Making Something Out of Nothing: Welfare Reform and a New Race to the Bottom

The 1996 welfare-reform law has been characterized as a significantact of devolution. For some, this devolution will free statesto become "laboratories of democracy" that develop better welfarepolicies; for others, it will provoke a debilitating "race tothe bottom" where states will reduce benefits out of fear ofbecoming "welfare magnets" that attract recipients from otherstates. This article suggests that neither "laboratories ofdemocracy" nor "race to the bottom" does justice to the complexitiesof the 1996 reforms. In the case of the former, new federalmandates limit state action and states face informal pressuresto "keep up" with one another in developing new restrictionsso that they can avoid becoming "welfare magnets." In the caseof the latter, we find limited empirical support for the existenceof welfare migration that is supposed to be provoking a "raceto the bottom." We find that there is limited welfare migrationbecause the real value of welfare benefits to recipients doesnot vary nearly as much as common portrayals suggest. Giventhese realities, welfare reform may produce a procedural raceto the bottom that turns the myth of migration into a self-fulfillingprophesy.     

Interstate Competition and Welfare Policy

In 1996, the federal government terminated the Aid to Familieswith Dependent Children (AFDC) program and replaced it withthe Temporary Assistance for Needy Families program (TANF).Many powers once held by the federal government are now beingused by state governments. Will welfare assistance be redesignedand expanded or will states "race to the bottom?" This issueis investigated by examining state welfare policy choices duringthe latter years of AFDC(1976–1994). Because each stateunder AFDC had the authority to set the level of its welfareguarantee for families that had no income, it is possible toestimate the effects of interstate competition on AFDC guaranteelevels. By estimating a spatial autocorrelation coefficientwhile controlling for theoretically relevant variables and statefixed effects, this study finds evidence that states are sensitiveto the welfare policies of their competitors.     

MYTHS ABOUT PUBLIC WELFARE: POVERTY, FAMILY INSTABILITY, AND TEEN ILLEGITIMACY

To rationalize federal cutbacks in spending for public welfare, President Reagan charged that public welfare programs are responsible for leading to a "national tragedy involving family breakdown, teen-age illegitimacy and worsening poverty." Yet analysis of 1980 and 1982 census data for the 50 states suggests that if this is so, it is because of low, not high, spending for public welfare. While low state spending for public welfare is predictive of high teen illegitimacy rates and directly linked to high state poverty and divorce rates, higher state spending for public welfare is predictive of lower teen birth rates, and linked to lower rates of family breakup and poverty. Despite limitations inherent in the analysis, the findings challenge the contention that spending for public welfare contributes to family breakup, teen illegitimacy and poverty.     

The State of American Federalism, 1996-1997

Federalism enjoyed political and popular salience during theperiod 1996–1997 as the so-called "Devolution Revolution"began to be implemented and analyzed in the United States. Whilethere were a few examples of important Revolutionary efforts,the federal government continued to hold much of the power andsignificance it has achieved over the past sixty years. Evenin the area of welfare policy, where in 1996 there were historicreforms enacted to end the federal entitlement, the federalgovernment maintained a significant presence that made the ideaof devolution of welfare policy responsibility some what questionable.Nevertheless, states continued to lead in policy innovationin areas ranging from education to health, and the U.S. SupremeCourt continued to question the limits of federal power. Thepast year illustrated, once again, the complexity of our federalsystem and how difficult it is to reform federalism—particularlywhen it involves a shift in power and creates the perceptionof winners and losers.     

The effect of child support on welfare exits and re‐entries

Much of the literature on welfare dynamics has focused on the effects of recipient characteristics and state‐level characteristics such as welfare benefits and economic conditions; there has been very little analysis on the effects of child support. This paper, using the 1979‐1996 National Longitudinal Survey of Youth, examines whether child support affects the likelihood of leaving and re‐entering welfare. The results indicate that strong child support enforcement is important in helping young mothers exit and stay off welfare. Women with $1000 child support payments in the previous year were 18 percent more likely to exit welfare and 12 percent less likely to re‐enter welfare. Compared with women in states that pursued child support least vigorously, women in states that had passed extensive child support enforcement legislation and that spent more money on child support enforcement were 79 percent more likely to exit welfare and about 60 percent less likely to re‐enter welfare. © 2002 by the Association for Public Policy Analysis and Management.     

