History of Welfare

David Harder
Cale Boggs
Jared Bliese
Edward Hubbs

Welfare: Net or Trap

Brief History of Welfare

• 1935: The Social Security Act, signed by President Franklin Roosevelt, establishes Aid to Dependent Children (later renamed Aid to Families with Dependent Children, or AFDC).
• 1964: Congress passes legislation making President John F. Kennedy’s food stamp program permanent.
• 1967: Congress passes requirement for every state to institute a work training and incentive program for AFDC recipients.
• 1988: Congress requites states to institute a Job Opportunities and Basic Skills training program (JOBS) for AFDC recipients.  The law also required states to provide benefits to poor two-parent families, and extends childcare and medical benefits for those who get a job and leave welfare.
• 1992: Then Arkansas Governor Clinton vows to “end welfare as we know it” as part of his campaign for president.
• 1996: President Bill Clinton signs the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.  The law ends the 61-year-old federal guarantee of monthly welfare benefits. “The primary problem with the welfare system between 1960 and 1996 was that in many states a person could not work without lowering their standard of living”. (Mike Mitchell)
• March 31st, 2004: Congress reauthorizes TANF funding until June 30th, 2004.

 

Components of the Bill

• The purpose of welfare reform was to strengthen families, and to work those families toward self-reliance.
• The main policy component of the bill was the TANF program, which replaced AFDC, JOBS, and several other entitlement programs.
• TANF: Temporary Assistance for Needy Families.  Under the TANF program, each state receives a fixed amount block grant.  Annual TANF funding is about $16.5 billion.
• The law also altered the administration of the Child Support Enforcement Program and Social Security Insurance for children.  It also modified the child nutrition program and instituted reductions in the Social Services Block Grant.
• The Basic block grant provides states and tribes $16.5 billion in federal funds each year, which covers benefits, administrative expenses, and services, targeted to needy families.

 

The TANF Program

• The TANF program gave states unprecedented leeway in determining how welfare funds could be used. States are allowed to use TANF funds in any manner “reasonably calculated to accomplish the purpose of TANF.”
• The purpose of the TANF program is to assist needy families so that children can be cared for in their own homes; and reducing dependency of needy parents by promoting job preparation and work.  Furthermore, it encourages the formation and maintenance of two-parent families.

 

Requirements for TANF Recipients

• With few exceptions, TANF recipients must work as soon as possible or no later than two years after first receiving TANF assistance.
• During 1997 and 1998, single parents had to participate in work activities for at least 20 hours per week.  By 2000, single parents had to participate in at least 30 hours of work activities per week.
• Two-parent families are required to participate in work activities for at least 35 or 55 hours per week, depending on the circumstances of the family.
• Work activities consist of: unsubsidized or subsidized employment, on-the-job training, work experience, community service, job search, vocational training, job skills training related to work, education directly related to work, satisfactory secondary school attendance and providing child care services to individuals who are participating in community service.
• No more than 12 months of vocational training, no more than six total weeks of job search, and no more than four consecutive weeks of job search of job search count as work activities.
• Families with an adult who has received aid for five years are no longer eligible for TANF assistance.  States, however, may provide assistance to families that have exceeded the time limit for up to 20 percent of their caseload.  States may also provide assistance to these families using state-only funds.

 

State TANF Requirements

• States were required to develop plans to implement TANF funding and submit them to the department of Health and Human Services by July 1997.
• States must maintain an annual cost-sharing requirement known as “maintenance of effort” of MOE.
• States required MOE is based on a percentage of the state’s expenditures on AFDC and AFDC related programs as of 1994.
• States that meet minimum work participation rate requirements must spend at least 75% of the 1994 level.  States that do not meet this requirement must spend 80% of the 1994 level.
• States may be penalized an amount of no more than 25% of the State’s block grant allotment for failing to comply with a number of requirements such as satisfy work requirements, comply with the five year limit of assistance, or meeting the MOE requirement.

