The success of welfare reform

This editorial is from the Chicago Tribune:

Twenty years ago, President Bill Clinton signed a welfare reform bill that he hailed as the fulfillment of his campaign promise to “end welfare as we know it.” At the heart of it were two new rules: Recipients were required to seek work, and they were subject to time limits. The central goal was to reduce poverty and its associated ills by averting long-term dependency.

The Personal Responsibility and Work Opportunity Reconciliation Act could be seen merely as an effort to save money. More important, though, was fostering the self-respect and independence that go with holding down a job and proving one's economic value. The old welfare system, Aid to Families with Dependent Children, didn't do those - one reason it was widely deplored.

By its own standards, welfare reform has been a success. The new system, called Temporary Assistance for Needy Families, or TANF, exceeded the most optimistic hopes. In a decade, the number of people getting welfare dropped by two-thirds, and the majority of women leaving the rolls were able to find jobs. Critics feared a million people would fall into poverty - but the poverty rate fell, particularly among blacks and children.

“The 1996 law created strong incentives, both positive and negative, for the most uneducated, untrained and unpromising welfare recipients to join the workforce,” Ron Haskins and Peter Schuck wrote in a 2012 Brookings Institution analysis. “Poor mothers responded to these incentives even more resourcefully than most policymakers had expected, despite their often chaotic domestic circumstances.” The Congressional Research Service reports, “In 2013, the official poverty level was still below pre-1996 welfare reform levels, despite two recessions since 1996.”

The Great Recession severely tested the program, throwing people out of work and making jobs harder to find. But work participation by recipients remained far higher even after the downturn than it had been before welfare reform.

Work requirements didn't accomplish all of this alone. Another factor was the expansion of the Earned Income Tax Credit, which supplements the wages of low-income workers. Providing more than $5,500 a year to families with two children, it has been “the single most effective antipoverty program targeted at working-age households,” according to the Tax Policy Center.

Nor was welfare reform a cure-all. In the wake of the Great Recession came a sharp increase in the number of people applying for federal disability benefits, which don't carry the same work mandate. The federal food stamp program, known as Supplemental Nutrition Assistance Program, or SNAP, has grown considerably, partly due to more generous eligibility rules and partly to hardship.

Even some advocates of welfare reform say it has sometimes been implemented badly. Some states have used their federal block grants, which were set at a fixed amount in 1996, for purposes only faintly related to combating poverty. As the official who oversees Oklahoma's program told Slate, “We pay for a lot of other important things with TANF dollars.”

But some valuable lessons have been learned. One is that given sensible incentives, a lot of people are able and willing to join the productive sector. Another is that when cash assistance carries a work requirement, it creates better feelings not just in taxpayers but in recipients.

At the 1996 signing ceremony, Clinton recalled his encounter with a woman who had left the rolls after finding a job. When he asked her the best thing about being off of welfare, she replied, “When my boy goes to school and they say, ‘What does your mama do for a living?' he can give an answer.”

Welfare reform was an admirable attempt to combine two ideas: that Americans have an obligation to help women and children who fall into poverty, and that those they help have a duty to help themselves. It struck the right balance then, and it still does.