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.
- Overall poverty, child poverty, and
black child poverty have all dropped substantially.
Although liberals predicted that welfare reform would push an
additional 2.6 million persons into poverty, there are 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 is at 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.
- Conventional figures exaggerate the
poverty rate. The poverty rate is 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 (USDA), there are nearly 2 million fewer hungry
children today than at the time welfare reform was enacted.
- Welfare caseloads have been cut
nearly in half and employment of the most disadvantaged single
mothers has increased from 50 percent to 100 percent.
- The explosive growth of
out-of-wedlock childbearing has come to a virtual halt.
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 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 similar
trends that occurred in prior economic expansions. The difference
this time is welfare reform.
Welfare reform has substantially reduced welfare's rewards to
non-work, but much more remains to be done. When TANF is
re-authorized next year, federal work requirements should be
strengthened to ensure that states require all able-bodied parents
to engage in a 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 the future Congress
must take active steps to reduce welfare dependence by rebuilding
and strengthening marriage.
PREDICTIONS OF SOCIAL DISASTER DUE TO WELFARE
Five years ago, when the welfare reform legislation was signed
into law, Senator Daniel Patrick Moynihan (D-NY) proclaimed the new
law to be "the most brutal act of social policy since
reconstruction." He predicted,
"Those involved will take this disgrace to their graves."
Marian Wright Edelman, President of the Children's Defense Fund,
declared the new reform law an "outrage ... that will hurt and
impoverish millions of American children." The reform, she said,
"will leave a moral blot on [Clinton's] presidency and on our
nation that will never be forgotten."
The Children's Defense Fund predicted that the reform law would
increase "child poverty nationwide by 12 percent ... make children
hungrier ... [and] reduce the incomes of one-fifth of all families
with children in the nation."
The Urban Institute issued a widely cited report predicting that
the new law would push 2.6 million people, including 1.1 million
children, into poverty. In addition, the study announced the new
law would cause one-tenth of all American families, including 8
million families with children, to lose income.
The Center on Budget and Policy Priorities asserted the new law
would increase the number of children who are poor and "make many
children who are already poor poorer still.... No piece of
legislation in U.S. history has increased the severity of poverty
so sharply [as the welfare reform will]."
Patricia Ireland, president of the National Organization for
Women, stated that the new welfare law "places 12.8 million people
on welfare at risk of sinking further into poverty and
Peter Edelman, the husband of Marian Wright Edelman and then
Assistant Secretary for Planning and Evaluation at the Department
of Health and Human Services, resigned from the Clinton
Administration in protest over the signing of the new welfare law.
In an article entitled "The Worst Thing Bill Clinton Has Done,"
Edelman dubbed the new law "awful" policy that would do "serious
injury to American children."
Peter Edelman believed the reform law would not merely throw
millions into poverty, but also would actively worsen virtually
every existing social problem. He stated, "[t]here will be more
malnutrition and more crime, increased infant mortality, and
increased drug and alcohol abuse. There will be increased family
violence and abuse against children and women." According to
Edelman, the bill would fail even in the simple task of
"effectively" promoting work because "there simply are not enough
WHAT ACTUALLY HAPPENED
In the half-decade since the welfare reform law was enacted,
social conditions have changed in exactly the opposite direction
from that predicted by liberal policy organizations. As noted
above, overall poverty, child poverty, black child poverty, poverty
of single mothers, and child hunger have substantially declined.
Employment of single mothers increased dramatically and welfare
rolls plummeted. The share of children living in single-mother
families fell, and more important, the share of children living in
married-couple families grew, especially among black families.
Reform opponents would like to credit many of these positive
changes to a "good economy." However, according to their
predictions in 1996 and 1997, liberals expected the welfare reform
law to have disastrous results during good economic times. They
expected reform to increase poverty substantially even during
periods of economic growth; if a recession did occur, they expected
that far greater increases in poverty than those mentioned above
would follow. Thus, it is disingenuous for opponents to argue in
retrospect that the good economy was responsible for the
frustration of pessimistic forecasts since the predicted dire
outcomes were expected to occur even in a strong economy.