 

 

 

Empower States

• Encourage state to seek new and innovative solutions to help welfare recipients achieve independence.
• This flexibility can help states design better programs that could significantly improve service delivery from Americans in need.
• Some examples of State Programs:
• Arizona: EMPOWER (Employing and Moving People Off Welfare and Encouraging Responsibility.
• California: CALWORKS (California Work Opportunity and Responsibility to Kids.)
• Kentucky: K-TAP (Kentucky Transitional Assistance Program)
• Massachusetts: TAFDC (Transitional Aid to Families with Dependent Children), cash assistance ESP (Employment Services Program), TANF work program.
• Nevada: TANF
• New York: FA (Family Assistance Program)
• Virginia: VIEW (Virginia Initiative for Employment, Not Welfare)
• Wyoming: POWER (Personal Opportunities With Employment Responsibility)
• And many more…

 

President Calls for Action on Welfare Reform

• President Bush called on Congress to enact his welfare reform agenda to “strengthen families” and help more welfare recipients “work toward independence and self-reliance.”
• President Bush has outlined a welfare reform agenda that builds on the success of the historic 1996 welfare reform law.  The President’s plan will:
• Help more welfare recipients achieve independence through work.
• Increase the welfare-to-work resources available for families
• Protect children and strengthen families.
• Empower states and local governments with a new Ticket to Independence initiative with new flexibility to more effectively move people from welfare dependency to work.

Explanations of the President’s Plan

• Help more welfare recipients achieve independence through work: The President’s plan requires welfare recipients to work 40 hours per week – either at a job or in programs designed to help them achieve independence.
• Increase the welfare-to-work resources available for families: The President’s plan will provide an average of $16,000 per family in federal and state welfare, childcare, and job training resources, compared to $7,000 per family available in 1996 when welfare reform was enacted.  Although welfare caseloads have declined by more than half, President Bush proposes to fund the TANF programs at the fully authorized level of $17 billion to ensure that struggling families get the support they need to move from welfare dependency to work and self-sufficiency.
• Protect children and strengthen families: The President proposes to continue historically high levels of support for childcare ($4.8 billion per year) through the Child Care and Development Fund.  The President’s welfare reform plan also provides states financial incentives to give more of the past-due child support payments they collect to mothers and children.
• Empower states to seek new and innovative solutions to help welfare recipients achieve independence: The President’s plan establishes a Ticket to Independence program to encourage state and local innovation.  Under the President’s plan, state and local governments will be able to consolidate a range of welfare programs (such as food stamps, housing, workforce programs, and adult education) to eliminate conflicting requirements, reduce red tape and improve their effectiveness for the people they serve.  This new flexibility will help states design better programs that could significantly improve service delivery for Americans in need.

Problems with Welfare

• Although Food Stamps, Medicaid, and different public housing programs are beneficial for many, these programs seem to trap the most at risk of our populace.
• The Primary problem with welfare primary to 1960 was that in many states a person could not work without lowering their standard of living.
• Most welfare recipients are unskilled, so full-time work actually ends up lowering their standard of living.
• Many see themselves unable to break out of poverty.
• The result is people being paid to be nonproductive.
• At any given time, 65% of welfare recipients are on the program for eight years or longer.

 

An individual moving from welfare to work will perceive some form of loss—a reduction in leisure, for instance.  As the congressional Research Service has pointed out, “Leisure is believed to be a ‘normal good.’  That is, with a rise in income, people will ‘purchase’ more leisure by reducing their work effort…Thus; the increase in [the value of welfare benefits] is expected to cause people to reduce work hours.”  In short, if an individual can earn the same income by working or not working, most people will choose not to work.

A better way to look at the value of welfare is to compare the equivalent-wage value of the welfare package to the median wage in each jurisdiction.  In 36 states, the equivalent-wage value of welfare exceeds 70% to the median state wage.

• For example, a first-year teacher can expect a salary of about $23,258. 
• Welfare recipients in nine states receive more than that of benefits. 
• The national median wage for a janitor is $6.75 per hour. 
• Welfare recipients in 47 jurisdictions receive more in benefits.
• The pretax value of welfare is more than that of a minimum-wage job in 40 states.

• Welfare is partly responsible for the deterioration of the “family.”
• Welfare reduces the cost of having children.
• Welfare increases illegitimacy by giving economic incentives for the bearing of additional children.
• By promoting people to have kids we are directly opposing Malthusian theory.

 

• Welfare benefits are surprisingly easy for aliens to receive.
• Immigration in the U.S. is relatively high.
• In 1970, 5.5 percent of newly arrived immigrants received welfare.
• In 1970, 6 percent of natives received welfare.
• In 1990, 8.3 percent of immigrants, while only 7.4 percent of natives received welfare.

• The welfare participation rate of a given immigrant wave increases over time as well.
• The wave that arrived during 1965-1969 had a welfare participation rate of 5.5 percent in 1970.
• This same group had a participation rate that rose to 9.8 percent in 1990.

