In 1996, the public debate over welfare reform included dire predictions that new work requirements and restrictions on lifetime benefits would thrust millions of children into poverty and leave a lasting stain on the nation’s conscience. Eight years later, with welfare reauthorization pending in Congress, those predictions have proven unfounded.
There is now broad agreement that welfare reform worked—as demonstrated by the large declines in both welfare rolls and child poverty since 1996. But evidence for a direct effect of welfare reform on child poverty is clouded by a number of other trends that coincided with welfare reform authorization—not the least of which was the longest sustained period of economic expansion in the nation’s history.
As the nation’s policymakers debate welfare reform reauthorization, it is important to quantify the impact of welfare reform on child poverty and understand how welfare reform fits into what we already know about poverty and how it can be reduced.
We identify a number of factors that played a significant role in reducing child poverty: increased work participation among single mothers; a rise in the level of wages; increases in parental education; declining family size; and, for some groups, a rise in the proportion of children living with two parents.
Although we cannot attribute all of these developments to welfare reform, we do find that welfare reform may be responsible for as much as half of the decline in child poverty among black and Hispanic households headed by single mothers—groups that had the highest rates of welfare participation and child poverty prior to reform.