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Antipoverty Effectiveness of Welfare Programs by strowbya1


									Was Welfare Reform Successful?

                  Today’s Readings
• TANF AT 10
Program Results are More Mixed Than
Often Understood, Sharon Parrott and Arloc Sherman Surf around, making
sure to examine the Guide to TANF Reauthorization Issues
• Blank, ―Was Welfare Reform Successful?‖ Economists’
Voice,, March, 2006.
• DeParle, Ch 16: Boyfriends: Milwaukee, Spring 1999
       Today’s Questions
• What criteria should be employed when
  evaluating the success of welfare reform?
• What are the prospects for valid evaluations
  of the effects of welfare reform?
• What methodology can we trust?
• What do the experts say about the success of
  welfare reform?
What criteria should be used to
  evaluate welfare reform?
• Should we evaluate TANF in its own terms?
    1996: A bill to restore the American family,
    reduce illegitimacy, control welfare spending and
    reduce welfare dependence.
  What criteria should be used to
  evaluate welfare reform?, cont.
• Should we ask if TANF has:
  – Restored the American family?
     • Decrease divorce and cohabitation and increase
  – Reduced illegitimacy?
     • reduce the number of children born to unmarried mothers
  – Controlled welfare spending?
     • Reduce the amount of money spent on welfare
  – Reduced welfare dependency?
     • Decrease the caseload
• If it has accomplished these goals should we
  declare welfare reform a success?
         Alternative criteria

• Or should we also judge TANF by criteria
  developed to evaluate previous welfare
  – Does the reform reduce poverty? (adequacy)
  – Does the program encourage personal
    responsibility? (work incentives)
  – Does the reform treat participants and non-
    participants fairly?
     • Does it treat persons in similar situations similarly?
       (horizontal equity)
     • Does it treat people in different situations differently?
       (vertical equity)
 Alternative criteria, cont.

– Does it target just the poor? (target
– Are the rules easily understood by all?
  (participants and tax payers)
– Can be the programs be easily accessed
  by those eligible? (hassle factor)
– Can the program be administered without
  error or fraud?
  Lessons from Federally Mandated
Evaluations of Demonstration Projects
• National Evaluation of Welfare-to-Work
  Strategies (NEWWS)
  – NEWWS sites: Atlanta, GA; Grand Rapids,MI;
    Riverside, CA
  – Participants followed for 3 to 5 years.
• Work-first programs increase employment
  and reduce welfare receipt relative to not
  having such a program
  – Major effect: speed entry into a job
  – Increases in earnings did not offset reductions in
    case benefits and food stamps
    Lessons from Federally Mandated
  Evaluations of Demonstration Projects,
• Education-first programs
  – No difference in impacts between work-first
    and education-first programs for
    participants in many programs
  – Where differences were recorded, work-
    first outperformed education-first
  – None of the education-first programs
    increased incomes over 5 years
     Lessons from Federally Mandated
   Evaluations of Demonstration Projects,

• ―Mixed‖ Approach: Portland, OR and
  Riverside, CA (GAIN): Short-term educational
  activity and delayed entry to look for ―good‖
  – Significant increases in earnings (25 to 49%)
  – Significant decreases in cash assistance (15-24%)
  – No increase in incomes
   Ongoing Federally Funded
    Demonstration Projects
• Federal dollars support evaluations of
  demonstration projects for specific
  subgroups of the recipients
  – The hard to employ
     • Substance abuse and/or chronic mental health
     • Disabilities
     • Victims of domestic abuse
     • Families living in rural areas
  Ongoing Federally Funded
 Demonstration Projects, cont.
• Programs that aim directly to affect
  family formation outcomes
  – Encourage marriage between unmarried
  – Support to sustain marriage among low-
    income couples
 What methodology can we trust?

• The Gold Standard: control versus treatment
  – Identify two groups of eligible persons, families,
    etc. with identical demographic and
    socioeconomic compositions
  – Subject one group to the treatment
  – Prohibit the other (control) group from
    experiencing the new rules
  – Compare the outcomes for each group through
How are Conclusions Actually Drawn?

• Spotty privately sponsored analyses
• Evaluating Trends in:
  – national data bases (CPS)
  – State/National administrative data
• Limitations
  – Cross-sectional data--snap shots
  – Data do not reflect what happened to families
    when they left welfare
            Did TANF
  Restore the American Family ?
National Healthy Marriage Resource
(Go to Research and Trends)
• Marriage rates

• Attitudes toward Marriage

• Attitudes toward Cohabitation
Marriage and Divorce Rates,
       DID TANF
  Reduce illegitimacy ?
• Teen Births Continue Drop; Births to
  Unmarried Women on the Rise
  – Center for Disease Control and Prevention

• ―Births:Preliminary Data, 2005,‖
  – National Vital Statistics Reports
   Review Ch7FamilySize.ppt

• The total number of live births to all unmarried
  women is rising
   – The number of births to black unmarried women is
• The percentage of births to unmarried mothers is
• The percentage babies born outside of marriage is
  rising for whites and declining for blacks
• The percentage of low birth weight babies is rising
Hamilton BE, Ventura SJ, Martin JA, and Sutton PD. Preliminary births for 2004.
Health E-stats. Hyattsville, MD: National Center for Health Statistics. Released
October 28, 2005.
        Did TANF
Control Welfare Spending?
Per Capita Spending on TANF, FY1997-

