In 1994, 9.6 million children and 4.6 million adults received cash assistance. Today’s program covers only a fraction of that—less than 3 million kids and only about a million parents. Back in 1994, Aid for Families with Dependent Children—welfare’s name pre-reform—touched the lives of about two thirds of poor families with kids. Now, only a quarter are aided by Temporary Assistance for Needy Families (TANF).
What happened? Welfare reform. As we argue in our new book $2 a Day: Living on Almost Nothing in America, one unintended consequence of the 1996 reforms was a dramatic rise—130 percent—in the number of households with children living on cash incomes of no more than $2 a day per person. That’s according to the best (though not perfect) data available, the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP).
The 1990s also saw many positive changes in social policy for poor, working families with children. A major expansion of the Earned Income Tax Credit greatly increased the benefits of work, and the Supplemental Nutrition Assistance Program (SNAP) now plays a vital role for poor families.
Yet you don’t get the EITC when you cannot find a job, and SNAP cannot be used for non-food purchases. Some cash assistance is vital for those at the bottom. Jessica Compton from Tennessee, a wife and mother of two, has an obvious indentation at the crease of her arm, the result of many needle pricks. To get some cash, she sells her blood plasma as often as the law allows.
TANF: failing to reach the neediest
Why is TANF failing to live up to its charge? Partly because it takes the form of a federal block grant to the states, who are therefore incentivized to keep the TANF rolls down. In some states, TANF dollars are siphoned off to cover services that states would have paid for anyway, such as child welfare systems.
Some prospective applicants are “diverted” when they seek aid. After nearly a year without employment, a desperate Rae McCormick, from Cleveland, Ohio, swallowed her pride and walked into the welfare office. She says she was told, “Honey, I’m sorry. There are so many needy people, we just don’t have enough to go around.”
There is also good evidence that many people eligible for TANF do not claim it, because of a lack of knowledge or a belief that it will not be paid out.
Even for those who receive it, TANF’s cash value is now very low. In no state does it bring a family up to even to half the poverty line. In 32 states and the District of Columbia, TANF for a family of three with no other income is now below 30 percent of the poverty threshold.
States need to be better motivated to put more of the TANF money they get into the pockets of needy households. Making work pay is a worthy goal. But so is ensuring that those without work do not fall into desperate poverty. Welfare reform, then, was a decidedly mixed blessing.
Next: Ron Haskins, our co-director and one of the architects of welfare reform, responds.