Kevin McCarthy oversells employment gains from past work requirements

Amid negotiations over lifting the nation’s debt limit, House Speaker Kevin McCarthy, R-Calif., offered his take on the merits of tying federal safety net assistance programs to work requirements.

"What does a work requirement do?" McCarthy said May 28 on "Fox News Sunday." He said the rule affects only certain people without dependents, ensuring  they find a job or get trained for one.

"Every study has shown, when you do that, it puts more people to work," he said. "And when they work, what happens? More people are paying into Social Security and Medicare. You will see at the end of the day, this (makes) our economy stronger, less dependent on China."

By May 31, representatives of McCarthy and President Joe Biden hammered out a debt limit agreement that passed the House and was being considered by the Senate. 

Although the plan sought mostly to cap spending, it also expanded the use of work (or job-training) requirements for the Supplemental Nutrition Assistance Program, also known as SNAP or food stamps.

But in a victory for critics of work requirements, including many Democrats, the agreement imposed no work requirements for Medicaid, the federal-state program that provides health insurance to lower-income Americans.

We wondered whether McCarthy is right to say that "every study has shown" that work requirements put "more people to work." We found that some studies do, but far from every one.

McCarthy’s office did not answer an inquiry for this article.

Most of the studies that showed employment gains from work requirements tracked what happened after the federal government overhauled cash welfare aid, a program now called Temporary Assistance for Needy Families.

"Research on programs that implemented work requirements in cash welfare recipients in the 1990s showed employment gains consistently," said Angela Rachidi, a senior fellow at the American Enterprise Institute, a conservative think tank.

In an analysis of studies last updated in 2016, the nonpartisan Congressional Research Service found that such welfare-to-work efforts "can increase employment," though the impacts tended to be "relatively modest."

Work requirements "worked OK in the 1990s after welfare reform, when there were decent low-paying jobs and governors like Tommy Thompson (R-Wis.) made sure they had health insurance and child care," said Timothy Smeeding, a public affairs and economics professor at the University of Wisconsin.

More recent studies — especially those analyzing how work requirements affect food stamp and Medicaid recipients — have shown less dramatic employment gains, if not declines.

"The recent peer-reviewed research by economists generally finds no effect of SNAP work requirements on employment," said James Ziliak, director of the Center for Poverty Research at the University of Kentucky.

A rundown of recent research by the liberal Center for Economic and Policy Research found 10 studies that examined work requirements’ effect on employment. Of these, three found gains in employment, but seven found none. 

For example, a 2023 paper published in the American Economic Journal, found "no effects on employment" from work requirements being placed on food stamp recipients. A 2022 paper found that work requirements "did not generate evidence of improved employment" participation. A 2021 paper found that a work requirement "does not substantially increase work" among beneficiaries.

Arloc Sherman, vice president for data analysis and research at the liberal Center for Budget and Policy Priorities, said the early 1990s welfare-to-work requirements helped push employment rates higher. But that occurred largely because they "typically provided new child care, job training, or other services." Such assistance did not play a big role in subsequent work requirements enacted for food stamps or Medicaid.

The nonpartisan Congressional Budget Office concluded in 2022 that, compared with the welfare overhauls of the 1990, work requirements for food stamps "have increased employment less; in Medicaid, they appear to have had little effect on employment."

For instance, one analysis of Arkansas’ now rescinded Medicaid work requirements, published in the New England Journal of Medicine, found "no significant changes in employment."

Heather Hahn, associate vice president for management at the Urban Institute’s Center on Labor, Human Services, and Population, cautioned against overexuberance about the studies that show employment gains. Those increases were often temporary, she said, "because many people who found jobs later lost them."

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And even when programs move people into the workforce, it’s not clear that they move people toward self-sufficiency. The Rand Corp., a policy research group, has produced reviews of the research that found that work requirements "show little effect on family income or income relative to poverty," because gains in work income were often canceled out by the loss of federal aid.

Supporters say that even if the employment gains are modest, they might be worthwhile as long as the policy also had no other negative side effects. But critics say these rules do bring negative consequences.

An often overlooked aspect of work requirements is that they amount to work reporting requirements. That is to say, it’s not enough for beneficiaries to be working;  they must also alert the state that they are working. 

The resulting bureaucratic hassle can make this reporting requirement difficult, especially if a recipient has little education and limited internet access, experts said. For example, if recipients who are working make a reporting mistake or fail to complete the required paperwork, they can be dropped from the benefit.

"The evidence shows the red tape associated with work requirements can cause people to lose access to vital supports, even when they are working or should be exempt," Hahn said. Also, with employers controlling work schedules, she said, people sometimes find they may not have enough hours to meet the requirements.

Such problems helped undercut Arkansas’ experiment in Medicaid work requirements, according to the Congressional Budget Office analysis: "Over the seven months of 2018 that the requirement was in effect, about 23% of Medicaid recipients who were subject to it lost coverage for failure to comply.".

Meanwhile, losing food or health assistance can turn into a vicious cycle, as sick and hungry people struggle to maintain steady employment, Hahn said.

Under the House-approved plan being considered by the Senate, negotiators agreed to lift from 49 to 54 the maximum age for the 80-hour-per-month work requirements, as long as the recipient is not disabled and has no dependents. For the first time, however, veterans, homeless people, and people transitioning from foster care would be exempted from the work requirement.

McCarthy said, "Every study has shown" that when work requirements are tied to federal safety-net programs, "it puts more people to work."

Some studies, especially those that tracked 1990s-era welfare-to-work programs, did show employment gains, although they were often modest and temporary.

However, a majority of more recent research on work requirements for food stamps and Medicaid shows little or no gain in employment.

The statement contains an element of truth but leaves out other evidence that would give a different impression, so we rate it Mostly False.