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Welfare system that discourages work ambitions needs fixing

In the past month, I have attended two presentations by Rob Sands, chairman of the Greater Rochester Chamber of Commerce and CEO of Constellation Brands, and Danny Wegman, Rochester Chamber board member and Wegmans Food Markets CEO, on exploring more focused efforts to address poverty and other economic issues in the Finger Lakes region.

Monroe Community College President Anne Kress, who co-chairs the Finger Lakes Regional Economic Development Council with Danny Wegman and serves on the Rochester Chamber board, also participated in the presentations. The discussions took a look at the Rochester Monroe Anti-Poverty Initiative as well as workforce development efforts.

Data shared in the presentation included what is referred to as a “Benefits Cliff Analysis Summary” that is part of the Finger Lakes Regional Economic Development Council’s “Finger Lakes Forward: United for Success” plan related to the Upstate Revitalization Initiative. The analysis calculates the factors that someone in poverty faces in order to make ends meet, and it examines how those factors are affected as household earnings increase.

The summary shows that a person not working at all will earn about $29,000 in social service benefits. If that person takes a job at $9 an hour, they will receive child care and other benefits that raise their annual income to an equivalent of just over $51,000. If you work hard at that job and get promotions taking you to $15 an hour, some benefits are scaled back because of your earnings, and you’ll see the equivalent of about $48,600 a year. Further salary elevation to $21 an hour brings another scaling back of benefits, taking your annual total salary to about $45,000.

This information was startling to those at the presentations. In essence, the social service system takes away the incentive to work. For the nearly two years that I have served as Rochester Chamber CEO, almost every business leader I visit tells me that they have a difficult time finding qualified employees for open positions.

One of our region’s top developers hired a man who was living in poverty. That worker, who excelled on the job, left shortly thereafter when his girlfriend had their third child. The worker told the developer that he would make more money through social services staying at home than through working. If we are going to make the workforce development changes that we need to drive our region’s economy, this “benefits cliff” has to be examined and we need all of our elected officials at the local, state and federal levels to be part of the discussion.

This is not about taking away benefits from those who need them. This is about not taking away the incentive for men and women to work, support their families, and progress. It is incredible that someone can work hard at a job every day, get promoted, earn more money, and yet see their ability to support their family lessen.

As I mentioned above, a hard thing for employers now is to find people who want to work and are prepared to work. As I listened to Rob, Danny and Anne give this very thoughtful and timely presentation, it reinforced why we are in the situation we are in today. Social services benefits and child care benefits are there to help those in need. We should not penalize those who are working and those who seek employment to better themselves and their families. Nor should we reward those who choose not to work. We must find an appropriate balance. Social services are a stopgap to get people into work, not a lifetime support system from government.

We have an abundance of great programs in our region. Monroe Community College is a leader in workforce development. We have great companies that provide employment opportunities for people ready and willing to work. In the end, our systems are defeating the ultimate goal of getting people to work. There is no better way out of poverty than a job. There is no better way for individuals to raise their self-esteem and support their families than to have a job. People want to work but, again, we have created a system that in many cases makes it more profitable not to work when countless jobs are available.

In order to change the social service system, we have to look at a transition process. Part of that is providing much more affordable child care. Transportation is also a big issue. I do credit the Regional Transit Service for studying routes and making changes that make sense to help people get to work. The bottom line, however, is that we have to stop taking away the incentive to work.

I believe the fight for an increased minimum wage in New York State missed the point. The minimum wage is meant to be a starting point, not a finishing point. However, when you look at the “Benefits Cliff Analysis,” even people being elevated to $15 an hour will likely lose benefits that they’re already receiving and end up making less in the long run. The minimum wage change is not going to, in any way, achieve the results intended.

It is now the responsibility of our local, state, and federal elected officials to take over. The business community is creating jobs and working on ways in its control to address poverty. Our legislators must now have the courage to work as a team, look at these systems and develop solutions to provide benefits for those who need them but create a progression that does not de-incentivize work or make promotions penalizing. Nothing is more important than a person who works hard and earns more money. That’s the American way and the path to the American Dream.

The “benefits cliff” is not something that can be changed by business leaders. This lies squarely in the laps of our elected officials at all levels to fix.

Robert J. Duffy is president and CEO of Greater Rochester Chamber of Commerce. Contact him at rduffy@GreaterRochesterChamber.com.

10/21/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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