Since the enactment of welfare reform in 1996, the conventional
poverty rate has fallen from 13.7 percent in 1996 to 11.8 percent
in 1999. Liberals predicted that welfare reform would push an
additional 2.6 million people into poverty, but there are actually
4.2 million fewer people living in poverty today than there were
when the welfare reform law was enacted.
When the Earned Income Tax Credit and non-cash welfare benefits,
such as Food Stamps and public housing, are counted in determining
poverty, the poverty rate in 1999 was even lower: 8.8 percent, down
from 10.2 percent in 1996.
Less Child Poverty
The conventional child poverty rate has fallen from 20.5 percent
in 1996 to 16.9 percent in 1999. In 1996, there were 14.4 million
children in poverty compared with 12.1 million in 1999. Though
liberals predicted that welfare reform would throw more than 1
million additional children into poverty, there are actually some
2.3 million fewer children living in poverty today than there were
when welfare reform was enacted. (See Chart 1.)
The child poverty rate is even lower when the EITC and non-cash
welfare benefits, such as Food Stamps and public housing, are
counted as income; the 1999 child poverty rate in this more
accurate assessment was 11.2 percent, down from 14 percent in
Less Black Child Poverty
According to the Census Bureau, the decreases in poverty have
been the greatest among black children. Today, the poverty rate for
black children has fallen to the lowest point in U.S. history. The
conventional black child poverty rate has fallen by one-third, from
around 43.8 percent in the mid-1990s to 33.1 percent in 1999. There
are 1.1 million fewer black children in poverty today than there
were in the mid-1990s. (See Chart 2.)
When the EITC and non-cash welfare benefits, such as Food Stamps
and public housing, are counted as income, the black child poverty
rate is even lower. According to this more accurate measure, the
black child poverty rate in 1999 was 21.6 percent, down from 31.1
percent in the mid-1990s.
Less Poverty Among Single Mothers
Like the rate for black children, the poverty rate for children
living with single mothers also is at its lowest point in U.S.
history. The rate fell from 44 percent in the mid-1990s to 35.7
percent in 1999. There are 700,000fewer single mothers living in
poverty today than there were in the mid-1990s.
When the EITC and non-cash welfare benefits, such as Food Stamps
and public housing, are counted as income, the poverty rate for
single mothers is substantially lower. According to this more
accurate measure, the poverty rate for single mother families was
25.7 in 1999, down from 34.4 percent in the mid-1990s.
Dramatic Reduction in Child Hunger
The number of children who are "hungry" has been cut nearly in
half since the enactment of welfare reform, according to the U.S.
Department of Agriculture. The USDA reports that in 1996, 4.4
million children were hungry; by 1999, the number had fallen to 2.6
million. Thus, there are
nearly 2 million fewer hungry children today than at the time
welfare reform was enacted. (See Chart 3.)
Decrease in the "Severity of Poverty"
Liberals, like those at the Center on Budget and Policy
Priorities, predicted that welfare reform would increase "the
severity of poverty." Specifically, it would increase the so-called
poverty gap for families with children by over $4 billion. (The poverty gap
is the measure of total income that is needed to lift the income of
all poor families exactly to the poverty line.) In reality, the
poverty gap for families with children has decreased by $4.5
Similarly, the number of children living in "deep poverty" has
declined appreciably. (Families in "deep poverty" have incomes that
are less than half the poverty income level.) In 1996, there were
6.3 million children living in deep poverty; by 1999, the number
had fallen to 4.9 million.
