Fifteen Years After Welfare Reform, Where Are We?

Aug 24, 2011

By Elizabeth Lower-Basch

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.

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