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How Welfare Reform Worked


How Welfare Reform Worked

April 30, 2006
Urban PolicyWelfare

Critics who warned of children begging in the streets were spectacularly wrong, but big problems remain

Welfare reform celebrates its 10th anniversary this year, and celebrates seems the right word. As most readers know, Temporary Assistance for Needy Families ended the much-despised Depression-era federal entitlement to cash benefits for needy single mothers, replacing it with short-term, work-oriented programs designed and run by individual states. Its success has surprised just about everyone, supporters and naysayers alike. So it seems a good time to remember the drama—make that melodrama—that the bill unleashed in 1996. Cries from Democrats of "anti-family," "anti-child," "mean-spirited," echoed through the Capitol, as did warnings of impending Third World-style poverty: "children begging for money, children begging for food, 8- and 9-year-old prostitutes," as New Jersey senator Frank Lautenberg put it. "They are coming for the children," Congressman John Lewis of Georgia wailed—"coming for the poor, coming for the sick, the elderly and disabled." Senator Ted Kennedy called it "legislative child abuse," Senator Chris Dodd, "unconscionable," Senator Daniel Patrick Moynihan, "something approaching an Apocalypse."

Other Washington bigwigs took up the cry. Marion Wright Edelman of the Children's Defense Fund called the bill "national child abandonment" and likened it to the burning of Vietnamese villages. Immediately after President Clinton signed the bill, some of his top appointees quit in protest, including Edelman's husband, Peter, who let loose with an article in the Atlantic Monthly titled, "The Worst Thing Bill Clinton Has Done."

It's worth recalling the outcry at this anniversary moment, not in order to have a gotcha-fest, pleasurable as such an exercise can be. The truth is that many of welfare reform's promoters were not spot-on in their predictions, either. But the apocalyptic scaremongering of reform opponents on the one hand, and the relative benignity of the bill's consequences on the other, prompt the obvious question: How is it that so many intelligent, well-intentioned people, including many experts who made up the late 20th century's best and brightest, were so mistaken—mistaken not just in the way a weatherman who overestimates the strength of a snowstorm is mistaken, but fundamentally, intrinsically and epistemologically wrong?

Four false fears

Before examining why so many people were wrong, let's look at exactly how they were wrong.

The most striking outcome has been the staggering decline in the welfare rolls, so large it has left even reform enthusiasts agog. At their peak in 1994—the rolls began to shrink before 1996, because many states had already instituted experimental reform programs—there were 5.1 million families on Aid to Families with Dependent Children, the old program. Almost immediately, the numbers went into freefall, and by 2004 they were down by 60 percent, to fewer than 2 million. A lot of reform opponents—the unreformed, so to speak—tried to chalk this up to the booming economy of the later 1990s. But according to former congressional staffer Ron Haskins, author of a history of the reform due out this fall, that doesn't make sense. In the 41 years between 1953 and 1994, he points out, the welfare rolls had declined only five times, and only once (between 1977 and 1979) for two years in a row. Compare that with the present case, when the rolls continued their fall even after a recession began in 2001, and when 2004 marked the 10th continuous year of decline.

Caseload declines are all well and good, but what caused opponents—and many proponents as well—to lose sleep was what would happen to women and their children once they left the dole. There were four chief concerns: First, would welfare leavers find jobs? Second, would they sink even deeper into poverty? Third, would their children be harmed? And fourth, would the states take advantage of the wide flexibility the bill gave them on implementation to join what many anticipated would be a "race to the bottom"?

So let's consider concern number one: Did women who left the rolls actually go to work? The answer is: more than almost anyone had predicted. According to one Urban Institute study, 63 percent of leavers were working in the peak year of 1999. True, some studies showed numbers only in the high fifties, but even these findings were much better than expected.

Nevertheless, a lot of skeptics still weren't biting. It was the luck of a boom economy, they said; just wait until the job market sours. Well, the recession came in 2001, and though it was no picnic, it was— once again—nothing like what had been feared. As of 2002, 57 percent of welfare leavers continued to punch a time clock.

Average incomes went up

What about concern No. 2—that welfare mothers would sink deeper into poverty? Shortly before welfare reform passed, the Urban Institute released a report warning that it could impoverish an additional 2 million people. Reform Jeremiahs waved the report around as scientific proof of their worst fears. Even if some welfare mothers did find jobs, they argued, they would merely be stocking shelves or making hotel beds, the proverbial "dead-end jobs" that would leave them worse off than on the dole.

