Welfare Reform – Heritage Foundation

 
 
An Overview of Obama’s End Run on Welfare Reform
By Robert Rector
September 20, 2012

In July of this year, the Department of Health and Human Services (HHS) granted itself authority to “waive compliance” with all of the work provisions in the Temporary Assistance to Needy Families (TANF) program.

HHS has declared that the work requirements written in the law are no longer legally binding on state governments and that they can and will be replaced by alternative rules devised unilaterally by the HHS bureaucracy. This action grossly violates the intent and letter of the welfare reform law.

1996 Reform Was Successful

In 1996, Congress enacted welfare reform legislation that replaced the old Aid to Families with Dependent Children (AFDC) program with TANF. The immediate effects of welfare reform were striking. During the four decades prior to the 1996 welfare reform, the welfare caseload had never significantly decreased.

By 1995, nearly one in seven children was on AFDC. Within just a few years of TANF’s implementation, however, the caseload was cut in half, and employment rates and earnings among single mothers soared.[1] Child poverty rates declined significantly. Roughly 3 million fewer children lived in poverty in 2003 than in 1995, including 1.2 million fewer black children, marking the lowest level of black child poverty in the nation’s history.[2]

Federal work requirements in the TANF program form the foundation of the popular welfare reform law of 1996. These work standards have three parts: They require (1) 30–40 percent of able-bodied TANF recipients (2) to engage in any of 12 different work activities (3) for 20–30 hours per week.

What HHS Wants to Do

In its guidance memorandum and related documents, HHS outlined the types of changes it was seeking in the TANF program. HHS stated that it would:

  • Lower the already lenient work participation rates in TANF by exempting substantial and loosely defined groups of recipients from the work rates;
  • Likely broaden the definition of “work activities”;
  • Replace the requirement that recipients engage in work activities for 20–30 hours per week with looser standards, perhaps as little as one hour per week; and
  • Replace the TANF work participation requirements entirely with alternative standards based on “employment exits.”

All of these changes are likely to substantially increase the number of TANF recipients who receive a check without working.

The “Employment Exits” Red Herring

Stung by criticism that it was weakening the work requirements in welfare, the Obama Administration released a subsequent letter stating that some or all of the states receiving future waivers would be required to increase the number of recipients who left welfare due to employment by 20 percent or at least to make progress toward that target. In reality, this is a miniscule change. To meet this standard, the typical state would merely need to increase the number of monthly “employment exits” from 1.5 percent of caseload to 1.8 percent.

States have kept statistics on employment exits for decades, but they have always been meaningless as a measure of success. Why? Because welfare caseloads always have routine turnover. The larger the caseload, the greater the number of exits—simply because there are more people in the system.

Historically, the number of employment exits rises as welfare caseloads rise and falls when welfare caseloads fall; increases in employment exits are negatively correlated to reductions in caseloads and dependence. For this reason, Congress deliberately excluded “employment exits” as a performance measure when crafting the 1996 welfare reform law.

Now the Obama Administration seeks to make “employment exits” the central performance standard of a radically revised TANF program. Paradoxically, by this standard, the old pre-reform AFDC program was a stunning success: Employment exits nearly doubled in the decade before reform, and caseloads increased by a third. By contrast, the post-reform TANF program has been a decided failure: Both exits and caseloads have fallen. The Obama Administration is not merely gutting welfare reform; it is standing it on its head.

Restore and Expand Work Requirements

Some 95 percent of the public believe that able-bodied recipients of government aid should be required to work or prepare for work as a condition of receiving assistance.[3] By that standard, the existing TANF work rules are already too lenient. Half of able-bodied TANF recipients receive a welfare check but perform no activity at all.

In addition, the federal government runs over 80 means-tested welfare programs providing cash, food, housing, medical care, and social services to low-income individuals. In 2011, the cost of these programs was $927 billion. Over 100 million Americans received benefits from these programs at an average cost of $9,000 per recipient. At the beginning of the year, only three of these 80 programs had a significant work requirement: the earned income refundable credit, the additional child refundable credit, and TANF. Now, in many states, the TANF work requirements will be weakened or eliminated.

Government should take the opposite course. The work participation rates in TANF should be increased to cover more recipients. In the long term, strong work participation standards should be established in other programs such as food stamps, public housing, unemployment insurance, and Medicaid. Regrettably, the Obama Administration is marching briskly in the opposite direction.

