The Verdict on Welfare Reform
HASKINS, RON
The Verdict on Welfare Reform Work works. BY RON HASKINS ONE ISSUE that has been virtually absent from the presidential campaign—for the simple reason that the major candidates apparently agree on...
...Underlying this argument was liberals' doubt that young, poor, often minority mothers could or should be expected to support themselves and their children...
...Because the EITC goes only to working people, these figures demonstrate the huge increase in commitment to work among poor and low-income mothers...
...Fast forward to September 2000 and the release of the U.S...
...In an ironic turnabout for conservatives, the Republicans also held that the millions of mothers on welfare were perfectly capable of supporting themselves...
...they required states to place a specific percentage of their caseload in work programs...
...the second fifth have incomes between $11,800 and $19,300 (all figures in constant dollars...
...In 1999, under this measure, the number of poor children fell for the sixth consecutive year, to 14.1 million, down 23 percent from its peak of 18.2 million in 1993 and, again, lower than in any year since 1979...
...Here average total income has jumped more than 20 percent...
...BY RON HASKINS ONE ISSUE that has been virtually absent from the presidential campaign—for the simple reason that the major candidates apparently agree on it—is welfare reform...
...Another antidote, of course, is marriage—waiting to have children until two committed parents are prepared to stick around and contribute...
...and they limited to a cumulative total of five years the period during which an individual could receive cash benefits...
...The implications for social policy are profound...
...It was nothing short of wrong, even cruel, critics claimed, to push mothers into the workforce...
...By contrast, ending the cash entitlement and demanding work has led to historic declines in child poverty...
...Mark that well: Welfare is down, and poverty is down...
...The third time, in August 1996, President Clinton signed the bill into law...
...An important part of the income picture for these families is the earned income tax credit (EITC...
...The poverty figures for 1999 are even more convincing...
...what jobs there were did not pay a living wage...
...It is instructive to compare the decline of children's poverty in the 1990s with that in the 1980s using this broader measure...
...Though the official poverty figures paint an exceptionally hopeful picture, they actually obscure a reality that's even more encouraging...
...It would be comforting to think that the candidates' silence on welfare reform means Americans across the political spectrum now accept these truths...
...They ended individuals' entitlement to cash welfare and replaced it with block grants to the states...
...The numbers show unequivocally that the Republican work strategy has been a spectacular success...
...The benefit increases until earnings reach about $10,000...
...For the bottom fifth, EITC income increased by over 240 percent to $716 between 1993 and 1999...
...More impressive still, while income from welfare has fallen by over 50 percent, to about $2,200, earnings have doubled, from about $4,800 to over $9,600...
...If the income pattern among poor mothers is annual increases in earnings and decreases in welfare benefits, the new poverty pattern is big decreases in welfare enrollment and big decreases in child poverty...
...Given that the bottom fifth includes the mothers still living on welfare with no earnings, this is remarkable progress...
...In its official measurement of poverty, the Census Bureau ignores income from the EITC and in-kind government benefits such as food stamps...
...The final lesson is the crucial one...
...Even in the bottom group, earnings nearly doubled, to over $2,400, while welfare income fell by over a third, to about $2,200...
...The implications for future social policy are profound: Work, not entitlement, is a vital antidote to child poverty...
...Census Bureau's annual report on income and poverty...
...These are important conclusions with clear implications for the future of American social policy...
...Ending the cash entitlement and demanding work has led to historic declines in child poverty...
...Yet just four years ago, the historic legislation that ended the federal welfare entitlement was highly controversial...
...The decline in child poverty during the 1990s is more than twice that of the 1980s for a simple reason: Many more low-income mothers are now working...
...Although they gave states unprecedented flexibility in designing programs and spending funds, they did impose several revolutionary changes on the states...
...During the economic expansion of the 1980s, when the number of jobs increased by a net 18 million, child poverty declined about 16 percent in 6 years (1983 to 1989) to 13 percent...
...Similarly, poverty among black children is at its lowest level ever...
...Government programs, depending on their design, can help or hurt...
...The Republicans were determined to enact reform at the federal level...
...One last statistic completes the picture of rising work effort, declining welfare, and falling poverty...
...House of Representatives...
...The conventional beliefs thoroughly trashed by the new Census figures are legion...
...government benefits for working people turn low-wage jobs into jobs with a livable income— far above the income provided by wel-fare—without the imposition of new wage and benefit mandates on business...
...They asserted that the economy would produce plenty of jobs and that government benefits provided to working Ron Haskins is staff director for Republicans on the welfare subcommittee of the Committee on Ways and Means in the U.S...
