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UW-Milwaukee - Center for Economic Development

Policy Research Report Abstract

Welfare Reform and the Metropolitan Milwaukee Labor Market, August 1996, by Pamela S. Fendt


"W-2--Wisconsin Works" is the State of Wisconsin's latest innovation in welfare reform. In May of this year the State applied to the U.S. Department of Health and Human Services for the federal waivers that would allow Wisconsin to modify AFDC regulations as outlined in W-2. However, the recent passage of welfare reform legislation at the federal level makes the waivers unnecessary. Wisconsin can now implement W-2 which, put briefly, proposes time-limits and work requirements for Wisconsin's welfare recipients in ways that fundamentally reshape the State's social safety net and labor market.

However, the W-2 waiver request--and indeed the entire conceptual basis for Wisconsin's welfare replacement program--rests on a set of untested and highly suspect economic assumptions. As State officials put it:

Jobs in Wisconsin are plentiful, making it an employee's market...The future outlook is even brighter. Businesses continue to move to Wisconsin, and employers will be hiring more workers this year. Wisconsin has the capacity to place even more welfare recipients in jobs and start them on their way to self-sufficiency.

W-2 is predicated on three core assumptions:

  • there are enough jobs in local private labor markets to accommodate the new entrants from the W-2 program;
  • there are a sufficient number of jobs at the "entry-level," to make them accessible to welfare recipients;
  • these jobs pay wages high enough to permit economic self-sufficiency among W-2 participants.

This report tests these assumptions for the four county Milwaukee Metropolitan Statistical Area, a region that contains over 50 percent of Wisconsin's current AFDC recipients. Clearly, it is in Milwaukee that the success of W-2 will be determined. Using labor market data and projections produced by the State of Wisconsin Department of Industry, Labor and Human Relations (DILHR) we have examined for the metropolitan Milwaukee labor market the number of jobs the State expects to be available through the year 2005. In addition, we have examined the 1995 wage levels of these jobs in the Milwaukee area. Finally, to test the likelihood that these jobs will be accessible to W-2 participants, we have matched the data on job openings with skill codes for occupations derived from the U.S. Department of Labor.

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