How do they do it?
Most of us get only anecdotal information about welfare and people who are poor. We ingest the media’s sensationalized stories. We listen to acquaintances who work as police officers, social workers, or other kinds of “street-level bureaucrats” dealing directly with those among the poor having the most difficulty. We ourselves observe men loitering on street corners or young women using food stamps at the grocery store. We don’t pay much attention to statistics or studies. As a result, our perceptions have been systematically distorted in negative ways. Common beliefs about welfare and work reflect these distortions.
We hear much about “welfare-to-work,” as if one were either on welfare or working. The common association is between welfare and laziness. Nothing could be further from the truth. Many people on welfare work—they have to in order to live.
Before writing Making Ends Meet,11 sociologist Kathryn Edin and anthropologist Laura Lein asked 379 welfare mothers from four different cities about their survival strategies.
The first jolt to our preconceptions is that these welfare mothers tended to spend less money than poor people with similar incomes who had full-time jobs. In part this was because working mothers have extra expenses like childcare, transportation, and clothing, but even when these expenses were taken into account, welfare mothers apparently lived more frugally. Contrary to myth, they managed their money well. Nevertheless, their total benefits averaged about 60 percent of their expenditures. It should be no surprise, then, that all these welfare families had some other source of income.
These other sources of income fell into three main categories. The first was work. Almost half of the welfare mothers interviewed worked, averaging $276 a month in earnings. Although reporting those earnings to their social worker is legally required, few of them did so, since almost all of their reported earnings would have been subtracted from their welfare checks, leaving them more exhausted and no further ahead financially. Most of the work they did was informal: babysitting, yard work for friends, or working for a small business that would pay in cash under the table. Only a small minority (about 8 percent) worked in the underground or illegal economy, chiefly at prostitution or drug selling.
Their second major source of income was friends and relatives, including boyfriends and the fathers of their children, whether they lived in the house or not. Almost four out of five welfare recipients received such support from their personal networks, although, for the same reasons, most did not report this income. From the women’s stories, however, these contributions were hardly “free money.” These mothers had to provide something in exchange for what they received: time and energy in maintaining relationships, free babysitting, house cleaning. Boyfriends who provided money received room and board in exchange.
The third source of extra income was local charity. In most cases, this was not considered a desirable source because few charities could offer much. Going from one to the other and meeting various requirements, only to receive a grab bag of groceries or some second-hand clothes, ate up time and energy.
The take-home lesson Edin and Lein offered was that virtually all welfare mothers “work” in many senses of the word: they do extra jobs, maintain the networks that support them, visit charities, and continually strive to meet the bureaucratic requirements necessary to stay on AFDC or TANF itself.
As if to prove the point about how deeply embedded our misconceptions are, a front-page article in the Washington Post quoted extensively from Edin and Lein’s research, but managed to look past the reality that the women interviewed had to find some other source of income in order to survive. It looked past their industry and resourcefulness and past the fact that they are not lazy to make a darker and more ominous point: these women were committing welfare fraud!12
THE END OF WELFARE
Most people agree that welfare needed reforming. Because AFDC was a federally funded but state-run program, benefits varied wildly from state to state, ranging from 12 percent to 55 percent of the poverty level for a family of three, making it not only an inadequate but also an inequitable program. In addition, AFDC contained perverse anti-work and anti-marriage incentives. Essentially all work income was deducted from benefits, and mothers going to work also lost Medicaid and childcare benefits, making it almost impossible to transition from welfare to work. Since a marriage partner’s income would be deducted from benefits, it was better to keep the relationship informal and not get married. AFDC needed change and improvement. It certainly got change.
Despite his rhetoric, President Reagan had only limited success in limiting “welfare,” that is, the AFDC program. It took a Democratic president, who had campaigned on a promise to “end welfare as we know it,” to eliminate the entitlement that had existed since the Depression. President Bill Clinton joined with a Republican Congress in 1996 to pass the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), popularly known as “Welfare Reform,” to change almost every aspect of federal and state public assistance.
The best-known and most controversial part of PRWORA rescinded the AFDC program and replaced it with Temporary Assistance for Needy Families (TANF) block grants to the states. This change converted welfare from an entitlement that paid cash benefits to all needy parents who met income restrictions into a combined cash benefit/work program whose benefits were contingent upon meeting work or work-preparation requirements. Open-ended federal funding to the states was replaced with block grants—fixed amounts determined by AFDC funding levels for 1994-1995 that could also be used for other purposes—thereby giving states a financial incentive to lower welfare caseloads. Most important, however, no matter how little income families had, they no longer had an entitlement to assistance. Government no longer required itself to help even destitute families.