 Source: Spending on Social Welfare Programs
in Rich and Poor States,
Source: Ibid.
Control Welfare Spending?
 Per Capita Spending on Medicaid,

 Source: Ibid.
      Did TANF
Decrease Dependency ?
• Welfare rolls fell by around 60 percent
  between 1996 and 2000.
• Caseloads continued to fall after 2000 as
  poverty began to rise.
  – Caseloads did not increase with recession
• Personal responsibility
  – Employment rates for single mothers rose from
    62% in 1995 to 73% in 2000. In 2005 they had
    fallen to 69%.
  Source: TANF AT 10
Program Results are More Mixed Than Often
    Understood, Sharon Parrott and Arloc Sherman
 National Welfare Caseloads,
 March 1994-September 2004

Source: U.S. HHS, Administration for Children and Families,
           Alternative Criteria:
            Work and Income
• Adequacy
  – Average incomes rose by about $5,000
  – Earnings increases were larger than welfare
    benefits declines
  – Income is not adjusted for costs of working: costs
    of working lower disposable income to pre-reform

  Source: Blank, 2006
               Work and Income

• Hardship? (Adequacy)
  – More single-mothers report not being on
    welfare and not working
  – Women involuntarily terminated have lower
    incomes and worse outcomes--how are
    they surviving?
  Source: Parrott and Arloc Sherman, 2006
        Poverty Reduction

Poverty fell initially
  • Poverty rates for single-mother households fell
    to historically low levels by late 1990s
 Slight increase in past 4 years
  • Increases in employment greater than declines
    in poverty
  • Share of the working poor rose and is higher
    than in early 1990s
            Poverty reduction

            1994   2000    2004
All ages
All races   14.5   11.3    12.7
Blacks      30.6   22.5    24.7
Hispanics   30.7   21.5    21.9
Under 18
All races   21.8   16.2    17.8
Blacks      43.8   31.2    33.6
Hispanics   41.5   28.4    28.9
    Especially for children . . .
  Poverty Rates Among Children

Source: U.S. Census Bureau,
Poverty Rates Among Black Children, cont.

Melissa G. Pardue, ―Sharp Reduction in Black Child Poverty Due to Welfare Reform,” The Heritage
Foundation Backgrounder #1661, June 12,2003
   Extreme Poverty (<50% PL ) for all
• Trends 1994-2004
  – Fell from 5.9 percent in 1994 to 4.5 percent in
  – Rose continuously to 5.4 percent by 2004
• By age in 2004:
  – Persons 18-24 had highest rates--9.0 percent
  – Persons under 18 were next at 7.6 percent
• By family status:
  – Persons in unrelated subfamilies have highest
    rates of extreme poverty: 26.7 percent
  – Children under 6 years: 9.0 percent
     Extreme Poverty Rates Among
           Children by Race

Source: U.S. Census Bureau,
             Alternative Criteria:
                 Other effects
• Effects on Children
   – child abuse—down since early 1990s
   – Some positive achievement and behavioral effects
     on young children associated with use of center-
     based child care
   – Some small negative effects on adolescents
     associated with lack of parental supervision

Source: Blank, 2006
    What really caused the
 changes in work and income?
• Work enforcement
   – Diversion effects.
   – Sanctions, time limits, messages??
• Good economy
   – Many jobs, even for the unskilled.
   – Rising real wages.
• New benefits
   – Especially EITC
   – a higher minimum wage (Sept. 1997)
• Relative role of these factors is disputed.
     Limitations of reform:
    A conservative’s agenda
• By and large, welfare reform was a grand
   – Finish work enforcement.
       • Recent reauthorization of TANF.
   – Keep welfare leavers at work:
       • An hours threshold for EITC.
   – Raise the incomes of leavers:
       • EITC, minimum wage.
   – Extend work enforcement to men:
       • Using criminal justice and child support.
   – Strengthen marriage.
Source: Larry Mead
      Limitations of reform:
        A liberal’s agenda
• Too soon to claim success
  – Collect and analyze nuanced data on
      • Well-being of low-income families no longer on welfare
      • Child effects
      • Family effects
  – Determine what combination of negative and
    positive incentives work best
  – Increase child care subsidies
  – Expand health insurance for low-income working
  – Sustain safety net for those for whom employment
    is just not possible
  Source: Blank, 2006
  Key Elements of TANF Reauthorization:
    (Signed into law, February 8, 2006)

• Eliminates the separate work participation
  rate requirements for two-parent families
  (thus applying the same lower rate to all
• Increases minimum state work participation
  rates from 50% for FY2006 to 70% for
• Revises requirements for calculation of
  participation rates and recalibration of the
  caseload reduction credit.
  Key Elements of TANF Reauthorization:
          Work Requirements

• Adds a new part C (Fatherhood Program) to
  promote responsible fatherhood.
• Requires TANF programs to be mandatory
  partners with One-Stop Employment Training
  Centers created under the Workforce
  Investment Act of 1998
• Includes $150 million to support programs
  designed to help couples form and sustain
  healthy marriages.

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