The Center's work on 'Welfare Reform / TANF' Issues

It’s Time to Bolster TANF

October 21, 2013 at 1:53 pm

Cash assistance benefits for the nation’s poorest families with children fell again in purchasing power in 2013, we explain in our annual update of state benefits under the Temporary Assistance for Needy Families (TANF) program.  Seven states increased TANF grant amounts last year — and encouragingly, no state cut benefits — but most kept family grant levels unchanged, allowing inflation to continue eroding the benefits’ value.

TANF is often the only source of support for participating families and, without it, they would have no cash income to meet their basic needs.  Yet, this critical safety net program supports fewer families — and its benefits are worth less — than ever before. Consider:

  • In 2012, just 25 of every 100 poor families received TANF benefits, down from 68 of every 100 in 1996, the year policymakers created TANF to replace the former Aid to Families with Dependent Children program.
  • TANF benefit levels are at least 20 percent below their 1996 levels in 37 states, after adjusting for inflation.
  • As of July 1, 2013, every state’s benefits for a family of three with no other cash income were below 50 percent of the federal poverty line, measured by the Department of Health and Human Services 2013 poverty guidelines (see map).  Benefits were below 30 percent of the poverty line in most states.

A few of the states that increased TANF benefits in 2013 were following through on past commitments to modestly raise benefits or adjust them for inflation. Three states — Connecticut, Ohio, and Wyoming — increased TANF benefits through annual cost-of-living adjustments (COLAs).  Such an automatic mechanism, built into state law, is the best way to prevent the value of TANF benefits from falling and to keep them even with inflation.

These are promising steps, but still more states should consider similar policy changes.  It’s time for states to halt the erosion of TANF benefits and slowly restore some of the purchasing power the grants have lost over the past 17 years.

Click here for the full paper and 50-state data.

New Evidence That Subsidized Jobs Programs Work

September 9, 2013 at 3:31 pm

Thirty-nine states and the District of Columbia used $1.3 billion from the TANF (Temporary Assistance for Needy Families) Emergency Fund to place more than 260,000 low-income adults and youth in temporary jobs in the private and public sectors during the Great Recession.  Now, from the Economic Mobility Corporation (EMC), there’s new evidence that these subsidized jobs programs did what they were supposed to do:  help disadvantaged individuals during hard economic times to boost their incomes and improve their chances of finding unsubsidized jobs when the subsidized jobs ended.

The EMC study shows that these programs helped businesses as well as job-seekers weather the worst of the recession.  It found:

  • Participation in subsidized employment programs led to significant increases in employment and earnings. Participants in four of the five programs covered by the study were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program.  The findings from Florida are especially noteworthy because researchers could compare participants with applicants who were eligible for the program but didn’t receive a subsidized job.  There, participants earned an average of $4,000 more in the year after the program than in the year before it, compared to a $1,500 increase for people in the comparison group.
  • The programs were especially effective for the long-term unemployed. In Mississippi and Florida, average annual earnings of the long-term unemployed rose by about $7,000 after participating; in Los Angeles and Wisconsin, they rose by about $4,000.  In all four sites, earnings rose much more among the long-term unemployed than among people who had been unemployed for shorter periods.
  • Employers reported hiring more workers than they would have otherwise and workers with less experience than their usual hires. Two-thirds of the employers interviewed for the study said that they created new positions for subsidized workers.  Over half said they hired people with less work experience than their usual hires. 

  • Most participating employers reported multiple benefits from the program. These included expanding their workforces, serving more customers, and improving their productivity.     

We’ve called the TANF Emergency Fund, which expired three years ago, a “win-win-win” because of its benefits for unemployed people, businesses, and communities.  This new study provides hard evidence of the program’s accomplishments.  It’s not too late to build on that success.

This year, at least five states — Nebraska, Colorado, California, Minnesota, and Rhode Island —expanded state funding or provided new funding for subsidized employment for TANF recipients or other disadvantaged individuals.

Congress should follow their lead.  One place to start would be to redesign the TANF Contingency Fund as an employment fund that states could use to provide subsidized jobs or otherwise invest in evidence-based employment programs that significantly increase the job prospects of people receiving or eligible for TANF.  That would help redirect scarce resources to states with the greatest need for jobs and help create jobs for those whom the tepid recovery has left behind.

