Workfare displaces permanent workers. New York City, which has the largest workfare program in the nation, replaced 17,000 waged workers with over 34,000 on workfare, and the numbers are expected to soar now that TANF recipients are included. Workfare also means loss of union jobs, occupational health and safety protections, and other hard-won workplace gains. Since workfare participants work off their benefits instead of receiving a wage, taxpayers end up footing the wage bill, giving employers a free ride. Promotes development of skills, not their decline.
Welfare programs interfere with the job market.
Welfare reform undercuts wages. Only a fraction will succeed, but the increased competition can only make it easier for employers to keep wages low and harder for unions to negotiate good contracts. From the outset, welfare supplied business with low-paid workers by setting benefits lower than the lowest prevailing wage. TANF's new wage subsidies and tax-credits use public dollars to pay firms that hire recipients pay wages, but profits remain in private hands. Lowering labor costs in these ways is part of a broader strategy initiated in the early 1980s, to promote economic recovery, helping business and imposing austerity on everyone else.