20 Years Since Welfare 'Reform'

America’s poorest are still dealing with the consequences of the legislation that Bill Clinton signed into law two decades ago today.

Greg Gibson / AP

As recently as April of this year, former president Bill Clinton defended the welfare reform bill he signed into law on August 22, 1996—twenty years ago today—as one of the great accomplishments of his presidency. The bill scrapped the welfare program known as Aid to Families With Dependent Children (AFDC) and created a new one that lasts to this day—Temporary Assistance for Needy Families (TANF). There was a grandiose idea behind the change: TANF was no simple safety net; it was also meant to be a springboard to self-sufficiency through employment, which it encouraged recipients to find work by imposing work requirements and limiting how long they could receive benefits.

Today, across the country, welfare is—at best—a shadow of its former self. In much of the Deep South and parts of the West, it has all but disappeared. In the aftermath of welfare reform, there has been a sharp rise in the number of households with children reporting incomes of less than $2 per person per day, a fact we documented in our book, $2 a Day. As of 2012, according to the most reliable government data available on the subject, roughly 3 million American children spend at least three months in a calendar year living on virtually no money. Numerous other sources of data confirm these findings. According to the most recent data available (2014), TANF rolls are now down to about 850,000 adults with their 2.5 million children—a whopping decline of 75 percent from 1996. TANF was meant to “replace” AFDC. What it did in reality was essentially kill the U.S. cash welfare system. (We use the term “cash welfare” to distinguish it from other forms of assistance, such as housing vouchers and food stamps, which have pre-designated uses.)

Cleveland, where the Republicans hosted their convention this year, is one of the poorest cities in the country and a place where the effects of this reform can be seen most plainly. What has happened to welfare in Cuyahoga County, which includes Cleveland and its inner suburbs, is reflective of its fate elsewhere in the nation. Currently, the county’s TANF-to-poverty ratio (the fraction of poor families with children who are actually receiving help from the program) sits at 22 percent—right about at Ohio’s, and the nation’s, average. (In some states, it is dramatically lower, such as Georgia, where it is just six, and Texas, where it is five.)

What’s happened to poor people as a result? Since 2013, we’ve spent considerable time in the city trying to find out. Each year, we catch up with several families who, in 2013, had spent at least three months living without money income exceeding $2 per person per day. To deepen our perspective, we also spend time trying to understand what’s going on for the city’s poorest, more broadly speaking. Earlier this month, one of us—Kathryn—spent a day talking to supplicants at a west-side food pantry. She spent an afternoon walking the streets of one neighborhood, striking up casual conversations with residents as they took out the garbage or sat on their porches. Yet the toughest experience was when Kathryn went for a ride-along with bailiffs assigned to the Cleveland Housing Court as they went about their daily rounds, evicting a family from their west-side apartment mid-meal.

Prior to August 22, 1996, families such as that one—families with little or no cash income—were entitled by law to a check from the government, thanks to AFDC. The program had many flaws. Yet it provided a cash floor that could have eased the hardships of folks at the end of their ropes.

TANF ought to be able to help—albeit temporarily, as the name implies. Yet many of the people we have studied have never received it. One woman, a high-school graduate and a mother of two, told us she doesn’t think it’s worth it. She believes that in order to meet the program’s requirements, she would have to work full time at a make-work job, leaving her no time to find legitimate employment.

Others have tried to get it and failed. When one mother we know lost her job at Walmart after her only means of transportation failed, she initially refused to apply for TANF out of pride, insisting that she was a worker, not a leach on the government. Finally, after months of fruitless job search, plus a list of health diagnoses a mile long, she broke down and applied. Since then, she has been sent away three times, all for no legitimate reason we, as TANF experts, can discern. Now, she, her daughter, and her fiancé are tripled-up with friends in a house that lacks heat and running water but offers a free roof over her head.

And many more aren’t even aware TANF is available. During her visit to the west-side food pantry a few weeks ago, Kathryn met families camping in unfinished basements of friends, a couple who survived a Cleveland winter while sleeping in a tent (they advised finding a thick mattress to keep your body off the ground and to keep a candle burning), and a family in the process of breaking apart—the three children parceled off to relatives—until a laid-off Ford assembly line worker and his partner of 14 years, who cleaned suburban homes until her car was repossessed, can secure stable jobs and a place to live. When we asked why they didn’t apply for TANF, we were met with blank stares. If our experiences across the city this summer are any guide, many poor Clevelanders—even those in desperate straits—don’t even realize the program exists.

We’ve traveled to many different parts of the country getting to know people in need. While greedy, heartless landlords were sometimes a source of their troubles, their biggest problem—by far—has been the lack of access to a cash safety net—money—when failing to find or keep a job. In 21st-century America, a family needs at least some cash to have any chance at stability. Only money can pay the rent (though a minority of families get subsidies via a housing voucher). Only money buys socks, underwear, and school supplies. Money is what’s needed to keep the utilities on. Each of the families we followed—technically eligible if our reading of the rules is right—weren’t getting that money from TANF.