...These two-fifths include virtually all the mothers still on welfare and most of those who have left welfare in recent years...
...The economy could not produce enough jobs for them...
...and the child care market expands when additional care is necessary...
...Over howls of protest, Republicans pushed these measures through Congress three times in 1995 and 1996...
...and not enough child care was available to meet the needs of families forced off welfare...
...Most poor and low-income mothers are capable of supporting themselves...
...Between 1994 (when most states began their own work-based reforms) and 1999, the average total income in the bottom fifth rose 13 percent, from $6,711 to $7,606...
...Happily, the bureau also computes an experimental poverty measure that includes these government transfer payments...
...With new data from the Census Bureau confirming the continuing decline in poverty, it is worth revisiting the old mistaken arguments...
...If programs subsidize sloth, we get plenty of it, and also ruin lives and communities...
...families would supplement earnings to leave mothers much better off than they had been on welfare...
...it then remains constant until income reaches about $12,500, at which point it phases out gradually until the entire benefit is gone at $31,000...
...At a stage of life when other young adults were building their human capital through postsecondary education or work, young mothers languishing on welfare were squandering their human capital...
...Now, four years on, the success of the reforms has shown those fears to have been groundless...
...During a similar period of the 1990s economic expansion, with job growth roughly comparable to that in the 1980s, child poverty declined by 37 percent, to 9.7 percent, its lowest level since 1979...
...Divide single mothers into five groups of equal size based on their total income (earned and unearned, cash and non-cash) in 1999...
...On the contrary, it provided mothers a reliable monthly cash allowance on condition that they not work, not save, and not get married...
...Even more impressive, these "total income" figures conceal a consistent pattern: rising earnings and declining welfare income...
...The findings are so encouraging that if the Census Bureau were not a reliable and respected government agency, there would be widespread suspicion that the Republican National Committee had cooked the numbers...
...Start with income...
...The first calculation in the series estimates the number of children in poverty before any government transfers...
...Like the rest of us, they are subject to human nature: If society gives much and expects little, many will accept the wicked bargain...
...But child poverty rose...
...In particular, the Republicans' insistence that mandatory work was the key to reform was greeted with skepticism by liberals and most of the nation's scholars and pundits...
...The bottom fifth have incomes below $11,800...
...After three decades and the expenditure of several trillion dollars, child poverty was consistently over 20 percent...
...The Census Bureau calculates a data series that shows the impact of government programs on children's poverty...
...In addition, the reformers said, most poor mothers used informal child care, and the market would meet whatever further demand for child care arose...
...But Republicans were adamant about the importance of work...
...they imposed cash sanctions both on states and on individuals who failed to meet work requirements...
...The assumption underlying the old welfare entitlement was that society owed a decent living to able-bodied Americans who didn't work...
...Liberals argued that Republicans were placing young women and their children in grave danger by weakening the safety net on which they were entitled to rely...
...Thus, for decades welfare had served as fertile soil for what psychologists call "learned helplessness...
...The War on Poverty greatly expanded the entitlement concept by creating additional means-tested programs, including major entitlement programs, and boosting welfare spending to unprecedented levels...
...for the second fifth, it increased from $678 to $1,973, an increase of nearly 200 percent...
...If the bottom fifth is moving in the right direction, the second fifth is even closer to self-sufficiency...
...The reformers believed that these mothers, if challenged, would rise to the occasion...
...In the five years after President Johnson launched the War on Poverty, the child poverty level averaged about 16 percent...
...In normal times, the American economy produces work for all who want it...
...If we demand and subsidize work, we get plenty of it, and reduce child poverty as well...
...In other words, this poverty level reflects the ability of families to keep themselves out of poverty without help from government...
...Expanded several times since 1986, the EITC now provides a maximum benefit of nearly $4,000 to an employed mother with two children and nearly $2,400 to an employed mother with one child...
...In the years since 1993, while the welfare rolls were plummeting by 56 per-cent—from 5.1 million families to fewer than 2.4 million—child poverty declined from 22.7 percent to 16.9 percent, its lowest level since 1979...
...But the evidence against two additional pieces of conventional wisdom is more important still...
...The existing welfare entitlement required virtually nothing from recipients in return for benefits...
...Thus, it is hardly surprising that poverty among children in mother-headed families fell to 36 percent last year, the lowest level ever recorded and down by over 40 percent from its 1959 level of 60 percent...
...Under the old welfare regime, child poverty rose...
Vol. 6 • November 2000 • No. 9