Plummeting Welfare Dependence
The designers of welfare reform were concerned that prolonged
welfare dependence had negative effects on the development of
children. Their goal was to disrupt inter-generational dependence
by moving families with children off the welfare rolls through
increased work and marriage. Since the enactment of welfare reform,
welfare dependence has been cut nearly in half. The caseload in the
former AFDC program (now TANF) fell from 4.3 million families in
August 1996 to 2.2 million in June 2000. (See Chart 4.)
Contrary to conventional wisdom, the decline in welfare
dependence has been greatest among the most disadvantaged and least
employable single mothers--the group with the greatest tendency
toward long-term dependence. Specifically, dependence has fallen
most sharply among young never-married mothers who have low levels
of education and young children. This is dramatic
confirmation that welfare reform is affecting the whole welfare
caseload, not merely the most employable mothers.
Since the mid-1990s, the employment rate of single mothers has
increased dramatically. Again, contrary to conventional wisdom,
employment has increased most rapidly among the most disadvantaged,
least employable groups:
- Employment of never-married mothers has increased nearly 50
- Employment of single mothers who are high school dropouts has
risen by two-thirds.
- Employment of young single mothers (ages 18 to 24) has nearly
Thus, against conventional wisdom, the effects of welfare reform
have been the greatest among the most disadvantaged single
parents--those with the greatest barriers to self-sufficiency. Both
decreases in dependence and increases in employment have been most
dramatic among those who have the greatest tendency to long-term
dependence, that is, among the younger never-married mothers with
A Halt in the Rise of Out-of-Wedlock
Since the beginning of the War on Poverty, the illegitimacy rate
(the percentage of births outside of marriage) increased
enormously. For nearly three decades, out-of-wedlock births as a
share of all births rose steadily at a rate of almost one
percentage point per year. Overall, out-of-wedlock births rose from
7.7 percent of all births in 1965 to an astonishing 32.6 percent in
1994. However, in the mid-1990s, the relentless 30-year rise in
illegitimacy came to an abrupt halt. For the past five years, the
out-of-wedlock birth rate has remained essentially flat. (See Chart
Among blacks, the out-of-wedlock birth rate actually fell from
70.4 percent in 1994 to 68.8 percent in 1999. Among whites, the
rate rose slightly, from 25.5 percent to 26.7 percent, but the rate
of increase was far slower than it had been in the period prior to
A Shift Toward Marriage
Throughout the War on Poverty period, marriage eroded. However,
since the welfare reform was enacted, this negative trend has begun
to reverse. The share of children living with single mothers has
declined while the share living with married couples has
This change is most pronounced among blacks. Between 1994 and
1999, the share of black children living with single mothers fell
from 47.1 percent to 43.1 percent, while the share living with
married couples rose from 34.8 percent to 38.9 percent. Similar
though smaller shifts occurred among Hispanics.
While these changes are small, they do represent a distinct
reversal of the prevailing negative trends of the past four
decades. If these shifts toward marriage are harbingers of future
social trends, they are the most positive and significant news in
all of welfare reform.
WHO GETS THE CREDIT? THE GOOD ECONOMY VERSUS
Some would argue that the positive effects noted above are the
product of the robust economy during the 1990s, rather than the
results of welfare reform. However, the evidence supporting an
economic interpretation of these changes is not strong.
Chart 4 shows the AFDC caseload from 1950 to 2000. On the chart,
periods of economic recession are shaded while periods of economic
growth are shown in white. Historically, periods of economic growth
have not resulted in lower welfare caseloads. The chart shows eight
periods of economic expansion prior to the 1990s, yet none of these
periods of growth led to a significant drop in AFDC caseload.
Indeed, during two previous economic expansions (the late 1960s and
the early 1970s), the welfare caseload grew substantially. Only
during the expansion of the 1990s does the caseload drop
appreciably. How was the economic expansion of the 1990s different
from the eight prior expansions? The answer is welfare reform.