[1]See Robert Rector and Patrick Fagan, “The Continuing Good News About Welfare Reform,” Heritage Foundation Backgrounder No. 1620, February 6, 2003, http://www.heritage.org/research/reports/2003/02/the-continuing-good-news.

[2]Ibid.

[3]See Robert Rector, “Obama’s End Run on Welfare Reform, Part One: Understanding Workfare,” Heritage Foundation Backgrounder No. 2730, September 19, 2012, footnote 6, http://www.heritage.org/research/reports/2012/09/obamas-end-run-on-welfare-reform-part-one-understanding-workfare#_ftn6

—Robert Rector is Senior Research Fellow in the Domestic Policy Studies Department at The Heritage Foundation.

September 20, 2012

Listening to Local Voices on Poverty
by Jennifer Marshall and Robert L. Woodson

 
    When the Obama Administration announced that it will waive the work requirement in welfare reform, it wasn’t just a bad idea that will roll back one of the most celebrated reforms of the past 25 years. It also showed disregard for the leaders of some of the nation’s poorest communities.

    These leaders had cried out against the corrosive effects of the old welfare system on neighborhoods, families and the spirit of individual responsibility. Their testimonies to the destructiveness of government dependence played an important part in shaping welfare reform. In 1995, they formed a task force charged by House Speaker Newt Gingrich with informing the legislative effort to reform the old welfare system.

    As a result of the historic reform law Congress enacted in 1996, welfare rolls dropped by half and poverty among black children fell to its lowest level on record in America as families moved to independence from the welfare state.

Despite that success, there is much more work to be done. That’s why a new generation of grassroots leaders came to Washington, D.C., on Sept. 12-13 for an antipoverty summit. The 25 leaders met with today’s welfare reformers in Congress, led by Rep. Steve Southerland (R-Fla.) and other members of the Republican Study Committee, in conjunction with the Center for Neighborhood Enterprise and The Heritage Foundation.

    These neighborhood leaders from across the nation have addressed effectively the most entrenched problems of poverty in many of America’s most devastated communities. Their approach promotes principles of personal responsibility, reciprocity and opportunity with a goal of empowering families to achieve upward mobility and, ultimately, self-sufficiency.

    In our nation’s capital, they told members of Congress how they achieved their victories, explained what resources and support could help replicate their programs on a larger scale and identified policy barriers that block greater success.

    The strategies of these leaders, who live in the impoverished neighborhoods they serve, stand in sharp contrast to the conventional approach to fighting poverty. That approach fosters dependency and has absorbed almost $20 trillion of taxpayers’ money since President Lyndon Johnson launched the War on Poverty in the mid-1960s. Today, government spends nearly $1 trillion a year on 80 federal programs for the poor.

    What’s the return on investment? At the outset of the War on Poverty, 8 percent of children overall were born outside marriage each year. Today, the overall “unwed birth rate” has shot to 41 percent, and among blacks, a staggering 72 percent of children are born to single mothers.

    The U.S. Census Bureau, releasing its annual poverty numbers Sept. 12, said the nation’s official poverty rate in 2011 held steady at 15 percent, with 46.2 million Americans in poverty. It’s bad news, even after three consecutive years of increases. But even worse is the persistently high level of poverty in good economic times or bad, particularly among children.

    The strongest factor in child poverty is absence of marriage. Overall, marriage reduces the probability of child poverty by more than 80 percent. If we want to fight poverty and welfare dependence, it’s urgent that we restore marriage. 

    More than a decade ago, the late Michael Joyce, president of the Lynde and Harry Bradley Foundation, addressed members of Congress on why it was critical to hear from such grassroots leaders:

There’s no better place to learn the language of civic renewal than from those who are actually doing it. They capture and convey to the public the ideal of a revitalized civil society, as our best means to protect even the most vulnerable, to tackle even the toughest problems. They are full of the practical wisdom that comes from working every day with real people in the neighborhoods on real problems.

    Joyce’s message – “listen to these folks,” he urged – continues to be sound advice for civic leaders and citizens across America as we face unprecedented economic and social challenges.

Poverty rates are higher among single-mother families, regardless of race.

     Among whites, single-mother families are more than six times more likely to be poor than married-couple families. The ratio is also high among African-Americans, Asian-Americans (four times more likely), and Hispanics (more than twice as likely).

Poverty rates for families with children, by mother’s marital status.

Poverty rates are higher among single-mother families, regardless of race

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