Mayor Mike Bloomberg and Strengthening California’s Middle Class

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Many California economists and workforce practitioners know of employment initiatives launched by Mike Bloomberg, when he was Mayor of New York, 2002-2013. However, beyond the economists and practitioners, these initiatives have not received the attention they deserve. With the California primary approaching, it is worth taking a look at a few of them: the results and lessons they suggest for policy going forward, and how Bloomberg’s approaches differ from those of other candidates and office holders. 

The Welfare System as a “Work First” System

The first initiative involves Bloomberg and the remaking of New York’s welfare system.

As Manhattan Institute Fellow Kay Hymowitz has chronicled, the welfare system and its relation to poverty has loomed large in New York over the past half-century. The explosion in the welfare rolls started during the administration of John Lindsay in the late 1960s—an administration which equated “compassionate government” with welfare expansion. By the end of 1973 when Lindsay left office, an astounding 1 million of New York City’s 7.9 million citizens were on welfare. 

The welfare rolls fluctuated over the next twenty years, but cash assistance recipients still numbered over 1 million in the mid -1990s. It was then that two things occurred. The federal government, under President Bill Clinton, enacted a welfare reform measure, placing new work requirements and expectations on welfare recipients. In New York, Mayor Rudy Giuliani and his Human Resources Administration chief Jason Turner, implemented these work requirements, restructured welfare offices from being the dispensers of benefits to employment centers, and established a system of transitional public service employment for welfare recipients initially unable to find jobs. 

Hymowitz notes that Bloomberg was under political pressure when he took office to reduce the work requirements, but instead pushed forward, stating “We will not allow our city to recede to the culture of dependency.” He introduced the WeCare initiative in 2005 to provide the intensive job placement and retention needed by many welfare recipients–especially as the “easier” cases by then had exited the rolls. By the time he left office, an active welfare to work structure was in place, and cash assistance cases had fallen to under 380,000. 

It wasn’t just that welfare costs decreased under Bloomberg. The incomes and lives of former welfare recipients improved. Between 2002 and 2013, Bloomberg’s Human Resources Administration placed cash assistance applicants and recipients into more than 1 million jobs.As Bloomberg has noted in his current campaign, many long time welfare recipients found that they could function in the job market. The jobs they obtained were mainly entry level in hospitality, health care, child care, or retail. If not enough in pay to reach middle class, these jobs paid above welfare and presented the possibility for wage advancement.

In the early 2000s, other Democratic mayors and office holders would say they were in favor of “work not welfare”, without taking action.  Bloomberg put a system in place and stuck with it.  

Income Supports in Lower Wage Jobs

To improve incomes of low wage workers, Mayor Bloomberg tested several projects, among which was Paycheck Plus, aimed at single men and women in poverty. Paycheck Plus built on the Earned Income Tax Credit (EITC), the refundable tax credit for low wage workers, which had been in operation since the mid-1970s. 

Prior to Paycheck Plus, the EITC offered little wage support for single individuals (or parents who did  not have custody of their children). The maximum credit a single individual could receive was around $500, and eligibility ended if the worker earned over $15,000. Paycheck Plus raised the tax credit to $2000 and expanded eligibility up to $30,000.

Expanding a tax credit is not especially distinctive. Bloomberg’s approach, though, differed in other ways. First, with a few exceptions (notably the research of New York University professor Lawrence Mead), low income single men of all races have not been given much attention in recent anti-poverty programs. Paycheck Plus recognized the importance of job-oriented rather than benefit-oriented subsidies to this group.

Second, Bloomberg required a careful measurement of results and honest accounting. The Manpower Demonstration Research Corporation (MDRC), the nation’s premier non-partisan evalution firm, was brought on board, and as Jim Riccio of MDRC notes, told to “let the chips fall where they may”. MDRC used a randomized controlled trial, and studied roughly 6000 low income single adults for three years after enrollment. MDRC’s evaluation was generally positive, but it also highlighted the program limitations (including only modest increases in employment rates). 

Third, since Paycheck Plus, Bloomberg has continued to pursue wage subsidies through the tax system. In his current presidential campaign platform, “Mike’s Plan to Make Work Pay”, Bloomberg builds on Paycheck Plus, setting out policies to increase its impact, and carefully test expanding to low income men and women whose unpaid work involves caring for children or elderly relatives. 

WorkAdvance and Sector-Based Job Training

WorkAdvance, a third Bloomberg initiative, involved sector-based job training. WorkAdvance enrolled workers earning below $15 an hour, and provided training tailored to specific sectors: information technology, environmental remediation., transportation, and health care. The training was augmented by best practices in intensive screening, career readiness services, placement services and retention services. 

WorkAdvance, operating as a pilot from 2011-2013, is well known among job training professionals, for several reasons. Though sector-based training has been a theme in the job training for several decades, WorkAdvance was one of the largest and most carefully tracked sector efforts. 2,564 individuals were enrolled (half to the WorkAdvance group and half to a control group) in four sites across the country, including Per Scholas, the information technology job training program in the Bronx. Like Paycheck Plus, the WorkAdvance impacts were monitored by a third party evaluator (again MDRC), and made available to training professionals and the public.

The results were uneven among sites, but the better programs, like Per Scholas, showed the possibilities with sector training when an agency has the strong employer ties and deep knowledge of a sector. Through his Bloomberg Philanthropies, Bloomberg has continued to fund sector-based training.

Since the 1960s, the best anti-poverty strategy has been a strong private sector economy. Employment and tight labor markets have done more than any government program during this time to improve the condition of low income individuals, and continue to do so. 

At the same time, our current employment expansion shows that even with the many benefits of growth, a segment of workers struggle to obtain and retain steady work. Other strategies of  Welfare-to-Work, Paycheck Plus wage subsidies, and Work Advance/sector job training have a role. Bloomberg has a record on these strategies for all to see. 

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