Welfare Reform in a Global Economy

Abstract

The federal government's welfare reform efforts have two defining characteristics: first, welfare reform requires welfare recipients to work for their checks (and to move toward permanent, self-sustainable employment); and second welfare reform devolves administrative responsibility to the states, punishing states if they fail to meet federal employment targets for their welfare populations.

But these two characteristics are in deep tension with the realities of a global economy. Thus welfare reform shifts the burden of welfare-to-work requirements to the states, even as the states have decreasing control over the size and shape of their local job markets in a global economy, and even as the global economy seems to be handing states exactly the wrong kinds of jobs to lift recipients out of welfare.

This article explores some of the tensions between the goals of welfare reform and the realities of a global economy. First, it explores how the federal government, not the states, increasingly controls the domestic labor market and available jobs in a global economy. Next, it argues that the federal government and the global economy have handed the states exactly the wrong kinds of jobs to lift recipients out of welfare.

The article argues that welfare reform must adapt in order to reconcile its goals with the realities of a global economy. Particularly: welfare reform must either refocus on training and education so that recipients can qualify for sustainable jobs in the global economy; or welfare reform must become a meaningful trade adjustment assistance program.

Keywords: welfare, redistribution, federalism, economy, trade

JEL Classification: D30, D31, D63, E24, H53, H77, I30, I38