Los Angeles Times, June 19, 2008: Wheels versus welfare

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By Rourke O’Brien

June 19, 2008

With falling home prices, rising food and fuel costs and an unemployment rate well above the national average, the current economic downturn may push already vulnerable California families to the brink of financial destitution. Thousands of people may turn to welfare for support in the coming months. That’s OK — that’s the purpose of temporary assistance. It’s not as if this is the money-for-nothing welfare of the early 1990s; these folks are required to start looking for work the second they land on the rolls. Yet to qualify for assistance, many families may be forced to give up the most effective tool they have in the fight against poverty and unemployment: their car.

To be eligible for temporary cash assistance — known as CalWORKS in California — families must prove that they are both income and asset poor. To qualify for assistance, a single parent with two children, for example, can’t earn more than about $12,000 a year or have more than $2,000 in other resources. In addition, the total fair-market value of all vehicles owned by a household cannot exceed $4,650 — a figure that hasn’t changed in more than a decade. In real terms, that means even a 10-year-old Honda Civic with 100,000 miles could disqualify a family from public assistance.

California is one of three states with such a restrictive vehicle limit — Texas and Idaho are the others. Nationally, 12 states exclude all household vehicles when determining a family’s eligibility for cash assistance; another 15 exclude at least one vehicle. Most other states exclude about $10,000 of the net or equity value of the vehicle; California’s $4,650 limit counts the car’s fair market value. This means that families may be deemed ineligible even if they still owe $5,500 on their $6,000 car.

The connection between car ownership and employment is clear. It’s not very surprising that having a reliable automobile reduces absences from work and helps give workers access to a wider range of jobs and better-paying ones. This is especially true in a region as spread out as Southern California. A 2000 report by the County of Los Angeles — the most recent data available — found that 64% of welfare-to-work job seekers who had unlimited access to a car were gainfully employed, compared with only 44% of those who relied on public transit or ride-sharing. Another study — of welfare recipients in Tennessee — found that having a car leads to better-paying jobs, more hours worked and an increased probability of leaving welfare.

With the relationship between car ownership and employment so clearly documented, California should be working hard to provide low-income families access to a reliable car. And, in some areas, they do get help. Sacramento County, for example, is authorized to purchase 50 vehicles a year for county welfare recipients who lack access to public transit. If we’re helping some families buy a car, wouldn’t it make sense, then, to let people who have cars keep them?

And instead of investigating someone who owns a 10-year-old Honda, shouldn’t district attorneys and others be concentrating their time and resources going after more costly types of fraud, such as identity theft? And shouldn’t caseworkers spend more time connecting a family to vital social services than verifying the worth of its 2002 Toyota Corolla?

The County Welfare Directors Assn. thinks so, and that’s why it’s supporting AB 2368, a bill championed by Assemblyman Felipe Fuentes (D-Sylmar) — and sponsored by the New America Foundation — that would exclude household vehicles from consideration when determining eligibility for CalWORKS. The Assembly passed the bill and has sent it to the state Senate.

The reasoning is sound: Individuals with cars will be more likely to find a job, stay employed and move to self-sufficiency, the goal of California’s welfare program. This reform will also increase efficiency by reducing paperwork and staff hours spent tracking down the value of vehicles, which the Assembly Appropriations Committee estimates would save the state more than $3 million a year.

It’s about time California’s welfare system catches up to the common-sense policies of states such as Kentucky, Alabama and Louisiana.

Rourke O’Brien is a policy analyst with the Asset Building Program at the New America Foundation.

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