Work Requirements Are Expensive for the Government To Administer and Don’t Lead To More Employment
Work Requirements Are Expensive for the Government To Administer and Don’t Lead To More Employment
The creation of additional bureaucracy to take basic supports away from Americans would be costly to the federal government and ineffective in promoting employment.
On April 19, 2023, House Speaker Kevin McCarthy (R-CA) released a proposal that predicates raising the debt ceiling on a wish list of harmful policy changes, playing brinkmanship with the economic well-being of working families and the nation. Among other policy changes, the proposal would impose or make more burdensome “work requirements” that take away supports for food, health insurance, and other basic needs from people who are working part time, are providing care to family members, or are disabled.
Work requirements are built on a false premise, as most program participants who can work already do so. For example, nearly three-quarters of adults who participated in the Supplemental Nutrition Assistance Program (SNAP) before the pandemic worked within a year of program participation. Work requirements do not lead to better financial outcomes for individuals; rather, they cost governments—which must monitor work or work-search documentation—millions of dollars. This is clearly demonstrated by new research out of a state-level plan to introduce additional administrative hurdles and costs in Iowa.
Work requirements don’t offer the benefits proponents claim
An individual does not typically satisfy a “work requirement” by having or looking for work; they satisfy this condition by documenting or proving that they have been or are looking for work. This can be particularly cumbersome and ineffective because the activities typically required by administrators have little to do with attaining gainful, long-term employment.
Research identifies several factors that make it more likely for an individual to have a successful employment outcome, including their access to a broad social network and their recipiency of unemployment insurance benefits. Likewise, access to education and training has longer-term positive outcomes for workforce participation than efforts that concentrate exclusively on job search activities. Work search activity requirements typically involve documenting the creation of profiles on job search websites, the contact of new employers each week, or the submission of resumes. Yet there is little evidence to suggest that these activities, documented week after week, make a significant difference in the speed at which individuals find jobs, the quality of the job, or the quality of the match between job and individual.
Work requirements are built on a false premise, as most program participants who can work already do so.
For example, a report by the Urban Institute shows that SNAP work requirements and work-related time limits for certain SNAP participants—such as able-bodied adults without dependents—do not increase earnings or employment in any meaningful way, but instead create administrative hurdles for state administrators of the programs. Additionally, the Urban Institute’s research shows that work requirements result in a significant decrease in program participation for people who need supports but are unable to navigate the increased administrative burdens.
Similarly, a work requirement that Arkansas imposed on Medicaid beneficiaries in 2018—which is similar to but less strict than the federal proposal from McCarthy—did not boost employment. Arkansas’ Department of Human Services reported that almost 16,000 people lost health coverage out of the 60,680 people who were subject to the requirement. Yet only 1,232 lost coverage because they actually did not meet the work requirements; the vast majority of those who lost their coverage had cases closed for paperwork reasons or relocation.
Despite projections that stricter requirements would save the state money, the policy cost the state and federal government $26.1 million to implement without achieving its purported employment goals. Research found that significant costs were incurred trying to notify beneficiaries of new rules and that reporting information about eligibility online was complicated. As a result, thousands lost health coverage and incurred more medical debt, and Arkansans ages 30 to 49 showed no significant changes in employment, community engagement status, or the number of hours worked.
Despite projections that stricter requirements would save [Arkansas] money, the policy cost the state and federal government $26.1 million to implement without achieving its purported employment goals.
Instead, research shows that having health coverage makes people more likely to be able to work. This runs counter to the assumption that underlies work documentation requirements; in reality, program participation makes work more likely, and taking away access to programs does not increase the likelihood of work.
In fact, more stringent work requirements hurt the overall economy and reduce overall employment. A Trump administration proposal would have restricted states’ ability to help jobless or underemployed workers in regions with higher unemployment rates, recognizing that there are often fewer jobs available in some parts of a state than in others. The rule would have taken food assistance away from an estimated 755,000 Americans; and because of the benefits SNAP spending has in every community across the country, there would have been 178,000 fewer jobs over a decade. Fortunately, courts vacated this Trump-era rule, but efforts to impose work requirements on various programs persist.
Framing work requirements as a cost saver is also misleading, as without access to supports, costs are incurred by states in other ways. For example, Medicaid coverage offsets uncompensated care, which many state budgets end up covering.
McCarthy’s proposal would increase costs and create administrative hurdles for states and millions of Americans
Speaker McCarthy’s debt ceiling proposal would impose work requirements, creating additional bureaucratic obstacles for an array of programs and tie millions of participants up in red tape.
For 10 million Medicaid beneficiaries, health coverage would be put at risk, contingent on their state completing additional verifications of their documentation of work participation. For example, in California alone, 2.7 million people—or 22 percent of Medicaid enrollees—would be at risk of losing coverage through the program, according to estimates by the Center on Budget and Policy Priorities. Even those who should be categorically exempt, such as those in long-term care facilities, would not automatically be exempt, creating enormous administrative burdens and costs for states, which administer Medicaid, SNAP, and Temporary Assistance for Needy Families (TANF) in partnership with the federal government. Meanwhile, staff, contractors, and technology systems would face additional burdens as they processed more forms and documentation, while states would lose access to federal dollars and participants would lose access to their health care.
