Yesterday marked 20 years since Bill Clinton’s controversial welfare reform bill went into effect, replacing America’s old safety net, Aid to Families With Dependent Children (AFDC), with a new one—Temporary Assistance to Needy Families (TANF)—intended to encourage welfare recipients to find work and become self-sufficient. But the reforms didn’t work out quite as well as policymakers hoped. Kathryn Edin and H. Luke Shaefer, two experts on public policy, have an Atlantic piece this week critiquing the program as it functions today. This reader has a lot of firsthand experience with the problems:
I was not on aid during welfare reform (although I was many years previously). But I was a vocational counselor in California whose job it was to get people who applied for aid into some sort of work activity. Preferable was “unsubsidized” employment, but most often it was “Work Experience,” in which the “participant” was placed in a government or nonprofit agency (anywhere from 20-32 hours a week) and they were paid minimum wage, of which a portion was deducted from their grant. Transportation and childcare was paid for. This lasted for six months.
And after that? Well, we moved on to step two, which was usually just more of the same until they “timed out” or were lucky enough to land a job. Some people came in, got in the program, and took off running and wound up in good jobs with just a little hand up. Other people, even though they did well, did not always wind up with a paying job at the end. The reasons are many, but we can start with the economy.
When welfare reform was enacted in 1996, the economy was booming, employers were begging for entry-level workers, and getting welfare recipients into those jobs made sense. But those heady times did not last, and even the most talented of people struggled to find a job that would get them off aid—never mind those retail and fast food jobs with crazy hours that made childcare a nightmare and kept people in poverty anyway.
Also, many women on aid suffer from mental health issues—not so severe that they would qualify for disability, but severe enough that they do not have the emotional resources to show up to work every day and focus on their tasks and get along with their supervisors and co-workers. And the struggle to raise children on top of work … they are sadly going to fail, and the system was set up to make them fail.
As a vocational counselor, I could have put together a plan for them that would “meet the participant where she is at.” Some would get a job and get off aid sooner, others would take much longer. And of course, some never would—at least not get off aid through finding work. What I often saw instead was women who lived with men to have some means of support. I could go on ... and on ...
If welfare reform had enacted good policy based on reasoned analysis instead of playing politics, many of the failures I saw in outcomes would not likely have occurred. The program failed most because of bad policy based on political bias. I recall the hearings that were held prior to the enactments of the legislation. Many of those who spoke addressed the very issues I have recounted here. They went right over the heads of the committee members.
Now they ask why it failed. They set it up to fail.
If requiring people to get jobs doesn’t work, what is good policy? According to Edin and Shaefer:
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.
This reader has a suggestion for how to provide such cash:
Federal and state, we spend close to a trillion dollars a year (it was $927B in 2011) on means-tested welfare programs, but half of that is Medicaid. If you really want to encourage work and independence, then rolling all these dollars—most of which are more effective at signaling our own moral rectitude and compassion than they are at making people's lives better—into a reformed version of the earned income tax credit (EITC), with a steep phase-in and a shallow clawback, direct deposited regularly into a bank account and based on the last few weeks’ paychecks, would be a lot more useful. Save out a little for those who are truly unemployable, and we’d reach a lot more people for the same amount of money.
A trillion dollars divided by the 48 million Americans living in poverty in 2015 comes out to about $20,833 per individual. That’s plenty of money to make life decent, if not comfortable, for most of the impoverished.
Lastly, a reader who received aid before the 1996 reforms points to the program that most helped her family:
In the late 1980s and early 1990s, we weathered an extended period of unemployment and underemployment. We had moved to Kansas to help my in-laws, who were in declining health, but in rural Kansas jobs that paid a living wage were in short supply. So we found ourselves on the “welfare” rolls—I think we had AFDC for a short time, but for several years we received food stamps and we had medical cards. We also had WIC (Women, Infants, and Children) assistance and our youngest children went to Head Start preschool.
These all helped, but the program that I think made the biggest difference in helping us get out of poverty was subsidized childcare. When that became available to us, I was able to work at part-time jobs while my children were small without having to use everything I made to pay for childcare. It also made it possible for me to go to graduate school (for which I had earned scholarships and assistantships), which led directly to me being able to get better paying jobs. Our finances were still very tight and it was a long journey out of poverty, but it would have been even harder without childcare assistance.
