Twenty years ago today, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, better known as the Welfare Reform Act. Clinton promised it would “end welfare as we know it.”
And it did. Because of the reform act, welfare funding now is called TANF, or Temporary Assistance for Needy Families – with a strong emphasis on “temporary.” Unlike before, welfare recipients now have a clock ticking when they first start receiving benefits. They are cut off from receiving federal benefits after five years (and in some states, it’s less).
The bill also changed how the federal government manages welfare dollars. Now, states get the money first and decide how to distribute it. Before, needy families received cash benefits directly through the federal welfare program.
This has meant welfare money has gone to some pretty surprising items, such as college scholarships for middle-class college students, and relationship counseling for married or seriously dating couples.
Recently, Bill Clinton was chastised for the results of the bill. At an April campaign rally for his wife and Democratic presidential candidate Hillary Clinton in Philadelphia, protesters held signs that read, “Welfare reform increased poverty.”
The former president challenged the protesters, and asked, “Then why do we have the largest drop in African American poverty in history when I was president?”
That statement is half-true. Poverty in the African American community reached historic lows between 1993 and 2001, but as Bill Clinton admitted two years before this exchange with protesters, welfare reform didn’t help the poorest of the poor. The number of families living in extreme poverty – who live on less than $2 a day per person – has more than doubled since the act passed.
Today, 20 years after Clinton signed the bill, where do poverty and welfare figures stand?
Reveal collaborated with Marketplace’s new podcast, “The Uncertain Hour,” to find out.
In the Reveal episode “A Welfare Check,” Marketplace reporter Krissy Clark digs into one of the biggest changes to come out of the reform: States get to manage their welfare dollars. This leaves them with a lot of freedom to choose how to spend the money, and they just have to state that the money is going to one of these four purposes:
- Assisting needy families so children can be cared for in their own homes or the homes of relatives.
- Promoting job preparation, work and marriage among needy parents.
- Preventing out-of-wedlock pregnancies among unwed couples.
- Encouraging the formation and maintenance of two-parent families.
“States were given a lot of flexibility,” said Liz Schott, senior fellow at the Center on Budget and Policy Priorities. “States have not used the flexibility well.”
Schott has been keeping track of welfare since before the reform act passed, just a little over 20 years. She and her colleagues have looked at welfare caseload data, poverty data, and state TANF spending to analyze where welfare stands today.
And what they found was a stark change in how states use welfare dollars. Before reform, states were pretty much in the same place. The overwhelming majority of welfare dollars went to cash assistance. That share has gotten smaller and smaller since 1996, and in 2014, 26 percent of all TANF dollars in the country went to cash assistance. The rest has gone to other things entirely.
In Michigan, for example, the state spends nearly $100 million a year in TANF money on college scholarships. For more than a decade in Oklahoma, TANF dollars funded relationship classes for seriously dating and married couples of all income brackets.
“By 2000, (TANF spending) was down to maybe 40 percent of the money in cash (assistance),” Schott said. “Now, really only $1 one out of every $4 goes to basic assistance.”
Reveal’s Jieqian Zhang used data from the Center on Budget and Policy Priorities on how states use their TANF dollars, charted it against poverty rates from the U.S. Census Bureau and demonstrated how states’ poverty and welfare spending have changed since 1998, the first year every state participated in the new program.
Zhang’s analysis shows that about three-quarters of the states have seen an increase in the rate of families in poverty. And nearly every state decreased the proportion of welfare funds used for cash assistance, child care and work-related assistance.
The five states that spent the smallest proportion of welfare dollars on cash assistance in 2014 were Illinois, Texas, Arkansas, South Carolina and Georgia.
These states spent less than 10 percent of their TANF dollars on cash assistance. In Texas and Georgia, Schott said most of the money went toward child welfare services.
“And of course, child welfare systems and child protective services are important things to fund,” she said. But, she continued, “none of these states, I would say, are providing a safety net for poor families or using the money to help connect poor families to work.”
“What we have seen is a tremendous increase in deep poverty,” she said. “If you look at the very poorest families, they are poorer. They are much poorer. Families at the bottom are destitute because they’re not getting cash assistance. And that is directly attributable to the disappearance of a safety net under TANF.”
Between 1998 and 2014, the number of families with children living in poverty increased 21 percent. In that same time span, the number of all U.S. families increased 16 percent.
Reform supporters point to the decrease in welfare caseloads since the act passed to show its success in moving people off assistance. In 1996, more than 4 million families were receiving welfare benefits; in 2014, that number was reduced to less than half. Supporters also point to an immediate decrease in poverty for single mothers and black children after reform.
But as Clinton has admitted, and as the data bear out, the reform act hasn’t helped the poorest of the poor. Today, there are nearly 1 million more families living on less than $2 per day per person than in 1996. Three million children live in these households.
Rachel de Leon can be reached at firstname.lastname@example.org. Follow her on Twitter: @rachelndeleon.