🤲Contemporary Social Policy Unit 4 – Welfare Reform: From AFDC to TANF

Historical Context

• Welfare reform in the United States gained momentum in the 1990s due to growing concerns about the effectiveness and efficiency of the existing welfare system
• The Aid to Families with Dependent Children (AFDC) program, established in 1935 as part of the Social Security Act, provided cash assistance to low-income families with children
• Critics argued that AFDC created a culture of dependency, discouraged work, and contributed to the breakdown of traditional family structures
• Welfare reform became a central issue in the 1992 presidential campaign, with candidate Bill Clinton promising to "end welfare as we know it"
• The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 was signed into law by President Clinton, marking a significant shift in U.S. welfare policy
• PRWORA aimed to reduce welfare dependency, promote work, and encourage personal responsibility among recipients
• The legislation was influenced by state-level welfare reform experiments in the early 1990s, such as Wisconsin's "Wisconsin Works" program, which emphasized work requirements and time limits on benefits

Key Legislation and Policy Changes

• The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 was the cornerstone of welfare reform in the United States
• PRWORA replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) program
• The legislation introduced several key changes to the welfare system:
  • Work requirements: Recipients were required to engage in work activities to receive benefits
  • Time limits: A five-year lifetime limit was placed on receiving federal TANF funds
  • Block grants: Federal funding for welfare was provided to states in the form of block grants, giving states more flexibility in administering their programs
• The Deficit Reduction Act of 2005 reauthorized TANF and made several modifications, such as strengthening work requirements and promoting healthy marriage and responsible fatherhood initiatives
• The American Recovery and Reinvestment Act of 2009, passed in response to the Great Recession, provided additional TANF funding to states and temporarily modified some program requirements
• Subsequent legislation, such as the Claims Resolution Act of 2010 and the Protecting Access to Medicare Act of 2014, extended TANF funding and made minor changes to the program

Transition from AFDC to TANF

• The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) program
• AFDC was an entitlement program that provided cash assistance to low-income families with children, with no time limits or work requirements
• TANF, in contrast, is a block grant program that provides states with federal funds to design and administer their own welfare programs within certain guidelines
• The transition from AFDC to TANF marked a shift from a focus on providing cash assistance to a focus on promoting work and self-sufficiency
• States were given more flexibility in designing their TANF programs, including setting eligibility criteria, benefit levels, and work requirements
• The transition also involved a change in funding structure, with states receiving fixed block grants rather than open-ended funding based on the number of recipients
• States were required to maintain a certain level of state spending on welfare programs, known as the "maintenance of effort" (MOE) requirement
• The transition from AFDC to TANF was phased in over several years, with states implementing their TANF programs between 1996 and 1997

Major Components of TANF

• Work requirements: TANF recipients are required to engage in work activities, such as employment, job search, or vocational training, to receive benefits
  • States must meet minimum work participation rates, which specify the percentage of recipients who must be engaged in work activities
  • Failure to meet work requirements can result in sanctions, such as reduced benefits or termination of assistance
• Time limits: TANF imposes a five-year lifetime limit on receiving federal funds, although states can choose to provide assistance beyond this limit using their own funds
  • Some states have adopted shorter time limits or have implemented intermittent time limit policies
• Block grants: Federal TANF funding is provided to states in the form of block grants, giving states flexibility in designing and administering their programs
  • States must use TANF funds to achieve one of the four program goals: providing assistance to needy families, promoting job preparation and work, preventing out-of-wedlock pregnancies, and encouraging the formation and maintenance of two-parent families
• Child support enforcement: TANF strengthened child support enforcement measures, requiring recipients to cooperate with child support enforcement agencies and establishing penalties for non-compliance
• Immigrant eligibility: PRWORA imposed restrictions on immigrant eligibility for TANF and other welfare benefits, although some of these restrictions were later modified by subsequent legislation
• Supplemental services: TANF funds can be used to provide a range of supplemental services to help recipients achieve self-sufficiency, such as child care, transportation assistance, and job training

Impact on Families and Children

• Welfare reform and the transition from AFDC to TANF had significant impacts on low-income families and children
• Caseload reduction: The number of families receiving cash assistance declined dramatically after the implementation of TANF, with caseloads falling by more than 50% between 1996 and 2000
  • Some of this decline can be attributed to the strong economy of the late 1990s, while some is due to the stricter eligibility requirements and work requirements of TANF
• Employment and earnings: Many TANF recipients entered the workforce, and employment rates among single mothers increased significantly in the years following welfare reform
  • However, many of these jobs were low-wage and did not provide sufficient income to lift families out of poverty
• Poverty: The impact of welfare reform on poverty rates is mixed, with some studies finding modest reductions in poverty, while others suggest that deep poverty (income below 50% of the poverty line) increased
• Child well-being: Research on the effects of welfare reform on child well-being has yielded mixed results
  • Some studies have found improvements in child outcomes, such as increased school achievement and reduced behavioral problems, while others have found negative effects, particularly for children in deep poverty
• Material hardship: Some families who left welfare experienced increased material hardship, such as difficulty affording food, housing, and medical care
• Differential impacts: The effects of welfare reform varied across different subgroups, with some families benefiting more than others
  • For example, families with greater barriers to employment, such as limited education or work experience, often fared worse under TANF than those with fewer barriers

