Welfare reform part 3

Thomas Sowell – Welfare

Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003.

The Continuing Good News About Welfare Reform

By and
February 6, 2003

Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) replaced the failed social program known as Aid to Families with Dependent Children (AFDC) with a new program called Temporary Assistance to Needy Families (TANF). The reform legislation had three goals: (1) to reduce welfare dependence and increase employment; (2) to reduce child poverty; and (3) to reduce illegitimacy and strengthen marriage.

WELFARE REFORM AND CHILD POVERTY

A recent paper by Dr. Rebecca M. Blank, former member of the Council of Economic Advisers in the Clinton White House, examines the link between welfare reform and child poverty.22 Professor Blank analyzes the income of families with children from 1992 to 2000 and finds that incomes rose for all but the bottom 2 percent of families with children. Moreover, poor families showed greater income gains than higher-income families, “suggesting that most poor families experienced larger income gains than did most middle and upper-middle income families.”23

Dr. Blank’s analysis shows a direct link between state welfare reform policies and rising incomes among poor families. States with welfare reform programs that offered “strong work incentives” showed greater increases in the income of single parents with children than did states with weak work incentives. Moreover,

at the bottom of the distribution, states with strong work incentives have the smallest share of children in families with negative changes in income, while states with the weakest work incentives show the highest share of children with [decreases in income].24

In other words, states with strong welfare work incentives had fewer families that lost income than did states with weak welfare work incentives. Blank finds that these income differences are the result of state welfare policies rather than differences in state economies.

In addition, Dr. Blank examines the effects of tough welfare reform “penalties” on the incomes of poor single-parent families. Examining the impact of stricter time limits and strong sanction policies that “provide a strong enforcement mechanism for women to participate in welfare-to-work programs,” she finds that tough welfare policies had a positive effect in raising the incomes of poor families. Overall, states with stricter time limits and stronger sanction policies were more successful in raising the incomes of poor children than were states with lenient policies. Dr. Blank concludes that

states with strict or moderate penalties for not working consistently show higher income gains among poor children throughout the income distribution than do states with lenient penalties…. [I]t is the more lenient states with softer penalties where children’s income seems to have grown least.25

Out-of-Wedlock Childbearing and the Economy
Out-of-wedlock childbearing and marriage rates have never been correlated to periods of economic growth. Efforts to link the positive changes in these areas to growth in the economy are without any basis in fact. The onset of welfare reform is the only plausible explanation for the shifts in these social trends. welfare reform affected out-of-wedlock childbearing and marriage in two ways.

First, even before passage of the law, the public debate about welfare reform sent a strong symbolic message that, in the future, welfare would be time-limited and that single mothers would be expected to work and be self-reliant. This message communicated to potential single mothers that the welfare system would be less supportive of out-of-wedlock childbearing and that raising a child outside of marriage would be more challenging in the future. The reduction in out-of-wedlock births was, at least in part, a response to this message.

Second, reform indirectly reduced welfare’s disincentives to marriage. Traditional welfare stood as an economic alternative to marriage, and mothers on welfare faced very stiff financial penalties if they did marry. As women leave AFDC/TANF as a result of welfare reform, fewer are affected by welfare’s financial penalties against marriage. In addition, some women may rely on husbands to provide income that is no longer available from welfare. Thus, as the number of women on welfare shrinks, marriage and cohabitation rates among low-income individuals can be expected to rise.

Welfare Reform and the Current Recession
When welfare reform was enacted, liberal opponents predicted that it would yield sharp increases in poverty even in good economic times; the effects of reform during a recession were expected to be disastrous. As noted, liberal predictions about the negative effects of reform during good economic times have been proven completely erroneous. Moreover, the disastrous effects expected of welfare reform during an economic downturn have, at least so far, failed to materialize during the current recession.

Historically, during a recession, overall child poverty rises by two to three percentage points. For example, during the economic downturn in the early 1990s, the overall child poverty rate rose from 14.8 percent to 17.8 percent. Historically, black child poverty rises even more sharply during a recession. During the back-to-back recessions in the early 1980s, for example, black child poverty rose by more than six percentage points, from 41.2 percent in 1979 to 47.6 percent in 1982.

However, during the current recession (which began in April 2001), these traditional negative patterns have not appeared. While the poverty rate for adults rose during 2001 in a manner consistent with prior recessions, the poverty rates for children in general — and for black children in particular — differed sharply from prior historical patterns. Despite the recession, from 2000 to 2001, the overall child poverty rate remained flat.26 The poverty rate for black children actually fell by a full percentage point from 31.2 percent in 2000 to 30.2 percent in 2001. Such a decline in black child poverty during a recession is without historical precedent.

While the child poverty figures for 2001 (the first year of the current recession) are unusually positive, a note of caution is warranted. The effects of a recession on poverty often continue and deepen for two or three years after the recession’s onset. Thus, when the Census Bureau releases poverty figures for 2002 and 2003, it is quite possible that reported child poverty will increase.27 However, if the unusual poverty figures for 2001 are any indication, the overall increase in child poverty (if any) generated by the current recession is likely to be far milder than in prior economic downturns.

The welfare dependence figures during the current recession also differ sharply from prior recessions. As Chart 3 shows, the AFDC caseload almost always rose during recessions.28 In some cases, the increase in caseload was dramatic. For example, during the early 1990s, the AFDC caseload rose by around 30 percent. However, during the current recession, the TANF caseload has actually declined. Between the beginning of the recession in April 2001 and September 2002 (the date of the most recent available data), the caseload actually fell by 4.4 percent.