Aside from the fixed funding (which is not indexed to inflation) through block grants, there are several major differences between TANF and AFDC. The first is “work supports.” Under TANF, states now have far more discretion than under AFDC to spend funds for purposes other than cash assistance. The block grants can fund transportation, wage subsidies, pregnancy prevention programs, childcare, and state earned income tax credits to support participants in their “transition to work.” For example, in an effort to “make work pay,” some states now allow welfare recipients to keep more of their earnings, thus making work more attractive. States are encouraged to innovate and create new approaches. Like AFDC, TANF is a combined federal/state program. In order to qualify for full funding, states must continue to spend from their own coffers at least 75 percent of what they spent under AFDC.
Mandated work requirements are a major part of the legislation. Cash assistance is designed to be temporary, and recipients must transition “from welfare to work.” States must sanction recipients who fail to meet state work requirements by reducing or eliminating their cash benefits and, sometimes, their food stamps. The federal government will reduce the block grants of states that fail to move enough recipients into jobs.
Time limits are also important signals to the states that recipients are to be moved off the rolls. In almost all instances, states are prohibited from using federal funds to give cash assistance to an individual for more than sixty months in her lifetime. States have the option of setting time limits as short as twenty-four months. Again, states are penalized through reductions in funding if appropriate numbers of people receiving cash assistance are not off the rolls soon enough. The states’ freedom to individualize their programs under the broad guidelines of the legislation does not extend to modification of this basic goal: to get people off welfare (not, it must be noted, out of poverty).
Next to TANF, the most controversial provisions in the PRWORA legislation were those that sharply restricted benefits for immigrants. The 1996 legislation essentially eliminated cash assistance, food stamps, Medicaid, SSI disability, and other benefits for almost 90 percent of immigrants. Congress modified the immigrant provisions
in 1997 to restore some benefits to disabled immigrants who had arrived before 1996. In May 2002 the Farm Bill reinstated food stamp benefits for adult legal immigrants who have lived in the United States for at least five years, with no minimum residency requirement for their children or the disabled. Otherwise, until they become citizens, legal immigrants (including children) arriving after 1996 have no access to government assistance—for example, SSI or Medicaid—regardless of need.
Although not well publicized, PRWORA also contained the most extensive revision of the food stamp program in twenty years. In addition to reducing funding across the board by about 3 percent, the legislation greatly restricted access to the program for adults without children, limiting them to three months of food stamps every three years. Since food stamps had previously been almost the only reliable source of additional income for these adults,13 it was a drastic change that received little public attention, which was surprising for a program that enjoys broad public support. Most people believe that even the “undeserving poor” should have food!
Under the Supplemental Security Income program (SSI), the families of disabled children receive up to $484 per month in cash assistance. Acting on the perception that SSI payments were being given for children who were not, in fact, disabled, eligibility standards were tightened under Welfare Reform, rendering approximately 15 percent of current recipients—135,000 poor children—ineligible.14 According to the Children’s Defense Fund, more than half of all applicants are being rejected under the new criteria.
Welfare Reform changed the nature of federal support for childcare by increasing funding, consolidating programs under block grants, and allowing up to 30 percent of TANF funding to be used for childcare work support.
The provisions to improve enforcement of child support by noncustodial parents were the most extensive parts of the 1996 legislation. The goals of these reforms were to increase the determinations of paternity, locate more noncustodial parents, and improve the enforcement of child support laws. Finally, there were cutbacks to various child nutrition programs.
Evaluations of the impact of PRWORA have been tentative for four crucial reasons. First, the legislation fails to mandate a comprehensive evaluation of the program. Required state reporting under the law is remarkably minimal. This makes assessment difficult, especially given the wide latitude and encouragement the states have received to craft innovative programs. There is no longer one national program to evaluate, but more than fifty regional ones. Some states have emphasized financial incentives to work. Minnesota, for example, gives cash assistance even to families whose income leaves them well over the official poverty level and offers recipients generous benefits. It also supplements job earnings with a state earned income tax credit and provides substantial work supports, including a childcare program available to many poor working families. The aim is to encourage higher work participation rates among families on the rolls and to increase total income by mixing earnings and assistance.
Other states, like Wisconsin, have emphasized caseload reduction. Strong work supports like childcare assistance are given, but the push is simply to get people off the rolls. Approximately 25 percent of families have left the Wisconsin program because of sanctions. Former governor Tommy Thompson, now Secretary for Health and Human Services in the administration of George Bush Jr., reported that the number of people receiving cash assistance had declined 93 percent since 1987, when Wisconsin began its own welfare reforms.15 Not surprisingly, the incomes of two-thirds of those who left the Wisconsin program remain below even the official poverty level.16
In some states, it is hard to know what is happening because reporting has been so minimal.