Revisiting Shapiro: Welfare Magnets and State Residency Requirements in the 1990s

The Personal Responsibility and Work Opportunity ReconciliationAct of 1996 (PRWORA) generated renewed interest in welfare racesto the bottom as states received greater discretion over eligibilitystandards for new residents. Despite U.S. Supreme Court decisionsfinding welfare-residency requirements unconstitutional andmounting empirical evidence that welfare benefits do not attractpoor migrants, state policymakers have enacted welfare-reformplans that treat newcomers differently as authorized in PRWORA.This article reviews the existing research on welfare migration,current state-residency requirements, and central constitutionalissues surrounding such requirements. With the likelihood thatcourts will have the final word on the current round of statewelfare-residency requirements, it is essential that empiricalresearch on welfare magnets examine the issues central to thecases currently moving through the judicial system.     

Political Partisanship and Welfare State Reform in Advanced Industrial Societies

In this article we evaluate two claims made in recent studies of the welfare states of advanced industrial societies: first, that welfare states have remained quite resilient in the face of demands for retrenchment; and second, that partisan politics have ceased to play a decisive role in their evolution. Addressing the first claim, we present analysis from a new data set on unemployment insurance and sickness benefit replacement rates for 18 countries for the years 1975–99. We find considerably more evidence of welfare retrenchment during the last two decades than do recent cross-national studies. Second, we examine the "end of partisanship" claim by estimating the effects of government partisanship on changes in income replacement rates in sickness and unemployment programs. Our results suggest that, contrary to claims that partisanship has little impact on welfare state commitments, traditional partisanship continues to have a considerable effect on welfare state entitlements in the era of retrenchment .     

Welfare-Ideological Change in Scandinavia: A Comparative Analysis of Partisan Welfare State Positions in Four Nordic Countries, 1970–2003

During the 1990s, the Nordic welfare states, notably Finland and Sweden, faced serious challenges that triggered a number of welfare restructuring processes. This article focuses on the political determinants of these processes, or, more exactly, it analyses changes in partisan welfare policy positions in Denmark, Finland, Norway and Sweden between 1970 and 2003. The main goal of the article is to chart possible changes in party positions on social policy. Has there been a decline in pro‐welfare attitudes during the period 1970–2003, and if so, how are these changes related to ideological and institutional factors? The data analysed in the article consists of election programmes, and more specifically, textual utterances concerning the welfare state. The results indicate a relatively high degree of stability in partisan support for welfare state expansion and investments in social justice, while market‐type solutions to social problems, on the other hand, have become more salient among parties, especially in the Right. The findings suggest that parties still differ from each other as to welfare‐political positions, indicating that Social Democratic and left‐wing parties remain the foremost defenders of the ‘Nordic Welfare Model’, whereas the Right has become more hesitant towards welfare state expansion.     

Recent Data Trends Show Welfare Reform to Be a Mixed Success: Significant Policy Changes Should Accompany Reauthorization

The conventional wisdom is that the 1996 federal welfare reform law has been a stunning success. Welfare caseloads have declined significantly and employment among disadvantaged single mothers has increased more than anticipated. Also, more low‐income children were living with married couples in the late 1990s. However, welfare reform was enacted in the midst of exceptional economic, demographic, and other policy changes and it is impossible to disentangle the impact of federal welfare reform from these other factors. This article describes these factors and puts the income gains and losses among families with children between 1996 and 2000 into the historical context of the past twenty‐five years. This analysis provides substantial evidence that welfare reform may have “worked” for many low‐income families with children while failing other low‐income families. Furthermore, despite recent increases in poverty following the 2001 recession, welfare caseloads continued to decline, indicating a fundamental flaw in what has traditionally been a countercyclical program. Data also suggest that the significant increase over the 1990s in the share of low‐income children living with married couples has been reversed following the recent recession. These findings suggest that the 1996 welfare law needs to be considerably retooled.     

