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In this essay, I want to lay out a specific empirical case affirming the success of welfare reform — 20 years old as of last week.
With that concession, why might someone think that welfare reform made children better off?
Critics who seek compromise with conservatives around the design of the future safety net would get much further if they would not insist that welfare reform caused a substantial increase in child poverty — deep, extreme, or otherwise.
The handful of papers that adjudicate between the effect of reform (and the state waivers before 1996) and other factors find that welfare reform was at least as important as the 1993 expansion of the Earned Income Tax Credit (or EITC, a subsidy for low-income workers) in reducing welfare receipt, both of which were larger factors than the improving labor market.
The EITC was the most important factor behind rising employment among single mothers, but welfare reform was roughly as important as the economy.
But in fact, adding food stamps, housing benefits, subsidized school meals, and energy subsidies to income does not affect the poverty trend among the children of single mothers after 1996. The number of families receiving cash welfare through the old program, Aid to Families with Dependent Children (AFDC), or its replacement, Temporary Assistance for Needy Families (TANF), fell from 58 per 100 single-mother families in 1994 to 26 in 2000. In contrast, the ratio had risen between 19, from 51 to 58 per 100 single-mother families.
(It makes the deep-poverty trend look worse.) In contrast, simply adding refundable tax credits to income (the Earned Income Tax Credit and the Child Tax Credit) and combining the incomes of cohabiting families leads to the conclusion that poverty among the children of single mothers was lower in 2014 than ever before. (See my recent presentation at the Cato Institute.) Finally, employment among single mothers without a high-school diploma rose from a little over 40 percent in 1992 to 65 percent in 1999.But PRWORA might have increased employment in at least three ways.It might have led states to invest in welfare recipients and to actively assist them in finding work.Some criticisms of PRWORA have used poverty statistics that convey too dour — sometimes, as with the extreme-poverty estimates, far too dour — a view of how children have fared.But, the main criticisms of PRWORA that have emerged come from Peter Germanis, a senior policy advisor in the federal office that administers TANF who worked on welfare reform in the Reagan administration and who now writes essays independently as “Peter the Citizen” decrying what a disaster TANF is.It does look like deep poverty at the time of welfare reform and today were and are lower than the rates that prevailed in the 1980s.For what it’s worth, my study also found that children of single mothers were about as likely to have a range of food problems at the start of welfare reform as they are today.A major part of the Germanis critique focuses on the fairly undisputed fact that few states have been especially innovative or attentive in trying to move TANF recipients into jobs (and that is putting it nicely).Because states have fallen down on the job in this regard, many liberals, Peter Germanis, and even a few libertarians have concluded that PRWORA must have failed in encouraging single mothers to work.As I discuss in my new paper, “Poverty after Welfare Reform,” child-poverty rates are not only unambiguously lower than in 1996, they are at an all-time low.More controversial is the question of whether “deep poverty” (being under half the poverty line) or “extreme poverty” (living under a day per person) has increased.