TANF Came Up Short in Response to the Recession

Aug 22, 2014

By Elizabeth Lower-Basch

A recent Brookings blog post poses a provocative question: “was the TANF welfare program's response to the Great Recession adequate?”  While the blog post asserts that it was, the answer is actually a resounding “no.”  As our colleagues at the Center on Budget and Policy Priorities (CBPP) have shown, while state programs varied in their response to the recession, TANF (Temporary Assistance for Needy Families) cash assistance overall failed to keep pace with sharp increases in unemployment and poverty.

The blog draws on a new Brookings paper (authored by Ron Haskins, Vicky Albert, and Kimberly Howard) that claims TANF largely met increased need during the recession.  But Brookings’ two major arguments are extremely flawed and don’t hold up to scrutiny.

TANF’s Responsiveness to Recession Unemployment Compared to the Old Program

Brookings argues that TANF is more responsive to unemployment during recessions than its predecessor program, Aid to Families with Dependent Children (AFDC), which was replaced by TANF in 1996.  While that’s technically true, it ignores important context.   Under TANF, poor single mothers are expected to work whenever possible.  AFDC had no such expectation, even when jobs were available.  Therefore, it’s not surprising that there was little correlation between AFDC single-mother caseloads and unemployment rates.  The number of families receiving cash assistance fell sharply when TANF replaced AFDC; even in the states where TANF grew the most in response to the recession, caseloads remained well below their AFDC levels.  Too often, low-income single mothers who lost their jobs in the recession often received neither TANF cash assistance nor unemployment benefits.

How to Measure TANF’s Growth During Increased Unemployment

Brookings asserts that because the recent recession hit states at somewhat different times, analyzing TANF growth during the period recognized as the “national recession” (as CBPP’s report did) does not fully capture the program’s responsiveness to increased unemployment.  Brookings offers two alternative measures: one that captures changes in a state’s TANF caseload during a period of rising unemployment, and another that captures caseload increases relative to their lowest level during the recession (completely ignoring the fact that caseloads declined in many states even as unemployment levels climbed). The first alternative is somewhat reasonable; the second is absurdly weighted in favor of caseload growth.

With its second measure, Brookings categorizes states based on whether they had higher- or lower-than-median percentage increases in unemployment rates and higher- or lower-than-median increases in TANF rolls.  Their analysis concludes that only seven states were unresponsive and problematic: Arizona, Georgia, Indiana, New Jersey, North Carolina, Rhode Island, and Tennessee.  But many of the states that they describe as “status quo”—lower than average in both categories—still had extremely high unemployment rates.  For instance, Michigan is considered a “status quo” state because its 109 percent growth in unemployment during its state-level recession was slightly less than the national average, even though  its unemployment rate climbed towards 15 percent.  That’s why it’s extremely misleading that the authors cite South Dakota, which peaked with 6 percent unemployment, as the illustrative example of a “status quo” state.   By using the median to determine a state’s responsiveness to the recession, Brookings is (by definition) asserting that just 25 states experienced high increases in unemployment—a claim with which almost no one would agree.

Michigan's total TANF family caseloads and unemployment rates from 2007 to 2011.

Having obfuscated TANF’s weakness with misleading statements, the  report then shifts to the safety net as a whole, concluding: “all in all, the American system of balancing work requirements and welfare benefits worked fairly well, even during the most severe recession since the Depression of the 1930s.”  This is true—but not thanks to TANF.  The elasticity of the safety net is largely owed to SNAP (the Supplemental Nutrition Assistance Program – formerly called Food Stamps), Unemployment Insurance, the Earned Income Tax Credit, and the Child Tax Credit—all of which respond automatically to recession and received additional boosts as part of the American Recovery and Reinvestment Act.  This distinction is critically important because some politicians, such as Congressman Paul Ryan (R-WI), want to use TANF as a model for other programs—a change that would severely undermine the safety net success of which Haskins and his co-authors cite. On the 18th anniversary of TANF, its impact on “ending welfare as we know it” remains to be seen.

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