Immigration and the Evolving American Welfare State: Examining Policies in the U.S. States

The inclusion of racial/ethnic minorities is often considered an important factor leading to a relatively limited American welfare system. However, given the federal nature of welfare eligibility rules and the states' role in determining benefit levels, few studies explicitly link questions of inclusion and benefit levels when explaining the evolution of American welfare policy. This study examines the relationship between inclusion and benefit levels by analyzing state policies related to the welfare reforms of 1996 which allowed states to decide if recent immigrants would be included in welfare benefits, and subsequently the extent to which this decision affected overall benefit levels offered by states under TANF. The results suggest that states' decisions regarding inclusion subsequently affect benefit levels, with the direction of these relationships most closely reflecting the erosion model's prediction of broader eligibility associated with lower benefit levels.     

An empirical investigation of interstate AFDC benefit competition

Claims that states which offer generous welfare benefits attract the poor and that some states pay low benefits intending to drive the poor away are neither uncommon nor entirely unfounded. This paper employs a two player (state) generalized game to model states' choice of a benefit level in the Aid to Families with Dependent Children (AFDC) program. Migration by the poor in response to interstate differentials in earnings and welfare opportunities, and the subsequent changes in AFDC caseloads, drive this game. Estimation of the model (using 1979 data) suggests that states within approximately 750 miles of each other do engage in a benefit-setting game. The rival's initial number of poor and preference for non-AFDC consumption appear to be the more influential rival characteristics. These findings, while derived from a different methodological approach, are consistent with previous studies which indicate that welfare recipients tend to move toward higher benefit states. Such migration may impede the efficient spatial allocation of labor. The results also indicate that states will tend to offer lower benefits given recipient migration than would be the case otherwise. State jurisdiction over benefits consequently leads to underprovision of AFDC. Federalization of the AFDC program would improve efficiency in terms of the spatial allocation of labor and the provision of AFDC.     

Politics and the New American Welfare States

Federal law allows states to create new welfare policies determining who can receive welfare, what types of clients are exempted from new welfare work requirements, and the value of cash benefits. This project tests nine different theoretical explanations of welfare policy to explain why states have reacted differently to this new authority. We test these explanations on Temporary Aid to Needy Families (TANF) policies promulgated between 1997 and 2000. Our findings confirm the strong role of race in TANF politics that Soss et al. (2001) recently reported, but we also find that other constituent characteristics, and institutions, paternalistic goals, and state resources have a consistent influence on welfare policy. These results indicate that different approaches to welfare are attributable to the unique, and very potent, combination of political characteristics in each state.     

Impacts of Intergovernmental Financial Incentives on State Welfare Policymaking and Interstate Equity

Welfare policy in the United States is strongly influenced byintergovernmental factors. This analysis traces the effectsof federal financial incentives on state welfare policy decisionsacross programs and examines how changes in federal incentivesaffect state policy choices over time. The data indicate thathigher levels of federal participation are associated with substantialreductions in variance of welfare grants among the states andwith higher levels of interstate equity. These findings implythat significant shifts in welfare outputs would result froma devolution of responsibility for welfare to the states.     

Predictions, Patterns, and Policymaking: A Regional Study of Devolution

This article examines state welfare policy choices since thepassage of the Personal Responsibility and Work OpportunityReconciliation Act(PRWORA) of 1996. IT argues that neither priorpredictions nor existing explanations of welfare policymakingfully capture the realities of reform. Using data from nationalstudies and comparisons of policymaking in six states, thisstudy demonstrates that diversity, not uniformity, characterizesstate responses to devolution. Accounting for these choicesrequires an understanding of the context of policymaking. Conventionalanalyses of welfare reform have ignored the institutional structuresthrough which policy is formulated and thus miss an importantdeterminant of choices: the actions of administrative officials.Analyses that ignore institutional settings, and the actionsof administrators within such settings, will continue to missmuch that is crucial to our efforts to understand policy decisions.     

Administration, Governance, and Policy Tools in Welfare Policy Implementation

Landmark welfare reform legislation passed in 1996 has been operating by legislative extensions since its expiration in September 2002. At this writing, reauthorization has been derailed by controversy over various legislative proposals. In this article, we contribute to the welfare policy debate by studying the importance of specific policy tools and the role of public administration in the dramatic fall in welfare caseloads from 1996 to 2000. Using administrative and survey data on welfare programs in 44 states, we test our theory that caseload reduction is a function of administrative commitments, policy design, and administrative actions linked to five sets of governance variables: environmental factors, client characteristics, treatments, administrative structures, and managerial roles and actions. We find strong evidence that administrative action to move clients into work, coupled with administrative commitments, can provide important links between policy goals and policy outcomes.     