The fact that welfare caseloads have, up to now, declined during the current recession is good news. However, a note of caution is, again, warranted. The effects of a recession in increasing welfare dependence may continue for several years after the onset of the recession. Thus, it is possible that TANF caseloads will rise during 2003. However, the recent trends in caseload strongly suggest that, if TANF caseloads do rise in 2003, the increase will be quite small when compared to increases spurred by prior recessions.

The fact that child poverty has not, as yet, risen during the present recession is linked to the continuing decline of TANF caseloads. During previous recessions, large numbers of single mothers left employment and entered the AFDC program. Families on AFDC are almost always poor. Thus, increases in welfare caseloads during prior recessions invariably led to concurrent increases in child poverty. However, the work requirements and time limits established by welfare reform have created strong pressures discouraging single mothers from leaving employment and entering welfare. The fact that TANF caseloads have not risen during the current recession has, in turn, helped to limit any rise in child poverty.

LOOKING TO THE FUTURE

The trends of the past six years have led some of the strongest critics of welfare reform to reconsider their opposition, at least in part. In 1996, Deputy Assistant Secretary for Human Services Policy Wendell Primus also resigned from the Clinton Administration to protest the President’s signing of the welfare reform legislation, predicting that the new law would throw millions of children into poverty.

As Director of Income Security at the Center on Budget and Policy Priorities, Primus has spent the past six years analyzing the effects of welfare reform. The evidence has tempered his earlier pessimism. “In many ways,” he recently stated, “welfare reform is working better than I thought it would. The sky isn’t falling anymore. Whatever we have been doing over the last five years, we ought to keep going.”29

Wendell Primus is correct. When Congress reauthorizes the TANF program this year, it should push forward boldly to promote further the three explicit goals of the 1996 reform:

  1. To reduce dependence and increase employment;
  2. To reduce child poverty; and
  3. To reduce illegitimacy and strengthen marriage.

These three goals are linked synergistically. Work requirements in welfare will reduce dependence and increase employment, which in turn will reduce poverty. As fewer women depend on welfare in the future, marriage rates may well rise. Increasing marriage, in turn, is the most effective means of reducing poverty.

Next Steps in Reform
When Congress reauthorizes Temporary Assistance to Needy Families in 2003, it should take the following specific steps.

  1. Strengthen federal work requirements
    Currently, about half of the 2 million mothers on TANF are idle on the rolls and are not engaged in constructive activities leading to self-sufficiency. This is unacceptable. Existing federal work requirements must be greatly strengthened so that all able-bodied parents are engaged continuously in supervised job search, community service work, or training.

    In addition, some states still provide federal welfare as an unconditional entitlement; recipients who refuse to perform required activities continue to receive most benefits. In reauthorizing the TANF program, Congress should ensure that the law prohibits federal funds from being misused in this manner in the future.

    Some might object to toughening work requirements during a recession, but it is important to remember that the TANF reauthorization law will set the rules for the program not for one year, but for the next five years. Provisions to toughen federal work requirements can be phased in so that they do not take effect until 2005 or later, long after the current recession has passed.

  2. Strengthen marriage
    As Chart 5 shows, the poverty rate among single-parent families is about five times higher than the poverty rate among married-couple families. The most effective way to reduce child poverty and increase child well-being is to increase the number of stable, healthy marriages. This can be accomplished in three ways.

First, the substantial penalties against marriage in the overall welfare system should be reduced. As it is currently structured, welfare rewards illegitimacy and wages war against marriage. That war must cease.30

Second, the government should educate young men and women on the benefits of healthy marriage in life.

Third, programs should provide couples with the skills needed to reduce conflict and physical abuse and to increase satisfaction and longevity in a marital relationship.

The 1996 TANF law established the formal goals of reducing out-of-wedlock childbearing and increasing marriage, but despite nearly $100 billion in TANF spending over the past five years, the states have spent virtually nothing on specific pro-marriage programs. The slowdown in the growth of illegitimacy and the increases in marriage have occurred as the incidental byproduct of work-related reforms and not as the result of positive pro-marriage initiatives by the states. The current neglect of marriage is scandalous and deeply injurious to the well-being of children. In future years, at least $300 million in TANF funds should be earmarked for pro-marriage initiatives.

CONCLUSION

More than 20 years ago, President Jimmy Carter stated, “the welfare system is anti-work, anti-family, inequitable in its treatment of the poor and wasteful of the taxpayers’ dollars.”31 President Carter was correct in his assessment.

The 1996 welfare reform began necessary changes in the disastrous old welfare system. The rewards for non-work in the TANF program have been substantially reduced. But much more remains to be done. When Congress reauthorizes TANF this year, it should ensure that, in the future, all able-bodied welfare recipients are required to work or undertake other constructive activities as a condition of receiving aid.

But increasing work is not enough. Each year, one-third of all children are born outside of wedlock; this means that one child is born to an unmarried mother every 25 seconds. This collapse of marriage is the principal cause of child poverty and welfare dependence. In addition, children in these families are more likely to become involved in crime, to have emotional and behavioral problems, to be physically abused, to fail in school, to abuse drugs, and to end up on welfare as adults.

Despite these harsh facts, the anti-marriage effects of welfare, which President Carter noted over two decades ago, are largely intact. The current indifference and hostility to marriage in the welfare system is a national disgrace. In reauthorizing TANF, Congress must make the rebuilding of marriage its top priority. The restoration of marriage in American society is truly the next frontier of welfare reform.

Robert Rector is Senior Research Fellow in Domestic Policy Studies, and Patrick F. Fagan is William H. G. FitzGerald Research Fellow in Family and Cultural Issues, at The Heritage Foundation. This paper is an updated version of Heritage Foundation Backgrounder No. 1468, published on September 5, 2001.

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