Cato’s Fundamentally Flawed Analysis

August 22, 2013 at 3:34 pm

The Cato Institute released a report this week that argues that people on “welfare” are better off than low-income working families.  In reality, that couldn’t be further from the truth, as we explain in our recent commentary.

Cato’s analysis makes two fundamental errors:

  • It substantially overstates the help that poor jobless families receive. Cato assumes that when a parent is out of work, the family can readily access cash welfare benefits, housing assistance, nutrition assistance through SNAP (formerly food stamps) and WIC (for pregnant and new mothers, infants and young children), and Medicaid.  But, very few families get that much help.  Just one-third of families that are eligible for cash assistance in the state they live in actually receive it.  Among those who do get help from TANF, Cato’s own figures show that just 15 percent also receive housing assistance.
  • It substantially understates the help that low-income working families get. Cato ignores the fact that low-income working families are eligible for, and receive, assistance through programs such as SNAP, Medicaid, housing assistance, and WIC.  These are important supports that help working families make ends meet.  For example, 86 percent of children who get health insurance through Medicaid or the Children’s Health Insurance Program (CHIP) are in working families.  And, more than half of able-bodied adults in households with children receiving SNAP work while receiving assistance.  When families leave welfare for work, the other forms of assistance they receive — such as SNAP and housing assistance — continue and only begin to fall if the family’s earnings exceed the amount it received from cash welfare benefits.

Moreover, due to changes to the safety net over the last few decades, these programs now do much more to promote work and support low-income working families.  They help keep millions of working parents and their children out of poverty.  To be sure, many working families still struggle to make ends meet, particularly if they face high child care costs, but Cato offers no policy proposals to improve these families’ financial security.

The changes to the safety net haven’t all been positive:  contrary to the picture that Cato’s report paints, these programs now do much less to help poor families in which parents are out of work.  This has led to an increase in the number of children living in deep poverty, which Cato’s policy recommendations would worsen.

Ultimately, the fact that so many families work to provide for their children is the real evidence that Cato’s analysis is misguided.  Looking at children in families below 150 percent of the poverty line in 2010, 15.7 million of them lived in working families that did not receive any TANF cash assistance that entire year.  By contrast, there were only 2 million children in TANF families without significant earnings that year.  These hard-working families seem to understand a lot more about the value of work than Cato does.

Click here to read our commentary.

States Taking the Lead in Making Work Supports More Efficient

July 31, 2013 at 3:45 pm

Some federal lawmakers have been ramping up their attacks on public benefit programs, most recently at a House Ways and Means hearing today on the need to reform the programs to get people “real help.”  Fortunately, at the same hearing, lawmakers heard that a number of states are already doing this — streamlining and better coordinating the programs and services that support low-wage work.

Illinois Health and Human Services Secretary Michele Saddler outlined the state’s transformation of several key programs — like SNAP (food stamps), Medicaid, and child care — to help low-income families keep and maintain jobs.

With the support of Work Support Strategies, a foundation-funded initiative, Illinois is simplifying and aligning policies across programs and investing in new technology to make it easier for families to apply and easier for the state to verify their information.  (CBPP leads the technical assistance for Work Support Strategies.)

The goal is simple yet powerful:  people seeking assistance need only tell their story once to get the supports they need.  As Saddler explains:

When I began, our benefit delivery system was broken. Families had to apply multiple times to get the assistance their family desperately needed. They had to take hours or even days off of work to sit in a local office to get help, potentially losing the very work we encourage. Our focus has been on finding and creating efficiencies in this system, seeking a better environment for customers and staff. A more efficient and accessible system leads to greater stability for families and ultimately saves the government future costs of benefits and administration.

Colorado, Idaho, North Carolina, Rhode Island, and South Carolina also participate in Work Support Strategies.  Together, they are showing that states that differ politically, geographically, and demographically can find common ground in maximizing efficiency and improving access to critical work supports.

That should be no surprise.  After all, every state has faced challenges stemming from the Great Recession, including increased need, budget cuts, and staff reductions, so every state stands to benefit from making its work supports more efficient and its low-income residents more successful.  Let’s hope Congress hears the news.