Though a lot of women did take low-paying service jobs, the unreformed got this one wrong, too. For one thing, they failed to consider the Earned Income Tax Credit, whose expansion in 1993 meant a 40 percent boost in annual earnings for a minimum-wage worker with two kids. Most leavers, though, were doing better than minimum wage. In 2002, the same Urban Institute that had predicted disaster found that the median hourly wage for working former recipients was about $8 an hour. Moreover, just as with most other people, the longer recipients were in the job market, the more they earned. Four years off welfare, only 4 percent of working single mothers were earning minimum wage or less.

As a result, most welfare leavers had more money than when they were on welfare. The poverty rate for single women with children fell from 42 percent in 1996 to 34 percent in 2002; before 1996, it had never in recorded history been below 40 percent. This was the first boom ever where poverty declined faster for that group than for married-couple families. Nor did leavers disdain their "dead-end jobs." Studies consistently found that former recipients who went on to become waitresses, grill cooks and security guards took pride in being salarywomen.

Still, it's fair to say that while post-reform America did not look like Calcutta, it was no low-wage worker's paradise, either, especially as the economy weakened in late 2001. Former welfare mothers were still poorer than single mothers overall. Some who worked had less income than on welfare. Many were not working full-time, and an estimated 40 percent of those who left the welfare rolls returned later on. In 1999, close to 10 percent of leavers were "disconnected"—neither working nor on welfare nor supported by a working spouse. By the recession year of 2002, that number had risen to almost 14 percent. From the beginning, studies from the Children's Defense Fund and the Center for Budget and Policy Priorities warned of an increase in the number of families in deep poverty, and a steady stream of rumors claimed that soup kitchens and homeless shelters had crowds of ex-recipients clamoring at their doors.

But at least some of these warnings turned out to have been yet more crying wolf. Those who returned to the dole tended soon to find other means of support, getting a new job, signing up for disability or unemployment insurance or turning to employed partners.

Child poverty went down

And that takes us to concern No. 3—the kids. Children were the unreformed's most lethal weapon: the image of kids starving in the streets, begging from strangers, and neglected and abused by desperate mothers, was enough to make the most robust reformer queasy. But the predicted Dickensian purgatory also turned out to be wrong. There may have been an increase in the number of children in foster care, but child abuse and neglect numbers are, depending on what measures you use, either unchanged or down.

More striking was what happened to rates of child poverty. They not only went down; by 2001, they hit all-time lows for black children. And though the numbers drifted up again during the recession, they were still lower than they had been pre-reform. On other measures, the young kids of former welfare moms are no worse off than under the old regime. Though some studies find lower achievement and more problem behavior among adolescents, the big picture doesn't show teen children in more trouble post-reform. After 1996, juvenile violence and teen pregnancy continued to go down, as they had since the early nineties.

As for the anti-reformer's final concern—the states' "race to the bottom"—that dog didn't bark, either. True, the enemies of reform might point at the 20-odd states that introduced a "family cap," which sought to stem illegitimacy by denying any increase in benefits to women who had another child while on welfare. But there's little question that the unreformed were wrong here as well—for the fourth time. The states were, if anything, nicer than the feds. No state barred cash benefits to teen mothers, though the reform program permitted them to do so. Forty-seven states made it easier for leavers to keep some of their cash benefits when they first went to work. Many states, including New York, did away with the five-year time limit for all intents and purposes by using state dollars to pick up the tab for those still on the dole at the time and deemed unable to work.

Critics equated reform with racism

This, then, is where we find ourselves today, 10 years after reform: a record number of poor single mothers off the dole and the majority of them gainfully employed; less poverty among single mothers, especially black single mothers, as well as their kids; children adjusting well enough, and state governments taking care of their own. The situation is so far from what experts predicted that, as New York University political scientist Lawrence Mead has put it, it brings to mind the Sovietologists at the fall of the Soviet Union.

Progressive pessimists were blind to the promise of reform partly because they believed that the American discomfort with welfare was really a mask for racism. The term "progressive" may imply forward thinking, but in many ways the pessimists are still living in George Wallace's America. Welfare recipients were, and are, disproportionately black: African Americans totaled about 37 percent of the welfare rolls in 1996, though they were only about 12 percent of the population. If Americans didn't like welfare, pessimists reasoned, it was because they didn't like black people. Wags referred to welfare reform as "racism in drag." A perfect example of the left's assumption that racist motives prompted welfare reform is a 1999 book called Why Americans Hate Welfare, by Yale political scientist Martin Gilens. Far from being mean-spirited, Americans are actually a fairly generous people, Gilens argued. If they hate welfare, it's not because they are tight; it's because they don't want to help black folks. With the help of a subliminally racist media, they look at black welfare recipients as lazy freeloaders, just as they did in the Jim Crow South.

