The_Bear

done with paper! now onto writing tetris!


The Welfare Reform Debate of 1995

Intro: context overview

The great emergence of public assistance programs in America was during the Great Depression of the 1930's. This emergence of public assistance programs was prompted by the vast multitudes of people who were left destitute as a result of the failures of the economy. The most important programs of public assistance created to combat the destitution of that era were contained in the Social Security Act of 1935; included in this act was, but not exclusively, Aid to Dependent Children, or ADC. ADC was a program that gave assistance in the form of money to families that had lost their primary breadwinner. This program continued largely intact, until Lyndon Johnson's 'Great Society' of the 1960's, where it was changed into Aid to Dependent Families with Children, or AFDC. AFDC was a program that gave direct assistance, in the form of money, to families with minimal criteria for potential recipients – it did not take into account the employment status of the parents, or the structure of the family. This soon became a problem; due to the lack of criteria, people were failing to work, and became dependent AFDC in the course of their lives. They were living off of their government given checks. In turn, this prompted calls for reform of AFDC from all of the politicians in the Government, because those who became dependent were seen as stealing from the taxpayers. The question soon became not if reform was necessary, but to what extent reform was necessary. Some argued that AFDC was ideologically wrong; they argued that a public assistance program for the poor should focus on promoting personal responsibility as well as work. Others argued that AFDC needed to be changed, but that it should remain ideologically the same; they argued that AFDC needed to remain a program that gave aid to families with minimal requirements for recipients, and that any ideological change in the program would bring more negative results than positive. AFDC was transformed into Temporary Assistance for Needy Families, or TANF, in 1996; along with this transformation, programs were added or strengthened to assist with the change. Among the were an increase in the Earned Income Tax Credit, or EITC, an increase in Federal funding for daycare, and the strengthening of child support laws. Since that time, it has been shown that the welfare reforms of 1996 largely had their desired effect of promoting work over welfare, and making work pay.
The problem in detail
In order to properly understand the welfare reform debate of 1995, it is necessary to first understand the failures of AFDC. These failures are attributable to culture that seemingly developed because of AFDC. This culture was a culture that apparently promoted the ideals of dependency; that AFDC had become a way of life, rather than its intended structure of aid to the living. The truth of this statement that aid programs, such as AFDC, breed dependence on the government, is shown two different ways; it is shown by Moynihan’s Scissors, and cross sections of how long people are on welfare at a given time.
Moynihan’s Scissors
Moynihan’s Scissors is named for former Senator Daniel Patrick Moynihan, who while serving as Undersecretary of Labor in 1972, issued a report that sought to illuminate some issues surrounding the nature of poverty. In this report, he graphed the unemployment rate against the number of new welfare cases per year, from 1948 to 1969; he found that from the year 1948 until about 1964, the change in the number of new welfare cases highly correlated with the change in the unemployment rate. However, after 1964, the unemployment rate dropped, while the amount of new welfare cases rose. These numbers intersected, and by 1969, the right tail of the graph resembled a pair of scissors. The conclusion from Moynihan’s Scissors is that AFDC, the primary public assistance program of the time, produced a disincentive for people to work, and was failing in that regard.
Cross Sectional Analysis of the composition of AFDC
This disincentive inherent in AFDC was shown to be true through examining a cross section of those receiving benefits under AFDC. At any given time, about 35% of those that would begin receiving AFDC benefits were expected to receive benefits for five years or greater, while about 76% of those on AFDC at any given time were receiving benefits for five years or more (class). If someone receives AFDC benefits in a given interval for five years or more, then they have factored AFDC into their budget, and are dependent upon its existence. The high amount of people who received benefits for such an extended period of time is evident that AFDC implicitly supported dependency, and was a program in need of reform.
The problem of dependency
The culture of dependency promoted by AFDC created three major problems. There was a problem of cost, ineffectiveness, and the decline of family structure under AFDC.
Excess cost
The problem of cost was due to the fact that the inflated amount of people who collected benefits required too much in Federal expenditures. Federal expenditures for AFDC totaled about 15 billion dollars for 1970, and about 20 billion dollars for 1990 (Levitan et al., 58). The size of these numbers are indicative of the amount to which AFDC had become a financial burden on taxpaying citizens.
Ineffectiveness
The ineffectiveness of AFDC was due to the degree that it promoted non-work. The poverty rate for all persons who do not work is greater than six times the poverty rate for those that work a full year, greater than nine times the poverty rate for those that work full time, and almost twice the poverty rate for those that work part time (Mead, 51). These high levels of difference between poverty rates prove that those who do not work will be far more likely be in poverty than those who work.
Decline in family structure
Lastly, a problem with AFDC was that it was an influence on the rise of female-headed families. It is important to understand the relevance that family structure has on the poverty rate, because a program that seemingly breaks down family structure would also seemingly contribute to the poverty rate. In comparing the poverty rate of female headed families with that of married couples, female headed families have: about a 25% increase in poverty rate for all persons, about a 19% increase for whites, and an almost 30% increase for blacks. For children, the poverty rate differences between female headed families and families with married couples are even more remarkable; for all persons, there is about a 34% difference in poverty rate, with: about a 28% difference for whites, about a 37% difference for blacks, and about a 26% difference for Hispanics (class). Therefore, a female-headed family will statistically be much more likely to be poor than a family with a married couple. AFDC implicitly promoted female-headed families – it treated single and double parent headed families equally by giving them the same level of benefits. Ultimately, AFDC inflated its own costs, proved ineffective in reducing poverty, and promoted female-headed families; thus, AFDC needed to be reformed. The argument then became an argument of extent – should AFDC be ideologically changed to favor work and personal responsibility, or should it be changed within its current framework to avoid the inevitable negative outcome otherwise.

