Welfare and Welfare Reform

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Welfare and Welfare Reform
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Two Views of Poverty

• The poor are victims of their circumstances and
  do not have opportunities to advance
• The poor are responsible for their circumstances
  and do not take advantage of available
  opportunities
• The emphasis of antipoverty policy in the U.S.
  has shifted between these two views
• The Personal Responsibility and Work Opportunity
  Reconciliation Act of 1996 emphasizes the second
  view

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Overview of the Aid to Families with Dependent
Children Program (AFDC)

• Established in 1935 as part of the Social
  Security Act
• Shared cost program between federal government
  and states
• Originally intended primarily for widows, AFDC
  increasingly served never-married mothers
• States had discretion primarily over setting
  income eligibility limits and benefit levels
• Activity requirements were weak and generally
  focused on education and training rather than
  work
• States were not allowed to time limit
  beneficiaries
• Beginning in early 1990s, states increasingly
  used waivers to try new approaches to reducing
  welfare dependence

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Overview of the 1996 Welfare Reform Law (PRWORA)

• Temporary Assistance for Needy Families
• Non-marital Births
• Supplemental Security Income for Children
• Child Support Enforcement
• Child Care
• Food Stamps

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Five Components of TANF

1. End Cash Entitlement
2. Block Grant Funding
3. Work Requirements
4. Sanctions
5. 5-Year Time Limit

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Purposes of TANF

1. Provide Assistance to Needy Families with
   Children
2. End welfare dependence by promoting work
   preparation, work, and marriage
3. Prevent non-marital pregnancies
4. Encourage formation and maintenance of two-parent
   families

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Provisions Designed to Reduce Non-marital Births

• States get illegitimacy reduction bonus
• Require teen mothers to attend school and live at
  home or other supervised setting
• Abstinence education
• Child support enforcement and paternity
  establishment
• Annual ranking of states on non-marital pregnancy
  ratios by HHS
• Allow family cap
• Allow reduction in cash benefits for non-marital
  births

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TANF and State EITC Policies Do Not Provide
Substantial Earnings Supplementation to Many
Low-Income Working Families

• In the 13th month of benefit receipt
• 4 states would give a family of 3 working 20
  hours a week at minimum wage nothing, 21 less
  than 200/month, and 26 more than 200/month
• 22 states would give a family of three working 35
  hours a week at minimum wage nothing, 21 less
  than 200/month, and 8 more than 200/month
• 42 states would give a family of 3 working 35
  hours a week at 8/hour nothing, 7 less than
  100/month, and 2 more than 100/month
• All figures for 2000

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Many States HaveSticks to Encourage Work
Stronger than TANF

• Initial Work Requirements
• 43 states require work activities in less than 24
  months
• 20 states do not exempt caregiver of youngest
  child 6 months or older
• Sanctions
• 15 states have 100 sanctions for first-time
  violators
• 22 states apply sanctions to Food Stamps and
  Medicaid
• Time Limits
• 6 states have time limits less than 5 years

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States Have Shifted Funding Priorities Away from
Cash Assistance
Emergency Assistance
in billions
31.1
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Other
JOBS
22.8
19
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Child care
Admin
10
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Work activities
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Cash
Admin
73
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Cash
50
1995
2000
.
Source Congressional Research Service
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AFDC/TANF Caseload, 1960-2001
Source U.S. Department of Health and Human
Services
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Participation in Food Stamp Program Has Fallen
Dramatically
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Food Stamp Participation Rates Have Fallen
Because

• Low-income working families
• Leave TANF without informing welfare office
• Have trouble making office visits
• Are unaware of eligibility
• State welfare offices
• Divert families
• Erect barriers to avoid federal sanctions
• Do not follow up with TANF leavers

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Small Percentage of Eligible Families Receive
Child-Care Subsidies

• Studies show only 12 of families who meet
  federal income eligibility guidelines and only ½
  of those leaving welfare receive child care
  subsidies
• Many low-income families have access to unpaid or
  informal child care
• States discourage care by
• Setting eligibility below 85 of state median
  income
• Establishing bureaucracy and waiting lists that
  discourage applications
• Co-payment requirements

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Percentage of Married, Single,and
Never-Married Mothers Working, 1985-2000

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Teen Birthrate, 1980-2000
Source National Center for Health Statistics