But that is just a first step. Nurullah, who now has a national reputation, has met other storytellers in the process of building her business. She now wants to grow it by starting a production company that will record some of the artists she has met. For her, coming to WSEP has meant transcending the issues of creating a job and finding independence, to seeing how she could grow and sustain her business.
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Welfare
Discouraging Productivity
Jack Litzenberg of the Charles Stewart Mott Foundation says the shift in the lives of people like Deborah Payne, Debra Davis, and Shanta Nurullah is based on what he calls "linkages," the informal yet vital contacts that entrepreneurs typically develop to exchange everything from encouragement to information. While such linkages are commonplace in the mainstream economy, they are tenuous in the inner city, where the struggle for survival does not unite people but isolates them.
Litzenberg says of the Mott Foundation: "Our money goes to trying to establish institutions that are so lacking in low-income neighborhoods: banks, credit unions, educational resources, community centers. You can create that scale of economy right in the neighborhood." He believes those organizations are vital because "if a neighborhood is socially chaotic, you cannot do economic development. You need institutions that can intermediate for people."
Litzenberg contends that the process of ending the isolation of poverty and creating linkages "has to be people centered. We have a bias in this country toward building real estate. We put up a shopping center. But how many stores are owned by the people in the neighborhood? How many jobs are created by that development?" The answer to both questions is very few. "I don't know why we think that if you develop physical infrastructure, people will automatically get better. Too often the building is hiding a cancer."
Nowhere else is the chronic underdevelopment and psychic malnourishment of people more pronounced than among people on welfare. Welfare to people who have never been on it is an abstraction leading to stereotype and caricature. To those sustained by it, it is a trap.
Discussions of welfare's failings usually focus on how it drives families apart and penalizes the working poor. Less well known is that welfare makes it virtually impossible to start a business. There are two simple reasons for that: First, if a person on welfare accrues liquid assets exceeding $1,000, he or she gets kicked off public aid. Try starting a business and living on less than $1,000. As for owning a car, that is permissible, but it can't be valued at more than $1,500. In other words, it's OK to own a car, but not one that may function reliably. Second, if you go off welfare, you often lose something of greater value than cash -- medical benefits. Connie Evans says that programs like hers allow people to replace the income from welfare easily, "but the risk of losing medical coverage for your children is a huge disincentive to leave welfare."
She estimates that about 40% of the women who come to WSEP remain on welfare for that reason alone. One woman she knows in the program is making $1,400 a month, while her Aid to Families with Dependent Children (AFDC) check is only $246. She can replace that income easily, but she needs the health-care benefits. Evans says that a frequent topic of conversation among her clients is "not wanting to play the game and wanting to be honest and aboveboard." But welfare always drives them back into the realm of dishonesty.
If a welfare recipient does happen to start a business, he or she is denied standard business tax deductions, the presumption being that business supplies will be turned to personal use. "The public-aid system assumes that everyone is a liar and a cheat," says Evans. "Why can't we allow a woman to make $10,000 in her business and keep whatever part of the welfare subsidy she needs?" The answer to that is that modern bureaucracy is inflexible and unresponsive, presenting welfare recipients with an all-or-nothing proposition. Evans notes that woman entrepreneurs in the mainstream economy often have spouses who bring in income and vital benefits -- a totally legitimate means of support for a fledgling business.
Meanwhile, the status quo creates a spending, not a saving, psychology, leading people on welfare to draw their savings accounts down to $1,000 -- the asset limit -- or less each month for fear of losing welfare benefits. They are psychologically locked into month-to-month thinking that shapes their world view. "That's not how you get out of poverty," says Evans. "The whole system is based on getting money and then spending that money." Meanwhile, Evans, noting that the basic monthly AFDC payment in Chicago is $246, says, "No one lives in Chicago on $246 a month. At that level you are just maintaining people in poverty."
Michael Sherraden, a professor at Washington University in St. Louis who has studied and written extensively about welfare, seconds that notion. "The system doesn't allow people to accumulate assets," he says. "This is not a feature of welfare that gets talked about." Yet at the very basis of living a planned and orderly existence is the ability of people to save money and develop wealth. Sherraden has proposed setting up so-called individual development accounts for welfare recipients, whereby a certain percentage of public-assistance grants paid to a welfare recipient are put into escrow just as if that person had an IRA account, resulting in forced savings. The concept is currently being tested in Iowa.
