State strategies for welfare reform: The Wisconsin story

Wisconsin is commonly cited as exemplar of the capability of states for reforming welfare. Wisconsin's welfare and caseload declined 22.5 percent between 1986 and 1994. I argue that the decline resulted from restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utilization by means other than denying access are jeopardized by proposed changes in federal cost-sharing, a prospective state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. Wisconsin Works, the state's plan for public assistance in a post-block grant world, continues benefit reduction and eligibility restriction but expands emphasis on employment. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere.     

Changes in the welfare caseload and the health of low-educated mothers.

Declines in the welfare caseload in the late 1990s brought significant change to the lives of many low-educated, single mothers. Many single mothers left welfare and entered the labor market and others found different ways to avoid going on public assistance. These changes may have affected the health and health behaviors of these women. To date, there has been little study of this issue. In this paper, we obtained estimates of the association between changes in the welfare caseload caused by welfare policy, and four health behaviors--smoking, drinking, diet, and exercise--and four self-reported measures of health--weight, days in poor mental health, days in poor physical health, and general health status. The results of our study reveal that recent declines in the welfare caseload were associated with less binge drinking, but otherwise welfare reform had little effect on health and health behaviors.     

The transformation of the Supplemental Nutrition Assistance Program

Between 2000 and 2005, the Supplemental Nutrition Assistance Program (SNAP, until recently, the Food Stamp Program) caseload increased by half. As the Great Recession unfolded, the SNAP caseload grew even more rapidly. Further, over the past two decades the composition of the caseload has shifted sharply away from families combining food and cash assistance and toward families receiving food assistance in the absence of any other major, means‐tested income support. By analyzing components of the caseload separately, we provide new and more insightful estimates of the effects of food and cash assistance policies and the economy on both the change in the composition of the caseload and the large caseload swings over the 1990s and 2000s. We find that the economy can explain a portion of caseload changes, but not compositional shifts. Food and cash assistance policies help to explain both changes. In total, the combination of SNAP and welfare policy changes account for about half of the sharp increase since 1994 in the share of SNAP households receiving food, but not cash, assistance. © 2011 by the Association for Public Policy Analysis and Management.     

The Impact of the Earned Income Tax Credit on Household Finances

Using a simulated instrument strategy, we analyze how expansions to the federal and state Earned Income Tax Credits (EITC) affected household finances over the past two decades. Using data from the Survey of Income and Program Participation wealth topical modules, we also test whether responses differ over time, as well as whether there are different responses to the federal and state expansions, and how responses vary by educational attainment. A $1,000 policy‐induced increase in the average household EITC leads to a 3 percentage point increase in the likelihood of holding money in a savings or checking account, and approximately $700 more held in savings balances. These results are coupled with large increases in pre‐tax family earnings. We also find some evidence of decreases in unsecured debt holdings. We interpret these results as further evidence that the EITC increases the financial stability of low‐income single mothers.     

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.     

Incentives,challenges, and dilemmas of TANF: A case study

This paper compares the incentives inherent in TANF (Temporary Assistance for Needy Families), the U.S. welfare system in place after the 1996 reforms, with those of TANF's predecessor, AFDC (Aid to Families with Dependent Children), using the experience in one state, Wisconsin, as an example. Is the new program successful in avoiding the “poverty trap” of the old welfare system, in which the marginal tax rates imposed on earnings and benefits were so high that they discouraged work effort outside a narrow earnings range? As women receiving assistance begin working more hours and earning more, income‐conditioned benefits (Food Stamps, EITC, Medicaid, and subsidies for child care) are reduced and withdrawn, in effect constituting a “tax” on earnings. Under TANF, there is more support for these families, at least in Wisconsin, and so economic well‐being should be higher for most women with earning in this range than it was under AFDC. But marginal tax rates under TANF remain high, and in some income ranges they are higher than under AFDC. Once in the work force, former TANF recipients have earnings over the long run that expose them to very high marginal tax rates, which decrease the benefits of working harder and make it very difficult to gain full eonomic independence. Evidence from other sources suggest that most low‐skilled women have earnings in the same range and so are likely to face similar reductions in benefits such as child care subsidies or the EITC as their earnings increase, even if they are not receiving welfare‐related benefits. © 2002 by the Association for Public Policy Analysis and Management.     

