The House Ways and Means Committee approved a resolution yesterday that highlights the successes of the 1996 welfare reforms, known as the Personal Responsibility and Work Opportunity Reconciliation Act. This is an important opportunity to acknowledge both successes and failures, with the overriding goal of improving and updating welfare reform rather than rubber-stamping an imperfect system.
There were some important positive gains in the initial years after the 1996 welfare reforms were passed. The law gave increased flexibility to states in implementing welfare programs, allowing states more choice in the design of services and permitting them to impose new requirements on families receiving assistance. At the same time, Congress in the mid-1990s took other significant actions to help low-earning families: it raised the minimum wage, expanded the Earned Income Tax Credit, increased child care assistance, strengthened child support, and broadened health care for low-income children. With these reforms implemented in a near-full-employment economy, employment among low-income parents went up, poverty fell, and welfare caseloads fell to historic lows.
Between March 1994 and September 2001, the national welfare caseload dropped dramatically, from about five million to two million families. Much of the caseload decline was because parents got jobs, but a significant share was because it became more difficult for families to receive assistance. Since 2001, caseloads have remained low, despite the fact that employment among low-income single mothers has fallen and poverty has grown during the last four years. A new analysis by the Center on Budget and Policy Priorities estimates that 57 percent of the caseload decline since 1996 was due to a decline in the share of eligible families receiving assistance.
Recent actions by Congress threaten to lead to further steps backward. The federal minimum wage has not been increased since 1997, and now stands at its lowest point in more than fifty years. Child care spending, which grew rapidly during the 1990s, actually fell between 2003 and 2004. The welfare law itself was scheduled to be reauthorized in 2002, but Congress did not complete the process until 2006. The law that Congress passed imposed new restrictions on state flexibility in providing employment-related services and created new incentives for states to further cut their caseloads; cut federal funding for child support enforcement, and provided a modest amount of new child care funding — far short of the amount needed to keep pace with inflation during the next five years. The law authorized the U.S. Department of Health and Human Services to write new regulations, and the agency took advantage of that opportunity to write rules making it significantly harder for states to provide access to education and training for low-income families receiving assistance.
The time has come to broaden the discussion. A balanced welfare reform effort can be a part of an overall strategy to reduce poverty, but it is crucial that the reform effort focuses on helping families enter stable employment and assisting eligible families, rather than just declaring success when the welfare caseload falls. At the same time, welfare is only one part of a system that should be protecting Americans from the ravages of poverty, and that entire system must be improved. Congress should seize this opportunity to revitalize the welfare discussion, rather than continue outdated and misguided policies.
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