Was Welfare Reform Successful?

Today’s Readings• TANF AT 10Program Results are More Mixed Than Often Understood, Sharon Parrott and Arloc Sherman

http://www.cbpp.org/8-17-06tanf.htm. Surf around, making sure to examine the Guide to TANF Reauthorization Issues• Blank, “Was Welfare Reform Successful?” Economists’ Voice, www.bepress.com/ev, March, 2006.• DeParle, Ch 16: Boyfriends: Milwaukee, Spring 1999

Today’s Questions

• What criteria should be employed when evaluating the success of welfare reform?

• What are the prospects for valid evaluations of the effects of welfare reform?

• What methodology can we trust?• What do the experts say about the success of

welfare reform?

What criteria should be used to evaluate welfare reform?

• Should we evaluate TANF in its own terms?– TITLE: TEMPORARY ASSISTANCE FOR

NEEDY FAMILIES (TANF) BLOCK GRANT OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996: A bill to restore the American family, reduce illegitimacy, control welfare spending and reduce welfare dependence.

What criteria should be used to evaluate welfare reform?, cont.

• Should we ask if TANF has:– Restored the American family?

• Decrease divorce and cohabitation and increase marriage

– Reduced illegitimacy? • reduce the number of children born to unmarried mothers

– Controlled welfare spending? • Reduce the amount of money spent on welfare

– Reduced welfare dependency?• Decrease the caseload

• If it has accomplished these goals should we declare welfare reform a success?

Alternative criteria

• Or should we also judge TANF by criteria developed to evaluate previous welfare programs?– Does the reform reduce poverty? (adequacy)– Does the program encourage personal

responsibility? (work incentives)– Does the reform treat participants and non-

participants fairly?• Does it treat persons in similar situations similarly?

(horizontal equity)• Does it treat people in different situations differently?

(vertical equity)

Alternative criteria, cont.

– Does it target just the poor? (target efficiency)

– Are the rules easily understood by all? (participants and tax payers)

– Can be the programs be easily accessed by those eligible? (hassle factor)

– Can the program be administered without error or fraud?

Lessons from Federally Mandated Evaluations of Demonstration Projects

• National Evaluation of Welfare-to-Work Strategies (NEWWS)– NEWWS sites: Atlanta, GA; Grand Rapids,MI;

Riverside, CA– Participants followed for 3 to 5 years.

• Work-first programs increase employment and reduce welfare receipt relative to not having such a program– Major effect: speed entry into a job– Increases in earnings did not offset reductions in

case benefits and food stamps

Lessons from Federally Mandated Evaluations of Demonstration Projects, cont.

• Education-first programs– No difference in impacts between work-first

and education-first programs for participants in many programs

– Where differences were recorded, work-first outperformed education-first

– None of the education-first programs increased incomes over 5 years

Lessons from Federally Mandated Evaluations of Demonstration Projects, cont.

• “Mixed” Approach: Portland, OR and Riverside, CA (GAIN): Short-term educational activity and delayed entry to look for “good” job– Significant increases in earnings (25 to 49%)– Significant decreases in cash assistance (15-24%)– No increase in incomes

Ongoing Federally Funded Demonstration Projects

• Federal dollars support evaluations of demonstration projects for specific subgroups of the recipients– The hard to employ

• Substance abuse and/or chronic mental health problems

• Disabilities• Victims of domestic abuse• Families living in rural areas

Ongoing Federally Funded Demonstration Projects, cont.

• Programs that aim directly to affect family formation outcomes– Encourage marriage between unmarried

parents– Support to sustain marriage among low-

income couples

What methodology can we trust?

• The Gold Standard: control versus treatment groups– Identify two groups of eligible persons, families,

etc. with identical demographic and socioeconomic compositions

– Subject one group to the treatment– Prohibit the other (control) group from

experiencing the new rules– Compare the outcomes for each group through

time

How are Conclusions Actually Drawn?

• Spotty privately sponsored analyses• Evaluating Trends in:

– national data bases (CPS) – State/National administrative data

• Limitations– Cross-sectional data--snap shots– Data do not reflect what happened to families

when they left welfare

Did TANFRestore the American Family ?

National Healthy Marriage Resource Centerhttp://www.healthymarriageinfo.org/

(Go to Research and Trends)• Marriage rates

• Attitudes toward Marriage

• Attitudes toward Cohabitation

Marriage and Divorce Rates, 1950-2000

DID TANFReduce illegitimacy ?

• Teen Births Continue Drop; Births to Unmarried Women on the Rise– Center for Disease Control and Prevention

http://www.cdc.gov/nchs/

• “Births:Preliminary Data, 2005,”– National Vital Statistics Reports

http://www.cdc.gov/nchs/data/nvsr/nvsr55/nvsr55_11.pdf

Review Ch7FamilySize.ppt

• The total number of live births to all unmarried women is rising– The number of births to black unmarried women is

down • The percentage of births to unmarried mothers is

rising• The percentage babies born outside of marriage is

rising for whites and declining for blacks• The percentage of low birth weight babies is rising

slightly.

