Mixed Results for Welfare Reform

RESEARCH l Eight years after reforms to the U.S. welfare program went into effect, early results of a study looking at low-income families suggest important distinctions between families that have experienced modest improvements in their financial status and families whose situations have either deteriorated or stayed the same during the period under consideration.

The report is based on data from a larger study of poor and near-poor families in Boston, Chicago, and San Antonio, which Kennedy School Professor William Julius Wilson, along with colleagues from
the University of Texas at Austin, Pennsylvania State University, Northwestern University, and Johns Hopkins University, began in 1999. This ambitious study includes interviews with approximately 2,400 caregivers and their children aged 0 to 4 and 10 to 14 and considers such issues as labor market experience, welfare history, and social demographics in an effort to better understand how families have fared since the introduction of Temporary Aid to Needy Families (TANF), which replaced the old Aid to Families with Dependent Children (AFDC). The study also includes an extensive ethnography with an additional 260 families in the same neighborhoods in the three cities.

The report indicates that under the new program — which ends entitlements, places time limits on benefits, and imposes work requirements — recipients are often confused about the complex rules and regulations that govern receipt of benefits; the increased earnings of welfare leavers are often offset by additional employment-related expenses such as childcare and transportation; and program-related sanctions, which are used to ensure that welfare recipients comply with the requirements of TANF, may disproportionately affect the most disadvantaged families who are the least equipped to cope with the consequences of such penalties.

The report, titled “After Welfare Reform, A Snapshot of Low-Income Families in Boston,” also underscores how the availability of other important noncash benefits, such as the Earned Income Tax Credit (EITC), Medicaid, housing subsidies and childcare subsidies, as well as the strong economy of the late 1990s, helped improve the economic condition of many low-income families, including those affected by welfare reform. However, the authors warned that “a focus solely on fluctuating welfare and employment rates does not illuminate the complicated welfare and work transitions that play out in the lives of low-income families. A more nuanced understanding of how these families fare…requires we dig more deeply.”

Families who have remained on welfare, despite the dramatic caseload reductions witnessed in Massachusetts since the introduction of welfare reform, appear to be the most disadvantaged. The data indicate that these caregivers have lower educational attainment, little or no work experience, and higher rates of physical and mental health problems in comparison to those families who recently left the welfare rolls or who have been off for longer periods. Similarly, some families that have recently left the rolls may be hampered in their efforts to obtain gainful employment by the limited job opportunities they have available to them, as well as the low levels of human capital they bring to the labor market. The families who seem able to make a successful transition off the rolls appear to be better able to cope with these limitations or have access to a more supportive social network.

More uncertainty lies ahead according to the report’s authors. The study, to date, does not measure the economic slowdown of the last few years. Furthermore, another round of welfare reforms threaten as reauthorization hearings currently under way could require non-exempt recipients in Massachusetts to increase work hours from 20 to 40 hours per week. The three-city study plans to carry out another round of interviews in early 2005.

The Boston welfare report is available online.