 

• In 1990, immigrant participation in the welfare system was 56 percent higher than the natives.
• Some argue that immigrants pay enough in taxes to cover their burden in the welfare system.
• In 1990, immigrants contributed about $7.6 billion to the welfare system.
• Also, in 1990 immigrants accounted for $23.8 billion in expenditures in the welfare system.
• This means there is about a $16 billion burden covered by the native tax payers.

Monthly Income	One Child	Two             Children	Three Children	Four Children	Five Children
400	404	564	701	830	977
600	253	532	700	811	940
800	162	417	659	768	897
1000	0	271	561	672	802
1200	0	198	464	577	707
1400	0	0	276	389	519
1600	0	0	228	298	386
1800	0	0	0	0	278
2000	0	0	0	0	0

The above increase in income is gross.  By examining the table you can see that it is more beneficial to have children than it is to work.

• Welfare workers in California complain that their clients say that it is not worth going off the program unless they can earn at least $12 an hour.
• At present the welfare system provides unconditional income support to young people once they leave school. It immediately provides an easy option to young people: you don't have to undertake further education or gain skills or work, because you will receive an income regardless.

 

Welfare reforms although beneficial for most, are still not completely the right answer.  If you make it attractive for people to get off welfare, you simultaneously make it attractive for others to go on welfare. Someone who has lost a job might find it worthwhile to sign up and let the state find her a new job within two years while providing such amenities as health care and day care.

• One more injustice of welfare is that it compels people who support themselves to give money to those who do not.
• The policy perhaps discourages production and therefore makes us all poorer.

 

That question seems to lead to a confrontation between two ethical notions.

• One notion says that each individual is morally bound to assist those "less fortunate."
• Charity is elevated from a virtue to a justification for one's life.
• The other notion states that someone's need is not a claim on your life-that you have a fundamental right to live that does not have to be validated by service to others.
• Ayn Rand described this as the right to live for your own sake.

Value of Benefits

• There are at least 77 Federal programs for the poor.
• State, county, municipal governments have additional programs.

 

Programs

TANF (Temporary Assistance for Needy Families)

• Is primary cash benefit program, most often considered “welfare”.
• Begun in 1935 (formerly AFDC, Assistance to Families with Dependent Children) as part of the Social Security Act.
• Provides cash to families with children whose mother or father is absent, incapacitated, deceased or unemployed.
• National average is $ 349 per month.

Food Assistance Programs

• There are currently 15 food assistance programs administered by the USDA (U.S. Department of Agriculture).
• USDA spent $23.3 billion during first half of fiscal 2004, an 11 percent increase over the first half of fiscal 2003.
• Five programs account for almost 95 percent of all food assistance.

Food Stamp Program

• Largest of the food assistance programs.
• TANF recipients are automatically eligible for food stamps.
• Spending for food stamp program totaled $13.2 billion in first half of 2004.
• Monthly participation averaged 23.4 million people in first half of 2004, 14 percent increase from the same period in 2003.
• Benefits per person average $85.78 per month which is an increase of $2.23 from 2003.

WIC Program (Women, Infants, and Children)

• Special Supplemental Nutrition Program for women, infants, and children.
• Spending totaled $2.4 billion for first half of 2004.
• Participation averaged 7.8 million people, a 3 percent increase from the same period in 2003.
• Per person food costs averaged $37.06, increase of $2.31 from 2003.
• WIC participants during first half of 2004 – 50 percent children, 24 percent women, and 26 percent infants.

National School Lunch Program

• Provides low-cost or free lunches to school children.
• Average of 29 million children participated in the program each school day in first half of 2004.
• Spending totaled $4.6 billion, a 7 percent increase over same time in 2003.
• 49 percent of all lunches served were provided free to students and another 10 percent were provided at a reduced price.

The School Breakfast Program

• Provides low-cost breakfasts to school children, eligibility is the same as that for the National School Lunch Program.
• 8.8 million children participated in the program each school day, 5 percent increase from last year.
• Spending totaled $1 billion, 8 percent increase over last year.

Child and Adult Care Food Program

• Provides subsidized healthy meals and snacks in participating child care centers and homes and adult day care facilities.
• Spending totaled $1 billion in first half of 2004, increase of 4 percent.
• 60 percent of all meals served were in child care centers, 37 percent in child care homes, and 3 percent in adult care centers.

 

Housing Programs

• There are two main types of government-funded rental housing assistance programs: tenant based assistance and project based assistance
• Tenant based assistance helps subsidize the rents of apartments that families find in the private market.  Most common is the Federal Section 8 housing voucher program.
• Project based assistance is attached to specific units.  Most common are the Federal public housing program and the project based Section 8 program.
• All programs vary depending on incomes of participating families.
• Nationally, 30 percent of TANF families receive Federal housing subsidies.