Progressive pessimists were especially gloomy when it came to the American economy. You can't blame them for not foreseeing the economic exuberance of the second half of the 1990s; few did. Less defensible was their deep-rooted assumption that poverty was "structural," as permanent a part of the American scene as the Appalachian Mountains. No matter how strong the economy, they asserted, there still wouldn't be enough jobs, employers wouldn't hire welfare mothers, and those who did would offer them only the most demeaning and temporary work.

From this vantage point, any talk about "personal responsibility" was only more evidence of racially tinged victim-blaming. Nothing distinguishes progressive pessimists from their pro-reform counterparts more than their attitudes toward self-sufficiency. For the pessimists, poverty in America was so severe, and dead-end jobs so demoralizing, that they almost invariably shattered the individual will (and, incidentally, led to such social pathology as child abuse). That's why, if manufacturing jobs moved out of the ghetto, the pessimists explained, the poor could not be expected to move where there were more opportunities—though throughout the '80s and '90s, millions of poor immigrants were doing just that.

But lives not transformed

For reformers, on the other hand, there was much to learn from "immigrant optimism," as it's sometimes called. People are capable of far more resourcefulness and resilience than welfare recipients had been given a chance to show, they contended. This understanding was one reason why Bill Clinton rejected the advice of most of his advisers and signed welfare reform in August 1996. "I've always known poor folks," he told Jason DeParle in an interview quoted in American Dream. "I've just never thought they were helpless."

Human beings tend to do pretty much what they are expected to do. When the culture expects self-sufficiency, people will try to achieve it. When the culture sends mixed messages about self-sufficiency, as it did during the old welfare regime—particularly to the minority poor—some will not try to become self-sufficient.

All of this might seem to lead to the conclusion that welfare reform has been a triumph for conservative thinking. That would be overstating things. The welfare reform bill was never simply about ending welfare dependency. As part of a larger bill called the Personal Responsibility and Work Opportunity Reconciliation Act, it was designed to improve the lives of the formerly dependent more broadly by nudging them toward middle-class life.

The left always thought of moving up as a matter of money, not behavior: if people earned a middle-class income, they believed, middle-class conduct and aspiration would be sure to follow. Conservatives tend to see it the other way around: middle-class mores are necessary for economic success. If people adopt bourgeois habits and ambitions, they will work hard, save and plan, and eventually have the money to make a down payment on a house or pay parochial school tuition. In the case of larger bill, supporters took this idea a bridge too far. They imagined the work ethic as the engine that would carry all other virtues in its train. Jobs would bring discipline to the lives of poor single mothers and transform them and their children. Work would turn them into bourgeois strivers.

And you do hear stories that seem to support that theory. Take Jewel, one of the three protagonists of Jason DeParle's American Dream. After failing repeatedly, she finally got her GED after the book came out and is now studying for a nursing degree, even while she holds down a full-time job. She is still with her boyfriend of 10 years, and he, in turn, has kept straight in the six years since he was released from prison, working during most of that time. Though they haven't married, they are raising their son together, pooling their money, and behaving in most respects like a married couple—helping, as DeParle told me, to "stabilize and encourage each other."

But taken as a whole, you'd have to conclude that welfare reform has not been the extreme makeover that supporters had sought. And the reason is that it has barely touched the single-mother problem. Reform optimists predicted that by heightening women's self-respect and belief in their future, work would make them more marriage-minded. Reformers also hoped that work requirements would act as a deterrent: girls seeing their mothers and older sisters juggling a low-paying job, an apartment, and children, all without a husband's help, would shun such a life.

Perhaps without welfare reform, things would have been worse. After rising steeply for three decades, the increase in the rate of out-of-wedlock births did slow around 1994. Robert Rector of the Heritage Foundation points out that if the pre-reform trend line had continued, 42 percent of all babies would be born fatherless today; instead, the number is about 35 percent. "Something different happened in the 1990s that didn't happen in Europe," where illegitimacy rates continued their inexorable climb, he observes. Moreover, the marriage rate among black Americans was substantially higher in 1998 than the trend line from 1960 to 1990 would have predicted. The number of poor couples who were cohabiting at the time of their babies' birth also rose. Still, a slowdown in the spread of illegitimacy and more shacking up among poor men and women—a notoriously fickle domestic arrangement—are not what optimists had in mind.