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Reporting on the forgotten issue of welfare reform

ASK THIS | February 18, 2005

News organizations should be asking if welfare reform is working at a time of increasing poverty and still-lagging employment. (Fourth in a series)

By Joel Berg


Q. Have deficiencies in welfare reform increased poverty, hunger and food insecurity in America?


Q. What is the current employment, economic, and food security status of families that left welfare in the 1990s?  How about the status of families that left the welfare rolls during the weaker economy of the last few years?  Now that national, state, and local welfare rolls are either edging up or staying stable after many years of sharp declines, is there evidence that the large-scale reductions in the rolls in the late 1990s may have had more to do with the strong economy than with increasing incentives to work? 


Q. Why are leading politicians of both parties — who frequently spoke glowingly about welfare reform in the late 1990’s when the rolls were declining and when former recipients were moving into paid jobs — currently all but ignoring the welfare issue in their public utterances? 


Q. Given that states couldn't achieve higher welfare work levels when the economy was stronger, can they meet the elevated work targets in the version of welfare re-authorization legislation that was supported by President Bush and passed by the House (but not considered by the full Senate) in 2004? Is there a split between D.C.-based Republican leaders and Republican governors over the workability of these proposals?


Q. Are families who receive Earned Income Tax Credit (EITC) benefits less likely to face hunger? How have the dramatic reductions in participation in the Food Stamps program contributed to the country's food insecurity and hunger? How have cutbacks in other federal anti-poverty programs -- including Section 8 Housing -- impacted these problems? Have state and city budget cutbacks in recent years disproportionately reduced programs for people in poverty and, if so, what impact has that had?



There was a dramatic 60 percent national decline in the number of people receiving federally-funded, welfare (TANF) between August 1996, when President Clinton signed the welfare reform bill into law, and December of 2003, according to the U.S. Department of Health and Human services. The number dropped from 12.2 million people to 4.8 million.


In the late 1990s, when the rate of decrease in the welfare rolls was most rapid, poverty also decreased as more former recipients moved into employment. But over the last few years, as the rate of decrease has slowed considerably -- and with many states now showing small increases in welfare again -- fewer recipients are moving into the workforce.


Welfare reform has worked better than many liberal critics originally predicted.  I worked for the Clinton Administration when the president signed the 1996 bill into law and I think, on balance, he did the right thing.  The previous welfare system was failing both recipients and taxpayers, and needed to be fixed.


In the late 90s, partially because the economy was so strong for all sectors of society (unlike the 1980s, when it benefited mostly the rich) and partially because states (which still had large budget surpluses) spent more on support services for former welfare recipients than originally predicted, significant numbers of low-income people across America did in fact move from welfare to work. 


But if some original critics of welfare reform should admit that many of the changes worked somewhat better than predicted, supporters of welfare reform need to acknowledge the gaping flaws that still exist in welfare reform, particularly during a time of increasing unemployment and soaring federal, state, and local budget deficits. 


It is certainly true that, when the economy was strong, many people on public assistance with the fewest problems, most skills, and greatest motivation did indeed move from welfare to work.  Some of these families moved out of poverty when they moved off welfare. Yet many others who moved from welfare to work still did not earn enough to fully feed their families and meet other basic expenses such as rent and child care,  forcing them to increasingly use pantries and kitchens, leave their children with inadequate supervision, and face numerous other problems.


Moreover, the true test of welfare reform is not whether it worked when the economy was strong and when jobs were abundant, but whether it works when the economy is weak and jobs are scarce. This concern is especially critical given that the counter-cyclical safety net (designed specifically to adapt to economic downturns) no longer exists as it did before. When considered in light of the current economy, welfare reform in America is failing in fundamental ways.

Permit me to cite the specific example of New York City, not only because I know it best but because it has often been trumpeted as a national model for the success of welfare reform. Public officials, including Governor Pataki and New York City Mayor Michael Bloomberg, repeatedly imply that everyone who moved off welfare in recent years has moved into employment. That hasn’t happened. 


This is a time of continued high unemployment, despite claims to the contrary. The official rates don’t include people who have stopped looking for work. Here in New York, in the last month reported (November 2004) unemployment again rose. In addition, job statistics disregard people who work in service jobs by the hour and who have had their hours and tips cut back. The disconnect between the feel-good recovery stories and the reality I am seeing in low-income neighborhoods is vast.