Medicaid

• Nation’s primary program for providing healthcare for low-income people.
• Also covers the elderly and disabled for many services not under Medicare.
• States must provide Medicaid to all persons receiving cash benefits.
• Spending varies dramatically by the state but must be within broad Federal guidelines.

Utilities Assistance

• There are several programs at the Federal and state levels designed to help low-income households pay for electricity, gas, water and other utilities.
• Participation levels in all states exceed 50 percent

 

TREND OF AFDC/TANF RECIPIENT CHARACTERISTICS FY 1990 - FY 2000
	FY 1990	FY 1992	FY 1994	FY 1996	FY 1998	FY 2000
FAMILIES
Total	$3,976,000	$4,769,000	$5,046,000	$4,553,000	$3,176,000	$2,269,000
Child-Only Cases	$459,000	$707,000	$869,000	$978,000	$743,000	$782,000
Percent	11.6	14.8	17.2	21.5	23.4	34.5
Race (Percent Of All Families)
White	38.1	38.9	37.4	35.9	32.7	31.2
Black	39.7	37.2	36.4	36.9	39.0	38.6
Hispanic	16.6	17.8	19.9	20.8	22.2	25.0**
Asian	2.8	2.8	2.9	3.0	3.4	2.2
American Native	1.3	1.4	1.3	1.4	1.5	1.6
Other	-	-	-	-	0.6	0.6
Unknown	1.5	2.0	2.1	2.0	0.7	0.8
ADULTS
Age Distribution (Percent Of All Adults)
Under 20	7.7	7.1	5.9	5.8	6.1	7.1
20-29	46.3	45.9	44.1	42.3	41.4	42.5
30-39	32.5	33.3	34.8	35.2	33.8	32.1
Over 39	13.4	13.6	15.2	16.5	18.6	18.3
Average Age	29.7	29.9	30.5	30.8	31.4	31.3
Employment Rate	7.0	6.6	8.3	11.3	22.8	26.4
CHILDREN
Age Of Youngest (Percent Of All Families)
Unborn	2.4	2.0	1.8	1.5	--	--
0 - 1	9.0	10.3	10.8	10.4	11.0	13.4
02-Jan	29.9	29.7	28.1	24.3	22.0	20.1
05-Mar	21.1	21.2	21.6	23.5	23.1	20.7
11-Jun	23.0	23.1	22.7	24.4	26.6	27.8
15-Dec	9.4	9.3	9.8	10.6	10.7	11.7
16 And Older	3.4	3.5	3.5	3.8	4.7	5.1
Unknown	1.9	0.8	1.7	1.5	1.8*	1.2*
Race (Percent Of All Children)
White	33.1	33.9	33.0	31.6	28.3	26.8
Black	41.4	38.5	37.9	38.4	40.2	40.1
Hispanic	17.7	18.7	21.2	22.4	23.4	26.8**
Asian	3.9	3.9	3.6	3.8	4.2	2.8
American Native	1.3	1.6	1.4	1.4	1.5	1.6
Other	-	-	-	-	0.7	0.6
Unknown	2.7	3.4	2.9	2.4	1.8	1.3
Notes:
* = Including Unborn Child.
** = Can Be Of Any Race.
Columns May Not Add To 100 Percent Due To Rounding.

 

The TANF Family

• Family Recipients was 1,579,000 adults and 4,385,000 children
• California has the largest number of TANF families with a monthly average of 501,000 and New York ranks second with 759,000. Combined the two states account for a third of U.S. totals.
• Of the $9.5 billion paid to the TANF eligible families in cash assistance during FY 2000, California alone paid $2.9 billion, which accounted for 30 percent of the U.S. total cash payments. New York made total cash payments of $1.4 billion. The combined payments of the two states account for almost half of total cash payments.
• 80% of families received Food Stamp assistance. Average monthly Food Stamp assistance of $223.
• Reasons for families receiving a reduction in assistance were sanctions at 6.1 percent, recoupment of prior overpayment at 8.7 percent and other at 8.8 percent. Over 50 percent of sanctions were due to the failure to comply with work requirements.
• Reasons for families no longer receiving assistance were due to employment at 19.9 percent, State’s policy at 12.1 percent, sanction at 6.5 percent, and voluntary closure at 2.3. States reported 26.4 percent of cases closing due to other unspecified reasons.