The effects of welfare reform on the academic performance of children in low‐income households

During the 1990s, U.S. welfare policy underwent dramatic reforms aimed at promoting employment and reducing dependence. Although the immediate effects on adult labor supply and family income have been studied extensively, this paper is the first to evaluate the long‐run effects on children's well‐being. Using a decade of national math achievement data and controlling for contemporaneous changes in education policy and environment, we associate welfare reform with relative test score improvements for low‐income students. Greater gains occur in states with larger initial welfare caseloads and larger caseload reductions.© 2009 by the Association for Public Policy Analysis and Management.     

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.     

“It’s Great When People Don’t Even Have Their Welfare Cases Opened”: TANF Diversion as Process and Lesson

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) encouraged states to reduce welfare caseloads. Caseload reduction can be accomplished by promoting exit for work, marriage, or other private means of support and by diverting new applicants. Most research on caseload decline has focused on welfare‐to‐work outcomes; less is known about processes of diversion. This study employs administrative records and ethnographic data to examine diversion in West County, New York, from 1999 to 2003. Findings demonstrate a high level of diversion and suggest that application is an ongoing and at times remedial process rather than an event. Diversion occurs at all points of the expanded TANF (Temporary Assistance to Needy Families) intake process and is associated with one‐time lump sum payments as well as the hassle factor engendered by new eligibility requirements. The encumbered lives of applicants and TANF staff discretion are also implicated as factors contributing to diversion. We conclude with an analysis of the implications of TANF diversion for access to benefits.     

Tax Code Knowledge and Behavioral Responses Among EITC Recipients: Policy Insights from Qualitative Data

We build on the robust quantitative literature on behavioral responses to the Earned Income Tax Credit (EITC) by using in‐depth qualitative interviews with 115 EITC recipients to examine how they understand and respond to its incentive structures regarding earnings, marriage, and childbearing. We find that respondents consider their tax refund as a whole, without differentiating the portion from the EITC; as a result, they cannot predict how their EITC refund would change if they altered their labor supply or marital status. Incentives for childbearing are better understood, but are not specific to the EITC; rather, parents respond to a combination of tax deductions and credits as a whole. Respondents would like to maximize their refunds, but most cannot or would not alter their behavior due to structural constraints they face in the labor and marriage markets. Rather than adjust work hours, defer marriage, or have additional children, respondents exhibit a different type of behavioral response to the incentive structure of the EITC: They alter their tax filing status in order to maximize their refunds. They routinely claim zero exemptions and deductions on their W‐4s, file their tax returns as head of household rather than as married, and divide children among the tax returns of multiple caregivers. Although some of these behaviors qualify as tax noncompliance, they emerge because the intricacies of the tax code conflict with the complexity and fluidity of finances and family life in low‐income households.     

Does it pay to move from welfare to work?

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act requires welfare recipients to look for work and has made it more difficult for nonworking recipients to remain on the welfare rolls. In addition, the economic boom of the 1990s and changes in federal and state policies have raised the net income gain associated with moving from welfare to work. This paper analyzes data from a panel survey of single mothers, all of whom received welfare in February 1997. In 1999, those who left welfare and were working had a higher household income and lower poverty rate, experienced a similar level of material hardship, engaged in fewer activities to make ends meet, and had lower expectations of experiencing hardship in the near future than did nonworking welfare recipients. Estimations of fixed‐effect regressions of income that control for both observable and unobservable time‐invariant characteristics show that monthly net income increases by $2.63 for every additional hour of work effort. About 60 percent of the observed monthly income difference between wage‐reliant and welfare‐reliant mothers can be attributed to differences in their work effort. Thus, after welfare reform, it does pay to move from welfare to work. © 2002 by the Association for Public Policy Analysis and Management.     

