States Stave Off a 'Battle at the Bottom'

When Janice Thompson moved off welfare and began working as a secretary in Chicago, the state of Illinois gave her a year of child care and other transitional support.

That year has ended, making room for the next round of women coming off welfare. Yet the cost of child care for her two younger children could eat up about half of her income of $22,000 (including child support from her ex-husband).

Fortunately for Ms. Thompson, a day-care subsidy will continue because the state has moved to ease the burden of the poor, regardless of their welfare status.

Rather than refusing child-care subsidies to low-income workers in favor of those who are just now moving off welfare, the Illinois legislature has approved a $100 million, 80 percent increase in those funds. All 30,000 families on the state's waiting list for day care will get assistance.

As welfare-reform kicks in around the country, advocates for the poor warn of a brewing "battle at the bottom."

While Illinois is avoiding such competition for day-care dollars, in many states, welfare recipients may be moving to the head of the line for support. And the competition will likely increase for subsidies in other areas such as health care, transportation to work, drug treatment, and for placements in jobs themselves.

After complaints from hotel workers, Maryland recently banned the replacement of low-wage employees with welfare recipients. Some nonprofit groups in New York are refusing to hire "workfare" participants - people who work in exchange for welfare benefits - in part because these employees replace some city workers and drive down wages for others.

Michael Kharfen, a spokesman for the Department of Health and Human Services in Washington, which is overseeing state reforms, says states are supposed to judge families' needs by income. "The reform does not set out a preference for welfare families over working-poor families," he says.

But the pressures of welfare reform give states an obvious incentive to help welfare recipients first. States must move recipients into jobs by certain deadlines or face financial penalties. Governors also don't want the political embarrassment of failing to meet deadlines.

Despite these incentives, it is wrong to leave the working poor behind, says Margy Waller, an analyst at the Progressive Policy Institute, a centrist Democratic think tank in Washington.

"The point of welfare reform is to make work pay, and if it doesn't, people may just choose welfare," says Ms. Waller, author of a new report on welfare-to-work and child care. Waller surveyed the 10 states with the largest welfare caseloads, and found that some - including Ohio, Georgia, and Texas - are giving higher priority for child care to families on welfare or in transition to work. Of the top 10 states, only three - Illinois, Michigan, and Washington - are creating a "seamless" system of child-care support for all low-wage workers, she says.

The good news, Waller says, is that in all 10 states (the others are California, Florida, New York, and Pennsylvania) overall government spending on child care will go up. But of these states, only Illinois has made a commitment to subsidize every qualifying low-income family, regardless of welfare status.

Among smaller-caseload states, at least three - Wisconsin, Minnesota, and Rhode Island - have made a similar commitment.

None of these states considers day care an "entitlement." Rather, they have determined what it will cost to subsidize all low-income families that fit the criteria, then appropriated that amount.

In Ohio, where control of day-care subsidies has moved from the counties to the state under welfare reform, child-care advocates say low-income workers may get the short end of the stick.

"There is, in general, a loss of money for the working poor to meet the needs of people on welfare," says Chris Humphrey, an official at Comprehensive Community Child Care, an agency that serves the greater Cincinnati area.

Ms. Humphrey notes that the working poor lose their qualification for day-care help at a lower income than do welfare recipients. She knows of workers who have asked for a pay cut so they can qualify for a child-care subsidy.

Even in Illinois, where child-care advocates are applauding the state's commitment, the picture isn't all positive. The state has agreed to subsidize all who qualify, but the amount per child does not cover the going rate for care.

"That's a big barrier to quality care in Illinois," says Elissa Bassler, head of the state's Day Care Action Council in Chicago. Still, "compared to how other states have implemented welfare reform and the child-care block grants, I think we're far and away the leader in terms of what people really need."

* The first part of this series appeared on July 25.

Pay for Parents at Home

INNESOTA has added a new twist to child-care subsidies.

The plan, called At-Home Infant Care, allows a low-income family to pocket most of its child-care subsidy while a parent stays home with a baby until age 1. For example, a family with one child and an income of $25,000 would get $210 a month.

"What this is is paid parental leave," says Gail Richardson of the Child Care Action Campaign in New York. "It gives parents more choices."

The program is limited to just one 12-month leave per family. For some families, the loss of one parent's income may be unaffordable, even with the subsidy. But for others, the "baby leave" money may be just enough to allow a parent to stay home.

The plan was proposed by state Rep. Richard Mulder, a conservative Republican who objected to the way child-care subsidies discriminated against stay-at-home parents.