America's great welfare-to-work experiment is far from finished, but
the early returns are nonetheless striking. The nation's welfare caseload,
after peaking in 1993 at 14.1 million recipients, has now fallen nearly
60 percent to 5.8 million recipients. The proportion of the U.S. population
on welfare is down to 2.1 percent, the lowest in 37 years.
Studies of welfare "leavers" show that most adults who exit
the rolls find jobs. The Urban Institute estimates that 61 percent of
leavers are working; state studies suggest a range of 50 percent to 70
percent. Those who work full-time earn from $6 to $8 per hour. Employment
among poor single mothers with children has risen from 35 percent in 1992
to 51 percent in 1998.
What of the hefty chunk of leavers who don't have jobs? The research
yields no clear picture of what has happened to them. Some probably work
intermittently, on and off the books. Others may get benefits from other
federal programs such as Social Security disability insurance or Supplemental
Security Income (SSI). Many seem to be falling back on friends and relatives
for support.
Even when families leave welfare for full-time work, they aren't necessarily
better off. The number of people receiving food stamps and Medicaid services
has fallen along with the welfare rolls, suggesting that many leavers
also are losing valuable non-cash benefits. Citing this trend, as well
as anecdotes about swollen lines at homeless shelters and food banks,
advocacy groups charge that welfare reform has made some families worse
off. This is undoubtedly true, though it bolsters the case for a comprehensive
system of public supports for working families rather than for weakening
work requirements or restoring the old welfare entitlement.
Most analysts agree that the main factors behind the caseload decline
are a strong economy, which has drawn millions of low-skill workers into
low-wage jobs; welfare reform itself, which has sent a powerful signal
to poor Americans that public assistance is temporary and conditional;
and increased support for the working poor, which has made work in entry-level
jobs more attractive.
The American Enterprise Institute's Doug Besharov and Peter Germanis
synthesized the results of a raft of econometric studies that weigh the
contributions of various factors to the caseload decline. They concluded
that:
The strong economy accounts for 15 percent to 25 percent of
the decline;
Welfare reform for 30 percent to 45 percent;
Aid to working poor for 30 percent to 45 percent; and
The minimum wage increase for 0 percent to 5 percent.
These findings confound the conventional, left-right wisdom. First, welfare
reform -- time limits, efforts to "divert" people from welfare,
work requirements and the credible threat of sanctions for those who refuse
to seek work -- has had a much bigger impact on declining caseloads than
the robust economy. This is good news, since it suggests that a downturn
would not necessarily take us all the way back to square one, as some
welfare reform skeptics have predicted. Second, the "pull" of
work incentives is as powerful a factor as the "push" of time
limits and work requirements. This bolsters the case for expanding wage
supplements, child care, health coverage, and other public supports for
the working poor. Third, these supports more powerfully shape behavior
than a higher minimum wage, which has played a negligible role in smoothing
the path from welfare to work.
It makes more sense to index the minimum wage -- let its value rise with
inflation -- than to view it as a principal tool for making work pay.
The exodus from welfare has begun to slow recently, probably because
the most job-ready people already have left the rolls. Those who remain
are apt to face many barriers to work: scant education and low skills
(41 percent lack a high school diploma, as opposed to 29 percent of the
leavers); learning disabilities; poor mental or physical health; domestic
violence; and drug and alcohol abuse. There's little doubt that helping
these mothers overcome multiple obstacles will be a more difficult and
costly proposition.
Finally, we've made only modest progress toward another key goal of the
1996 law: reducing the number of out-of-wedlock births. After rising steadily,
the number of out-of-wedlock births has leveled off but is still too high
at 1.3 million a year. This is bad news, since children born outside of
marriage, especially to teenage mothers, are much more likely to drop
out of school, have children out of wedlock, and wind up on welfare.
Nonetheless, there are intriguing signs that a well-designed welfare-to-work
system can begin to reweave the frayed bonds of marriage and family in
poor communities. For example, a study of Minnesota's Family Investment
Program by the Manpower Demonstration Research Corporation found that
participants were 38 percent more likely than traditional welfare recipients
to get or stay married. Such gains, however, don't come cheap: The Minnesota
project provided generous supports to working mothers and allowed them
to convert the value of their food stamp allotment into cash. "Parents
with a greater sense of financial security may be more likely to marry,"
the study said.
All in all, a fair verdict on the progress of welfare reform after four
years would be: Better than expected, but the toughest challenges still
lie ahead.
Blueprint Keyword: Extra Welfare Reform
