Minimum Wage for ‘Workfare’ Favored

WASHINGTON —  After months of deliberation, the White House has quietly decided to go along with a Labor Department interpretation of existing laws that means that states will have to pay the equivalent of the minimum wage to welfare recipients forced to take government-sponsored jobs, even for community service work.

The decision was made despite protests by many state officials, who wanted to place large numbers of welfare recipients in 20-hour-a-week community service jobs that would require them to work in exchange for benefits. The state officials fear that their efforts to put people to work--as required by the welfare reform law--would be stymied by the cost of the minimum-wage restriction.

But the administration may not have the final word on the issue. Several Republicans in Congress are considering changes in the labor laws or the welfare law that would relieve states of the requirement to pay welfare recipients minimum wage--currently $4.75 in most states but $5 in California.

Clinton’s decision would have virtually no effect in California, where all workers, including former welfare recipients placed in jobs through state programs, receive the state minimum wage or more, state officials said. Gov. Pete Wilson’s “Cal Jobs” program has placed former welfare recipients in jobs that pay about $7.50 an hour, said Wilson spokesman Sean Walsh. About 80,000 adults are enrolled in a Los Angeles County workfare program.

In Los Angeles, one labor leader cheered the ruling. “We want to protect our permanent work force, and one easy way to do that is to insure [that] there are not extra incentives for employers to replace them with low-paid welfare recipients,” said Bart Deiner, a spokesman for Service Employees International Union Local 660, which represents about half of Los Angeles County’s 80,000 public employees.

Presidential advisor Bruce Reed insisted Friday that states would not be hurt as much by the requirement as some officials believe. The Labor Department’s guidelines, to be issued in a few weeks, will explain that states can count both cash grants and food stamps when calculating whether a welfare recipient is earning the minimum wage, he said.

“For every state except Mississippi, the combination of food stamps and cash welfare is enough to pay at least the minimum wage for 20 hours a week,” Reed said.

However, the equation actually is trickier than that. Because state labor laws vary, some states probably also would have to add on the cost of workers’ compensation, unemployment insurance and other expenses--increasing the actual cost to them for each participant.

Reed said that the administration will help states get waivers to the food stamp laws to construct “workfare” programs. But he could not guarantee that all states would be able to get around the other costs.

The welfare law passed by Congress last year requires states to put 25% of their adult welfare recipients to work this year but allows them to count mandatory workfare positions. States that do not meet the requirement face the loss of 5% of their federal welfare funds.

*

The Treasury Department is still reviewing whether states will have to pay unemployment insurance and Social Security taxes for workfare participants. It is also determining whether the Earned Income Tax Credit will apply to workfare participants.

Despite the administration’s assurances, “some states are upset,” said Susan Golonka, a welfare analyst for the National Governors Assn. “It will make it more difficult for states to meet the work requirement, and administratively, it’s going to be very burdensome.”

Advocates for poor and low-income Americans said that the states have no reason to complain.

“I think there’s a point of fairness here,” said Steve Savner, a welfare analyst at the Center for Law and Social Policy.

Times staff writers Max Vanzi in Sacramento and Carla Riviera in Los Angeles contributed to this story.