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Image not complete. Have to install new graphics tablet. jeanne
California State University, Dominguez Hills
University of Wisconsin, Parkside
Created: June 21, 2008
Latest Update: June 21, 2008
jeannecurran@habermas.org
takata@uwp.edu
patriciaacone@yahoo.com
Introduction One of the problems with our guidelines for welfare as a safety net is that we tend to decide what is needed to get folks back on their feet is something that we can decide rationally based on the wealth at their disposal. Wealth is usually calculated by financial assets, meaning that their financial worth can be measured by the cash they could realize by turning what they have into commodities from which they could provide themselves with cash. Visualize the old "pawn shop."
Property you own represents wealth. It can be sold, and you can use that cash to survive. We start by thinking of the house as the major investment of most American families. By selling the house, the family can realize the wealth represented by the house. Problem is that on the peripheral edge of home ownership are those who have struggled to own their home, have perhaps only recently acquired the home, and, in the present housing market with subprime foreclosures can't realize adequate cash from their home to get the family back on a secure financial path.
The car (or cars in traffic congested urban areas) is usually the next most expensive asset the family on the financial edge has. (I'm assuming that valuable jewels, antiques, and art went long before we hit the stage where a safety net needs to be provided by the community.) As the economic crisis deepens for many working class families, with the price of gas, the corresponding increase in the cost of food, and rising unemployment as corporations try to shift the costs they can to consumers, we find ourselves in a domino effect, with one person's catastrophe triggering catastrophe for others.
In this sense, a safety net is a community's way of limitng the spread of devastation, so that collectively we can recover and move our whole community back into a context from which a secure financial future can be constructed.
The Federal Reserve just took drastic steps to provide such a context for Wall Street to recover intact from the Bear Stearns collapse. That was welfare for Wall Street. We seems to be having a little more difficulty in moving the federal government to providing a similar safe haven context for communities at the family level of protecting the family's place to live and means to get to good paying jobs. Behind the Bear Stearns rescue steps was the shared belief among economists and the administration and Wall Street participants that Wall Street, the community infrastructure, could be damaged by the collapse, could recover as a community infrastructure if emergency safety net steps were taken, and that the infrastructure as a whole needed and could return to health with the safety net.
For individuals, caught by the frustration of slow marginal gains in their wealth, and the ambition to do better, make similar risky and sometimes ill-advised decisions, just as Bear Stearns did. Some Bear Stearns executives engaged in fraudulent practices. That sped up the collapse. Some family individuals make poor, perhaps ill-advised or even morally indefensible decisions. That can hasten the familiy's financial crisis.
The Secretary of Labor (I think it was; will have to check for sources) said that the Federal Reserves's rescue of Bear Stearns by strengthening and guaranteeing losses for a rival corporation to take over Bear Stearns had not been treated with greater sensibility and concern than the homeowner's who had found themselves financially strapped by the subprime mortgages on which Bear Stearns had profited. The investors of Bear Stearns, said the Secretary of Labor, did not view the Fed's actions as positive at all. They stood to lose millions; maybe some even billions. But the Secretary of Labor missed the point on that one. Investors who had reaped huge profits from the subprime mortgage loans did stand to lose both the profits and their investments. But that was a risk to which they had agreed in the pursuit of enormous financial gain at the expense of ordinary folks' dreams of owning their own home. What about the ordinary folks who stood to lose not only their dream, but also any hope of financial stability for them and their family because they had foolishly fallen for fraudulent hard sells?
References up later. Much too hot today. But, meanwhile check out this article against the context of seeking the American dream of home and family community as opposed to seeking quick and dirty riches, at the expense of the gullible and less sophisticated.
Rourke O'Brien's article appeared on Thursday, June 19, 2008, in the Los Angeles Times: Wheels versus welfare. Having a car shouldn't keep needy families from receiving assistance. Copyright: Source Copyright. Included here under Fair Use Doctrine for teaching purposes only and for archival preservation when old papers are dropped from existing websites or when websites and/or their archives cease to exist. This happens more often than you may realize. jeanneConsulted by jeanne on June 21, 2008.
