Let’s Draft Dan Wolf

The Cape Cod Times brings the news that State Senator Dan Wolf (D-Harwich) will not seek re-election to the Senate in 2016 and that he will be issuing a statement about his plans in the near future.

Here’s hoping that those plans include running for the Democratic nomination for Governor in 2018. It is always nice to vote for somebody who thinks the Democratic Party in Massachusetts should stand for something more than its perpetual numerical majority.

The Ethics Commission has come to its senses on the issue that derailed his run for Governor in 2014, so that’s no longer an obstacle.

Plus, the 2018 ballot might also include the initiative petition that RaiseUpMassachusetts is fighting for to amend the State Constitution to raise additional revenue for education and infrastructure. A great cause to pair with a great candidate – what’s not to like?

The Patrick Administration’s Legacy on Poverty, Part One: “Flaws at DTA”

In a widely circulated December op-ed Governor Patrick offered us a balance sheet on his eight years in office. On the plus side of the ledger: economic growth, student achievement, health insurance, energy efficiency and lots lots more. The ledger’s much smaller minus list includes the scandal at the state crime lab, the tragedy at the Department of Children and Families and “flaws” at DTA (the Department of Transitional Assistance, the state agency that manages various public assistance programs including Food Stamps).

To most people, “flaws” at DTA would mean the ones that received enormous publicity following reports issued in 2013 by the Inspector General and the Auditor. Those reports pointed to risks that people not eligible for benefits were nevertheless receiving them, and that the improper use of the debit cards used to issue benefits — known as Electronic Benefits Transfer (EBT) cards — was increasing those risks.

The subject of welfare abuse being a form of catnip for some, pretty soon the Herald’s Holly Robichaud, among others, was sufficiently under the influence to inflate the problem into a matter of “hundreds of millions of dollars,” far beyond the potential losses identified by the Inspector General and Auditor. The notion that hundreds of millions of dollars were being wasted was a very convenient fiction for some legislators who, at the same time, were fighting against proposals to increase revenues by a similar amount — why raise taxes when you can stop welfare fraud instead? Ideas about how to foil abuse abounded, and a plan to put Photo ID’s on EBT cards emerged as one clear winner.

Thus a really dumb idea was born. Or, rather, reborn. Years earlier, Governor Mitt Romney had considered the idea of putting Photo ID’s on EBT cards, but ultimately rejected it as impractical and not cost-effective. Impractical, because, like all debit cards, security against EBT card theft comes through the use of a PIN number, not a photograph. Moreover, Food Stamp benefits are calculated based on the resources of all the members of a household, and so all the members of the household are allowed to use the card. Putting a photo of one of the household members on the card simply creates an erroneous impression that no one else in the household is permitted to use the card. And not cost-effective, because the federal government (which funds the Food Stamp program) won’t pay for the extra cost of Photo ID’s, and so if the state wants them it has to pick up the tab. You would search in vain for another program that Mitt Romney thought was a waste of taxpayer money that was so enthusiastically embraced by so many of his supporters.

Fortunately, not everyone was buying the story that the state’s biggest problem was that public benefits might be going to ineligible people. Senator Dan Wolf, for example, told the Boston Chamber of Commerce that “to allow the conversation to turn once again to the few people on public assistance who may be abusing EBT cards is nothing more than blaming the victims, blaming the most vulnerable, and turning us away from the real issues we face.”

And for a time it seemed that Governor Patrick, like Senator Wolf, would resist the Photo ID mania. He suggested, for example, that its cost-effectiveness be measured, but when the Legislature rejected even that modest idea, he capitulated — and then some. His Department of Transitional Assistance got busy and Operation Photo ID started rolling out just before Christmas in 2013, weeks before the deadline the Legislature had set. Glitches depriving people of their Food Stamp benefits happened immediately, and they were sufficiently widespread and serious (8,200 EBT cards mistakenly deactivated, for example) for the federal government to step in with a warning letter to the state. Throughout 2014 the problems persisted, and once again last month, the federal government pressed the state for solutions.

Insisting, despite evidence and multiple warnings to the contrary, that its EBT card rollout had been “an overwhelming success,” DTA has pressed forward with more changes, including the launch of something called the “business process redesign” in late October. Under the redesign, food stamp clients no longer have an assigned case worker and instead are told to call a statewide assistance phone number. Likewise, applications are no longer handled at local offices and are all sent to Taunton for processing.

Another “overwhelming success?” Initial reports are very discouraging. Social service agencies and food pantries are reporting that when Food Stamp clients call the statewide phone number, no one is on the other end. Clients are turned away from local offices if they attempt to deliver an application there. Applications sent to Taunton often disappear, and those that do arrive join a growing backlog of unprocessed paperwork. As of this writing, DTA’s business process redesign looks to rival the Health Care Connector website and the online system for Unemployment Insurance as an information technology calamity.

