Between a Poor and a Poorer Place: Why Welfare Should View the Labor Market as the Problem Rather than the Solution to Poverty

Abstract

This paper seeks to argue, in direct contrast to Clinton’s reforms in the 1990s, that the modern American welfare state should view the secondary labor market as the primary problem low income citizens face rather than the solution to poverty. Section I will summarize the history of welfare in the US by describing how an illegitimate caricature of welfare recipients precipitated a shift towards welfare-to-work policies. Section II will show that the secondary labor market, where welfare recipients are forced to work, harms low-wage workers and that the welfare-to-work program TANF does not improve recipients’ outcomes either during or after the program. Section III will conclude by taking a review of welfare policies and arguing that welfare should focus on structural labor market problems rather than welfare-to-work or basic income guarantee schemes.