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Law Throws Welfare Recipients Into Treacherous New World of Work

August 16, 1996

NEW YORK (AP) _ Valerie Price raises four children alone, has enrolled in cosmetology school and plods the streets daily in search of a part-time job.

If that search is any guide to what’s out there now for welfare recipients like Price, they are confronting a bleak future, and it’s likely to worsen under welfare reform.

The legislation passed by Congress in early August will flush a torrent of additional low-skilled or unskilled people into a job market where the demand for them already may have reached a saturation point.

President Clinton has said he will sign the legislation, which limits welfare benefits to five years and forces able-bodied adults to work after two years. But even Clinton’s Treasury Secretary, Robert Rubin, said it will require further job creation to succeed.

``This is the center hole, the big black hole of the welfare bill: The jobs are not there,″ said Chuck Loveless, a legislative aide to the American Federation of State, County and Municipal Employees.

Price, 36, has been on public assistance since April 1995. She looks forward to starting cosmetology classes in September. During the typical day, she takes her children to summer camp, then starts knocking on storefronts around her Harlem neighborhood. Mostly she looks for work at beauty-supply merchants and hair salons that might need an extra hand selling or cleaning up during the afternoons or weekends.

The pickings are slim. Many proprietors, she said, prefer to hire full-time help at below-minimum wage and pay cash.

``They’re not interested in hiring part-time,″ Price said. Still, she tries to be optimistic. ``You got to see yourself in the position where you want to be, and someday you’ll get there.″

Even if she finds work, the welfare reform ironically could threaten her future employment security. Reform critics say the influx of new job seekers will give employers leverage to hire the cheapest help.

``This would be a tremendous pressure on low-wage jobs, probably pushing the wages even lower,″ said Audrey Freedman, a labor economist who runs her own consulting firm.

Others say the U.S. economy could readily absorb a bigger labor force. They point to the 8 million jobs Clinton himself has bragged about creating during his tenure. They point to the tens of thousands of jobs that the Labor Department says are created each month in retailing, construction, financial services. They point to resurgent factories in the Midwest, the new auto belt in the South and the Silicon Forest of the Northwest.

``This economy would easily accommodate them,″ said Donald Ratajczak, director of the Economic Forecasting Center at Georgia State University in Atlanta. ``They could very well show up for all the places that say they are hiring now, to bag groceries, serve hamburgers, any number of things.″

Still, about 4.8 million adults currently receive federal public assistance. Most are unskilled and have only a high school education, if that. Many have never worked, or have mental or physical health problems, or have children or parents who need care, making them difficult to employ.

Other powerful economic forces could hamper efforts by welfare recipients to find work. Perhaps the biggest is the Federal Reserve, the central bank, which wields enormous influence through its control of interest rates.

Many economists believe the Fed is close to raising rates to slow the economy and thwart inflation by making the cost of borrowing go up. That will likely hurt businesses and reduce the number of jobs _ just as people on welfare rolls are forced to seek work.

Furthermore, welfare reform coincides with a new law to raise the minimum wage, which could reduce the number of already-dwindling jobs available to the unskilled. The North America Free Trade Agreement also is narrowing employment opportunities by shifting more low-paying jobs to Mexico.

Lawrence Mishel, research director at the liberal Economic Policy Institute in Washington, estimates that adding 1 million people to the work force would depress wages by 12 percent for the lowest third of wage earners.

``Implicitly, then, you are funding new jobs for ex-welfare recipients by the wage losses of current low-wage employed,″ Mishel said.

Ex-welfare recipients who have found work without the pressure of the reform have mixed views about it. Many think that a law forcing people to work regardless of their circumstances is shortsighted.

``I don’t feel over sympathetic about certain situations,″ said Mozella Richardson, a 22-year-old mother of two who attends the City College of New York and works there as an office assistant.

``But if you’re trying to do something to better yourself, then they should help you do it,″ she said. ``Then you make the choice if you’re going to succeed or not.″