Party Identification,Issue Attitudes,and the Dynamics of Political Debate

This article investigates whether media coverage of elite debate surrounding an issue moderates the relationship between individual‐level partisan identities and issue preferences. We posit that when the news media cover debate among partisan elites on a given issue, citizens update their party identities and issue attitudes. We test this proposition for a quartet of prominent issues debated during the first Clinton term: health care reform, welfare reform, gay rights, and affirmative action. Drawing on data from the Vanderbilt Television News Archives and the 1992‐93‐94‐96 NES panel, we demonstrate that when partisan debate on an important issue receives extensive media coverage, partisanship systematically affects—and is affected by—issue attitudes. When the issue is not being contested, dynamic updating between party ties and issue attitudes ceases.     

WORKFARE IN THE 1980s: SUCCESSES AND LIMITS

Between 1981 and 1987 twenty-eight states experimented with workfare programs. By requiring mandatory community service from welfare recipients, the states hoped to reduce welfare caseloads as well as increase community service. Based in part on those program experiences, Congress included the first national workfare requirement in the 1988 welfare reform package (the Family Support Act). This study is the first to attempt to evaluate the implementation and impact of workfare on a national basis. A pooled, cross-section, longitudinal model is used to estimate the effect of workfare on AFDC caseloads. Despite the low level of state-level implementation, the evidence suggests that workfare may have contributed to welfare caseload reductions in the 1980s.     

Has welfare reform changed teenage behaviors?

Data from the National Longitudinal Surveys of Youth 1979 and 1997 cohorts were used to compare welfare use, fertility, educational attainment, and marriage among teenage women in the years before and immediately following welfare reform. The first objective was to document differences between these cohorts in welfare use and outcomes and behavior correlated with entry into welfare and with future economic and social well‐being. The second objective was to investigate the causal role of welfare reform in behavioral change. Significant differences were found between cohorts in welfare use and in outcomes related to welfare use. Furthermore, difference‐in‐differences estimates suggest that welfare reform has been associated with reduced welfare receipt, reduced fertility, and reduced marriage among young women who, because of a disadvantaged family background, are at high risk of welfare receipt. Finally, in the post‐welfare reform era, teenage mothers are less likely to receive welfare and are more likely to live with at least one parent than in the pre‐reform era. Establishing more definitively that welfare reform is responsible for these changes will require further investigation. © 2003 by the Association for Public Policy Analysis and Management.     

Section 8 and Movement to Job Opportunity: Experience after Welfare Reform in Kansas City

Abstract

This research addresses the extent to which tenant‐based rental assistance, before and after welfare reform, helps households move to areas with greater opportunities for employment. It was thought that the threat of losing their welfare benefits would encourage participants in the Section 8 program to use the mobility it offers to move to neighborhoods with greater opportunities for employment.

Two samples of Section 8 program participants, one taken before welfare reform and the other taken after it was enacted, have been examined. With the strong economy after welfare reform, more Section 8 households are employed and fewer are on welfare. However, the analysis finds that, independent of welfare reform, households did not use their housing subsidy to move to areas with greater opportunities for employment. Program participants typically remained in racially concentrated areas of the central city, away from those neighborhoods with job growth or large numbers of jobs.     

Extending the EITC to noncustodial parents: Potential impacts and design considerations

This paper examines the noncustodial parent earned income tax credit (NCP EITC), a new type of credit recently enacted in New York and Washington, D.C., and proposed by Senator Bayh and then‐Senator Obama in 2007. The NCP EITC offers an earned income tax credit to low‐income noncustodial parents who work and pay their full child support. This paper provides background information about the policy and presents national estimates of eligibility and benefits for an NCP EITC under three alternative policy scenarios. It also discusses several key design and implementation issues. © 2010 by the Association for Public Policy Analysis and Management.     