Ominously, the rate of food stamp participation in Massachusetts appears to be confirming the bad news. Nationwide, the start of an economic recovery is lowering the number of food stamp recipients slightly, but as of September — even before DTA’s launch of its redesign, the decline in Massachusetts is 7.3 percent — four times the national rate. It seems inevitable that DTA’s practices will only accelerate that decline when the numbers for the last quarter of 2014 come in.

So, what “flaws” at DTA should we remember as the legacy of the Patrick administration? Just the ones that suggested that the wrong people were getting help, or also the ones that demonstrated that the right people were not getting help?

The answer might depend on whether, as Governor Patrick has often said, we grow a backbone and stand up for what it is we believe.

Progressive Unemployment Insurance Reform (One in a Series)

Update: February 6, 2014. Today the State Senate passed an Unemployment Insurance (UI) Reform bill. One important element in that bill is the increase in the amount of employees’ wages on which employers pay the UI tax, which funds the unemployment insurance system. The amount is going from the first $14,000 in wages to the first $21,000 in wages. More specifics of how that works and why it is a very good idea are in the post below. The Senate also changed the table that sets employer UI taxes so as to require employers whose employees use the UI system frequently to pay at a higher rate than employers whose employees file few claims. The Senate also commendably declined (with one limited exception) to make any cuts in UI benefits or eligibility, which was a priority of employer groups (including the Mass. High Tech Council, as in the post below).
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Original Post: December 2, 2013

Following the passage by the State Senate of legislation increasing the minimum wage, business groups have been rushing to endorse House Speaker Robert DeLeo’s idea that any minimum wage increase should be paired with changes to the state’s unemployment insurance (UI) system. The latest organization to boost this plan is the Massachusetts High Technology Council, which polled itself last week on the issue and arrived at the not-at-all-surprising results that its members oppose a minimum wage increase, but that their opposition softens considerably if “sweeping reforms” to the state’s unemployment insurance system are undertaken at the same time.

Atop the list of UI changes that these business groups endorse are two that would come at the expense of unemployed workers: one proposal would make more laid-off workers ineligible for any UI benefits, and another would shorten the period of time that those laid-off workers who did still qualify could collect benefits. This business agenda, essentially, is a zero-sum game between employers and employees.

But that’s not the only UI reform agenda. A progressive UI agenda would certainly agree that our state’s UI system is in need of reform, but would propose a different solution. This alternative has been filed in legislation in the House by former Rep and current Boston Mayor-elect Marty Walsh, and in the Senate by minimum wage champion and Senate Chairman of the Committee on Labor and Workforce Development Dan Wolf. Instead of pitting employees against employers, this approach would reallocate the amount of UI taxes paid by employers. That amount is now heavily weighted against low-wage employers, who pay a disproportionately high percentage of their wages to satisfy their UI obligations.

Here’s how the Walsh/Wolf proposal works.

UI funds should be designed to be countercyclical — to be built up before recessions, drawn on during recessions, and then rebuilt during recoveries, so that the UI program can serve its purpose of stabilizing economic activity during downturns. To achieve this result, the formula for determining the annual rate that employers pay into the fund should take into account, among other factors, the wages that the employees of that employer receive, because UI benefits are calculated on that basis (the weekly UI benefit in Massachusetts is half the worker’s average wage, up to a maximum of $674).

For the past ten years, employers have paid UI taxes on only the first $14,000 of their employees’ wages. Because this is an artificially low amount and also because it has not been increased in ten years, the fund is susceptible to becoming overdrawn, particularly during severe recessions like this one. The low $14,000 amount also treats employers whose employees earn more than that more generously, and the higher the employee salary the greater the relative benefit to employers.

The bills filed by Mayor-elect Walsh and Senator Wolf adjust one factor in the formula for calculating employer contributions in order to reflect current wages and would index that factor to keep pace with future wage growth. (Policy wonks: see Section 2 of each bill.) This legislation would more fairly allocate responsibility for UI to businesses whose employees receive higher wages while working (and therefore higher UI benefits if laid off). It would also protect laid-off workers from unnecessary benefits cuts and protect the state’s economy during downturns by ensuring that families of laid-off workers still had purchasing power.

What’s not to like?

SIDEBAR: A little background on the Massachusetts High Technology Council. It’s a trade association of 100 or so members, including high technology companies and also law firms, banks, accounting firms and universities, whose mission is to make Massachusetts the world’s most attractive place “in which to create, operate and grow high technology businesses.” Its strategies for reaching that goal include keeping business taxes low while at the same time ensuring that Massachusetts always gets a healthy share of federal defense spending.