Ending the welfare cycle

by Lady Lockhart

The 1996 Welfare Reform Law replaced the Aid to Families with Dependent Children program with the Temporary Assistance for Needy Families (TANF) program. TANF implemented strict work requirements for welfare recipients, and since then, welfare caseloads have decreased by more than 50%. But are smaller caseloads an indicator of success? That depends. If the goal was to simply kick people off public assistance, then welfare reform has been successful. But if the goal is to help recipients and ensure their future success so that they don’t return to welfare, then no – welfare reform has been far from successful.

From 1996 to 2000, the percentage of people “dependent” on welfare declined from 5.2 to 3 percent, according to a 2013 report from the Department of Health and Human Services. The “dependency” rate has since risen back to 4.6 percent, declining briefly only in 2006 and 2007. Millions of people cycle in and out of welfare, and a few common-sense changes could help improve the system. For example, the law should continue to provide supportive services, such as childcare, to recipients even after they have found employment. The current policy quickly renders recipients ineligible for childcare benefits when they find a job, creating a situation in which working mothers, unable to afford a babysitter and cut off from benefits, are forced to quickly exit the workforce. These mothers return to home and to welfare, perpetuating the cycle of dependence.

Future welfare reform solutions need to be two-tiered. First, keep encouraging recipients to accept immediate employment while continuing to invest in their future marketability. Second, job training should be focused on retention and advancement so that recipients will have more sustainable employment. If welfare recipients accept seasonal or temporary employment, they should be coached on managing their finances accordingly, while also searching for full-time jobs.

This leads me to my third point – financial literacy is key. Most welfare recipients are eligible for the Earned Income Tax Credit, which comes in a lump-sum payment during income tax season. Many are also unemployed during this time, but could benefit from investing some of those funds for future expenses. Welfare policy needs to begin coaching welfare recipients on managing their finances in both good and bad times.

New policies furthering enhanced supportive services, job retention and advancement training, and financial literacy will help further reduce welfare caseloads, and produce more confident, self-reliant citizens. In an August 22, 2006 NY Times Op-Ed, former President Bill Clinton said the goal of the welfare reform law was “to make welfare a second chance, not a way of life.” Society should be understanding of welfare reliance in a time of need, but we should also support policies that genuinely help fellow citizens achieve long-term self-sufficiency. With TANF up for reauthorization this year, policymakers should consider these solutions to ensure that welfare policy truly is successful, not only at reducing caseloads, but also at ensuring recipients’ long-term sustainability.

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Lady is a first year Post-Grad Batten student pursuing the MBA/MPP dual degree. Her policy interests include social policy, welfare policy, fiscal policy, and public-private partnerships. She has previously worked in the Pennsylvania House of Representatives, both as a Legislative Assistant and as a Research Associate.