Wisconsin's approach differs from Minnesota's; it works
Star Tribune, February 6, 2000
By John H. Hinderaker and Scott W. Johnson

When Congress enacted welfare reform legislation in 1996, it abolished the federal entitlement to cash benefits for poor families under the old Aid to Families with Dependent Children program. Recognizing the destructive consequences that the program had wrought, Congress directed each of the 50 states to design its own program to replace it.

Perhaps no two states resemble each other more closely than Minnesota and Wisconsin. Among other things, each has a population of roughly 5 million, each is dominated by a single metropolitan area, and each has a long-standing progressive political tradition. But in charting welfare reform, no two states have taken paths that diverged more markedly.

Prior to the late 1980s, Minnesota and Wisconsin had similar welfare systems. In the spring of 1986, however, Wisconsin's welfare caseload peaked at more than 100,000 families and became a significant political issue. In November 1986, Tommy Thompson was elected governor on a platform that focused on welfare reform. In the following years, under Gov. Thompson's leadership, Wisconsin implemented reforms that imposed responsibilities on welfare recipients as a condition of their receiving benefits. These reforms culminated in the 1996 adoption of Wisconsin Works, or W-2. The fundamental premise of W-2 is that no one receives cash assistance without working for it.

Wisconsin enforces its work requirement by denying benefits to able-bodied adults who refuse to work, by cutting benefits to the extent that recipients fail to show up for their jobs, and by providing community service jobs as a last resort. Applicants for welfare benefits in Wisconsin no longer meet with a social worker to sign up for benefits at the county welfare office; rather, they meet with a financial and employment planner at a designated job center. Moreover, beneficiaries are subject to the same ground rules as working citizens outside the welfare system. They receive no benefits merely for having their eligibility for welfare approved; they receive benefits only following a month in which they have performed their jobs or their assigned activities.

The results have been remarkable. Thompson's reforms have virtually eliminated Wisconsin's welfare caseload. The number of families receiving welfare has dropped from its high of more than 100,000 in 1986 to only 8,251 as of June 1999, a 92 percent decline. Viewed short-term, since the implementation of W-2, the results are equally impressive. From December 1997 through June 1999, Wisconsin reduced its already low caseload of 18,655 families by an astounding 56 percent.

Among its other effects, Wisconsin's welfare reform has stopped the migration of welfare beneficiaries from nearby states to Wisconsin in search of higher benefits. As Thompson noted in an April 1999 speech, "They used to put up posters in the Greyhound Bus depot down in Chicago that said, 'Go to Wisconsin for $18.50 and you can increase your welfare allotment by at least $175 a month.' Guess what happened? People came to Milwaukee and signed up for our welfare system."

Minnesota's version of welfare reform, the Minnesota Family Investment Program (MFIP), was implemented on Jan.1, 1998. Minnesota's welfare system provides a clear contrast with Wisconsin's. MFIP encourages work, but it does not actually require it. All new welfare beneficiaries are exempt from any work-related requirements for up to six months. Thereafter, many recipients, including those with children under 1 year old, those who claim they are victims of domestic abuse, and those who are "experiencing a crisis" continue to be exempt from any work-related requirements.

In Minnesota, welfare remains an entitlement. The most severe sanction that can be imposed if a recipient refuses to work or fails to comply with program requirements is a 30 percent reduction in benefits. Since Minnesota's cash welfare benefits exceed comparable benefits in Illinois and Indiana by 41 percent and 85 percent respectively, a 30 percent reduction is hardly Draconian.

Not surprisingly, Minnesota's approach has produced results very different from Wisconsin's. Only 38 percent of the state's welfare recipients are working, despite Minnesota's record low unemployment rate. In addition; since Minnesota's caseload peaked in 1992 at 66,212 families, it has declined only 30 percent, just onethird the percentage decline experienced by Wisconsin. Since the implementation of MFIP, the caseload reduction is even less impressive. Over the period from December 1997 through June 1999, Minnesota's welfare family caseload declined a mere 3.6 percent, one of the smallest postwelfare reform reductions of any state in the country.

In part these results reflect the fact that MFIP has done nothing to stem the tide of families who move from nearby states to Minnesota for welfare.

In Hennepin County, for example, the home of Minnesota's largest welfare population, roughly a third of the caseload every year consists of new arrivals from other, mostly nearby states with lower benefits, such as Illinois and Indiana, or with more demanding programs, such as Wisconsin.

Although researchers are closely monitoring the results of welfare reform in Minnesota and Wisconsin, they have found no evidence to suggest that the poor are faring worse in Wisconsin than in Minnesota. On the contrary, by supporting able-bodied recipients who do not work, Minnesota's welfare system needlessly encourages and perpetuates dependence.

The contrast between welfare reform in Minnesota and Wisconsin raises a fundamental issue of fairness. Wisconsin has adopted, as one of the principles underlying its welfare system, the proposition that "the system's fairness will be gauged by comparison with lowincome families who work for a living." Wisconsin's approach is consistent with Abraham Lincoln's observation that the basic precept of tyranny is "You work and I eat." Lincoln condemned slavery as a manifestation of this tyrannical principle. By implementing a welfare system that respects the state's working citizens, Wisconsin has experienced a new birth of freedom.

-- John H. Hinderaker and Scott W. Johnson are attorneys and authors of "A Tale of Two States: Welfare Reform in Minnesota and Wisconsin, which will appear in the spring 2000 issue of American Experiment Quarterly. Hinderaker is also chairman of the Center of the American Experiment, a conservative and free-market think tank in Minneapolis.