Liberal Distortions of Welfare Reform
The current election campaign has heightened sensitivity to racial concerns. Among liberal Democrats this has led to a focus on the impact of President Bill Clinton's cash-welfare policies. Last week, for example, in an attempt to undercut Hillary Clinton's support in the black community, Jamelle Bouie of Slate claimed that "welfare reform couldn't protect poor women in the recession that followed."
In the same vein, but with much more detail, Eduardo Porter vilified the 1996 welfare-reform law in an October New York Times column. He contended that welfare does not encourage dependency, citing a finding by Mary Jo Bane and David Elwood that over 40 percent of pre-reform welfare recipients were short-term users. Porter then claimed it was the strong economy, not Clinton's welfare policies, that explained the substantial drop in poverty rates during the late 1990s. Porter also condemned the mean-spiritedness of the current state-run cash-welfare system, citing the fact that "today only 26 percent of families with children in poverty receive welfare cash assistance ... down from 68 percent two decades ago."
A month later, the grand dame of entitlements, Frances Fox Piven, made similar claims in a Pacific Standard essay, but added that since employment policies won't work, only increased cash payments will reduce poverty.
Every one of these claims is misleading or inaccurate. The Bane-Ellwood study, for example, covered the period 1968 through 1989 — but the welfare population ballooned from a steady 3.8 million during the 1980s to 5.1 million by 1992.
Porter misrepresented what happened after welfare reform, too. The poverty rate of children living in single-mother households declined from 50 percent in 1996 to below 40 percent by 2000. To support his claim that a strong economy, not changing welfare policies, was responsible for this improvement, Porter referenced a study that focused on one aspect of welfare reform: time limits. By contrast, in a paper commissioned by the American Economics Association, Rebecca Blank surveyed more than 20 studies and concluded, "Economic factors had smaller effects post-TANF, suggesting that the policy changes of the mid-1990s were a major cause of declining [welfare] caseloads." In particular, President Clinton's Council of Economic Advisers, headed by Joseph Stiglitz, concluded that after the 1996 reform, the strong economy was responsible for only 9 percent of the welfare caseload decline while the reforms were responsible for 35 percent.
There are a number of reasons why a strong economy alone was insufficient to draw many welfare mothers into the labor market. In 2005, I interviewed staff in welfare-to-work transition programs. They consistently indicated that welfare mothers had a totally unrealistic set of wage expectations. Nydia Hernandez, administrator of the STRIVE program in Chicago, told me "they would say that they had to make at least $10 per hour, but when you looked at their lack of credentials — hadn't worked in six years and didn't even have a GED — you could see how unrealistic they were." Only after being convinced of the long-term benefits did many women accept paid employment. In addition, the requirement that cash-welfare recipients spend 20 hours a week on work-related activities (such as applying and interviewing for jobs) prodded many to shift to paid labor, including one of the three women New York Times poverty reporter Jason DeParle followed in his book on welfare reform.
Bouie and Piven are also wrong in their claim that the shift from welfare to work did not insulate single mothers from the early 2000s recession. The poverty rate among children living in single-mother-headed families remained at 40 percent from 2000 through 2002 and rose only to 42.5 percent by 2005. These rates were well below those seen prior to welfare reform, and the increase was only one-half the increase observed during the previous 1990-1992 recession. Indeed, a Federal Reserve Bank study found that, compared with the bottoms of the two previous recessions, in 2004 young single mothers were much less likely to have incomes below the poverty line.
Porter also misleads when he bemoans the dramatic decline in the share of poor families on cash welfare. The decline is happening because work is now more advantageous for single mothers: A job enables them to gain substantial safety-net benefits, including the Earned Income Tax Credit (EITC) and the child tax credit. Even if they don't quite escape official poverty, these mothers are substantially better off working than they would be if they went on cash welfare.
Most important is the 20-hour work-related-activity requirement. In 2014, the median annual cash welfare payment across states was $5,148. If mothers instead worked those 20 hours at a job that paid $8 per hour, their wage income would be $8,320 plus (if they had two children) an EITC of $3,328 and $800 in child credits. While part-time employment does not allow these families to escape poverty, it would yield $12,448, and more in the 20 states that have their own EITC programs.
Certainly a case could be made for states to modestly increase cash payments and make their work requirements more appealing. But it is the labor market that offers single mothers the best hope of escaping poverty. Indeed, those at work are more likely to socially interact with others who work, improving the likelihood of forming lasting partnerships that result in middle-class status. The employment focus of social policy should be strengthened, not weakened, so that more single mothers can move forward.
Robert Cherry is a professor at Brooklyn College.