Welfare Reform’s Next Step: A Considered Opinion

It is gratifying to see all the attention that welfare reform reauthorization is already receiving, more than a year before the deadline arrives. The 1996 debate, although a little harsh at times, was good for the nation in that both conservatives and liberals had the opportunity to formulate and defend their views on how best to proceed?and the result was the most sweeping social change in America in more than half a century.

Before 1996, the nation had generous social policies by which we tried to meet the needs of poor families by giving them entitlements, especially cash, Medicaid, and food stamps. But after several decades of unrelenting giving, marriage had virtually disappeared in many communities, and participation in the workforce by poor and low-income adults was unacceptably low.

With Wisconsin and other states leading the way, the nation’s cash welfare program began to undergo a revolution. Specifically, the idea of entitlement to cash was replaced with the concept of mutual obligation. While Americans always have been and always will be willing to help the poor, they also recognize that those who can work must help themselves.

The revolutionary reforms of 1996 simply codified what most states were already doing?creating a much more demanding welfare system in which the poor are expected and, when necessary, required to work.

We in Wisconsin are widely recognized as the pioneers of welfare reform. Our monthly caseload dropped by more than 93 percent between January 1987 and January of this year. We ended welfare and the Aid to Families with Dependent Children entitlement check altogether in 1997 and replaced it with a new work-based program called Wisconsin Works, better known as W-2. This program, signed into law on April 25, 1996, is now the standard for welfare reform in America.

W-2 is an employment program rather than a welfare program. It requires those “who can work to get a job and those who cannot to contribute according to their abilities.” No longer are parents paid for having additional children. The state focuses its efforts on helping parents find jobs and, once they are employed, climb the job ladder until they are ultimately self-sufficient.

And families are better off under W-2. A mother of three, working full time at the minimum wage, brings in an income package that lifts her family above the federal poverty level. Former AFDC recipients are getting paid an average of $7.42 an hour in their first jobs?more than $2 above the minimum wage.

But there’s more to the story about welfare. As early as the 1970s, Congress began to work quietly on providing benefits to working-poor and low-income families. By the time the welfare reform legislation was signed in 1996, low-income working families with children could receive cash income supplements of up to $3,600 through the earned income tax credit, as well as Medicaid coverage for themselves and their children, child care assistance, food stamp benefits, and a host of other income supplements. These work supports converted $10,000-a-year jobs into family incomes of $16,000 or more.

The joint impact of the 1996 reforms and the expanded work-support system has transformed the nation’s cash welfare program. Now the rolls have been reduced by more than half, employment of single mothers?especially those who were previously the most likely to stay for long periods on welfare?is at an all-time high, and child poverty is lower than it has been since 1979. Child poverty has declined twice as much during the latest economic expansion as it did during that of the 1980s.

These are great successes, but we cannot?and will not?rest on our achievements so far. As the October 1, 2002, reauthorization deadline approaches, I fully expect that we will have another rousing debate as we work to take welfare reform to the next step in the new century. Of the many issues that should receive careful attention during the reauthorization debate, four stand out.

First, many states need to complete the welfare transformation by expanding their work experience programs. Nearly everyone on the cash welfare caseload should be working or combining work and training. Above all, we should not allow caseload reduction to preempt the need to establish good work experience programs. The new Temporary Assistance for Needy Families (TANF) program aims to help prepare every family for work, not 40 percent or 50 percent of families.

A second important issue is strengthening families. As Mickey Kaus wisely argues elsewhere in this issue the main goal of welfare reform is to transform the culture of poverty. The nation has clearly had major success in rolling back the culture of not working, but the incidence of single-parent families, especially those formed by births outside of marriage, is still too high. Even worse, married-couple families have virtually disappeared in many communities, especially in big cities.

States are beginning to develop programs to discourage births outside of marriage, but the programs need to be expanded. Also, state and local governments, working with faith-based and other private-sector and community-based programs, must aggressively develop programs that promote and reward marriage. At the federal level, more research is needed to identify programs that can reduce such births and promote marriage. Both the federal government and the states must do more to help poor fathers play a more active role in their children’s lives and to increase their employment and wages.

Third, many of us have been surprised by the drop in food stamp and Medicaid receipt by families leaving welfare. The major problem does not appear to be in the federal statutes, as these families are still entitled to both benefits when they leave welfare. We should thoroughly investigate this problem, but it seems likely that most of the solutions will be found at the state and local level. Our experience in Wisconsin, however, suggests that one federal problem may be the food stamp quality-control system. Because cases in which adults work are more likely to have errors and to result in fines against states, the administrative signals in the food stamp program are at odds with those in the TANF program. This problem, as well as issues of state outreach in both the food stamp and Medicaid programs, should receive careful scrutiny during the reauthorization debate.

Finally, too many families are either languishing on welfare rolls or have left welfare but are not working. Most of these families have several barriers to employment, such as low education or work experience, drug or alcohol addictions, transportation problems, or insufficient access to child care. In Wisconsin, we worked to help our families overcome these barriers through training, transportation aids, and assistance with child care. Barriers must not become excuses?either for government or for former welfare recipients, especially if we can work together to improve matters and move more people to the workforce.

These and a host of other issues are discussed in more detail in this issue of the Brookings Review. Thanks in large part to the Brookings Institution, especially its Welfare Reform & Beyond project, and to other think tanks, scholars, child advocates, and analysts in congressional and administrative agencies, we already are formulating a clear picture of the successes of the 1996 reforms. All who will participate in the debate and policymaking, as well as interested citizens, should carefully study the abundant information on welfare reform. I know of no better place to start than with this issue of the Brookings Review.