Senate Committee on Finance

Welfare Reform: Building on Success

Mr. Chairman and Members of the Committee, thank you for inviting me to testify. My name is Margy Waller. I am a Visiting Fellow at the Brookings Institution in Washington, DC where my research focuses on welfare and low-income working families. It is an honor to appear before you to discuss the outcomes of the 1996 welfare law, and methods for building on the law's success as you consider reauthorization.

There is a widespread consensus that the implementation of the law has led to some important and positive outcomes. Caseloads have dropped significantly, in large part because adult welfare recipients left the rolls to go to work. In addition, the most common way for welfare recipients to fulfill work requirements is an unsubsidized job in the regular market. Furthermore, states report that nearly two-thirds of all adults are working or participating in activities intended to lead to work.

One of the most surprising positive outcomes of the 1996 law, moreover, has been the ability of states to use the flexibility in the law to "make work pay." The combination of caseload decline, and the promise made and kept by Congress to retain level funding of the Temporary Assistance for Needy Families (TANF) block grant for five years, and the flexibility provided in the TANF regulations, has made it possible for states to invest over half of the block grants in child care, transportation, and other services. Research increasingly shows the importance of these supports for families that stay in the workforce. Given this record of achievement, considerable consensus about the success of the law has emerged.

In view of that, the changes to the 1996 bill contemplated in the administration's proposal for welfare reauthorization are hard to understand. In sum, the proposal seems sure to undermine the success of the welfare law by effectively eliminating the ability of states to employ proven welfare-to- work strategies, and virtually wipe out the progress made in the last six years to use TANF and child care funds to "make work pay."

To see why this is so, my testimony will review the following points:

  • States are moving record numbers of recipients into jobs and using the flexibility in the law to engage a high percentage of the remaining recipients.
  • States also use the flexibility in the law to provide work supports like child care and transportation that help parents care for their children and remain off welfare to low-income working families.
  • There is no evidence that increasing the number of hours an adult must participate in welfare-to-work activities will lead to better employment or family outcomes.
  • The administration's proposed work requirements will effectively force states to create costly one-size-fits-all work programs states have generally not used their flexibility to implement on their own.
  • There is a growing body of evidence that employment and family outcomes improve when low-income families get work support services like child care, transportation, housing, training, and wage subsidies.
  • States report that the administration's proposal would require that they cut funding for these successful work support services in order to pay for large, expensive, and unproven work programs for those remaining on the rolls.

In my testimony, I will first review some important outcomes and lessons of the state and local implementation of the welfare law. Next, I will outline my concern that these successes will be undermined by the limitations and cost of the administration's proposal. Finally, I will make some specific recommendations to the committee for your consideration as you draft a reauthorization bill.