Unfortunately, the childcare assistance program has been cut more and more over the last 20 years—not only here in Kansas but in other states as well. It’s always seemed strange to me for lawmakers to tell poor people to get jobs, but not offer any substantive support that makes it worthwhile to work.
So what do you think is the best way to provide that substantive support, if at all? Write us at hello@theatlantic.com, particularly if you have experience implementing a welfare program or receiving aid from one.
Gillian recently explored “How the Tax-Prep Industry Takes Advantage of Low-Income Filers”—namely by overcharging poor people to process the refund they receive through the Earned Income Tax Credit. “A new report finds that some Americans are giving away nearly 25 percent of their refund for services they could get for free,” Gillian wrote. Here’s a representative experience from a reader:
I get the EITC. This year I got my taxes done at H&R Block and they charged me almost $400. They didn’t have any price listings anywhere and didn’t explain pricing in person before we started. I walked in thinking it was a $50-100 service and left feeling scammed. Yes my refund is large, but that’s my emergency fund for the entire year. Next time I’ll know better.
A helpful email via hello@ just came in from two doctors, Michael Hole and Lucy Marcil, plugging a program they founded to help low-income people keep more of their tax money:
As pediatricians, we think Gillian B. White’s article means more than major tax-prep chains like H&R Block and Liberty taking money from America’s most vulnerable and working families. It means potential damage to the health and wellbeing of the country’s future and most precious resource—her children.
The EITC and Child Tax Credit, together, lift more children out of poverty than any other Federal policies. The EITC, in particular, has been linked to improved maternal health, higher birth weights among black populations, improved K-12 school performance, and increased adulthood income for children whose caregivers received the refunds.
[Our] new organization, StreetCred, files taxes and tax credit applications for low-income, working families waiting to see their doctors in pediatric clinics. For free. StreetCred, a VITA-sponsored organization that filed returns with 94% accuracy per the IRS during the 2016 tax season, maximizes convenience and minimizes complexity for taxpayers relying heavily on their refunds for basic necessities.
Meanwhile, here’s a substantive back-and-forth between a few readers in the comments section. The first:
Bilking people out of their EITC is just a particularly egregious example of what’s wrong with EITC in the first place: Lots of low-income families have lousy money management skills, and dropping a giant chunk of cash on them in late April is a recipe for ensuring that the cash has a minimal impact on their well-being, and is all gone by May.
EITC needs to be disbursed in smaller chunks, over the whole year. There used to be a program called “Advance EITC,” which enhanced the earner’s paycheck, but it was discontinued because it was fraud-prone and difficult to administer. [CB note: Here’s a good 2009 post from The Tax Foundation if you’re interested in details over the AEITC’s demise.]
There’s simply no reason why there isn’t a decent, secure, low-fraud IT solution to make something like AEITC work. It probably requires some surveillance of bank accounts (which will cause all sorts of civil libertarian hand-wringing), but spreading the money out over the whole year will be massively more beneficial than dumping it as a lump sum.
This reader disagrees:
People with lousy money management skills will still have lousy money management skills, regardless of how you distribute the money. If you give it to them all at once, they’ll blow the whole chunk on a 70" flat screen. If you dole it out in smaller pieces each month, they’ll buy smaller stupid items each month.
A counterpoint from the first commenter:
Semi-competent money management isn’t rocket science; it’s something that most people learn when they’re kids. And how do they learn it? By being entrusted with small amounts of money and learning the consequences of spending it, either wisely or unwisely. Drop a year’s worth of allowance on a kid and tell him that it’s all he gets for the year and he’ll ... go out and buy a 70" flat screen. Give him a weekly allowance and he’ll discover what he can and can’t do with it. He gets to make lots of little mistakes instead of a couple of big ones.
Update from a reader who essentially rebuts both of those readers, pointing to a 2015 report from the Center on Budget and Policy Priorities:
The study found that the families spent roughly half of EITC refunds on current consumption, such as groceries, child expenses, and furniture. They spent the other half paying off past-due bills and debt, and for “asset-building” such as savings, education, or home ownership and home repairs. Nearly two-thirds of families spent part of their refunds on expenses related to raising children, and about one-third made car purchases or repairs.
