Two decades after welfare reform: More very needy children and families, less government assistance

Twenty years ago this summer, Congress passed a welfare reform bill that dramatically changed the federal approach to poverty alleviation through cash assistance in the United States. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 did away with the Aid to Families with Dependent Children (AFDC) program and replaced it with Temporary Assistance for Needy Families (TANF). Unlike under AFDC, poor families are not guaranteed benefits under TANF. Rather, the system centers on a “welfare to work” approach. Most adults are now required to be involved in work or related activities (such as job search or community service) in order to qualify, and can only receive benefits for a limited time period.

The law also transformed welfare from a federal entitlement into a patchwork of state-administered programs funded by a federal block grant that has not increased since welfare reform was first enacted; it is, in fact, gradually declining in real value, due to inflation. States have great flexibility in how TANF funds are used, and are now using a majority of funds for purposes other than cash benefits. States also stand to lose funds if they do not meet federal work participation rates for TANF beneficiaries. This policy encourages states to either move more adult recipients into the workforce, or to reduce the number of non-working adults on their welfare rolls. Many states have chosen to shrink their rolls by enacting stringent eligibility requirements, and by limiting the amount of funds available for cash assistance.

The 20^th-anniversary milestone offers an occasion to look at these changes’ effects on the individuals and families welfare is intended to help. By many measurements, some of the country’s neediest families and children now face increased hardship.

Welfare access has declined, but need remains high

Proponents have praised the reformed system for encouraging self-sufficiency through work. They point to shrinking welfare rolls, and consistently higher employment numbers among low-income single mothers since the legislation passed. However, this perspective does not address the fact that many poor Americans have not achieved self-sufficiency under the new system.

Demographic trends indicate that many who are in great need of cash assistance are not receiving it. In 2011, more than twice as many households with children than in 1996 had less than $2 per day in cash income . Yet the percentage of poor children whose households receive cash assistance has declined dramatically, from 58 percent in 1996 to 17 percent in 2014 (see Figure 2). As of 2011, 30 percent of poor children were in disconnected families, meaning no one in the household was working nor were they receiving TANF. The share of disconnected low-income single mothers has steadily increased over the last two decades.

In large part because eligibility requirements make it more difficult for many adults to qualify, the population that receives income assistance is more vulnerable now overall than before welfare reform, as well. An increased percentage of beneficiaries are women who are work-exempt due to pregnancy or the need to care for infant children. In 2013, about three quarters of beneficiaries were children, and in 38 percent of TANF households, children were the only family members for whom the households received assistance. The average monthly benefit is now lower in purchasing value than before welfare reform for almost all recipients, and is currently only $429 for a family of three. Benefit values continue to decline as TANF funds shrink and are repurposed. Most state benefits brought a family’s income to less than 30 percent of the poverty line last year.

Work proves elusive for many

The evidence strongly suggests that many poor adults face significant challenges to finding a job, and that the supports available to help them stay employed are often inadequate. Most parents who receive TANF have one or more barriers to obtaining a job and keeping it. Common barriers include health problems, the need to care for children with special needs, and a lack of education and work experience. States offer uneven packages of support services to these hard-to-employ individuals. For example, only 6 percent of TANF funds spent directly on child care go toward assisting those receiving cash benefits. Federal law also severely restricts the extent to which job skills training and attendance in degree-preparatory programs, often necessary for job access, may count as work activities.

The fact that the increase in TANF beneficiaries was much more modest than the spike in unemployment during the recent Great Recession suggests that the program is not responding well to changing economic conditions to meet the basic needs of the most vulnerable families and children when times are toughest.

Future solutions

Experts have put forward a number of suggested changes to TANF that both strengthen the safety net for families and children with the greatest need and preserve the focus on employment. One proposal is to offer state-sponsored work opportunities for those unable to find a job on their own. Another is to improve access to child care subsidies. Restrictions like work requirements and time limits could be relaxed during economic downturns. Congress could also modify the Supplemental Security Income program to include a temporary disability benefit that would accommodate poor parents who are temporarily unable to work.

It’s clear that action should be taken to address the needs of those who are struggling most under the current system, especially because this group includes so many children.