Fifteen Years After Welfare Reform, Where Are We?
In 1996, 36.5 million Americans lived in poverty. That same year President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, better known as "welfare reform." The overhaul changed the Aid to Families with Dependent Children (AFDC) program into today's Temporary Assistance for Needy Families (TANF), creating a block grant that imposed lifetime limits on benefit receipt and set an expectation that recipients would work or participate in other activities leading to self sufficiency.
In the years since, the number of people receiving cash assistance has dropped significantly. In 1996, 12.3 million received assistance compared to 4.4 million in 2010. Some hail this as a raging success and model for other programs. If the goal of reform was to dramatically shrink the number of people receiving cash assistance, it is a success. That logic only works, though, if people drop off the rolls because of diminished need. Unfortunately, the true story is that welfare reform has missed the mark.
We now have the benefit of 15 years of history to assess the program, its intentions, and what actually happened. We know that:
- Funding has eroded over time. The core block grant has not been adjusted for inflation since it was created, and thus the value has shrunk by nearly 30 percent. This year, for the first time since 1996, the supplemental grants for states with high growth rates and low grants were not fully funded.
- State flexibility has led to a patchwork safety net. Maximum monthly cash assistance benefits for a single parent family of three in June 2010 ranged from $170 in Mississippi to $923 in Alaska.
- States have cut benefits in the recession due to budget constraints. Since the TANF Emergency Fund expired in September 2010, at least five states have imposed cuts in benefit levels. Others have shortened time limits, or cut the "earned income disregard" that ensures recipients will have more income when they work.
The real measure of whether welfare reform has been successful is less need, not fewer people receiving it. The number of people needing assistance today is at its highest level since before welfare reform. Forty four million Americans, or 14.3 percent, are living in poverty and struggling to meet their basic needs. While some attribute the growth in poverty to the recession (which has certainly exacerbated a bad situation), poverty was on the rise well before the recession began.
One in three families is poor or low-income. Instead of moving people out of poverty, welfare reform has made it more difficult for those in need to receive aid and has broadened the base of working poor.
In 1996, some acknowledged that low-income families would need supports to enter and be successful in the working world. The Earned Income Tax Credit was greatly expanded to meet some of the expected need. Work supports for low wage workers - food stamps (now known as Supplemental Nutrition Assistance Program or SNAP), Medicaid and CHIP to provide health insurance for low-income children, and the earned income and child tax credits - have successfully helped families during the toughest economic downturn since the Great Depression. Earlier this month the Department of Agriculture revealed that a record 45.75 million people - about 15 percent of the population - received SNAP benefits in May 2011, for example. But rather than strengthening these critical supports, House leaders are calling for sharp cuts to these programs or for imposing arbitrary caps on them. This would extend one of the worst aspects of TANF - its inability to respond to increased need-to other work supports.
In calling for welfare reform, President Clinton said "If you work, you shouldn't be poor." Implicit in this statement was an assumption that anyone willing to work would be able to find a job, which was not unrealistic during the 1990s, a time of prosperity and low unemployment. Today, unemployment is at generational highs and those with the least education and skills are having the toughest time in the labor market. In 2010, states used the flexibility under TANF and the additional funding provided under the TANF Emergency Fund to create subsidized jobs for more than 250,000 low-income parents and youth. Despite the TANF Emergency Fund's success and broad bipartisan support in the states, Congress allowed the program to expire last year. People want to work and provide for their families. We should give them the opportunity to do so.
Our nation rests on opportunity, but we have not adequately provided it for millions of low-income and poor individuals and families.
Congress must extend TANF before it expires Sept. 30. When it does so -and as it makes budget decisions for the next year and the next decade - it must recognize the need to provide both security and opportunity for low-wage workers and their families, in good times and in bad. Fifteen years after welfare reform, there's room for improvement that focuses on reducing the number of people in need of assistance, not just reducing the number receiving it.