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The US Welfare Reforms

The US Welfare Reforms. What can NZ learn from them?. Main Elements of US Social Security. Unemployment Insurance and Old-age, Survivors and Disability Insurance Supplemental Security Income Temporary Assistance for Needy Families. When did the reforms take place?.

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The US Welfare Reforms

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  1. The US Welfare Reforms What can NZ learn from them?

  2. Main Elements of US Social Security • Unemployment Insurance and Old-age, Survivors and Disability Insurance • Supplemental Security Income • Temporary Assistance for Needy Families

  3. When did the reforms take place? • Individual state reforms were ongoing but the fore-runners to federal reform occurred from 1990 (work requirements, time limits, tax credits and family caps) • Consequently federal reform, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), was passed in 1996 by President Clinton

  4. Why reform?

  5. What were the reforms intended to achieve? • Reduce welfare dependency • Increase employment • Increase income • Reduce unmarried births and increase marriage rates • Reduce teenage birth • Improve educational and health outcomes for children

  6. What were the major reforms? • Aid to Dependent Families with Children (AFDC) replaced with Temporary Assistance for Needy Families (TANF) • Transformed funding • Transformed entitlement

  7. Block Grants • Matched funding was replaced by a block grant • Set at a level based on the highest caseload in previous 3 years • New flexibility allowed block grant to be used for none-cash assistance • Bonuses and penalties applied • Maintenance of effort (MOE) required and supplemental grants available

  8. Time limits • Removed entitlement to long-term assistance (with proviso for exemptions and the use of state funding for extensions) • Federal requirement was 5 years over a lifetime (states could adopt lower limits)

  9. AFDC/TANF families compared to DPB recipients since 1990

  10. US/NZ single parent employment rates

  11. US/NZ single mother poverty

  12. US/NZ ex-nuptial birth rates

  13. US/NZ teenage birth rates

  14. US/NZ total recorded crime

  15. US child abuse

  16. NZ child abuse

  17. “…there is no evidence that the size of the homeless population has changed dramatically over the past ten years.” US Department of Housing and Urban Development, 2007 US Homelessness

  18. US ‘welfare’ has a new face • In 1995 80 percent of welfare spending went on cash assistance; by 2007 that had reduced to only 30 percent • Pre-reform 2/3 of poor single mothers received cash assistance compared to one quarter today • Welfare now primarily consists of social services rather than cash assistance

  19. Changed expectations • Single parents are expected to work, with most assistance aimed at helping them overcome barriers to finding and retaining a job • The debate largely revolves around how best to achieve this eg through education or work requirements?

  20. Which welfare-to-work policies were most effective? Based on evaluation of 26 welfare-to-work policies; • Earnings and employment increased the most when job search was stressed more than education, although training and education still played a role for more disadvantaged recipients • Only earnings supplement (combination of welfare and work) consistently increased income

  21. The negatives of US welfare reform • Real expenditure on cash transfers has increased via subsidised housing, food stamps, earned income tax credits and Medicaid • No significant change to the ex-nuptial birth rate • Some have experienced lower incomes and greater hardship

  22. The positives of the US welfare reforms • Poverty decreased, especially amongst minority groups • Employment increased • Crime did not sky-rocket • Overall child abuse and neglect did not increase • Teenage birth rate dropped • More children live in working homes

  23. Speculation for NZ • Given the trend-lines, does the US investment in services pay higher social dividends than an income support approach? • How will America’s next generation fare with many more being raised in working households?

  24. Speculation for NZ (continued) • The US seems to be making a dent in their high teenage birth rate, often a feature of inter-generational welfare dependence. Should NZ make similar efforts? • Based on the US funding model i.e. block grants, is there an opportunity to expand whanau ora similarly?

  25. Final words “That the 1996 welfare reform was a success, in overall terms and on average, is almost universally accepted by policy analysts and researchers.” Professor Robert Moffitt, Kreiger-Eisenhower Professor of Economics at Johns Hopkins University, 2008.

  26. Recommended reading • A primer on U.S. welfare reform, Robert Moffitt • CRS Report for Congress, The TANF Block Grant: A Primer on TANF Financing and Federal Requirements, Congressional Research Service • Policy Basics: An Introduction to TANF, Center on Budget and Policy Priorities

  27. Supplemental Security Income (SSI) reforms • Reduced benefit eligibility for the less severely disabled • Tightened eligibility rules for legal aliens/non-citizens • New regime of claimant reassessments

  28. SSI Reforms (continued) • Post 1996 recipients with Drug or Alcohol Addiction as prime incapacity were made ineligible • Remaining secondary DAA recipients required an appointed agent for benefit payment and mandatory referral for addiction treatment (originated in 1972)

  29. Total numbers on SSI since 1990

  30. Results of SSI reform • A majority of DAA claimants returned under a different incapacity eg psychological disorder • Mixed results for those who left welfare

  31. NZ teenage birth rate by decile • 65.8 girls per 1000 aged 15-19 gave birth in the most economically deprived areas, classified as decile 10 • 6.92 per 1000 gave birth in the most affluent areas, or decile one

  32. US/NZ property crime

  33. US/NZ violent crime

  34. Change in TANF spending 1997 - 2007

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