Welfare reform, once a hotly contested issue in U.S. politics, no longer burns with the contentious fire it used to. Now, on the tenth year anniversary of one of the most fundamental shifts in human service policy this country has ever seen, advocates and policymakers are looking back at the first 10 years of a multibillion dollar aid industry.
The system in effect before the shift, Aid to Families with Dependent Children (AFDC), was a product of Franklin Delano Roosevelt’s New Deal, left over from 1935. Introduced during the Great Depression when the U.S. economy was reeling from the grave stock market collapse of 1929, and many wives had lost their husbands to the First World War as well as to other economic and social duress, AFDC offered money to mothers in order to support their children, without requiring them to look for work in a job market that was practically non-existent at the time.
Fast forward 50 years from 1935, and the situation, at least in the public’s eye, was very different. Single, unwed mothers had replaced widows as the primary recipients of welfare, and allegations of abuse were widespread. In 1991 around 5 percent of all welfare benefits went to mothers who didn’t qualify for them, according to a 1994 report from the U.S. House Ways & Means Committee. In the late 1980s Ronald Reagan gave a speech describing a “Welfare Queen” who enjoyed cruising the streets of Chicago in her “Welfare Cadillac,” which was obtained by allegedly milking the welfare system for more than $150,000. Intrepid reporters out to score an interview with the “Welfare Queen” found out soon after that she never existed in the first place. But Reagan’s portentous words on the issue got the ball rolling, and thus welfare reform became a top priority of the people, with Clinton saying in his 1992 presidential campaign that welfare “should be a second chance, not a way of life.” It came to a boil in 1996.
Bill Clinton, facing a Republican Congress, worked with the conservative Senate and House to create the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWOA), a landmark piece of bipartisan politicking which would, in effect, change the face of welfare for the first time in 60 years.
The welfare program legislated in PRWOA, was similar to AFDC in that it still provided money to families with children. Called Temporary Assistance to Needy Families (TANF) because it is indeed temporary, as opposed to AFDC, five years was the limit for how long a family could receive welfare checks, at least in most states. Massachusetts does not have the five-year restriction, but families using its program can receive cash assistance for 24 months out of every 60 months, or two years out of every four.
Another change was the shifting of responsibility for welfare implementation on to state shoulders, allowing each individual government to determine how best to serve their most needy citizens. TANF programs are funded by giant amounts of taxpayer money, specifically tailored to states depending on their economic size and population density and as long as the states are meeting the federal requirements set down by PRWOA, the money continues to flow.
This brings us to the most important, most lauded, and ultimately most controversial element of TANF and the mid-1990s welfare reform: work.
The criticism usually leveled at AFDC was the program’s lack of incentives for encouraging people to stop using it. Without a work requirement, plus guaranteed payments until you made enough money to not qualify, there was a great likelihood families would remain on the dole indefinitely. There was also the chance that even if you got a job, it might pay less than your welfare check after taxes.
TANF changed that. Often referred to as the “welfare to work” program, it created work requirements and employment quotas that states must meet. Mothers with children receiving welfare have to be finding work and staying employed, even if it means working a job for no pay, in order to receive cash assistance. (However, there are several exceptions to these rules, specifically to allow mothers who must stay at home for certain reasons to receive assistance without being required to work).
Welfare reform received mostly favorable reviews from both political alignments, and was carried to even greater heights by the economic tidal wave of the late 1990s.
Some of the often referred to successes of welfare reform in the 1990s are the reduction of national welfare caseloads by nearly half, the significant reduction of children living on or below the poverty level, as well as increased employment rates among single mothers.
“I think we’ve moved tremendously in the right direction,” Massachusetts Health and Human Services Commissioner John Wagner told Spare Change News, when asked to comment on the tenth anniversary of TANF. “We’ve been getting away from just cutting checks.”
Frank Conte, director of communications for the Beacon Hill Institute, a conservative economic policy center at Suffolk University, also sees TANF and welfare reform as a giant success.
“We’ve been fortunate to see the welfare caseloads drop (since TANF’s implementation),” Conte said.
However, not everyone is in agreement about the alleged success of the program. Sharon Parrott is director of the Welfare Reform and Income Support Division for the Center on Budget and Policy Priorities (CBPP), a nonpartisan economic think tank specializing in research on the way economic policy impacts middle to lower class families in North America. She coauthored a recent study for the CBPP entitled “TANF at 10,” which aims to show that although TANF often receives rave reviews that are backed up by seemingly competent statistical data, these assessments often miss the bigger picture.
Parrott cites three major reasons for the apparent success of getting single mothers employed in the 1990s: the excellent economy, work supports such as childcare, and welfare reform.
“But, when the economy failed in 2000, everything changed direction,” she told SCN.
Parrott came across myriad facts that indicated some major stumbling blocks in TANF’s ability to help the most needy of families. Although child poverty decreased in the 1990s, according to her study the number of children living below half of the poverty line increased by nearly a million between 2000 and 2004, while the number of children receiving assistance through TANF declined during the same period.
She also points out that the reduction in welfare caseloads championed by TANF’s advocates is likely due to ever changing fiscal poverty levels and could actually be a result of poor families qualifying out of welfare, while remaining in poverty.
“There is a fiscal incentive for states to reduce their caseload,” Parrott said. If a state does not spend the entirety of their TANF block grant on welfare, it is allowed to transfer that money to other programs that fall under Health and Human Services.
When the caseload levels dropped in the 1990s, it was heralded as a success of welfare reform. But was it the result of an increased number of welfare recipients transferring to working lifestyles, or was it the new federal quotas for caseload levels and stringent work requirements that were pushing people off assistance?
“There was no investigation of how caseload levels were reduced so significantly,” she said. And with more stringent work requirements recently passed at the federal level, there is a chance that further reductions will be forthcoming and not for the best of reasons.
“I find it impossible to imagine that states won’t restrict access in order to meet the new requirements,” Parrott said.
Commissioner Wagner is also worried about the new requirements, but for different reasons.
“We’re in a murky state because we no longer have the authority to run a private program,” he told SCN. “We now have a state law that differs from the federal law.”
The federal government, according to Wagner, is requiring compliance with these new standards by Oct. 1. Wagner says there’s no way they’ll meet that deadline. “They should be giving us a bit more time,” he said.
If the state requirements remain as they are for a significant period of time, the federal government will charge Massachusetts a $50 million fine for non-compliance, according to Wagner.
“We’re trying to navigate two sets of rules. That becomes very complicated,” he said.
But still Wagner applauds TANF and dismisses its critics. “The criticism of TANF pales in comparison with that of AFDC,” he said.
Parrott, the author of the TANF study, agrees. “I don’t know anyone who thinks AFDC was doing a great job for poor families.”
She says, “the cheapest and easiest way to do that is to restrict access,” which means states will be meeting their federal requirements, while those in need who don’t fit into certain categories will find themselves forgotten.