July 21, 2003 | Backgrounder on Welfare and Welfare Spending
The welfare reform legislation of 1996 took a dramatic step forward in reforming the system by introducing the notion of reciprocal obligation rather than one-way handouts of welfare benefits. Yet today, after seven years, reform in many states has been severely limited by a failure to institute reasonable sanctions for non-compliance with work and work-preparation requirements.
Congress will consider the reauthorization of welfare-reform legislation this year. The House has already passed legislation that would remedy this problem: H.R. 4 would require all states to impose meaningful, but temporary, sanctions on recipients of aid under the Temporary Assistance to Needy Families (TANF) program who consistently fail to perform required job search, training, or community service work.
In contrast, the welfare bill soon to be introduced in the Senate by Senator Charles Grassley (R-IA)--the Personal Responsibility and Individual Development for Everyone (PRIDE) bill--does not include the House sanction provisions. The PRIDE bill undermines the concept of reciprocal obligation, permitting states to continue one-way handouts. The PRIDE legislation, if enacted, will encourage self-destructive idleness among recipients, generating additional dependence and child poverty in the future.
Under the old pre-reform welfare system, welfare was a one-way handout. In 1996, Congress enacted broad welfare reform legislation: the Personal Responsibility and Work Opportunity Act (PRWORA). This law eliminated the old Aid to Families with Dependent Children (AFDC) program and established a new program named Temporary Assistance to Needy Families (TANF).
TANF sought to replace traditional one-way welfare handouts with a new system of reciprocal obligation. Under TANF, aid would no longer be given unconditionally; instead, aid was to be given in exchange for constructive behavior on the part of the recipient. Taxpayers would assist individuals in need of aid, but recipients would be expected to obtain employment or prepare for work through activities such as supervised job search, training, or community service work. Able-bodied recipients who were unwilling to undertake constructive activities would be ineligible for assistance.
The principle of reciprocal obligation, however, has never been fully implemented within the TANF program. Reform in many states has been severely limited. Currently, more than half the TANF caseload resides in states where recipients may routinely refuse to work or prepare to work and still receive the bulk of their TANF benefits.1 These states, in essence, continue to operate pre-reform entitlement systems in which recipients are guaranteed a cash income irrespective of behavior.
In these states, the traditional welfare philosophy of one-way handouts continues with little change. Not surprisingly, the declines in child poverty and welfare caseloads have been less in states with weak or lenient sanctions for recipients who refuse to prepare for work, when compared to states that have taken the notion of reciprocal obligation more seriously.2
Weak or lenient sanctions benefit neither society nor welfare recipients. They make it difficult or impossible for welfare offices to engage recipients in activities leading to self-sufficiency, and they generate unnecessary dependence with large numbers of recipients sitting idly on the rolls. This can clearly be seen in New York City.
The City of New York is nearly unique in its emphasis on universal engagement--having all TANF recipients continuously engage in constructive activities such as job search, training, or community service work. However, according to restrictions imposed by the New York State legislature, the city may impose only limited sanctions on recipients who refuse to undertake required activities. As a result, more than one-third of work-able TANF recipients in New York City routinely refuse to participate in required activities and remain in self-destructive idleness on the welfare rolls. Lenient sanctions thus undermine the goal of universal engagement and cripple the path to self-sufficiency for many TANF recipients.
The TANF reauthorization act (H.R. 4) passed by the House of Representatives in February attempts to fix this problem by requiring that all states must impose meaningful, but temporary, sanctions on TANF recipients who consistently fail to perform required job search, training, or community service work. Regrettably, the Personal Responsibility and Individual Development for Everyone (PRIDE) bill designed by Senator Charles Grassley does not include the House sanction provisions. As a result, the Senate bill undermines the concept of reciprocal obligation and permits states to continue one-way cash handouts. The PRIDE bill (which the Senate Finance Committee is expected to vote on later this month) encourages self-destructive idleness among welfare recipients and, if enacted, will generate additional dependence and child poverty.
As noted, reciprocal obligation--requiring welfare recipients to participate in work or other activities in exchange for assistance--is a core principle of welfare reform. The importance of giving something back through work activities while receiving benefits extends beyond its important social and moral dimension. Requiring TANF recipients to engage in work and other constructive activities is the chief tool the states have with which to help recipients move to responsibility and self-sufficiency. For these and other reasons, the 1996 PRWORA law incorporated explicit work requirements for those receiving assistance.
If reciprocal work obligations are to be meaningful, cash welfare benefits must be linked to the recipients' completion of work or other constructive activity, much like a real job. However, more than half of all TANF recipients live in states where the welfare agency has no practical way of enforcing the requirement that adults participate in their assigned activities. In these states, welfare recipients who choose to remain in idle dependence continue to receive the vast majority of their welfare benefits. Where there is only a weak link between the receipt of benefits and attendance at welfare-to-work activities, agencies have little or no constructive leverage with which to draw unwilling recipients into programs intended to help them become independent.
New York City illustrates the perils of operating a welfare-to-work program that lacks strong sanctions. In his second term, Mayor Rudolph Giuliani set a goal of "universal engagement" for welfare recipients. The mayor charged the city human services agency with the mission of contacting all available recipients and actively engaging them in constructive work and other activities. But after four years of intensive effort, more than one-third of those who are capable of participating cannot be induced to do so.
Chart 1 shows the result of New York's outreach efforts, which were designed to ensure that all recipients participated in self-help programs. In 1996, about one-third of recipients who were capable of participating had not yet been contacted by the agency. By 1999, virtually all recipients were routinely contacted and notified of their self-help obligations.
