Albuquerque Tribune
July 26, 2006

Who says hard work pays?
by Bill Jordan
Deputy Director for Policy
New Mexico Voices for Children

The recently released Legislative Finance Committee audit of the Temporary Assistance for Needy Families (TANF) program shows New Mexico finally ranking above the national average in a positive benchmark. Fully 64 percent of our state's welfare recipients have jobs, according to the report. Nationally, that number's only 48 percent. The TANF program is successfully moving people out of welfare and into work. Unfortunately, with an average wage of just $6.67 an hour, work in New Mexico is not moving people out of poverty. On top of that, the state isn't doing enough in the way of education, job training, or assistance with childcare costs. In New Mexico, it seems, hard work alone does not necessarily translate into self-sufficiency.

It's heartening to see the Legislature seeking some accountability from the Human Services Department (HSD), charged with helping our most vulnerable families. But, as the report points out, the department's approach to TANF is one of the underlying problems.

New Mexico is considered a "work-first" state in welfare policy. Our emphasis is on getting TANF recipients thrown into a job - any job - as early as possible. While this works in the short term, people tend to get stuck in dead-end jobs that pay poverty-level wages in the long-term - particularly the 30 percent of TANF recipients who lack a high school diploma or GED. Additionally, while people can spend time in treatment for problems such as domestic violence and substance abuse in lieu of working, they can't get similar help with mental illnesses even though such problems keep nearly 40 percent of TANF recipients from gainful employment.

Job training, education and social supports are only a part of solving the poverty puzzle. For working poor families, childcare costs present an enormous barrier to exiting poverty. Currently, New Mexican families must live at or below 155 percent of the federal poverty level (FPL) in order to qualify for childcare subsidies. For a family of three, that's an annual salary of just $25,700. The LFC report recommends keeping eligibility at this level and raising the 'exit' amount - meaning the salary level at which families no longer qualify for childcare assistance. Raising the exit level is an excellent step, but if we really want to move children out of poverty we need to make childcare assistance available for families earning 200 percent of the FPL.

Two hundred percent of the FPL is considered the entry level to middle class. While the annual income for a family of three at 200 percent of the FPL may sound like a lot - $33,200 - good center-based childcare takes out such a large amount that it knocks families back to 150 percent of the FPL. At $600 a month per child, a year of quality childcare is more expensive than a year of tuition, fees and books at UNM. As a consequence, families must opt for a lower quality of care - even though the benefits of a high quality childcare program that incorporates early childhood education are numerous and long lasting. Not only does the child benefit, but so does the state, by seeing higher math and reading scores and high school completion rates, and a host of other good returns.

Two other pieces of the solution are not explored in the report because they fall outside of the purview of the HSD. One must be a statewide increase in the minimum wage. While the $6.67 an hour noted before is higher than the federal minimum of $5.15, New Mexico must step up with a minimum wage of $7.50 an hour. Critics claim that such a raise would put too many families above the eligibility level for childcare assistance, but it's simply not true. A single parent of two must earn $15 an hour before losing such assistance. A three-person household in which both parents work full time at $6.67 an hour is already ineligible for assistance at the current entrance level. Even earning $7.50, they'd be eligible if we raised the entry level to 200 percent of the FPL.

The state must also enact an earned income tax credit that piggy backs on the federal EITC already in place. The federal EITC has proven to be a most effective tool for alleviating poverty. Together, an EITC and a minimum wage that's not an insult to a working person's dignity would send the signal that here in New Mexico hard work is valued - because no one who works full time deserves to live in poverty.