Responsibility and Work Opportunity Reconciliation Act of 1996
(PRWORA) replaced the failed social program Aid to Families with
Dependent Children (AFDC) with a block grant program, 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
out-of-wedlock childbearing and strengthen marriage. In the ten
years since its enactment, welfare reform has succeeded in each of
President Johnson's War on
Poverty had failed to reduce welfare dependence. From 1965 to 1994,
AFDC caseloads rose steadily, reaching a height of 5 million
families on the rolls. Because prolonged welfare dependence has
negative effects on the development of children, welfare reform was
intended to disrupt inter-generational dependence by moving
families off the welfare rolls through increased work and marriage.
Welfare caseloads began to decline in earnest after 1996 and have
fallen by 56 percent since then.
This decline in welfare
dependence coincided with the increase in the employment of single
mothers. These trends have been particularly dramatic among those
who have the greatest tendency to long-term dependence: younger
never-married mothers with little education. During the late 1990s,
employment of never-married mothers increased by nearly 50 percent,
of single mothers who are high school dropouts by 66 percent, and
of young single mothers (ages 18 to 24) by nearly 100 percent.
Welfare reform impacted the whole welfare caseload, not just the
Not surprisingly, as
families left welfare and single mothers transitioned into work,
the child poverty rate fell, from 20.8 percent in 1995 to 17.8
percent in 2004, lifting 1.6 million children out of poverty. The
declines in poverty among black children and children from
single-mother families were unprecedented. Neither poverty level
had changed much between 1971 and 1995. By contrast, six years
after PRWORA was enacted, these two poverty rates had fallen to
their lowest levels in national history, from 41.5 percent to 30
percent for black children and from 53.1 percent to 39.8 percent
for children from single-mother families.
Since welfare reform, the
once explosive growth of unwed childbearing has ended. The unwed
birthrate was 7.7 percent in 1965 and increased about one
percentage point per year for the next thirty years. Had this rate
of increase been sustained, the unwed childbearing rate would have
hit 41.6 percent by 2003, but welfare reform interrupted this
process. Between 1995 and 2003, overall unwed childbearing inched
upward by only 2.4 percentage points, a fourth of the pre-reform
rate of increase. The black unwed childbearing rate actually fell
from 69.9 percent in 1995 to 68.2 percent in 2003.
Opponents of reform would
like to credit many of these positive changes to a good economy,
but the evidence for this interpretation is not strong. While a
healthy economy did contribute to the progress charted in welfare
dependence, employment, and poverty, good economic conditions alone
would not have produced the striking changes that occurred in the
Historically, periods of
economic growth have not resulted in lower welfare dependence.
Indeed, during two episodes of economic expansion, the late 1960s
and the early 1970s, welfare caseloads actually grew substantially.
Only during the 1990s boom did caseloads drop appreciably. While a
slowed economy may have affected the rate of caseload reduction
since 2001, it is important to note the vast difference in trends
before and after welfare reform. In the days of AFDC, welfare rolls
remained flat or rose during periods of economic growth and rose
substantially during recessions. Since PRWORA, caseloads have
plummeted in a robust economy and declined slowly during a
Another way to disentangle
the effects of welfare policies and economic factors on declining
caseloads is to examine differences in state performance. A 1999
study by The Heritage Foundation showed that differences in state
welfare reform policies were highly successful in explaining the
rapid rates of caseload decline.
By contrast, the relative vigor of state economies, as measured by
unemployment rates, changes in unemployment, or state job growth,
had no statistically significant effect on caseload
Nor can the increase in
single-mother employment be solely explained by a good economy. Dr.
June O'Neill examined changes in welfare caseloads and employment
from 1983 to 1999.
Her analysis showed that in the period after the enactment of
PRWORA, policy changes accounted for roughly three-quarters of the
increase in employment and decrease in dependence. Economic
conditions, in contrast, explained only about one-quarter of the
changes in employment and dependence.
Similarly, Dr. Rebecca
Blank's paper on changes in children's family income over the 1990s
showed a direct link between state welfare reform policies and
rising income among poor families.
States with welfare programs that offered "strong work incentives"
showed greater increases in the income of single parents with
children than did states with weak work incentives. Furthermore,
Blank found that states with stricter time limits and strong
sanction policies were more successful in raising the income of
poor children than were states with lenient policies.
Welfare reform has been
successful. However, that success has been limited by several
factors. First, welfare reform in 1996 addressed only one of the
more than fifty means-tested federal welfare programs, AFDC.
Second, the federal work requirements that pushed the states to
promote work and reduce welfare dependence have always been too
lenient, resulting in lax state work programs once the minimum
federal standards have been met. Third, while the law set clear
goals to reduce out-of-wedlock childbearing and strengthen
marriages, nearly all states' bureaucracies simply ignored these
To continue and extend the
success of welfare reform, future efforts should focus on the
following goals: 1) strengthen TANF work requirements; 2) establish
work requirements in parallel welfare programs; and 3) fortify the
Healthy Marriage Initiative.
Rector is Senior
Research Fellow in Domestic Policy Studies, and Christine Kim is
Policy Analyst in Domestic Policy Studies, at The Heritage