What Did the 1990s Welfare
Reform Accomplish?
Rebecca M. Blank
December 2003
(A topic closely related to Gene
Smolensky’s past research and concerns)
What Did Welfare Reform Do?
1996 legislation followed waiver
experimentation
 Created TANF

Funding stream, not a program
 Ended entitlements
 Block Grants


Other provisions (immigrants, food
stamps)
State Responses





Welfare-to-work efforts
Earnings disregard changes
Sanctions enforcement
Time limits establishment
Few cash benefit changes
Result: State and federal welfare dollars for
noncash assistance rose from 23% in 1997 to
56% in 2002; proportion of money spent on
direct cash assistance fell from 77% to 44%.
Other Program Changes
Child care subsidies rose
 Declines in AFDC led to declines in
Food Stamp and Medicaid usage
(although other Medicaid changes
had delinked it with cash assistance)
 EITC increases
 Minimum wage increases

Economic Changes Important
Unemployment rates fell and stayed
low
 Wages rose

Figure 1
Total AFDC/TANF Caseloads
5,000,000
4,000,000
3,000,000
2,000,000
1996 Welfare Reform
1,000,000
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
0
19
70
Number of Households Receiving AFDC/TANF
6,000,000
Year
Note: 2003 data is through March of 2003.
Source: Website for Agency for Children and Families, Department of Health and Human Services (http://w w w .acf.dhhs.gov)
Figure 2
Total Caseloads
2,000,000
Number of Households Receiving AFDC/TANF
1,800,000
1,600,000
Waiver States
1,400,000
1,200,000
Non-Waiver States
1,000,000
800,000
600,000
400,000
200,000
0
-6
-4
-2
0
2
4
Year Relative To Year of Implementation of Waivers or TANF
Source: March Current Population Survey and Table A1 from "The Effects of Welfare Policy and the Economic Expansion on Welfare Caseloads: An Update" by the
Council of Economic Advisers. August 3, 1999.
6
Figure 3
Percent of Single Mothers Reporting Work During the Year
100%
90%
More than High School Diploma
80%
70%
Only High School Diploma
60%
50%
No High School Diploma
40%
30%
20%
10%
0%
1988
1990
1992
1994
1996
Year
Source: Author's tabulations of the March Current Population Survey
1998
2000
2002
Figure 4
Percentage of Single Mothers on Public Assistance in Previous Year
Who Report Working in March
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1990
1992
1994
1996
1998
Year
Source: Author's tabulation of the March Current Population Survey
2000
2002
2004
Table 1
Single Mothers' Income Composition
Total
Income
(in 2000
dollars)
Percent of Total Income
Public
Assistance
Own Earnings
Other
Earnings
Other
Income
1990
$18,563
23.08%
53.21%
4.30%
19.41%
1991
18,383
24.37
53.20
3.76
18.67
1992
17,882
23.22
52.73
3.50
20.55
1993
18,401
23.26
51.94
3.34
21.46
1994
19,296
20.06
54.73
3.78
21.43
1995
20,523
17.13
56.31
4.07
22.49
1996
20,512
15.43
57.98
4.16
22.43
1997
20,979
12.47
61.21
3.95
22.37
1998
22,054
9.37
64.93
4.43
21.27
1999
23,498
7.60
65.92
4.77
21.71
2000
24,318
5.74
68.39
4.54
21.33
2001
25,195
4.97
67.29
4.62
23.12
Note: Total income is the mean dollar value (in 2000 dollars) before taxes, and it does not include EITC
subsidies. Public Assistance is composed primarily of AFDC and TANF benefits and does not include
the inputed value of Food Stamps or Social Security Income.
Source: Author's tabulations of the March Current Population Survey
Key missing information in these
calculations:
Work expenses
 Tax and transfer benefits
 Cross-household transfers