How did they survive? Nearly all had sold plasma from time to time, some regularly. In 2014, so-called “donations” hit an all-time high at 32.5 million, triple the rate recorded a decade prior. They collected tin cans for an average yield of about $1 an hour. They traded away their food stamps, usually at the going rate of 50 or 60 cents on the dollar. Some traded sex for cash or—more commonly—the payment of their cell phone bill, a room to stay in, a meal, or some other kind of help. One 15-year-old was lured into a sexual relationship with her teacher on the promise of food. Yet these desperately needy families either didn’t know the program existed, felt the stigma and hassle weren’t worth it, or had been rebuffed at the welfare office.

Some would argue that families are better off without cash welfare. Franklin Delano Roosevelt warned that welfare was “a narcotic, a subtle destroyer of the human spirit.” Yet even Ron Haskins, one of the Republican architects of the program, recognizes that the problem of “disconnected mothers”—those neither working nor on welfare—is “a serious policy issue, that its magnitude is increasing, and that in two decades the nation has not figured out how to address the problem.”

Why has TANF left so many needy families behind? Its advocates argue that it reduces dependency and promotes work. Its critics contend that the time limits and work requirements it imposes are too punitive. Yet a careful look under the hood reveals that both of these claims fail to grasp the fundamental nature of what TANF has become.

To put it plainly, TANF is not really a welfare program at all. Peter Germanis, a conservative expert on welfare policy and former Reagan White House aide, describes it best, as a “fixed and flexible funding stream”—think slush fund—for states, provided by what are known as “block grants.” Yes, some block-grant dollars are used to provide cash aid to struggling families. But three of every four dollars allocated to TANF is directed toward other purposes.

How can this be? After the 1996 welfare reform bill was signed into law, states were no longer obligated to give out a dime to those in need. The rules governing TANF are so flexible that states can potentially eliminate cash handouts all together. What’s more, TANF’s rules threaten to penalize states that continue to provide cash assistance, such as California, Minnesota, Oregon, and Vermont. It is easier to comply with TANF regulations by simply pushing people off the rolls, as Cuyahoga County has done.

Built into the very core of TANF are perverse incentives for states to shed families from the welfare rolls. If they do so, they get to keep the money and use it for other things. And outside of what’s spent on cash aid, there is virtually no meaningful oversight on how the rest of the money is spent.

If past is prologue, the dollars devoted to cash assistance will only continue to dwindle. Even in 2006, TANF had far greater reach than it does now. Meanwhile, counts of the number of families knocking on the doors of the nation’s food pantries have reached the highest point ever recorded. “Donations” of blood plasma in exchange for cash have tripled in the last decade. School-aged children are increasingly likely to be homeless or doubled up. In sum, on many measures, child and family wellbeing has taken a nosedive.

Welfare reform is certainly not the only factor driving these trends. An increasingly perilous low-wage labor market and a growing affordable-housing crisis are critical drivers too. Yet a simple thought experiment brings the role of welfare reform in focus. Imagine a world in which states are prohibited by law from denying any family who meets eligibility criteria. Now envision a world in which denying a family in need is perfectly legal, and states who do so get to keep the cash. This is America before and after welfare reform. On the eve of welfare reform, roughly seven in 10 poor families claimed cash aid; only about two in 10 now do so. If the safeguards governing AFDC were in place today, this sort of extreme poverty would be a fraction of what it is now.

What are states doing with their TANF dollars if they aren’t providing cash welfare to families? Some states, such as Ohio, spend a considerable portion on child care, no doubt a boon to the working poor, yet folks not in jobs or in work programs aren’t eligible. Likewise other states, such as Wisconsin, use some of their block grant to fund state tax credits that benefit the working poor.

But the remainder goes to an assortment of other activities not necessarily benefitting the impoverished at all. Michigan funds college scholarships for young adults with no children, under the rationale that doing so may reduce teen pregnancy. Texas spends a large chunk of its block grant on its child welfare-system, an expense the state would have to assume responsibility for otherwise. When TANF is used to pay for giveaways for the non-poor or to plug budget holes, it becomes welfare for states and not for people.

What states spend astonishingly little on—besides cash assistance—is helping the poor find employment. In 2014, Ohio—which is about at the national average here—allocated only 8 percent of combined federal and state TANF funding to vital “hand-up” activities linking recipients to jobs.

Ronald Regan brought the image of the infamous—albeit mythical—welfare queen into the national consciousness. Bill Clinton probably owes his first term in office to his promise to “end welfare as we know it,” and possibly his second to signing the reform into law. Both politicians railed against AFDC’s so-called “perverse disincentives.” TANF offered states a lot of flexibility to innovate, to allow a flowering of new ideas to help the poor. But that’s not what the country got. Instead it got a new kind of welfare queens: states. States, not people, are using TANF to close the holes in their budgets. It is states, not people, who are falling prey to the “perverse disincentives” of welfare.