Hamilton BE, Ventura SJ, Martin JA, and Sutton PD. Preliminary births for 2004. Health E-stats. Hyattsville, MD: National Center for Health Statistics. Released October 28, 2005. http://www.cdc.gov/nchs/products/pubs/pubd/hestats/prelim_births/prelim_births04.htm#Figure%202

Did TANFControl Welfare Spending?Per Capita Spending on TANF, FY1997-

2003

Source: Spending on Social Welfare Programsin Rich and Poor States, http://aspe.hhs.gov/hsp/social-welfare-spending04/summary.htm

Source: Ibid.

Control Welfare Spending?Per Capita Spending on Medicaid, FY1997-

2003

Source: Ibid.

Did TANFDecrease Dependency ? • Welfare rolls fell by around 60 percent

between 1996 and 2000. • Caseloads continued to fall after 2000 as

poverty began to rise. – Caseloads did not increase with recession

• Personal responsibility – Employment rates for single mothers rose from 62% in

1995 to 73% in 2000. In 2005 they had fallen to 69%.Source: TANF AT 10Program Results are More Mixed Than Often

Understood, Sharon Parrott and Arloc Sherman

http://www.cbpp.org/8-17-06tanf.htm.

National Welfare Caseloads, March 1994-September 2004

Source: U.S. HHS, Administration for Children and Families, http://www.ncsl.org/statefed/welfare/caseloadwatch.htm#overall

Alternative Criteria: Work and Income

• Adequacy– Average incomes rose by about $5,000– Earnings increases were larger than welfare

benefits declines– Income is not adjusted for costs of working: costs

of working lower disposable income to pre-reform levels.

Source: Blank, 2006

Work and Income

• Hardship? (Adequacy) – More single-mothers report not being on

welfare and not working– Women involuntarily terminated have lower

incomes and worse outcomes--how are they surviving?

Source: Parrott and Arloc Sherman, 2006

http://www.cbpp.org/8-17-06tanf.htm.

Poverty Reduction

Poverty fell initially• Poverty rates for single-mother households fell

to historically low levels by late 1990s

Slight increase in past 4 years• Increases in employment greater than declines

in poverty• Share of the working poor rose and is higher

than in early 1990s

Poverty reduction

1994 2000 2004All agesAll races 14.5 11.3 12.7Blacks 30.6 22.5 24.7Hispanics 30.7 21.5 21.9Under 18All races 21.8 16.2 17.8Blacks 43.8 31.2 33.6Hispanics 41.5 28.4 28.9

Especially for children . . . Poverty Rates Among Children

Source: U.S. Census Bureau, http://www.mindfully.org/Reform/2005/37-Million-US-Poverty1oct05b.gif

Poverty Rates Among Black Children, cont.

Melissa G. Pardue, “Sharp Reduction in Black Child Poverty Due to Welfare Reform,” The Heritage Foundation Backgrounder #1661, June 12,2003 http://www.heritage.org/Research/Welfare/bg1661.cfm?renderforprint=1

Extreme Poverty (<50% PL ) for all persons

• Trends 1994-2004 – Fell from 5.9 percent in 1994 to 4.5 percent in 2000– Rose continuously to 5.4 percent by 2004

• By age in 2004:– Persons 18-24 had highest rates--9.0 percent– Persons under 18 were next at 7.6 percent

• By family status:– Persons in unrelated subfamilies have highest rates

of extreme poverty: 26.7 percent– Children under 6 years: 9.0 percent

Extreme Poverty Rates Among Children by Race

Source: U.S. Census Bureau, http://www.jointcenter.org/DB/printer/chilpovt.htm

Alternative Criteria: Other effects

• Effects on Children– child abuse—down since early 1990s– Some positive achievement and behavioral effects

on young children associated with use of center-based child care

– Some small negative effects on adolescents associated with lack of parental supervision

Source: Blank, 2006

What really caused the changes in work and income?

• Work enforcement– Diversion effects.– Sanctions, time limits, messages??

• Good economy– Many jobs, even for the unskilled.– Rising real wages.

• New benefits– Especially EITC – a higher minimum wage (Sept. 1997)

• Relative role of these factors is disputed.

Limitations of reform: A conservative’s agenda

• By and large, welfare reform was a grand success– Finish work enforcement.

• Recent reauthorization of TANF.

– Keep welfare leavers at work:• An hours threshold for EITC.

– Raise the incomes of leavers:• EITC, minimum wage.

– Extend work enforcement to men:• Using criminal justice and child support.

– Strengthen marriage.Source: Larry Mead

Limitations of reform: A liberal’s agenda

• Too soon to claim success– Collect and analyze nuanced data on

• Well-being of low-income families no longer on welfare• Child effects• Family effects

– Determine what combination of negative and positive incentives work best

– Increase child care subsidies– Expand health insurance for low-income working adults– Sustain safety net for those for whom employment is

just not possibleSource: Blank, 2006

Key Elements of TANF Reauthorization: (Signed into law, February 8, 2006)

• Eliminates the separate work participation rate requirements for two-parent families (thus applying the same lower rate to all families).

• Increases minimum state work participation rates from 50% for FY2006 to 70% for FY2010.

• Revises requirements for calculation of participation rates and recalibration of the caseload reduction credit.

Key Elements of TANF Reauthorization: Work Requirements

• Adds a new part C (Fatherhood Program) to promote responsible fatherhood.

• Requires TANF programs to be mandatory partners with One-Stop Employment Training Centers created under the Workforce Investment Act of 1998

• Includes $150 million to support programs designed to help couples form and sustain healthy marriages.