Welfare Reform, 10 Years Later

August 20, 2006

On its 10th anniversary, the 1996 welfare reform law is being widely recognized as a striking success. Passage of the law was followed by a rapid decline in welfare rolls, historic increases in employment by poor, single mothers leaving or avoiding welfare, and the first substantial decline in child poverty since the early 1970s. Poverty among black children and kids in female-headed households reached all-time lows.

But it would be a mistake to think the nation’s greatest social problems have been solved. Welfare reform could wind up playing an important role in resolving these problems, but only if researchers, policy analysts and public officials pursue new solutions to old problems as aggressively as they pursued welfare reform. Three areas deserve attention:

The first is promoting marriage and reducing nonmarital births, which, thanks in part to initiatives by Congress and the Bush administration, are already major goals of the nation’s social policy. Marriage augments income, helps adults accumulate wealth, reduces several leading health problems of adults and, in most cases, provides the best rearing environment for children. This means that promoting marriage could become the single most productive social investment by government.

We are in the beginning stages of a nationwide campaign to promote and strengthen marriage by mobilizing churches and other community groups. This movement would be stronger if federal and state governments change their tax and benefit laws to reduce marriage disincentives and fund local organizations engaged in pro-marriage activities.

A second problem is that far too many young males quit school, drop out of the labor force, commit crimes and live apart from and fail to support their children. Increased marriage rates would almost certainly have an effect because a commitment to wives and children provides the motivation and environment that discourage street culture and increase work and responsible behavior. Other community-run programs, especially those that provide mentoring, may have some effect in helping young males stay in school and find work.

Perhaps the most intriguing idea discussed by policy analysts is to provide a large incentive for men to work. Under current law, mothers receive up to $4,500 in supplemental cash through the Earned Income Tax Credit, are at least partially covered by health insurance, have access to food stamps, and often receive child care or access to Head Start. But men usually only receive food stamps.

With government relentlessly pursuing fathers to support their children, many poor dads are driven underground because a major portion of their legitimate earnings is deducted for support payments.

This unfortunate situation could be corrected by creating a new earned income tax credit for single men. As proposed by social policy researcher Gordon Berlin in a forthcoming paper, men who work at least 30 hours weekly would qualify for up to $4,500 in cash earnings supplements. This policy would convert a typical $6-per-hour job into an $8-per-hour job that might make young men reevaluate their interest in low-wage work. A mother and father working full time at $7-per-hour jobs, which are widely available, could have combined income of more than $25,000 in earnings and an additional $8,000 from their combined tax credits. Their total income of $34,000 would put them within striking distance of the middle class.

The third problem is education and training for the working poor. For the foreseeable future, the U.S. school system will produce a million or so dropouts every year. Many of these unskilled young people will eventually work in low-paying jobs.

The 1996 welfare law emphasized work over education because academic programs for school dropouts and others with low skills have a poor track record. But with so many former welfare mothers employed in low-wage jobs, many of them have a new understanding of the importance of training.

Government, businesses and junior colleges should develop training programs of a year or less that would lead to skilled jobs in the local economy. Many parents stuck in low-wage jobs would enroll in these courses, particularly if they receive help with child care and transportation. This approach is greatly preferable to mandating a living wage or other policies that impose burdens on employers.

The achievements of the 1996 welfare reform law, combined with generous, public work supports for mothers, are now sending a strong signal from government that welfare dependency must be replaced by employment. The success of this agenda opens new opportunities for government, working with the private sector, to intelligently address some of the nation’s leading domestic problems.

Now is not the time to simply cite the considerable success of welfare reform without taking vigorous public and private action to attack the serious social problems that remain.