The second reason that evaluation of the program has been difficult is that an important part of the legislation is the mandated time limit that permanently prohibits states from using federal money to give cash benefits to any family head-of-household for more than sixty months in her lifetime. Because the first families only met that sixty-month limit in late 2001, there is no data on what happens to these families. Since it has already been demonstrated that sanctioned families are far less likely to find employment than families that leave the rolls for other reasons, the impact of the time limits will most likely be harsh, but this cannot yet be evaluated.
A third reason it is difficult to evaluate the impact of the 1996 legislation is that its effects are hard to separate from those linked to a number of other federal and state legislative changes designed to “make work pay.” The most important of these were both federal and state earned income tax credits that effectively increase the income of the working poor and the increase in the federal minimum wage. Other such policies included expanded public health insurance for low-income children not receiving cash assistance, increased spending on childcare subsidies, and increased earned income “disregards” that allow welfare recipients to keep more of their earnings when they work while on welfare. While only the earned income tax credit and the increase in the minimum wage have had major impact on poverty, each of these policies increased to some extent the incomes of low-wage workers or provided them with other benefits.
Finally, from 1996, when the law was passed until the end of 2000, the United States economy enjoyed an uninterrupted boom of staggering proportions that increased employment, reduced poverty, and increased both state and local tax coffers. Unemployment fell to historic lows, making it easier for poor people to get jobs. Because of the hot economy, states took in more tax money, while having to deal with less poverty, than is likely to be the case in years to come. Since the amounts of the TANF block grants were based on state needs during the base period 1994-95, when we were coming out of a recession (and the need for assistance, therefore, relatively greater), the states have until now received proportionally more, in both tax revenue and block grants, per poor person than they will now that the economy is undergoing one of its periodic slowdowns. With more income and fewer recipients the states should be doing quite well. The real test will come in the next few years as the country experiences the effects of the current economic slide. States have already begun cutting programs because of dwindling resources and projected increases in caseloads.17
Since the “success” of the welfare reform legislation depends so completely on the goals one considers important, evaluation is bound to be controversial. While the extraordinary growth of the economy during the first five years of the legislation impairs any attempt at definitive evaluation, some results are nevertheless clear.
If the primary goal of welfare reform was to devolve responsibility for welfare from the federal government to the states, the PRWORA has been an unqualified success!
If the primary goal of welfare reform was “to end welfare dependence” (usually meaning to reduce welfare rolls), the legislation far exceeded anyone’s expectations. Nationwide, rolls are down more than 50 percent, from 5 million families in 1994 to 2.2 million in June 2000, a remarkable change. Equally important, between 1994 and 2001 the employment rate for single mothers rose from 59 percent to 74 percent.18 While a strong economy and work supports not included in PRWORA are certainly part of the explanation for this rise, there are good reasons to believe that the legislation played a major role as well. For example, no similar change in welfare participation or single-parent employment rates was recorded under AFDC during the economic boom of the 1980s. Since the block grants amounts are constant, this decline in caseloads has meant that states are awash in funds to use for other purposes, including work supports.
If, on the other hand, the primary goal of welfare reform had been to lift people out of poverty, matters would be far less clear. It is certainly true that the overall poverty rate has been declining steadily, from 15.1 percent in 1993 to 11.3 percent in 2000, and the poverty rate among African Americans, Hispanics, and other minorities, while still appalling, has been declining at an even more rapid pace. The level of childhood poverty is, by many measures, the lowest in a generation. The
role that the welfare reform legislation has had in this decline, however, is unclear. By the middle of 2001, when the first effects of the economic slow-down were felt, the poverty rate increased again to approximately 11.8 percent, and greater increases are expected. The problem is that working parents who have left the rolls typically have low earnings, with a median wage (among those who are working) of $7.1519 an hour and annual earnings around $8,000 to $12,000 (because most do not work full time, year-round), not enough to bring even the smallest family above the poverty level and certainly not enough to live on.
More ominous, it appears that forty percent of families that leave the rolls end up with neither job nor cash assistance. In some states, the use of sanctions—reducing or eliminating assistance for noncompliance with program rules—has accounted for a large part of those leaving welfare. Although very few states have followed sanctioned families to find out what happens to them, studies show that sanctioned families tend to have multiple barriers to employment—little education or work history, higher incidences of mental and physical illnesses and disabilities, inability to speak English, or the need to care for a disabled parent or child in the home.20 An Urban Institute study found that among those who left TANF with three or more such barriers only 9 percent were working.21 (Among all parents leaving welfare, approximately half are working at any given time.) A recent study in Michigan found that those who were forced from TANF because of sanctions were also more likely than those who left for other reasons to have been victims of domestic violence and to be mentally ill. In a three-city study, 93 percent of families forced from TANF because of sanctions remained in poverty.22
Urban Injustice: How Ghettos Happen Page 10