Nevertheless, during this same period, an increasing proportion of recipients simply refused the agency's call to enroll in welfare-to-work activities. Chart 2 shows that between 1996 and April of 1999, the refusal rate increased from 16 percent to 25 percent. The situation grew worse. As the human services agency made every possible effort to engage the remaining idle adults in constructive activities, the proportion of adults refusing to accept their welfare-to-work assignments reached 40 percent in November 1999 and remained at an unacceptable 36 percent for each of the two years thereafter.
Even with inviting program options and plenty of supports such as guaranteed child care, New York's welfare agency was never able to fully engage the idle welfare population in activities designed to lead to self-sufficiency. The reason was a weak sanction policy for non-compliant welfare recipients.
According to state law, TANF benefits in New York City drop only modestly for those who refuse to participate in constructive activities. For example, if an able-bodied adult consistently refuses to participate, TANF benefits for a family of three are cut only slightly, from $588 to $475 per month. Other welfare benefits such as subsidized housing and Medicaid aid remain completely unaffected by non-compliant behavior. Consequently, TANF recipients do not face a significant penalty for choosing continued idleness rather than self-help, and the absence of significant sanctions for those who refuse in engage in constructive activities has led to a large, and growing, population of recipients trapped in self-destructive idleness.
What New York City needs is a policy of "full-check sanction": suspending the entire monthly TANF check to a family if the parent consistently refuses to undertake any required activity whatsoever. If full-check sanctions were imposed, most of New York's idle TANF population would quickly comply with required self-help activities.
New York's problem will increasingly be repeated as states without full-check sanction provisions find themselves with few remaining options to engage those who would rather stay at home and receive benefits. With national welfare dependency rates less than half of what they were at their peak before the 1996 reforms, states must be in a position to forcefully engage the remaining idle population in order to help them reach self-sufficiency.
As noted, prior to the 1996 welfare reform, welfare benefits were largely one-way handouts. Individuals deemed "needy" were entitled to a check, and aid was given out unconditionally. Recipients were rarely, if ever, required to engage in constructive activities as a condition of receiving aid.
The 1996 reform act was a major step toward ending cash welfare as a one-way handout.3 With this reform, the AFDC system of cash entitlements was replaced by the new TANF program, which focused on reciprocal obligation: Individuals in need would be given aid but would be required to work or to prepare for work as a condition of receiving that aid. Under TANF, aid would no longer be unconditional but would be linked to constructive behaviors.
Accordingly, the 1996 welfare reform legislation insisted that an increasing proportion of recipients engage in constructive activities. The law also required that TANF recipients be subject to a "full-check sanction." Recipients who refused to perform any and all required activities would not continue to receive TANF benefits. Specifically, the law stated that if a recipient refused to perform required activities, the state should, at a minimum, "reduce the amount of assistance otherwise payable to the family pro-rata." That is, the family's TANF check should be reduced in proportion to the degree of non-compliance.
The clear meaning of this provision was that individuals who consistently performed none of the activities required of them should receive no TANF benefits. "No activity" meant "no benefits." The congressional conference report on the law clarified this basic point.
Regrettably, the Clinton Administration ignored the clear content of the PRWORA reform law on this point and issued TANF regulations that authorized states to use lenient or partial sanctions on parents who were fully non-compliant. Today, more than half of the nation's TANF recipients reside in states with lenient or partial sanctions. In these states, parents can consistently fail to perform any and all required activities, month after month, and still continue to receive most of their TANF cash aid.
The welfare reauthorization bill (H.R.4) passed by the House of Representatives in February enforces the principle of reciprocal obligation between society and the welfare recipient. The bill reaffirms the sanctioning provisions of the original TANF law, stipulating that state TANF programs must have meaningful sanctions for non-compliant behavior. At a minimum, if a parent on TANF who is required to engage in activities fails to perform any activity whatsoever for two consecutive months, the entire TANF check for the family must be suspended for one month. The TANF check may be resumed in the next month if the parent has complied with the activity requirements.
In contrast, the PRIDE bill, soon to be introduced by Senator Grassley, rejects the fundamental premise that a reciprocal obligation exists between society and welfare recipient. According to the PRIDE bill, federal taxpayers have an obligation to support welfare recipients, but recipients have no obligation to engage in constructive activities in exchange for that aid. The bill permits states to give federally funded TANF checks to individuals who have consistently refused to perform all activities that have been required of them.
In establishing a welfare system based on conditional aid and reciprocal obligation, two points are critical. First, recipients must not be permitted to remain in idle dependence but, instead, must be required to engage in constructive activities while on the rolls. Second, recipients who consistently fail to perform required activities (such as job search, job training, or community service) should not continue to receive welfare checks.
The House reauthorization bill ensures that able-bodied TANF recipients who consistently refuse to undertake constructive activities will lose their entire TANF check, at least temporarily. By contrast, the PRIDE bill allows federal TANF funds to continue indefinitely for those who refuse to work or prepare for work. By adhering to the rule that able-bodied recipients may refuse to engage in required activities and still receive cash TANF benefits, the PRIDE bill undermines the foundations of work-based welfare reform.
1. The states and jurisdictions that apply only weak or partial sanctions for adults who completely refuse to undertake required activities under the TANF program are Alaska, California, Hawaii, Indiana, Kentucky, Maine, Minnesota, Missouri, Montana, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia.
2. See Robert E. Rector and Sarah E. Youssef, "The Determinants of Welfare Caseload Decline," Heritage Foundation Center for Data Analysis Report No. CDA99-04, May 11, 1999, and Rebecca M. Blank and Robert F. Schoeni, "Changes in the Distribution of Children's Family Income Over the 1990s," University of Michigan, January 2003.