This March, Congress must reauthorize the welfare reform law passed in 1996. As Congress considers welfare reform’s track record, let’s look at what really helped low-income families find jobs and care for their families. The list is short: good jobs, child care, and health insurance. Without these, welfare reform is a sham.
A look at the facts shows that the punitive measures embodied in the welfare reform law were not the primary cause of its success. Welfare reform was successful because the economy was good and because work supports – child care and health insurance – helped make work pay.
During the late 1990s when the states implemented welfare reform, jobs were plentiful and wages were rising, especially for low-wage workers. The tight labor market led to historically high levels of employment among Americans and more mothers were at work than at any previous time.
The strong economy meant that finding employment was easier than it would have been if welfare reform passed in the middle of a recession or in a period of falling inflation-adjusted wages.
Finding a job, however, is not enough to ensure that former welfare recipients are successful off welfare. What made the difference for many welfare mothers was the increased availability of child care and health care that were a part of welfare reform. Since most former welfare recipients found jobs that did not offer health insurance and since child care is critical for working mothers, these work supports often made the difference between keeping a job and not.
Welfare reform recognized that a low-wage job might be insufficient to sustain a family through the notion of "making work pay." As a part of this, welfare reform gave states the flexibility and the funds to provide assistance to welfare mothers who began working. Fortuitously, states had more money per welfare recipient in the late 1990s than they had previously because welfare rolls fell faster than funding levels.
Many states did use this extra cash to make work pay. Over the four years between 1997 and 2001, states gave an extra $7.7 billion to help pay for child care for low-income families. They gave an extra $24 billion to cover low-income children under the new Children’s Health Insurance Program. They also gave more money for transportation and job training.
These extra funds helped mothers transition into the world of work. Access to child care was critical. Finding child care in most American communities is tough for any parent. It is even harder for low-income families. On average, for low-income families – those below 200 percent of poverty – child care eats up about 14 percent of their family budget, compared to only about 7 percent for other families.
Money spent on child care directly supports the employment of mothers. Mothers who use child care centers are more likely to stay employed than are mothers who turn to informal kinds of care, such as their grandmother, sister, or neighbor. Informal care can be wonderful – when it works. However, informal care is frequently not reliable, which means that it is inadequate for workers who can get fired if they must take off work to care for children.
Money spent on increased access to health care was also critical since most low-wage employers do not provide their employees with affordable health insurance. Among low-wage workers, only about one-third receive health insurance from their employer. The Children’s Health Insurance Program, implemented in 1997, sought to increase coverage for children of the working poor, many of whom were former welfare recipients.
This is not to say that funding levels for child care or health care were entirely sufficient in the late 1990s. The Department of Health and Human Services reported that only about one-in-eight children eligible for federal child care subsidies actually received any assistance in 1999. Further, even though health insurance coverage increased for low-income children, millions remained uninsured.
The picture has worsened through the recession and tepid recovery. As states sought to balance their budgets over the last two years, child care and health care subsidies to working parents were often first on the chopping block. Thirty-two states have made cuts to their low-income child care programs and the Children’s Health Insurance Program has been cut back in 22 states.
The Bush administration had the opportunity to prevent these drastic cuts. They could have offered real budget assistance to the states to limit these cuts. This would have both helped their fiscal bottom line, as well as helped provide valuable assistance to families struggling to make it in a job-loss recovery. Instead, the administration gave tax cuts to the wealthiest Americans.
The issue before Congress now is what worked and what didn’t in welfare reform. The administration believes that what worked were the sticks, not the carrots. Their proposed changes would limit child care spending while increasing the hours of work required for welfare recipients. The administration wants welfare moms to work 40 hours per week – more hours than the typical mom works – with no additional money to help pay for child care.
This blindness to understanding what working families need to make work work will only hurt families doing their best to find and keep jobs in today’s economy. It is most telling that even as the economy has more than 2 million fewer jobs today than it had when Bush took office, the administration expects the lowest-paid workers to put in more time at work.
Dr. Heather Boushey is a research economist with the Center for Economic and Policy Research in Washington, D.c=