American Poverty and Welfare Reform

1. American Poverty and Welfare Reform

2. The Evolution of Welfare

3. America followed a very cautious approach in developing a welfare system • Much later than most of the other democracies, the federal government’s first tentative involvement provided some grants to the states to help their poor in 1911. • The Social Security Act passed in 1935 provided the foundation for our current welfare system. • It was passed in response to the Great Depression. • Roosevelt wanted to help the public, but feared a welfare state. Primarily he wanted his administration to design and implement a system that helped the able-bodied poor find work—real work.

4. Roosevelt convinced Congress to pass the Social Security Act of 1935, the Works Progress Administration (WPA) and the Civilian Conversation Corp (CCC). The latter two programs put millions of people to work in public sector jobs. • The major provision of Social Security was designed to help the aged who could no longer be in the employment market.

5. Social Security Act of 1935 • Established the Social Security program for the aged • Provided grants to the states to assist the aged, blind and disabled (now SSI). • Provided grants to help states set up unemployment compensation programs • Established Aid to Dependent Children which was designed to assign children in families that had lost a parent (mostly fathers who had died).

6. The SSA would be profoundly important, but it was by western standards, a conservative approach. • It was implemented slowly. Not until 1950 were half of retired workers covered by SS. • States were given a lot of control over Aid to Dependent Children (DC) and benefits for the aged, blind and disabled. • Roosevelt wanted to include health care under the SSA, but there was too much opposition from the medical profession. • In the end the programs were conservative compared to those in place at that time in western Europe and Scandinavia.

7. Social Security and Welfare Expansion • In 1950 ADC changed to Aid to Families with Dependent Children (AFDC). This was designed to expand aid to one parent plus the children. • 1961 ADFC was amended to allow aid to some two-parent families • Food Stamp program established in 1964, expanded nationwide in 1974 • Medicaid and Medicare were established in 1965 • Supplemental Security Income (SSI) established in 1974.

8. By the late 1950s and through the 1960s it became clear that AFDC had become exactly the type of program that Roosevelt, his supporters and later advocates had hoped to avoid. • It was supporting idle adults (mostly single, unemployed mothers), it had become large and expensive, and it was suspected of discouraging marriage, and encouraging illegitimate births. • The driving force behind the changes in AFDC was the unexpected and significant increase in the number of children being born out-of-wedlock. • Presidents began to offer alternatives.

9. Johnson—Great Society—A Hand up, Not a Hand Out. • Nixon wanted to base reform on a Negative Income Tax for the poor, the unemployed, and the underemployed. • Ford—EITC was passed in 1975 • Carter—a Negative Income Tax for low-income earners and a Guaranteed Income for the disabled. • Reagan—Mandatory work programs and program cutbacks/more control by the states.

10. Family Support Act Passed in 1988 • Passed at the end of Reagan’s Presidency • 1990 all states had to set up systems to garnish wages of non-paying absent parents. • States required to set up job training programs • States were required to provide support services for welfare or low-income adults trying to work. • Allowed states to set up demonstration projects (innovative welfare experiments).

11. FSA of 1988 • Only modest change because the act was badly underfunded and mostly served as an example of where Congress might be headed with reform. • Demonstration projects in some states were imformative. • The DPs provided some evidence about the impact of innovative ways of dealing with the poor.

12. Major Reform: 1996 • The Personal Responsibility and Work Opportunity Reconciliation Act of 1996

13. Established Temporary Assistance for Needy Families (TANF) • TANF replaced AFDC (Aid to Families with Dependent Children). • The new program reflects President Clinton’s goal of “ending welfare as we know it.”

14. Clinton was an advocate of reform but he twice vetoed bills passed by Congress • Clinton wanted: • Work to pay—if you worked full-time year around, you escaped poverty. • Improvements in child-support enforcement • Better programs to prevent unwanted pregnancies. • Job assistance • Time Limits on benefits to able-bodies adults • Public Service and Subsidized Jobs for people transitioning into jobs in the private sector.

15. Republican wanted to: • Cap welfare spending • Turn welfare over to the states • Time limits, strong sanctions, family caps • Employment requirements for TANF recipients • Elimination of aid to most legal immigrants • Cap food stamp expenditures • Tighten rules for Supplemental Security Income (SSI). • Better enforcement of Child Support Orders

16. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 • As passed: • Basically a Republican victory—they won on more issues than did the Democrats • Assistance would be based on a contractual relationship between recipient and state

17. PWORA goal was to shift welfare from cash assistance to helping people become viable members of the workforce. Basically a supported-work program. Turns welfare over to the states. a. Block grant to states to fund their own welfare programs. b. This means that we now have 50 different state programs. c. Caps expenditures for some welfare programs—primarily TANF. d. Limits the time period that most recipients can receive welfare paid by the federal government (2/5 rule). e. Gives the states the right to strongly sanction clients who are uncooperative, including banning them from welfare.

18. e. States must meet yearly employment goals for TANF recipients. f. States are required to establish a central case registry to track all child support orders in the state and this information must be shared with the federal government. g. States are required to establish a new hire registry, coordinate this with their child support data, and share this information with the federal registry.

