Welfare Reform: The Downside

So yesterday I discussed whether welfare reform "worked".  It certainly caused a lot of people to move into work, where they were eligible for the Earned Income Tax Credit and for advancement to better positions.  It caused the structural poverty rate to fall.

But few program changes are entirely win-win, and this was no exception.  Even as many families have climbed out of poverty, some families have plunged deeper into it; as I understand it, mostly those headed by women with severe mental illness, drug and alcohol problems, or personality disorders.  Before, if your mother was smoking crack, she could at least still collect her welfare check. Cutting off the check after five years, or cutting benefits as some states did, didn't mean she stopped smoking crack.  It just meant there was less money around the house.

Those people are unambiguously worse off since welfare reform.  And whatever you think of the behavior of the mothers, the kids didn't decide to have Moms who are borderline psychotic or addicted to drugs.  They are suffering from this change.  Jake Blumgart's piece at The American Prospect properly laments this.

But I think that progressives ignore the possibility (indeed, what I take to be the near-certainty) that this is an inevitable tradeoff.  If we provide benefits sufficiently generous to support people who are too screwed up to provide themselves with a very minimal living standard, we will also encourage people who aren't that screwed up to stay home rather than going to their tedious, low wage job. (Especially young people, who are not known for their patience or foresight).  Despite a broader trend of more people having babies without first getting married, the rate of childbirth among unmarried mothers between the ages of 15-19--those whose children who are most at risk of poor life outcomes--declines noticeably post 1995.  Though of course correlation is not causation, this at least suggests that welfare reform may have helped both mothers and children by encouraging young women to make better long-term choices about when to have babies.
Screen shot 2011-08-24 at 11.24.56 AM.png
Obviously, we'd really like to see those birth rates in the 15-17 group fall to zero, and steeper declines in the 18-19 age group.  But even a modest decrease is good news.  And it shows up in the child poverty figures, which was even more dramatic than the poverty rate in the 18-64 age group.

Screen shot 2011-08-24 at 11.36.10 AM.png
Since welfare dependency was a cycle, this will have lasting effects: all the women who delayed childbearing until they had some work experience and financial stability are more likely to have healthy kids who themselves are better able to cope, and to pass on those skills to their children.

But producing better outcomes for those women and their children came at the expense of the women who for whatever reason still made those bad decisions about work and childbearing.  Which group should we focus on?

There's no one obvious answer; liberals are mostly going to be more concerned about the very neediest, and conservatives are going to be more concerned about encouraging good choices.  But both groups matter.  And since the social service system was manifestly not good at distinguishing those who were capable of working, and those who weren't, before reform changed the incentives, we are stuck with a choice between false positives and false negatives: either we "help" those who don't need it, pulling them out of the workforce, or we provide less than optimal help to people whose lives will become even more chaotic and miserable than they otherwise would be.