Another way to disentangle the effects of welfare policies and
economic factors on declining caseloads is to examine the
differences in state performance. The rate of caseload decline
varies enormously among the 50 states. If improving economic
conditions were the main factor driving caseloads down, then the
variation in state reduction rates should be linked to variation in
state economic conditions. On the other hand, if welfare polices
are the key factor behind falling dependence, then the differences
in reduction rates should be linked to specific state welfare
In a 1999 Heritage Foundation study, "The Determinants of
Welfare Caseload Decline," the author examined the impact of
economic factors and welfare policies on falling caseloads in the
states. This analysis
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
A recent paper by Dr. June O'Neill, former Director of the
Congressional Budget Office, reaches similar conclusions. Dr.
O'Neill examined changes in welfare caseload and employment from
1983 to 1999. Her analysis shows that in the period after the
enactment of welfare reform, policy changes accounted for roughly
three-quarters of the increase in employment and decrease in
dependence. By contrast, economic conditions explained only about
one-quarter of the changes in employment and dependence. Substantial
employment increases, in turn, have led to large drops in child
Overall, it is true that the health of the U.S. economy has been
a positive background factor contributing to the changes in welfare
dependence, employment, and poverty. It is very unlikely, for
example, that dramatic drops in dependence and increases in
employment would have occurred during a recession. However, it is
also certain that good economic conditions alone would not have
produced the striking changes that occurred in the late 1990s. It
is only when welfare reform was coupled with a growing economy that
these dramatic positive changes occurred.
Out-of-Wedlock Child-Bearing and the
Out-of-wedlock child-bearing and marriage rates have never been
correlated to periods of economic growth. Efforts to link the
positive changes in these areas to growth in the economy are
without any basis in fact. The onset of welfare reform is the only
plausible explanation for the shifts in these social trends.
Welfare reform affected out-of-wedlock childbearing and marriage in
First , even before the passage of the law,
the public debate about welfare reform sent a strong symbolic
message that, in the future, welfare would be time-limited and that
single mothers would be expected to work and be self-reliant. This
message communicated to potential single mothers that the welfare
system would be less supportive of out-of-wedlock child-bearing and
that raising a child outside of marriage would be more challenging
in the future. The reduction in out-of-wedlock births was, at least
in part, a response to this message.
Second , reform indirectly reduced welfare's
disincentives to marriage. Traditional welfare stood as an economic
alternative to marriage, and mothers on welfare faced very stiff
financial penalties if they did marry. As women leave AFDC/TANF due
to welfare reform, fewer are affected by welfare's financial
penalties against marriage. In addition, some women may rely on
husbands to provide income that is no longer available from
welfare. Thus, as the number of women on welfare shrinks, marriage
and cohabitation rates among low-income individuals can be expected
What Will Happen During a Recession?
There is considerable concern over what will happen to welfare
caseloads and poverty during the current economic slowdown. No one
at present can answer these questions, but a reasonable guess is
that welfare caseloads and poverty will rise during the slowdown,
though not as steeply as they did in prior slowdowns.
Throughout the slowdown or recession, TANF will provide support
to parents without jobs. Welfare reform was
not designed to kick single mothers off welfare and abandon them if
they cannot find a private-sector job. If the number of available
jobs shrinks during the recession, mothers should be welcomed back
onto the TANF rolls. However, while on TANF, all parents should be
required to perform community service work, training, or supervised
job search. Such performance requirements will increase the
incentive to re-enter the labor market and will reduce the length
of future stays on welfare.
The re-entry into TANF of large numbers of former recipients may
seem to conflict with strict time limits on the receipt of TANF
benefits. However, federal and most state time limits have
sufficient loopholes that time limits should not serve as an
obstacle to receipt of benefits in most cases. Under no
circumstances should a state deny TANF benefits to a parent who
genuinely cannot find private-sector employment.
LOOKING TO THE FUTURE
The trends of the past five years have led some of the strongest
critics of welfare reform to reconsider their opposition, at least
in part. In 1996, the Deputy Assistant Secretary for Human Services
Policy, Wendell Primus, also resigned from the Clinton
Administration to protest the President's signing of the welfare
reform legislation, predicting that the new law would throw
millions of children into poverty.
