Many people are celebrating today, August 22, as the 10th anniversary of “welfare reform.” While it's true that President Clinton signed the law eliminating the previous program, Aid to Families with Dependent Children, and establishing Temporary Assistance for Needy Families block grants on this date in 1996, that was hardly the first effort to rewrite the book on welfare as we knew it. Both Congress and the states began expanding work-based reforms years earlier, and much of what now goes by the name of welfare reform took place prior to the implementation of the 1996 law. Moreover, our research, published recently by the Brookings Institution, finds that “welfare” is an inapt description of the policies adopted in the last decade.
To better reflect today's reality, welfare reform should be shorthand for the policy shift toward providing employment benefits to low-wage workers. Key components of this shift include reimbursement for work expenses like child care and transportation, health insurance when employers fail to provide affordable options, and policies that boost low wages, including the minimum wage and the Earned Income Tax Credit (EITC).
Social conservatives love to conflate welfare reform with the 1996 law and cite it as the turning point in our national domestic policy. They fail to credit the Democratic-led efforts predating it and laying the groundwork for its early, if mixed, success. For example, one of the most important reforms came with the 1993 expansion of the Earned Income Tax Credit. Another important policy lever was congressional passage and enactment in 1996 of a federal minimum wage hike.
Moreover, the conservative “pat on the back” for the 1996 law is belied by this reality: Almost half of the much-heralded decline in cash assistance caseloads occurred after the EITC expansion -- and before implementation of the Temporary Assistance grants.
Viewed this way, 2006 marks a much more mature anniversary of welfare reform. Still, it is an opportune moment to focus specifically on today's Temporary Assistance in the context of broader changes.
Many policy-makers and scholars still think of Temporary Assistance as “welfare” -- a program for people who have little or no connection to the world of work. But our research establishes that this is simply no longer accurate. Instead, today's Temporary Assistance bears more resemblance to employment benefits like unemployment insurance and the Earned Income Tax Credit.
We analyzed how state officials spent their Temporary Assistance dollars, choosing to “follow the money” in order to assess priorities after states were granted new authority to set their own goals and fund services.
We found that state officials have gone from spending most of their Temporary Assistance money on cash benefits to spending it increasingly on an array of work supports and services. Moreover, the beneficiaries include a great number of parents in low-wage jobs who do not receive cash assistance at all. In fact, states on average use only about a third of their Temporary Assistance funds to provide cash assistance; instead, they provide employment benefits like those that higher-wage workers may get through their employers or the tax system: child care, transportation subsidies, and more.
Even cash assistance today bears little resemblance to welfare of old. The vast majority of those receiving cash assistance are workers: 60 percent lived in a household with at least one worker, and one-third lived in a household with a full-time worker. And Temporary Assistance lives up to its name: The typical parent receives cash assistance for only four months at a time, often when they are between jobs.
Unfortunately, policy-makers continue to think of Temporary Assistance as a welfare program. One example of this myopia is that the federal government does not even know how many families actually receive employment benefits funded with Temporary Assistance, because they only count parents getting cash assistance.
This shortsighted view puts Temporary Assistance at risk. Currently, federal law does almost nothing to require that state officials say how they are spending the funds and to set goals related to the use of funds. History shows that block-grant funds without clear programmatic goals representing broad public consensus are at risk of cuts. Temporary Assistance may fare no better if the public continues to view it as a “welfare to work” program for non-working recipients of cash assistance with little connection to the labor market.
To correct this misunderstanding and ensure funding for the future, progressive policymakers must establish clear goals and performance measures for Temporary Assistance. And they should clarify the empirical reality that Temporary Assistance is for employment benefits -- designed to help make the economy work better for low-wage workers, rather than a more limited “welfare-to-work” program.
These days, conservatives are trying out a new theme: they argue that low-wage workers who get publicly funded employment benefits -- things like child care and health insurance -- are still depending on “welfare.” We assume that conservatives are concerned about the shift in public opinion stemming from the success of these reforms. Indeed, anti-government conservatives have good reason to worry -- the shift in public attitude toward support for low-wage workers could thwart their plans to undermine and, ultimately, undo these important federal benefits.
Progressive voices must combat this new effort, but we also need to articulate a positive and inclusive social policy vision making clear we're all in this together. Today, nearly one-third of our labor market comprises low-wage jobs paying barely $10 an hour, without benefits. As long as this continues, there can be no higher priority than to address the inequities faced by millions of Americans in such jobs.
Margy Waller is director of The Mobility Agenda at the Center for Community Change and a former adviser to President Clinton on welfare policy. Shawn Fremstad is publisher of Inclusionist.org and adviser to several national nonprofits.
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