Did some groups gain more
than others?
Table 2
Changes Among Single Mothers: 1995 to 2001
Earnings as a
share of
Family
Income
(1995)
Change
from 1995
to 2001
Public
Assistance as a
share of Family
Income (1995)
Change
from 1995
to 2001
Ratio of
Column (2)
to Column
(4)
(1)
(2)
(3)
(4)
(5)
0.564
0.110
0.171
-0.122
-0.903
No High School Diploma
0.366
0.191
0.342
-0.224
-0.854
Only High School Diploma
0.582
0.097
0.173
-0.115
-0.840
More than High School Diploma
0.647
0.066
0.084
-0.066
-0.989
White (non-Hispanic)
0.612
0.078
0.105
-0.077
-1.013
Black (non-Hispanic)
0.529
0.149
0.232
-0.172
-0.868
Hispanic
0.479
0.160
0.284
-0.190
-0.841
No Preschooler
0.604
0.064
0.100
-0.070
-0.917
Preschooler(s) (less than 6)
0.510
0.171
0.265
-0.186
-0.917
Infants(s) (less than 2)
0.451
0.208
0.331
-0.229
-0.909
Part 1.
All
By Education
By Race
By Age of the Youngest Child
Source: Author's tabulation of the March Current Population Survey
Table 2
Changes Among Single Mothers: 1995 to 2001
Percent on
Welfare (1995)
Change
from 1995
to 2000
Ratio of
Column (2)
to Column
(4)
(2)
(3)
(4)
(5)
0.735
0.081
0.274
-0.175
-0.461
No High School Diploma
0.487
0.160
0.465
-0.281
-0.568
Only High School Diploma
0.752
0.059
0.272
-0.161
-0.367
More than High School Diploma
0.854
0.037
0.173
-0.120
-0.307
White (non-Hispanic)
0.818
0.044
0.197
-0.130
-0.338
Black (non-Hispanic)
0.671
0.126
0.356
-0.229
-0.551
Hispanic
0.599
0.139
0.369
-0.236
-0.591
No Preschooler
0.808
0.035
0.188
-0.123
-0.285
Preschooler(s) (less than 6)
0.646
0.133
0.381
-0.235
-0.567
Infants(s) (less than 2)
0.560
0.163
0.425
-0.244
-0.665
Part 2.
All
Percent
Working
(1995)
Change
from 1995
to 2000
(1)
By Education
By Race
By Age of the Youngest Child
Source: Author's tabulation of the March Current Population Survey
Table 2
Changes Among Single Mothers: 1995 to 2001
Percent Working
(1995)
Change
from 1995
to 2000
Ratio of
Column (2)
to Column
(4)
(2)
(3)
(4)
(5)
0.402
-0.078
0.735
0.081
-0.970
No High School Diploma
0.682
-0.105
0.487
0.160
-0.656
Only High School Diploma
0.413
-0.053
0.752
0.059
-0.898
More than High School Diploma
0.241
-0.054
0.854
0.037
-1.463
White (non-Hispanic)
0.291
-0.045
0.818
0.044
-1.021
Black (non-Hispanic)
0.510
-0.118
0.671
0.126
-0.934
Hispanic
0.566
-0.145
0.599
0.139
-1.043
No Preschooler
0.305
-0.047
0.808
0.035
-1.346
Preschooler(s) (less than 6)
0.522
-0.106
0.646
0.133
-0.794
Infants(s) (less than 2)
0.584
-0.098
0.560
0.163
-0.604
Part 3.
All
Percent
Below Poverty
Line (1995)
Change
from 1995
to 2000
(1)
By Education
By Race
By Age of the Youngest Child
Source: Author's tabulation of the March Current Population Survey
Did some groups gain more
than others?



Little evidence that single mothers who were
more disadvantaged in the labor market (I.e.
lower skill; minority; younger children) had
greater difficulty finding work. Striking similarity
in changes between public assistance and
income shares.
More disadvantaged groups better able to
increase their work share relative to their
declines in welfare participation
More disadvantaged groups had greater difficulty
translating employment increases into poverty
declines.
Welfare Leaver Studies
Very useful descriptive information
 Not very useful in providing an
overall evaluation of welfare reform.
No information on other populations.
 Not useful in helping separate policy
changes from other changes.

Regression Estimates from of
Existing National Data Samples
Used to estimate caseload changes,
employment changes, income
changes, etc.
 Major reviews of these: Blank
(2002), Grogger, Karoly and
Klerman (2002)
 Most show BOTH policy and
economy mattered; but large
amounts unexplained

Particularly promising approaches
Compare differential effects among
more and less educated women
 Look at flows rather than levels in
caseload change
 Find a good instrument for a policy
effect (EX: Grogger’s use of age of
children to study time limtis)

Yet, all of these estimation approaches have
limits – identification of a policy effect is
extremely difficult
TANF was implemented everywhere
within a year’s time.
 TANF implementation occurred as
the economy boomed and EITC was
expanded nation-wide
 Individual policy components within
TANF are hard to code and not well
identified either

Experimental Data
Very effective for looking at single
policy changes; less effective for
evaluating multiple changes.
 No states are running post-waiver
experiments on welfare reform
programs.

Key Results from Experiments
Effectiveness of work-first programs
 Amazing results of financial
incentive programs

Can increase both earnings and income with
combined incentives and mandates

Effects of work pgms on children
What Big Questions About Welfare
Reform Remain Unanswered?

•
•
Interpreting the Caseload Decline and
Employment increase
Both changes were far greater than
anyone would have predicted
Uncertainty about why such a large
changes occurred
* Synergies?
* Behavioral shifts?
* Misinformation?
What Big Questions About Welfare
Reform Remain Unanswered?

The Effects of an Economic
Slowdown in the new Policy Regime?
So far very limited effects.
* Is this the fulfillment of the
promise of welfare reform?
* Is this just a mild slowdown?
* Are we missing key measures
of economic pain?
What Big Questions About Welfare
Reform Remain Unanswered?

Relation of Assistance Programs to
Family Composition & Fertility
Major goal of welfare reform, but
timing of changes doesn’t match
timing of policy change
Current research investigating
policy/marriage/fertility links is still
limited and contradictory
Figure 5
Birth Rates for Unmarried Women, Age 15-44
Live Births to unmarried women per 1,000 unmarried women
100
90
Black
80
70
60
50
40
All
White
30
20
10
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
Year
Source: Centers for Disease Control and Prevention. (2002). Births: Final data for 2000 (Table 18). National Vital Statistics Reports, 50(5).
1998
2000
Conclusions
1996 legislation did constitute a
major reform (this happens rarely)
 Transformation of the public
assistance system is still a work-inprogress. The arguments between
critics and supports remain very
unsettled
 Role of economy remains key