As Director of Income Security at the Center on Budget and
Policy Priorities, Primus has spent the past five years analyzing
the effects of welfare reform. The evidence has tempered his
earlier pessimism. He recently stated,
In many ways welfare reform is working better than I thought it
would. The sky isn't falling anymore. Whatever we have been doing
over the last five years, we ought to keep going.
Wendell Primus is correct. When Congress reauthorizes the TANF
program next year, it should push forward boldly to further promote
the three explicit goals of the 1996 reform:
- To reduce dependence and increase employment;
- To reduce child poverty; and
- To reduce illegitimacy and strengthen marriage.
These three goals are linked synergistically. Work requirements
in welfare will reduce dependence and increase employment, which in
turn will reduce poverty. As fewer women depend on welfare in the
future, marriage rates may well rise. Increasing marriage, in turn,
is the most effective means of reducing poverty.
Next Steps in Reform
When Congress re-authorizes the Temporary Assistance to Needy
Families programs in 2002, it should take the following specific
- Strengthen federal work
requirements. Currently, about half of the 2 million
mothers on TANF are idle on the rolls and are not engaged in
constructive activities leading to self-sufficiency. This is
unacceptable. Existing federal work requirements must be greatly
strengthened so that all able-bodied parents are engaged
continuously in supervised job search, community service work, or
In addition, some states still provide federal welfare as an
unconditional entitlement; recipients who refuse to perform
required activities continue to receive most benefits. In
re-authorizing the TANF program, Congress should ensure that the
law will prohibit federal funds from being misused in this manner
in the future.
- Strengthen marriage. The poverty rate of single-parent families
is about five times higher than among married- couple families. The
most effective way to reduce child poverty and increase child
well-being is to increase the number of stable, productive
marriages. This can be accomplished in three ways.
First , the substantial
penalties against marriage in the overall welfare system should be
reduced. As it is currently structured, welfare rewards
illegitimacy and wages war against marriage. That war must cease.
Second , the government should
educate young men and women on the benefits of marriage in
Third , programs should provide
couples with the skills needed to reduce conflict and physical
abuse and to increase satisfaction and longevity in a marital
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 last 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 have occurred as the incidental by-product of
work-related reforms and not as the result of positive pro-marriage
initiatives by the states. The current neglect of marriage is
scandalous and deeply injurious to the well-being of children. In
future years, 5 percent to 10 percent of federal TANF funds should
be earmarked for pro-marriage initiatives.
More than 20 years ago, President Jimmy Carter stated, "the
welfare system is anti-work, anti-family, inequitable in its
treatment of the poor and wasteful of the taxpayers' dollars." President Carter
was correct in his assessment.
The 1996 welfare reform began necessary changes to the
disastrous old welfare system. The rewards to non-work in the TANF
program have been substantially reduced. But much more remains to
be done. When Congress re-authorizes TANF next year, it should
ensure that, in the future, all able-bodied welfare recipients are
required to work or undertake other constructive activities as a
condition of receiving aid.
But increasing work is not enough. Each year, one-third of all
children are born outside of wedlock; this means that one child is
born to an unmarried mother every 25 seconds. This collapse of
marriage is the principal cause of child poverty and welfare
dependence. In addition, children in these families are more likely
to become involved in crime, to have emotional and behavioral
problems, to be physically abused, to fail in school, to abuse
drugs, and to end up on welfare as adults.
Despite these harsh facts, the anti-marriage effects of welfare,
which President Carter noted over two decades ago, are largely
intact. The current indifference and hostility to marriage in the
welfare system is a national disgrace. In reauthorizing TANF,
Congress must make the rebuilding of marriage its top priority. The
restoration of marriage in American society is truly the next
frontier of welfare reform.
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.