Economy & Business

Why the 1996 Welfare Reform Benefited Poor Children

(Dreamstime image: Redbaron)
In evaluating the efficacy of ’96 welfare-reform law, we first need to define our terms.

Twenty years ago last week, Congress passed legislation overhauling the nation’s cash welfare system. In a new paper, “Poverty after Welfare Reform,” I attempt to discern how hardship has changed among children since August 22, 1996, when President Clinton signed into law the legislation that created the Temporary Assistance to Needy Families (TANF) program. The report argues that, contrary to the claims of an influential book by Kathryn Edin and Luke Shaefer, practically no children live in families getting by on $2 a day per person. It concludes that “deep child poverty” — living under half the official poverty line — is probably no higher than it was before welfare reform. The study argues that both $2-a-day and deep poverty are measured very badly, making it difficult to draw conclusions from them about hardship trends. In contrast, child poverty (deep or shallow) unambiguously fell after 1996 and is lower than ever before.

The paper is descriptive by design. Rather than making the claim that welfare reform caused child poverty to fall, I simply argue that it did fall (or was more or less unchanged among the poorest of the poor). However, I do believe that welfare reform actually reduced child poverty. This case is poorly understood by the critics of reform, who tend to distort it in predictable ways. Here I want to begin to lay out why conservatives believe that welfare reform benefited poor children, by clarifying what we do and don’t mean by that. In a second piece, I will get to the facts that have convinced me that welfare reform reduced poverty.

The first thing to say is that no one believes that welfare reform was the only reason that child poverty fell. That should be obvious, yet critics of reform sometimes seem to think otherwise. In his critique of my paper, (response here) Slate’s Jordan Weissmann stresses that “the 1996 welfare reform law is at best responsible for only some of” the decline. In a similar vein, the anti-welfare-reform article of Vox’s Dylan Matthews is oddly headlined, “If the Goal Was to Get Rid of Poverty, We Failed.”

Well, sure, if you set up the debate to be about whether welfare reform was the only factor behind declining poverty or suggest that its goal was to completely eliminate poverty, that’s a debate you have a pretty good chance of winning. I’ll gladly agree with Weissmann that “TANF may have had some positive effects on the headline poverty rate, but it didn’t single-handedly work miracles.” If you think your opponent is arguing for miracles, it is likely that you are misinterpreting their claims.

Other critics of reform seem to believe that claiming that welfare reform was beneficial amounts to saying that it achieved the single largest reduction of child poverty possible. Now that would be some achievement — successfully enacting the one set of policy details (and getting the Department of Health and Human Services to implement the one set of rules and regulations) that minimized child poverty to the largest extent possible. That’s a pretty high bar, though, isn’t it?

RELATED: 20 Years After Welfare Reform, Conservatives Should Build on Its Success to Address Poverty

The real question of interest is not whether welfare reform was the only cause of declining child poverty, nor whether it was the best conceivable way to reduce child poverty. The important question is whether welfare reform reduced child poverty or not — are children better off today than they would be if we had not passed welfare reform?

That is a difficult question to answer because none of us knows what the counterfactual would have been in the absence of reform. It would be silly for me to claim to have an airtight case. Nor does anyone who argues that welfare reform did more harm than good. But critics of reform should at least recognize the case as it actually exists rather than parrying an argument that no one is making.

For example, Weissmann uses his critique as an opportunity to troll me by suggesting (falsely) that what I conclude is that food-stamp and Medicaid expansions prevented welfare reform’s actual damage from being realized. That suggestion betrays a real lack of imagination about what would have happened absent welfare reform (in addition to misreading the evidence I present, but that’s for the next essay).

RELATED: Welfare Reform: Two Decades of Success

The old cash welfare program, Aid to Families with Dependent Children (AFDC), was broadly unpopular because it violated deep-set American values around reciprocity (expectations in return for help) and personal responsibility. Americans have historically been willing to help the poor, but only if they are willing to help themselves. AFDC discouraged work, marriage, savings, and independence. Any expansions to the safety net that occurred after 1996 took place in a context in which we had eliminated the old system in favor of one that was more consistent with widely shared values. To some extent, Americans (and legislators) became more generous after welfare reform because of welfare reform.

#share#Under the old system, it is highly unlikely that Congress would have expanded the safety net as it did in response to the Great Recession, because most single mothers would have been able to rejoin the welfare rolls. Meanwhile, many fewer single mothers would have benefited from joining the workforce because under AFDC many would have remained on the rolls. (As I’ll discuss in the next essay, rising employment was much more important for reducing poverty than Weissmann and other critics believe.) The technical way of stating this argument is that subsequent expansions of the safety net (like the increase in work among single mothers) were “endogenous” — we cannot assume they would have occurred absent welfare reform.

It is also interesting to ask whether some other welfare-reform policy would have reduced child poverty more than the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) did, regardless of whether or not that’s what would have happened. But we don’t know how any other welfare-reform proposal would have affected child poverty. That some other theoretical plan might have done better is not a damaging criticism of PRWORA.

RELATED: Ending Welfare as We Know It

Too many liberals are far too confident that the reforms they advocate would have been better than PRWORA and would be better than continuing current policy, because they tend to not seriously consider unintended consequences. Reforms that make receipt of welfare relatively more attractive will tend to draw more families onto the rolls and thereby run the risk of preventing them from benefiting from the advantages of employment. Or it will discourage planned and responsible childbearing by reducing its costs.

Relatedly, many critics of reform are too dismissive of paternalistic anti-poverty policy. “Don’t people know what’s best for themselves?” ask liberals and libertarians who assume that if work pays, people will naturally work. There is much to be said for this view, undoubtedly, but even if most people know what’s best for them most of the time, some do not at least some of the time.

Furthermore, policy shouldn’t necessarily strive to give people what they think is best for themselves in a world where wants are potentially unlimited and someone else is paying. Some people value leisure more than work at the margin, and in that case we have to ask whether working taxpayers are obliged to support the leisure of those who could work but do what’s best for themselves by not working. The same may be said of people whose childbearing decisions are what’s best for them; none of us is entitled to do what’s best for ourselves and expect others to bear the costs.

These particular ways of evaluating the success of welfare reforms are, in a sense, moral rather than economic. But conservatives hold these normative views, in part, out of the belief that work and responsible childbearing may benefit children economically even if they do not make parents happier in the short run. For that matter, they may make society better off economically in the long run by promoting economic growth.

In the end, the conservative resistance to weakening the tough provisions in the 1996 law stems from the belief that — regardless of whether there might have been a better way — welfare reform improved the lives of the poor when compared with the old system. We get very nervous about departing from a model that a lot of evidence suggests was better than the status quo.

Of what does that evidence consist? I’ll get to that in my next piece.

Scott Winship directs the Social Capital Project for Senator Mike Lee in the Joint Economic Committee. His writings reflect his own views, not those of Senator Lee or the JEC.

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