Indeed, under McCarthy’s proposal, states would not be able to use federal dollars to support residents facing paperwork challenges or residents who should be exempt from the requirements—such as parents staying home to provide care for their children. Moreover, many people would lose much-needed benefits due to the onerous burden of complying with the red tape. Nearly 93 percent of Medicaid participants ages 19 to 64 are working, caregiving, or attending school or have an illness or disability.
SNAP, meanwhile, already includes strict work requirements, time limits, and eligibility verifications for many of its 41 million participants. Even so, McCarthy’s proposal would increase the age at which SNAP participants are exempt from work requirements to include people ages 50 to 55. Anti-hunger advocates and farmers’ groups alike note the importance of SNAP in rural areas, such as upstate New York. Unemployment rates and the cost of food are generally higher in rural areas, and populations are typically older, meaning that efforts to make SNAP recipiency contingent on work for older people will be especially harmful. Projections indicate that 136,000 Californians, 58,000 Floridians, and 54,000 New Yorkers ages 50 to 55 would be at risk of losing SNAP under McCarthy’s proposal.
Lastly, McCarthy’s plan for TANF, which provides very modest amounts of financial support, would increase state administrative costs for a program that already has very restrictive requirements. Two-thirds of those who participate in TANF are children, and the amount of financial support received is minimal: While amounts vary by state, in Mississippi, the maximum monthly benefit is $146. Specifically, McCarthy’s plan would pressure states to increase their work participation rate via increased documentation requirements, creating further administrative burdens for a program that already only provides benefits to 26 percent of eligible people.
Research shows that policy changes in Iowa will cost the state millions to administer
A newly passed bill in the Iowa House of Representatives and Senate provides a clear illustration of the costs of creating additional administrative burdens.
New research from Iowa’s Legislative Services Agency, a nonpartisan staff agency that serves the Iowa Legislature, indicates that these changes will cost the state $17 million over the first three years—more than 2 1/2 times the amount Iowa would otherwise have spent on SNAP during that period. These administrative costs include 218 additional state government hires to administer new checks on Iowans’ eligibility for SNAP benefits. The law also allows the state to hire a private company to complete these eligibility checks, the contract for which would include a bonus payment for additional Iowans deemed ineligible, incentivizing administrators to remove more Iowans from program participation. Moreover, the state would incur additional costs for installing new systems to process and authenticate eligibility, as well as for verifying that Iowans don’t exceed thresholds that restrict how much Iowans can keep in savings accounts, while losing access to federal dollars.
[Iowa’s work requirements] will cost the state $17 million over the first three years—more than 2 1/2 times the amount Iowa would otherwise have spent on SNAP during that period.
The same nonpartisan research estimates that these new processes will not only create additional red tape for hundreds of thousands of Iowans but also deny food assistance and/or health care to about 1 percent of all Iowans: 8,000 Medicaid participants, 2,800 SNAP participants, and 600 Children’s Health Insurance Program (CHIP) participants. Notably, this is far more people than the miniscule number of Iowans deemed to be participating in these programs fraudulently. For example, nonpartisan research estimates a SNAP fraud rate of 0.07 percent, or 195 Iowans. It is likely that a much larger number of participants would lose access based on paperwork errors, such as forms being mailed to previous addresses, rather than fraud.
Other policy changes can better support employment goals
Many policymakers share the aim of ensuring that people with employment goals can find work to support their families. Yet other policy options—such as strengthening enforcement against discrimination of disabled workers, creating a national system of paid medical and family leave, and meeting child care needs—offer much more promise than work requirements.
As described above, evidence suggests that more reliable access to supports such as health insurance makes people more likely to work. In addition, a more consistent commitment to moving people with employment goals to reliable work with family-sustaining wages should involve a change to SNAP eligibility rules to disregard income earned during training via reauthorization of the Farm Bill.
Notably, the current approach may disincentivize workers from participating in workforce training. Training programs sometimes include minor stipends, income, or financial support to make them reasonable options for adults who are changing industries or searching for better employment. Yet since these stipends often reduce the benefit amount or make the trainee ineligible for SNAP, while being much too small to live on, it may make more short-term financial sense for trainees to forgo training and the resulting higher-paying employment opportunities altogether.
Changing the SNAP Employment and Training program to disregard temporary work income when considering SNAP eligibility could help maintain an individual’s financial stability while increasing the likelihood that they pursue training in pursuit of a high-quality job.
Federal attempts to restrict access to food, health coverage, and other supports would be expensive to administer and do not lead to better financial outcomes for individuals. Instead, the creation of these additional bureaucratic hurdles is inconvenient and burdensome to participants and government officials alike. New legislation in Iowa will more than double the state’s SNAP costs while creating paperwork headaches for hundreds of thousands of residents. Congress must not adopt this approach at the federal level, as it would simply increase burdens and costs for millions without improving Americans’ well-being.
The authors would like to thank Nicole Rapfogel, Jean Ross, Bobby Kogan, Emily Gee, and Aurelia Glass for their feedback.
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