In Nebraska, Paul Ryan’s Anti-Poverty Plan Has Already Been Tested

Nebraska tried something similar to Paul Ryan’s proposal for fighting poverty for a decade. There are lessons to be learned.
by | October 2014

On July 24, Wisconsin Rep. Paul Ryan announced in a speech at the American Enterprise Institute his plan to combat poverty. He would consolidate federal assistance plans into block grants for the states, and every poor person would get a dedicated social worker to help create a personal plan to get out of poverty. While the Republican congressman’s speech was short on financial details, the idea received praise from both the left and right. Reihan Salam wrote at Slate that “having smart, dedicated caseworkers working on behalf of people who are down on their luck … could help save time and money later.”

It could. But it probably won’t. Those who are interested in the feasibility of such a policy ought to take a look at Nebraska, which tried this exact strategy for a decade. What Nebraska found was that the approach seemed to work -- but it was incredibly expensive.

Jointly run by the University of Nebraska and the state health and human services department, Building Nebraska Families operated for a decade beginning in 1997. Using funds from President Bill Clinton’s welfare reform initiative, the state assigned many low-income residents to social workers to help them plan for the future and achieve economic stability. Caseworkers were well trained -- requirements generally included a master’s degree and several years of experience. And the caseloads were kept low, with each social worker focused on just 12 to 18 clients.

“If they said they were having problems at home we made them show us,” says Marilyn Fox, a University of Nebraska extension educator who helped implement the program. Many of the clients didn’t have cars or dependable child care, so caseworkers would meet with them in their houses. They taught the basics of consumer finance, as well as parenting skills like how to cook family meals or how to get a library card. “These were little goals,” says Fox. “Then we’d come back to reinforce them and do follow up.” Goal-setting was central to the program. “If we can make good decisions at home, we can make good decisions at work.”

For some participants, the results were extraordinary. Among the hardest-to-employ population, those people with multiple barriers to employment, 46 percent of the program participants were able to get jobs. (That’s compared to 29 percent among those who did not receive the personal care of a dedicated caseworker.) In the final six months of the program, participants earned an average of $548 per month -- 56 percent higher than for those without the assistance.

But the program also cost a lot of money, some $7,400 a year per person. And the jobs participants found were fairly low-paying positions. Only 20 percent of people were employed in jobs that paid more than $8 an hour. Clients were still receiving extensive social services. According to a 2009 evaluation by Mathematica Policy Research, the program’s “benefits did not outweigh its costs. … Services to the very hard to employ resulted in costs to society that exceeded benefits by close to $5,000.”

What’s more, for clients who didn’t face multiple barriers to success -- people who were relatively healthy, had graduated from high school and had been receiving federal Temporary Assistance for Needy Families (TANF) funds for less than a year -- the program didn’t seem to make any difference at all, says Alicia Meckstroth, a researcher on the Mathematica evaluation. Building Nebraska Families, she says, “did not have any impact at all as far as employment or job retention.”

Nebraska shuttered the program in 2006. The federal Deficit Reduction Act of 2005 reclassified what state programs qualified for TANF dollars; Building Nebraska Families’ home visits and life-skills education would no longer be eligible. Unwilling to shoulder the high costs on its own, the state ended the program. “There was no value judgment that it wasn’t effective,” says Betty Toelle, who was a program manager at the Nebraska Department of Health and Human Services at that time. “It was just that it was a really expensive program.”

Nebraska’s experience suggests that Ryan’s social-worker approach to tackling poverty could be extremely effective -- particularly for the slice of the low-income population that needs employment help the most -- but only if Congress is willing to invest heavily in the plan. That would be a very tough sell in Washington, especially among Ryan’s own GOP colleagues. As Nebraska’s Fox puts it, “It seemed like a very expensive program, and we’re just a very conservative state.”