 

The TANF Adults

• Most adult recipients are women.
• Men represent 10 percent of adults.
• Of adult recipients 7 percent were teenagers and 18 percent were 40 years of age or older.
• Nearly 93 percent of adult recipients were head of household.
• Most adult recipients are U.S. citizens and non-citizens residing legally account for 8 percent.
• Half of adult recipients have received a formal education of 12 years or more.
• Work participation was mandatory for almost three of every five adults.
• 7 percent were exempt from work participation because they were single parents with child under 12 months. 11 percent were exempt because of a sanction and 10 percent are exempt due to a good cause, i.e. disabled, poor health or other. 8 percent were teen parents who were required to participate in education.
• Over 42 percent of adults participated in some type of work activity.
• In addition to the 37 percent of adults exempt from work participation, at least 20 percent of recipients did not participate in the mandatory work programs.

 

The TANF Children

• The average age of children is 7.8 years of age. 13 percent of children were under the age of 2 while 39 percent were of preschool age under 6.  Only 8 percent of the children were 16 years of age or older.
• Most recipient children were of the head of household and only 8 percent were grandchildren of the head of household. Of all recipient children in child-only cases, 62 percent lived with parents and 23 percent with grandparents who did not themselves receive assistance.
• The racial distribution has not changed in recent years. Black children are the largest group at 40 percent of recipients. 27 percent were white, Hispanic or Latino.

 

Financial Circumstances

• Of TANF families, 98 percent received cash and cash equivalents assistance with the average monthly amount of $349. Monthly cash payments for one child were $285, $356 for two, $423 for three and $516 for four children or more.  Some families who were not employed received other forms of assistance such as childcare, transportation and other supportive services.
• One in four families had non-TANF income. The average monthly amount of non-TANF income was $580 per family.  Sixteen percent of the TANF families had earned income with the average monthly amount of $675. Eight percent of the families had unearned income with the average monthly amount of $277.
• One quarter of recipient adults had earned income. Average monthly income earned increased to $668 form $598 in FY 1999, an increase of about 12 percent. Six percent of adult recipients had unearned income averaging about $291 per month.
• Ten percent of families received child support with the average monthly amount of $174.
• One in ten families had some cash resources (e.g., cash on hand, bank accounts or certificates of deposit) with the average amount of $252. Cash resources were defined by the State for determining eligibility for and /or amount of benefits.

 

A number of major changes in the characteristics of welfare recipients have occurred in the 1990s. The trends in recipient characteristics are as follows:

Child-only Families

• In 2000 child only cases accounted for 35 percent of the total caseload. Child-only families increased steadily in the 1990s reaching a peak of 978,000 in 1996.
• Through 1998 the number of child-only families decreased to 743,000 although their proportion of the caseload increased steadily to 23 percent.

 

Racial/Ethnic Composition of Families

• In 1990 the racial composition of welfare families was 38 percent whites, 40 percent blacks and 17 percent Hispanics. In 2000, it was 31 percent whites, 39 percent blacks and 25 percent Hispanics.
• The shift from white to Hispanic families is consistent with broader population trends.
• This shift has been accelerated since 1996 as shown by the population trends of California, New York and Texas. 70 percent of welfare recipients were in these three states. In California, Hispanic families on welfare were 38 percent and in 2000 it increase to 45 percent.
• The proportion of minority welfare families has increased from three-fifths to just over two-thirds of the total recipient families.
• The main cause of the increase in minority welfare families is due to the increase in Hispanic families.

 

Age of Adult Recipients

• The average age of adult recipients was 29.7 in 1990 and increase to 31.3 in 2000.
• Proportion of adults over 39 years increased from 13 to 18 percent of adult recipients between 1990 and 2000.

 

Employment Rate

• The employment rate of adult recipients has increased. In 2000, 26 percent of adults were employed, which is about 2.4 times the 1996 employment rate of 11 percent and four times the rate of the early 1990s.

 

Age of the Youngest Child

• Between 1990 and 2000 the proportion of families with a toddler aged 1 or 2 declined from 30 to 20 percent.
• The proportion of families with a child under the age of six increased from 36 to 45 percent during the same time frame.

 

Total TANF recipients by State

References:

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Parrot, S. (1998) Welfare Recipients who find jobs:  What do we know about their employment and earnings?  Washington, DC: enter on Budget and Policy Priorities.

TANF Annual Report to Congress 2002

U.S. Department of Health & Human Services.  “Major Provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.”  May 29, 2002.  http://www.acf.hhs.gov/programs/ofa/aspesum.htm (5 April 2004).