19. Also designed to reduce future generations of poor by: • Funding programs to reduce out-of-wedlock births—must have an abstinence focus. • Requiring both parents of children to accept financial responsibility for their support. • Providing funding for procedures and programs to identify absent parents. • Providing states with funds that can be used to improve childcare, after-school care, and other supervised programs for millions of low-income children.

20. States have the Discretion to: • Set eligibility and benefit levels for cash assistance (as before) • Decide if they want to supplement income earned by TANF families • Offer “other carrots.” • Spend TANF funds on support rather than cash payouts. • Save block grant funds for economic downturns.

21. Aliens • Illegal aliens and legal aliens are generally ineligible for aid. • Legal aliens: no assistance for first five years • If they need assistance after first five years, their sponsors must pay. • They become eligible after working 40 quarters, or when they become citizens.

22. Basic Philosophy • Helping poor people develop better attitudes, habits and goals. • Doing this by requiring the poor to make changes, including working in exchange for assistance. • Focus of the act is primarily on adults and the currently poor, many of whom have been poor or economically marginal their whole life.

23. An Example of a Sophisticated Plan • The Wisconsin W-2 Plan

24. IX. Wisconsin W-2 1. No Entitlement to Welfare a. W-2 is available to all adults with income below 115% of their poverty level. b. Anyone willing to work is placed in a job, or given help in finding employment. c. Designed to treat clients the same as people who are working in the private sector. Job pay does not vary by the size of the employee’s family. 2. Mutual Obligation Contracts a. Financial and Employment Planner (FEP) helps applicants develop an Employment Plan (EP). • Designed to discourage those who will not cooperate. • Lay out ground rules. • Set goals for those who can be helped.

25. b. Applicants may be enrolled in several weeks of supervised job search. • Includes dressing for success, time management, instructions on how to take directions, how to get along with co-workers, transportation options. c. Develop a list of goals and a plan of action. 3. Employment Ladder—Starting at the Top • Unsubsidized Employment---no cash assistance, but often qualify for EITC, food stamps, medical coverage, child care, and job access loans. b. Trial Jobs (Subsidized Employment)---employer is subsidized (maximum of about $300 a month in 2011) for up to six months. Expectation is that employer will them provide a full-time job. Employee is paid at least the minimum wage, and may be eligible for EITC, food stamps, medical coverage, childcare and job access loans.

26. C. Community Service Jobs (CSJs)---designed to allow applicants to learn job skills and work habits. Receive up to $673 a month, and may be eligible for food stamps, medical coverage, childcare and job access loans. d. W-2 Transition---A combination of supervised work, education and training. Monthly salary (up to $628) and may be eligible for food stamps, medical coverage, childcare and job access loans. Employees in the three lowest rungs are restricted to 24 months in any one category, and 60 months in the various work options.

27. IV. Grants in CSJs and W-2 do not vary by family size. V. Support Services a. One Stop Social Welfare Centers b. Job access loans c. Transportation Services d. Child Care - no time limit on eligibility. All families below 165% of poverty level are eligible. e. Child Support - all collections to custodial parent. f. Health Care g. Local Children’s Services Networks h. Community Steering Committees - mostly focus on jobs, childcare and transportation. i. Education and Training

28. VI. Problems with W-2 Wisconsin’s plan is more sophisticated than most, but it has not been a great success. • Between 50 and 70% of those who have left the rolls are working, but rarely full-time. Most work 20 or fewer hours per week. Earning generally leave clients close to or below the poverty level. They may be better off financially, but still below the poverty line. • Many clients will not cooperate with program requirements. C. The private firms hired to run the program have often been incompetent. D. Poor data collection and monitoring of clients. E. Sanctions – Often used to just dismiss clients and reduce the rolls. The following chart ranks states in their response to PRWORA

29. State Welfare Reform Classifications • Ranked on 1) adequacy of benefits, 2) inclusion of the poor, 3) quality of state support programs. • Adequacy: the generosity of benefits received by program participants. • Inclusion: the percentage of poor people receiving benefits. • Policy commitment: the availability, accessibility, extent and quality of government assistant to poor and low-income families.

30. Rankings • Minimal: Alabama, Arkansas, Kentucky, Louisiana, Mississippi, South Carolina, Tennessee, Texas, West Virginia • Limited: Delaware, Florida, Georgia, Missouri, North Carolina, New Mexico, Nevada, Oklahoma, and Virginia. • Conservative: Idaho, Indiana, Kansas, Montana, North Dakota, Nebraska, South Dakota, Utah, and Wyoming. • Generous: California, Colorado, Connecticut, Iowa, Illinois, Massachusetts, Rhode Island, Washington, Maine, Michigan, New York, Oregon, Pennsylvania. • Integrated: Maryland, Minnesota, New Hampshire, New Jersey, Ohio, Vermont, Hawaii, and Wisconsin.

31. Impact of Race on State Policy Choices

33. Change in Welfare Assistance • Change in TANF assistance • Cash assistance ≈ 1/3 of federal TANF spending • Non-cash assistance ≈ 2/3 of federal TANF spending • Welfare is no longer primarily a cash assistance program – cash plays a secondary role

42. Administration: • In almost all the states, welfare programs are now administered by state and private corporations. • A business model is used • The agencies (particularly the private agencies) must meet contractual goals—often statistical benchmarks. • This has often caused these private companies to focus more on numbers than quality.

43. The Shift to Work-Based Welfare • Declines in Caseloads and Expenditures