Criticisms and Controversies

• Work requirements: Critics argue that TANF's work requirements are too strict and do not take into account the barriers many recipients face, such as lack of education, limited job skills, and mental or physical health problems
  • Others contend that the emphasis on work has led to a neglect of other important goals, such as providing adequate support for families and ensuring the well-being of children
• Time limits: The five-year lifetime limit on receiving federal TANF funds has been criticized as arbitrary and insufficient, particularly for families facing significant barriers to self-sufficiency
  • Some argue that time limits have led to an increase in deep poverty and material hardship among families who have exhausted their benefits
• Block grant structure: The block grant structure of TANF funding has been criticized for failing to respond to economic downturns and increased need for assistance
  • During the Great Recession, many states faced budget shortfalls and were unable to provide adequate assistance to families in need
• State flexibility: While proponents argue that state flexibility allows for innovation and tailoring of programs to local needs, critics contend that it has led to a "race to the bottom," with some states adopting very low benefit levels and strict eligibility requirements
• Inadequate funding: TANF funding has not kept pace with inflation, and its real value has declined significantly since 1996
  • Critics argue that this has limited states' ability to provide adequate assistance and services to needy families
• Disparate impact: Some studies have found that welfare reform has had a disproportionate impact on certain groups, such as African American and Latino families, who are more likely to face barriers to employment and are more likely to live in states with less generous TANF programs
• Marriage promotion: TANF's goal of promoting marriage and two-parent families has been controversial, with some arguing that it is not an appropriate role for government and that it diverts resources from more pressing needs

State-Level Implementation

• Under TANF, states have significant flexibility in designing and implementing their welfare programs, leading to substantial variation across states
• Eligibility criteria: States set their own eligibility criteria for TANF, including income thresholds, asset limits, and family composition requirements
  • Some states have adopted more restrictive eligibility criteria, such as lower income thresholds or family caps (limits on benefits for additional children born while receiving assistance)
• Benefit levels: TANF benefit levels vary widely across states, with some states providing much higher benefits than others
  • In 2020, monthly benefit levels for a family of three ranged from $170 in Mississippi to$1,086 in New Hampshire
• Work requirements: While all states must meet federal work participation rate requirements, they have flexibility in defining work activities and setting hour requirements
  • Some states have adopted stricter work requirements, such as higher hour requirements or narrower definitions of work activities
• Time limits: States can choose to impose shorter time limits than the federal five-year limit, and some have adopted intermittent time limit policies (e.g., 24 months of assistance followed by a 24-month ineligibility period)
• Sanctions: States have discretion in setting sanctions for non-compliance with program requirements, such as failure to meet work requirements or cooperate with child support enforcement
  • Sanction policies range from partial benefit reductions to full-family sanctions, which terminate all assistance to the family
• Diversion programs: Many states have implemented diversion programs, which provide short-term assistance (e.g., lump-sum payments or job search support) to help families avoid the need for ongoing TANF assistance
• Supplemental services: States can use TANF funds to provide a range of supplemental services, such as child care, transportation assistance, and job training, but the availability and generosity of these services vary widely across states

Long-Term Outcomes and Evaluations

• Employment and earnings: Studies have found that welfare reform led to increased employment and earnings among single mothers, particularly in the short term
  • However, many recipients found jobs that were low-wage, unstable, and did not provide sufficient income to lift families out of poverty
  • Long-term studies suggest that the employment and earnings gains from welfare reform have been modest and have not kept pace with the rising cost of living
• Poverty and material hardship: The impact of welfare reform on poverty and material hardship has been mixed
  • Some studies have found modest reductions in poverty, particularly in the years immediately following the implementation of TANF
  • However, other research suggests that deep poverty (income below 50% of the poverty line) increased, and many families who left welfare experienced increased material hardship, such as difficulty affording food, housing, and medical care
• Child well-being: Research on the long-term effects of welfare reform on child well-being has yielded mixed results
  • Some studies have found improvements in child outcomes, such as increased school achievement and reduced behavioral problems, while others have found negative effects, particularly for children in deep poverty
  • The effects of welfare reform on child well-being may vary depending on factors such as the age of the child, the severity of poverty, and the availability of other supports and services
• Family formation: One of the goals of TANF was to promote marriage and two-parent families, but research suggests that welfare reform has had little impact on family formation
  • Some studies have found modest increases in marriage rates among low-income couples, while others have found no significant effects
• State-level outcomes: The long-term outcomes of welfare reform have varied across states, reflecting differences in state-level policies and implementation
  • States with more generous TANF programs and a greater emphasis on providing supportive services have tended to have better outcomes in terms of poverty reduction and child well-being
• Limitations of evaluations: Evaluating the long-term impacts of welfare reform is challenging due to the complexity of the policy changes, the varying state-level implementations, and the difficulty of isolating the effects of welfare reform from other economic and social factors
  • Many studies rely on observational data and quasi-experimental designs, which may not fully account for selection bias and other confounding factors
  • The long-term effects of welfare reform may also be influenced by broader economic and social trends, such as changes in the labor market, rising income inequality, and the increasing cost of living