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August 22 2016

Welfare Reform at 20: It Was a Big Step in the Right Direction

Patrice L. Onwuka

It is the 20th anniversary of the welfare reform that President Bill Clinton signed into law.

Hillary Clinton has been forced by pressure from the left of her party, specifically Bernie Sanders and his supporters, to disavow the welfare reform bill that her husband signed into law.

It came about because of a bipartisan movement that started with conservatives and was finally adopted by Clinton. It had immediate effects on the economic condition and psyche of America’s poor.

USA TODAY notes in a piece observing welfare reform's birthday:

The newly minted Temporary Assistance for Needy Families put an emphasis on getting people out of poverty and to work. Under TANF, recipients in most cases are required to participate in work activities for 30 hours a week. Combined with expansions to the Earned Income Tax Credit, a tax credit for people with low- to-moderate-income jobs, TANF succeeded in getting people to work, especially during Clinton’s presidency.

From 1996 to 2000, employment rates among never-married mothers shot from 63% to 76%, according to the non-partisan Center on Budget and Policy Priorities (CBPP). Additionally, both poverty rates among families with single mothers and overall poverty rates dropped.

"The welfare reform legislation moved us in the right direction by being much more aggressive about employment for the single mother population," said Robert Doar, a scholar at the American Enterprise Institute.

This week, there’s a lot of opining about whether welfare reform was successful.

For the left, which was vocally outraged about the work requirements when the bill was signed in 1996, the answer is a resounding "no."

Last year, for example, the book $2.00 a Day: Living on Almost Nothing in America claimed to be an indictment of welfare reform. It claimed that four percent of all families with children (millions of children) subsist on less than $2 a day per person in income and that number has risen sharply over time. They blame welfare reform. As a result, America is moving into Third World status, according to a CBS News article with the headline “The Surging Ranks of America’s Ultra Poor.” New York Times columnist Nicholas Kristof who was sympathetic to welfare reform in 1996 cites the $2 a day figure and now believes that welfare reform failed. He advocates killing it and starting all over again with a system that includes a massive Deal type of public sector jobs program.

But Manhattan Institute scholar Scott Winship analyzed the statistics and finds that most official poverty statistics underestimate the income of poorer families by entirely excluding valuable benefits and overstating inflation:  

The reality of poverty after welfare reform is not that portrayed by critics—including, most recently, Edin and Shaefer. Children—in particular, those in single-mother families—are significantly less likely to be poor today than they were before welfare reform. This is because income and poverty trends are poorly conveyed by official statistics and by most analyses of poverty data. Household surveys underestimate the cash income of these families and do not count as income a variety of valuable noncash benefits, including food stamps, housing subsidies, and Medicaid (the receipt and value of which are also underestimated). Meanwhile, the rise in the cost of living tends to be overestimated, pulling up poverty trends over time.

Specifically, Winship found:

  • Children—in particular, those in single-mother families—are significantly less likely to be poor today than they were before welfare reform: child poverty overall fell between 1996 and 2014.
  • “Deep poverty”—defined as having a family income below half the official poverty line—was probably as low in 2014 as it had been since at least 1979.
  • Practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics), once the receipt of all government benefits are factored in.

In an interview with Politico Winship tackles the $2-a-day statistic:

I still consider it deeply suspect. For one the increase over time, at least in the data I use, starts in the 1970s. Edin and Shaefer begin in 1996, so they aren’t looking at what happened prior to that. If the increase started back in the 1970s, that certainly hurts the case that welfare reform was behind any rise that happened. Similarly, the increases happened among families unaffected by welfare reform—elderly, childless families. Even married college graduates saw an increase in $2 a poverty, which I think is implausible. And finally, the problem of earnings underreporting really cast the figures into doubt.

Perhaps, now is a good time to assess what can be done better going forward to ensure that Americans continue to achieve self-sufficiency. There’s room for innovation and change, but let’s start with correct statistics to develop policy solutions, not cherry-picked ones.

For example, Heritage’s Rachel Sheffield says it’s time to ask more from welfare recipients:

The biggest problem, however, is that the original 50 percent work participation rate is simply too low: 50 percent of TANF recipients can be doing no work at all, and a state can fulfill its work requirement. The main reason why the work rate was set at 50 percent was pressure from governors at the time the law was passed; for the most part, they sought to keep required work participation as low as possible.

  …

Today’s policymakers have been idle for too long. They should build on the ’96 law by insisting on more of what made it a success in the first place: work.

 

 

 

 

 

 

 

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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