Anti-Poverty Programs’ Success Refutes Rep. Ryan’s Claims

July 26, 2013 at 11:19 am

Well, we knew this was coming.  Just last week, our Senior Fellow, Arloc Sherman, wrote a blog that began this way:

Next year, the nation will mark the 50th anniversary of the War on Poverty, which President Johnson proclaimed in his State of the Union address of January 1964.  Sadly, we should expect to hear a drumbeat of attacks claiming that, as President Reagan said long ago, we fought a war on poverty and “poverty won.”  Indeed, House Budget Committee Chairman Paul Ryan said recently of the anti-poverty effort, “We don’t have much to show for it.”

So, right on cue, Chairman Ryan said yesterday:

Next year marks the 50th anniversary of the War on Poverty.  We’ve spent approximately $15 trillion and the question we ought to be asking ourselves is, ‘where are we?’  With a 15 percent poverty rate today — the highest in a generation — and with 46 million people in poverty, I would argue it’s not working very well.

Needless to say, we have a different take.  Here, in anticipation of such attacks, is the rest of what Arloc Sherman wrote last week:

The truth is very different.  A number of anti-poverty programs — including some key efforts that have their origins in the War on Poverty and some that came later, often the product of bipartisan agreement — have an impressive record of achievement.  Together, programs such as food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP), the Earned Income Tax Credit (EITC), Medicaid, college financial assistance and broader based programs such as Medicare, have reduced poverty and malnutrition, expanded access to health care, and opened doors of opportunity for millions of people.  To be sure, poverty remains a serious problem in the United States and remains higher here than in many western industrialized countries.  And, not every program begun in the 1960s or more recently has been effective.  But, a bumper sticker analysis of the War on Poverty and today’s safety net that implies that “poverty won” misses the mark.

Take SNAP.  Chairman Ryan’s budget would cut the program by $135 billion over the next ten years.  Yet, the program is a prime example of a major national accomplishment.  Before food stamps and other nutrition programs were widely available, it was not hard to find large numbers of children in very poor areas of America with distended bellies or other indications of malnutrition.  That’s no longer the case.

A recent academic study looked back at the babies who benefited from the introduction and expansion of food stamps in the 1960s and 1970s and found that they grew up to be healthier and more likely to finish high school than their peers born in counties where the program had not yet been instituted.

Medicaid, created in 1965 as another core piece of the War on Poverty, also continues to make a major difference in people’s lives, improving health and reducing infant mortality and childhood deaths.  The program now provides health coverage to nearly 65 million low-income Americans, including children, parents, seniors, and people with disabilities.

Various newer programs also have been effective in reducing or alleviating poverty.  Consider, for example, the EITC, a program for working families created under President Ford and expanded under President Reagan and later presidents and congresses of both parties.  Not only does the program directly reduce poverty — this tax credit kept more than 6 million Americans above the poverty line in 2011, including more than 3 million children — but research has shown that it increases employment among single mothers and helps lead to better academic achievement among low-income children in participating families.

Those who claim that we don’t have much to show from anti-poverty programs often cite the fact that the poverty rate under the government’s official measure of poverty is similar now to what it was in the mid-1960s.  Such a comparison, however, is grossly misleading.  The official poverty measure counts only families’ cash income before taxes.  It fails to count food stamps, the EITC, rental subsidies, and the like.  As a result, it counts the forms of assistance that have shrunk dramatically since the 1960s such as cash welfare payments to poor families with children, while leaving out the key forms of assistance that were created or expanded during this period and have powerful anti-poverty effects.

That’s why analysts from a variety of political perspectives prefer the government’s newer Supplemental Poverty Measure (SPM), which includes both cash assistance and “non-cash” benefits such as SNAP, the EITC, and rental assistance, and which also nets out income and payroll taxes that people must pay.  The SPM shows that without the safety net, the percentage of Americans in poverty would be nearly double what it is:  29 percent of Americans would have been poor in 2011, rather than the 16 percent who were poor when safety net programs are taken into account.  SNAP alone kept 4.7 million above the poverty line (see chart).

As we approach the 50th anniversary of the War on Poverty, we’ll have more to say about anti-poverty programs.  Stay tuned.