Wheels versus welfare
Having a car shouldn't keep needy families from receiving assistance.
By Rourke O'BrienHighlights and commentary by jeanne.
June 19, 2008
With falling home prices, rising food and fuel costs and an unemployment rate well above the national average, the current economic downturn may push already vulnerable California families to the brink of financial destitution. Thousands of people may turn to welfare for support in the coming months. That's OK -- that's the purpose of temporary assistance. It's not as if this is the money-for-nothing welfare of the early 1990s; these folks are required to start looking for work the second they land on the rolls. Yet to qualify for assistance, many families may be forced to give up the most effective tool they have in the fight against poverty and unemployment: their car.
To be eligible for temporary cash assistance -- known as CalWORKS in California -- families must prove that they are both income and asset poor. To qualify for assistance, a single parent with two children, for example, can't earn more than about $12,000 a year or have more than $2,000 in other resources. In addition, the total fair-market value of all vehicles owned by a household cannot exceed $4,650 -- a figure that hasn't changed in more than a decade. In real terms, that means even a 10-year-old Honda Civic with 100,000 miles could disqualify a family from public assistance.
California is one of three states with such a restrictive vehicle limit -- Texas and Idaho are the others. Nationally, 12 states exclude all household vehicles when determining a family's eligibility for cash assistance; another 15 exclude at least one vehicle. Most other states exclude about $10,000 of the net or equity value of the vehicle; California's $4,650 limit counts the car's fair market value. This means that families may be deemed ineligible even if they still owe $5,500 on their $6,000 car.
The connection between car ownership and employment is clear. It's not very surprising that having a reliable automobile reduces absences from work and helps give workers access to a wider range of jobs and better-paying ones. This is especially true in a region as spread out as Southern California. A 2000 report by the County of Los Angeles -- the most recent data available -- found that 64% of welfare-to-work job seekers who had unlimited access to a car were gainfully employed, compared with only 44% of those who relied on public transit or ride-sharing. Another study -- of welfare recipients in Tennessee -- found that having a car leads to better-paying jobs, more hours worked and an increased probability of leaving welfare.
With the relationship between car ownership and employment so clearly documented, California should be working hard to provide low-income families access to a reliable car. And, in some areas, they do get help. Sacramento County, for example, is authorized to purchase 50 vehicles a year for county welfare recipients who lack access to public transit. If we're helping some families buy a car, wouldn't it make sense, then, to let people who have cars keep them?
The very phrase, "we're helping some families buy a car," will cause others to cry out "why not me?" And why not? If you're on the edge of losing everything you have and need that car to be able to work and get yourself back on a stable financial path? That IS what welfare is supposed to do. Help you keep yourself away from financial ruin that would put you on welfare. jeanneAnd instead of investigating someone who owns a 10-year-old Honda, shouldn't district attorneys and others be concentrating their time and resources going after more costly types of fraud, such as identity theft? And shouldn't caseworkers spend more time connecting a family to vital social services than verifying the worth of its 2002 Toyota Corolla?
The County Welfare Directors Assn. thinks so, and that's why it's supporting AB 2368, a bill championed by Assemblyman Felipe Fuentes (D-Sylmar) -- and sponsored by the New America Foundation -- that would exclude household vehicles from consideration when determining eligibility for CalWORKS. The Assembly passed the bill and has sent it to the state Senate.
The reasoning is sound: Individuals with cars will be more likely to find a job, stay employed and move to self-sufficiency, the goal of California's welfare program. This reform will also increase efficiency by reducing paperwork and staff hours spent tracking down the value of vehicles, which the Assembly Appropriations Committee estimates would save the state more than $3 million a year.
t's about time California's welfare system catches up to the common-sense policies of states such as Kentucky, Alabama and Louisiana.
Rourke O'Brien is a policy analyst with the Asset Building Program at the New America Foundation. Article licensing and reprint options
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