Compelling Case to Reauthorize Welfare Reform

Republicans scored a historic victory in the congressional elections of 1994, reoccupying the Senate after an eight-year hiatus and capturing the House of Representatives for the first time in 40 years. It is now clear that the most important change in public policy resulting from the Republican victory was the massive overhaul of the nation’s welfare programs.

It is now clear that the most important change in public policy resulting from the Republican victory was the massive overhaul of the nation’s welfare programs.

The central welfare reform programs created by Republicans in 1996 have been due for reauthorization for the past two years, but the U.S. Senate has yet to enact legislation. When Congress gets down to business later this month, reauthorizing welfare reform should be at the top of its agenda. The results of the reforms have been too important for Congress to allow the programs to languish in the never-never land of continuing resolutions. Consider what has happened in the world of welfare since 1996.

The central feature of the 1996 legislation was repeal of the nation’s cash assistance program for the poor. This program embodied the concept of entitlement, under which able-bodied young adults with children had a legal right to cash and other benefits if they didn’t work and, in most cases, didn’t marry. Republicans thought rewarding nonwork and nonmarital births with entitlement welfare benefits was inconsistent with traditional American values and provided strong incentives against work and marriage. So they substituted work for entitlement. Specifically, they imposed a work requirement on individual recipients and required states to reduce or terminate the welfare benefit of any recipient who did not meet the work requirement. The length of stay on cash welfare was limited to five years, thereby sending a clear signal that welfare was temporary.

These changes in welfare came after a decade of bipartisan reforms of federal and state work-support programs that provide assistance to low-income working families with children. These work-support reforms included major expansions of the Earned Income Tax Credit, a program that provides cash subsidies of up to $4,000 to low-income working families. Money for child care was also greatly increased, and Medicaid health insurance was reformed to make children from low-income working families eligible, even if they were not on welfare, thereby ending another incentive for single mothers to stay on welfare. Taken together, these reforms dramatically altered work incentives for families on welfare such that they would almost always be financially better off working, even in low-wage jobs.

But before welfare reform passed in 1996, the expansion of the EITC and other work support programs failed to lure people off welfare. By themselves, the work support expansions represented a domestic policy of walking softly and carrying a big carrot. Republicans, by enacting welfare reform with work requirements, sanctions and a time limit, supplemented the work support carrot with a big welfare stick and transformed welfare into a work program. The stick elicited howls of protest from liberals who claimed that the reform would not work and would harm children. They even predicted that more than 1 million children would be dumped into poverty.

Now, more than seven years later, it is clear that the critics of welfare reform were wrong. The welfare rolls have plunged as never before and millions of previously welfare-dependent mothers found jobs, primarily in the private sector. The biggest increase in employment was among never-married mothers, precisely the ones most likely to go on welfare and stay there for a decade or more. Census Bureau data for the period 1993 to 2002 show that this unprecedented increase in employment led directly to substantial increases in earnings and declines in welfare income. Increased earnings offset the declines in welfare income and produced both substantial net increases in total income and historic declines in the poverty rate of families headed by mothers. Indeed, poverty among children in female-headed families and among black children is now the lowest ever.

There is growing evidence of the enormous breadth of impacts of welfare reform, most of which were not anticipated even by its most avid supporters in 1996. Last year alone, four new studies demonstrated these widespread impacts:

Analysis of information from two national surveys showed that the longer low-income mothers stayed in the labor force, the more their earnings increased.

A report to the American Economic Association last January found that states that had strong mandatory work programs backed by sanctions and that strictly enforced the welfare time limit had single mothers with higher earnings and lower rates of poverty than mothers in states that had less rigorous welfare reform programs.

A study of families living in low-income neighborhoods of three large cities found that mothers who left welfare for work raised their annual income by around $10,000. Based on extensive psychological testing, adolescents whose mothers left welfare for employment showed improved mental health while terminations of employment were related to adolescents increased behavior problems.

Separate studies of the 1990 and 2000 census conducted by Paul Jargowsky of the University of Texas found that the number of people living in high-poverty neighborhoods declined by about one-quarter (or 2.5 million people) during the 1990s. These unexpected declines were described by Jargowsky as stunning.

No policy produces all benefits and no costs. Perhaps the major cost associated with the 1996 reforms is that some poor families are worse off as a result of the reforms. These families, usually because of depression, addictions, or other serious personal problems, have not met their work obligations under the new welfare system. And unlike the pre-1996 welfare system, the new system does not permit them to simply stay on welfare and do nothing. With research funds made available by the 1996 legislation, states and researchers around the country are now working to find ways to help these floundering families.

The 1996 welfare reform law is the most successful and far-reaching social reform in a half century. It is unfortunate that this successful law has been held in limbo by Congress for two years. Prompt action by Congress this year to renew the law for five more years will ensure that states have the funding they need to continue aggressive implementation of the work requirements and thereby help even more low-income families achieve the self-reliance that comes from work.

Archer, a Houston Republican now retired from Congress, is the former chairman of the Committee on Ways and Means. Shaw, R-Fla., is the chairman of the Ways and Means subcommittee that handled welfare. Haskins was the welfare staff director of Ways and Means when the 1996 welfare reforms were developed and enacted.