The Scandinavian Welfare Model in Crisis? Achievements and Problems of the Danish Welfare State in an Age of Unemployment and Low Growth

The "Scadinavian welfare model" is often considered vulnerable to mass unemployment. The Danish welfare state provides and opportunity to examine the capacities of the "Scandinavian model" to adapt to this situation. This article explores a number of alleged crisis problems of th welfare state, ground into budgetary pressures, incentive problems and legitimacy problems. It is conclude that most of these problems have been exasggerated and that the rrreal threats to the economic foundations of the welfare state should be found in political steering and incentive problems rather thant in the exogenous pressures from the social and economic system, or in pressure from th unintended side effects of welfare arrangement. It is furthermore argued that one of the main achievements of the Danish welfare state has been so prevent unemployment and labor market marginalization from developing into a broad-ranged social marginalizaton and a political po-larization which could undermine citizenship and solidarity in society.     

Asymmetric Effects of Intergovernmental Grants: Analysis and Implications for U.S. Welfare Policy

Theories of federal grants to states and localities suggestthat these grants have a stimulative effect on spending, causingrecipient governments to expand and contract programs alongwith changes in the grants. However, policymakers may responddifferently to grant decreases than to grant increases becausethey face political and bureaucratic pressures to expand programs.These asymmetric reactions may depend on specific politicalstructures. Pooled time-series regressions of data from theAid to Families with Dependent Children program across 46 statesfrom 1965 to 1994 demonstrate state government responses togrant changes. Bureaucratic pressures and proposals lead statesto expand their welfare benefits upon increases in federal grants,but not to contract them upon decreases in federal grants. Withregard to the 1996 welfare reforms, this study indicates thatthe switch to block grants will lead to little or no state reductionin welfare payments.     

The Puzzling Lack of a Social Dilemma

Among theories dealing with welfare state policy development, theories of social dilemmas and of key actor-group influence over government policy formation are increasingly holding sway. These theories emphasise that few would risk being unilateral contributors to the systems without any compensating elements. Thus, selective, means-testing systems or stingy universal systems in which some citizens 'contribute' while others 'receive' may risk being regarded as unfair in the eyes of the contributors in spite of the redistributive intentions. The degree of welfare state programme 'fairness' and reciprocity would, then, explain the degree of support for the welfare state. However, by using data from the United Kingdom and Sweden, this article will, first, claim that the social dilemma research turns a blind eye to the fact that public opinion in general as well as key groups appears to be able to yield its support even when welfare states contain distinctly selective elements and low-compensation universal programmes. Second, the article will elaborate on the confusion surrounding welfare state taxonomies as one plausible reason for why social dilemma theories may risk missing the target. Finally, the article will elaborate on the future of the welfare state as we know it. The main points are that given the fact that the welfare states in the two countries really already are conglomerates of different types of welfare programmes and, given a weak relationship between key groups and policy formation, the most likely future for the welfare state is that policies will continue to follow mixed paths.     

Devine intervention? Lessons in systemic retrenchment from Canada’s most generous welfare state

This article tackles the importance of systemic retrenchment in welfare state research by focusing on two core elements neglected in the literature: the civil service and governmental revenues. Saskatchewan has possessed key ingredients associated with generous welfare states: a dominant left-wing party, a supportive bureaucracy and important non-visible fiscal revenues. According to the comparative welfare state literature, this is also an excellent recipe for maintaining a generous welfare state amid attempts, primarily by right-wing governments, to scale it back. Yet, most social indicators in the post-Devine years demonstrate that Saskatchewan can no longer be considered a leading welfare state in Canada. Reforms to the bureaucracy and a host of financial measures resulting in a near default explain why the Devine government was successful in its efforts to disrupt the CCF/NDP social legacy despite the fact that the NDP regained power for 16 years afterwards.