September 5, 2001

September 5, 2001 | Executive Summary on Welfare and Welfare Spending

Executive Summary: The Good News About Welfare Reform

Five years ago last month, President Bill Clinton signed legislation overhauling part of the nation's welfare system. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) replaced the failed social program known as Aid to Families with Dependent Children (AFDC) with a new program called Temporary Assistance to Needy Families (TANF). The reform legislation had three goals: 1) to reduce welfare dependence and increase employment; 2) to reduce child poverty; and 3) to reduce illegitimacy and strengthen marriage.

At the time of its enactment, liberal groups passionately denounced the welfare reform legislation, predicting that it would result in substantial increases in poverty, hunger, and other social ills. Contrary to these alarming forecasts, welfare reform has been effective in meeting each of its goals.

  • Poverty has dropped substantially. Although liberals predicted that welfare reform would push an additional 2.6 million persons into poverty, there are actually 4.2 million fewer people living in poverty today than there were in 1996, according to the most common Census Bureau figures.
  • Some 2.3 million fewer children live in poverty today than in 1996.
  • Decreases in poverty have been greatest among black children. In fact, today the poverty rate for black children has fallen to the lowest point in U.S. history. There are 1.1 million fewer black children in poverty today than there were in the mid-1990s.
  • The poverty rate of single mothers is at the lowest point in U.S. history, having fallen substantially since the onset of welfare reform.
  • Conventional figures exaggerate the poverty rate. Poverty rates are even lower when the Earned Income Tax Credit (EITC) and non-cash welfare benefits, such as Food Stamps and public housing, are counted as income in determining poverty. This more accurate assessment shows that the overall poverty rate in 1999 was 8.8 percent, down from 10.2 percent in 1996.
  • Hunger among children has been almost cut in half. According to the U.S. Department of Agriculture, there are nearly 2 million fewer hungry children today than at the time welfare reform was enacted.
  • The AFDC/TANF caseload has been cut nearly in half. The decreases in welfare have been greatest among disadvantaged groups with the greatest propensity for long-term intergenerational dependence, e.g., younger never-married mothers with young children.
  • Employment of single mothers has increased greatly. The largest increases in employment have been among the most disadvantaged mothers with the greatest barriers to obtaining work. Employment of young single mothers (age 18 to 24) has nearly doubled. Employment of single mothers who are high-school drop-outs has risen by two-thirds.
  • The explosive growth of out-of-wedlock childbearing has come to a virtual halt. Since the beginning of the War on Poverty, the share of births that are outside marriage had increased relentlessly at nearly one percentage point per year. Overall, the percentage of births that were out-of-wedlock rose from 7.7 in 1965 to an astonishing 32.6 percent in 1994. However, since welfare reform the growth in illegitimacy has slowed to a near halt. The out-of-wedlock birth rate has remained almost flat for the past five years, and among blacks it has actually dropped.
  • Marriage has been strengthened. The share of children living in single-mother families has fallen, and the share living in married-couple families has increased, especially among black families.

Some incorrectly attribute these positive trends to the strong economy in the late 1990s. Although a strong economy contributed to some of these trends, most of the positive changes greatly exceed shifts that occurred during prior economic expansions. The difference is due to welfare reform. A recent analysis by former Director of the Congressional Budget Office Dr. June O'Neill finds that welfare reform has been responsible for three-quarters of the increase in employment of single mothers and three-quarters of the drop in welfare caseload. By contrast, good economic conditions were responsible for only one-quarter of the changes in these variables. The increase in employment of single mothers, in turn, is a major factor behind the drop in child poverty.

The Future of Reform. Notwithstanding this record of accomplishment, far more needs to be done. When TANF is reauthorized next year, federal work requirements should be strengthened to ensure that all able-bodied parents engage in supervised job search, community service work, or skills training as a condition of receiving aid. Even more important, Congress must recognize that the most effective way to reduce child poverty and increase child well-being is to increase the number of stable, productive marriages. In reauthorizing TANF, Congress must greatly strengthen the pro-marriage aspects of welfare reform.

The 1996 TANF law established the formal goals of reducing out-of-wedlock childbearing and increasing marriage, but despite nearly $100 billion in TANF spending over the past five years, the states have spent virtually nothing on specific pro-marriage programs. The slowdown in the growth of illegitimacy and the increases in marriage, noted above, have occurred as the incidental by-product of work-related reforms and not as the result of positive pro-marriage initiatives.

This neglect of marriage by state welfare bureaucracies is scandalous and deeply injurious to the well-being of children. Current welfare policy sharply penalizes marriage between low-income men and women. In future years, welfare's disincentives to marriage should be significantly reduced. In addition, 5 percent to 10 percent of future federal TANF funds should be earmarked for pro-marriage initiatives.

Robert Rector is Senior Research Fellow in Domestic Policy Studies, and Patrick F. Fagan is William H.G. Fitzgerald Senior Fellow in Family and Cultural Issues, at The Heritage Foundation.

About the Author

Robert Rector
DeVos Center for Religion and Civil Society