.

Fraser, D., 'Television and the Satellite: the story so far'.

Angley, J., 'Identification Cards: major issues'.

Fraser, D., 'Television and the Satellite: II. The Current Issues'.

Leigh, M.., 'Brunei Darussalam: the price of consent'.

Fox, W., 'Australia's External Debt'.

Martin, B., 'International Terrorism: Recent Developments and Implications for Australia'.

Larmour, C., 'Affirmative Action Legislation in Australia'.

Brown, G., 'The Joint Defence Facilities as Bargaining Chips: pros and cons'.

McCormick, W., 'The Export Woodchip Industry of South East NSW: major environmental issues'.

Kopras, A., 'Trading with South Africa'.

Daniels, D., 'Child Maintenance Reform'.

If you wish to receive copies of any of these publications, please contact the Publications Officer, Department of the Parliamentary Library, Kurrajong Annexe, Barton A.C.T. 2600, or phone (062) 72 7551.