Under such conditions, many former welfare recipients are failing to find – or failing to maintain – employment, and are increasingly forced to rely upon soup kitchens and food pantries to feed themselves and their families. Government studies on welfare almost always fail to fully account for people who have left the public assistance rolls but did not obtain employment. For example, the most significant New York State study on this topic, “Leaving Welfare: Post-TANF Experiences of New York State Families, June 2002,” was able to obtain information from only 53 percent of sampled families.


The study assumes that the families interviewed had identical outcomes to the 47 percent of families who did not respond.  But it is highly likely that the families that could be located for interviews had far better financial and employment conditions than those families who did not participate.


Still, the most ardent supporters of welfare reform continue to trumpet the myth of its unqualified success.  In his State of the City address in 2004, Mayor Bloomberg bragged: “The number of New Yorkers receiving public assistance also continued to decline…That’s a tribute to our city’s commitment to replacing the dependency of welfare with the dignity of work.” This statement implies, falsely, that all the people leaving public assistance were entering the workforce and that the jobs they were obtaining were long-lasting and highly-paid enough to “replace” welfare and provide the “dignity of work.”


Since then, the situation has worsened. Given that New York City has lost a few hundred thousand jobs at all levels of skills and income over the last few years, near-term employment prospects for welfare-leavers are now grim. According to Mayor Bloomberg’s Fiscal Year 2004 Preliminary Management Report: "Reported job placements for welfare recipients fell during the reporting period, reflecting recent economic trends…The proportion of public assistance participants who left welfare for work and did not return within 180 days declined, and is lower than the target for Fiscal 2004. This downturn is another reflection of economic trends." 


According to more recent statistics from New York City, out of the people who left public assistance over the past year, less than 40 percent did so because they were placed in jobs. Out of that 40 percent, fully 24 percent were no longer employed after six months. Thus, almost 70 percent of people who left welfare in New York City had no post-welfare employment reported after six months. Because the City does not track former recipients beyond six months, we have no idea how many more former recipients may have lost employment later on.


Other data from around the country now indicate that, especially in this still-difficult economy, many people left welfare without having jobs, but even many of those who did obtain jobs early on likely lost them later, or kept jobs but didn’t earn enough to feed their families.


The way the politicians keep claiming success for welfare reform is by moving the goal lines to decrease their performance targets.


For instance, in 2003, Mayor Bloomberg set a goal of placing 120,000 welfare recipients in jobs,  but ended up placing only 70,410, or 58 percent of the original goal. But by decreasing the 2004 goal to only 90,000 job placements, when the City was able place 82,651 people in jobs, the Bloomberg Administration produced a politically appealing (but highly deceptive) chart showing that they had achieved 92 percent of their placement goal in 2004.  


The reality is that cities and counties across America are still removing low-income families from the welfare rolls, but many of those families are now failing to find or keep paid employment.  At the same time, poverty, homelessness, and hunger are increasing nationwide. Despite that, President Bush and the House of Representatives supported legislation in 2004 to further increase work requirements for welfare without increasing funding to states.

Said Margy Waller, a visiting fellow at the Brookings Institution, in November 2004: "The president's proposal would increase state obligations to have more cash assistance recipients enroll in work activities for more hours than is required under current law. If that happens, we expect states will have to increase their spending on work activities and child care for the children of those parents. Where will the money come from to pay these additional costs? Nationally, states have been spending more than their annual block grant as they use up the accumulated savings from reduced spending on cash assistance that resulted from caseload decline. States are not likely to raise taxes to spend more on these programs, so they would have to reduce spending on the support services to low-income working families that they have created and expanded with caseload reduction savings. Primarily, this means cuts to child care. Yes, cuts beyond the reductions that have already occurred in state after state."

Congress will take up welfare re-authorization again in 2005. A major story will be whether it adopts the tougher standards supported by the President and passed by the House in 2004, or the more flexible standards considered by the Senate in 2004.


Additional experts who can be contacted by the press:


Margy Waller,Visiting Fellow, Brookings Institution
on Urban and Metropolitan Policy



Andrea Kane, Outreach Consultant, Brookings Institution




Edward M. Cooney, Executive Director, Congressional Hunger Center

202- 547-7022 x 14



Ellen Vollinger, Legal Director, Food Research and Action Center

202-986-2200 x3016



Doug O'Brien, Vice President of Public Policy and Research

America’s Second Harvest

312-263-2303, ext. 158

Brookings Inst. Web site
Margy Waller, a visiting fellow at the Brookings Institution, on the status of welfare reform

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