WASHINGTON - April 1 - An updated briefing paper from the Center for Economic and Policy Research (CEPR), "For Welfare Reform to Work, Jobs Must Be Available," argues that policy makers must take into consideration the difficult labor market situation for former welfare recipients as the Senate this week considers making substantial changes to the law.

This analysis of the Personal Responsibility and Work Reconciliation Act, commonly known as welfare reform, by Heather Boushey and David Rosnick, finds that during the recession and recovery from 2001 to the present, job growth has been slow and wage growth has been negligible in the industries that former welfare recipients predominantly work in.

Most former welfare recipients are working in low-wage service-sector jobs.

Most former welfare recipients found employment in a relatively small number of industries over the late 1990s. Nine industries, mostly in the service sector, account for the employment of nearly two-thirds of all former welfare recipients.

Overall, these are relatively low-wage industries: in the fourth quarter of 2003, the retail industry had an average hourly wage of $11.90 while food establishments averaged $7.77 per hour (not including tips), both of which were much lower than the $15.47 average for the private sector as a whole.

Many of the industries in which former welfare recipients found jobs have been among the hardest hit during the recession and recovery from 2001 to the present.

If job growth had remained steady at its 1.9 percent pace over the last business cycle (measured from the July 1990 peak to March 2001 peak), rather than falling to –0.9 percent from March 2001 through February 2004, the economy would have had an additional nine million private sector jobs over the current 109 million. These nine million “missing” jobs are a result of the negative growth in private-sector employment growth over the past three years.

Of the total number of these "missing jobs", 51.6 percent were in these eight industries with high proportions of former welfare recipients.

The experience of former welfare recipients within these sectors is likely to be even worse than that of the average worker

Former welfare recipients are likely to be among the first laid-off, as many have shorter employment histories than other workers. And when they do lose their jobs, these workers will certainly have a more difficult time finding employment than they did when the economy was booming in the late 1990s.

For the full paper see: http://www.cepr.net/labor_markets/welfarejobshit-2004april01.htm

Or in PDF format: http://www.cepr.net/labor_markets/welfarejobshit-2004aprilo1.pdf

See also Dr. Boushey's column, Proposed Welfare Reform Changes Put Working Moms in a Bind, published by the Center for American Progress: http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=35852.

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