Marriage patterns among unwed mothers: Before and after PRWORA

The promotion of marriage and two‐parent families became an explicit public policy goal with the passage of the 1996 welfare reform bill. Marriage has the putative effect of reducing welfare dependency among single mothers, but only if they marry men with earnings sufficient to lift them and their children out of poverty. Newly released data from the 2002 cycle of the National Survey of Family Growth (NSFG), along with data from the 1995 cycle, allow us to compare pre‐ and post‐PRWORA differences in (1) cumulative marriage rates among unwed mothers, and (2) patterns of marital choice (that is, differences in characteristics of the men these mothers marry, such as their education and employment status). Overall, our results show that unwed childbearing is associated with lower marriage rates and marital quality. Difference‐in‐difference models show that welfare reform was not strongly associated with pre‐ and post‐welfare reform changes in marriage among nonmarital birth mothers, even among the most disadvantaged mothers. Compared with other women, nonmarital birth mothers also were less likely than other women to marry “economically attractive” men in the post‐welfare reform period. The success of marriage promotion initiatives may depend heavily on whether women themselves are “marriageable” and whether potential spouses have the ability to support a stable family life. © 2008 by the Association for Public Policy Analysis and Management.     

Social spending,partisan bias and vote choice. Evidence from the US

Most models in political science and political economy assume that benefiting from public spending increases the likelihood of voting for the government. However, we do not have much empirical evidence on the conditions under which recipients of public spending reward governments for their public transfers. This article studies the electoral implications of welfare spending cuts in the early years of the Reagan Presidency, when public spending changes were particularly pronounced. Using 1982 NES data, this paper demonstrates that voters who lost public benefits punished Reagan but this only occurred when they identified with the Democratic Party. By contrast, benefit recipients not affected by government cuts were more likely to support Reagan, but again this was only significant among voters identifying with the party of government. This paper thus finds that governments cannot automatically “buy” votes by using welfare spending, the influence of which is instead cushioned by party identification.     

From Welfare to Work: Has Welfare Reform Worked?

This paper discusses estimates of the effect of welfare reform,as measured by the imposition of time limits and family cap provisions, on the employment and fertility of less educated unmarried women. This analysis shows that welfare reform has induced less educated unmarried women to move from welfare to work in significant numbers. The imposition of time limits and other administrative reforms correlated with it have increased the employment of unmarried women with 12 or fewer years of education by an estimated 363,171, approximately 28 percent of the decline in welfare caseloads for this group since 1994. Furthermore, evidence shows that women who have left welfare for employment worked approximately 29 hours per week, which even at low wages may significantly improve their financial status relative to public assistance. However, little evidence can be found to show that the imposition of time limits and family caps affect the fertility of less educated unmarried women. © 2001 by the Association for Public Policy Analysis and Management.     

Are Parental Welfare Work Requirements Good for Disadvantaged Children? Evidence From Age‐of‐Youngest‐Child Exemptions

This paper assesses the impact of welfare reform's parental work requirements on low‐income children's cognitive and social‐emotional development. The identification strategy exploits an important feature of the work requirement rules—namely, age‐of‐youngest‐child exemptions—as a source of quasi‐experimental variation in first‐year maternal employment. The 1996 welfare reform law empowered states to exempt adult recipients from the work requirements until the youngest child reaches a certain age. This led to substantial variation in the amount of time that mothers can remain home with a newborn child. I use this variation to estimate the impact of work‐requirement‐induced increases in maternal employment. Using a sample of infants from the Birth cohort of the Early Childhood Longitudinal Study, the reduced form and instrumental variables estimates reveal sizable negative effects of maternal employment. An auxiliary analysis of mechanisms finds that working mothers experience an increase in depressive symptoms, and are less likely to breastfeed and read to their children. In addition, such children are exposed to nonparental child care arrangements at a younger age, and they spend more time in these settings throughout the first year of life.