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AFDC needed to be ideologically changed to favor work and personal responsibility
Some argued that the proper course of action was to ideologically transform AFDC into a program that promoted work and personal responsibility. This argument implicitly assumed that if people began to work, their work would beget a sense of personal responsibility that would infiltrate the culture of dependency and cast aside the plague of poverty. Increases in the level of work would decrease welfare rolls, costs to society, poverty rates, and positively affect family structure. To achieve this desired effect, welfare benefits would be tied to work, a time limit of five years would be placed on welfare benefits, and other programs would be implemented or strengthened to “make work pay”. Since the welfare reform of 1996, programs have been implemented, with mostly the desired results.

Ideological change of AFDC: the proper reforms positive effect on work
Those who believed that AFDC needed to be ideologically changed, with such change increasing the employment rate of the poor, believed so because to them, work was a necessary pre-requisite to end poverty. They followed the theory perpetuated by Mead, that “Given the work ethic, workers are more likely to be better off than non workers, despite if they are financially unsuccessful. (Mead 49)” Therefore, an increase in the amount of people working would both give the poor more income, and give them a greater sense of a work ethic. This desired outcome was pursued by the linking of benefits to some minimum hours of working, as was the case under TANF, and strengthening the EITC. The EITC was a program enacted in the 1970’s that acted as a financial supplement to the earned income of the poor. If there were a minimum number of hours of work required for AFDC benefits, people would logically increase their amount of working hours in order to receive the AFDC benefits; similarly, if the EITC was strengthened, it would make this work more profitable. This has statistically shown to be true; for female-headed families, from 1993 to 1998, there was about a 15% increase in their total income due to earnings, while there was about a 20% decrease in their income due to AFDC/TANF. This occurred while their total income stayed relatively constant (Levitan et al., 70). Furthermore, between the years of 1993 and 2000, the EITC for the average total income of female family heads with children increased from 216 dollars to 888 dollars (Sawhill et al., 15). The combination of the increasing influence of work, as well as the increase in the influence of the EITC, shows that more people were working, and that work was becoming more profitable for many – consequently, in 2000, total income for female headed families was about 1500 dollars more than in 1993 (Sawhill et al., 15). Therefore, those who supported a public assistance system that emphasized the profitability of work were correct in their assertions.

Ideological change of AFDC: the proper reforms positive effect on costs
In addition to it making more people work, those that argued for an ideological change in AFDC believed that such a change would drastically reduce costs to society. It would do this by establishing time limits on AFDC benefits, and promoting work.
Time limits on benefits would decrease costs, because it would not allow the 76% of people who were on AFDC for five years or more to continue receiving benefits. Thus, there would be a large section of those that received benefits under AFDC what would stop receiving benefits, reducing costs to society. Historically, from 1994 to 2001, there was an average of a 60% decline in the caseloads of AFDC (Sawhill et al., 11). This 60% decline in caseloads translated into decreased costs to society. From 1993 to 1999, AFDC/TANF expenditures decreased from about 20 billion a year, to about 11 billion a year(Levitan, 58). When combined, the decrease in costs and the increase in work, they show that the welfare reforms eased the financial burden of welfare on society.

Ideological change of AFDC: the proper reforms positive effect on family structure
Finally, there was an argument that AFDC promoted a decline in two parent families coupled with a rise in female-headed households. This defeated the attempt to eliminate poverty. Family structure, as has been shown, is one of the most influential statistics in determining the probability someone is poor. AFDC was perceived to be responsible for the decline in two parent families because it guaranteed, with minimal criteria, equal benefits to female-headed families and two parent families; this disseminates the feeling that, at least in the realm of economics, the two are equal.
The guaranteed benefits of AFDC promoted female-headed families, because any female that had children would be guaranteed benefits on AFDC. This, promoted personal irresponsibility; women were seen as having kids without the desire to raise them, and that society was paying the price for their failures. Furthermore, because there was a lack of criteria for those eligible for benefits, single parent women with kids were almost always eligible for AFDC. These phenomenons were taken into account during the welfare reform of 1996, through the increasing levels of criteria pertaining to AFDC eligibility, and the strengthening of child support laws to increase female-headed families’ income. The results are debatable. There has been a decline in the number of births outside marriage, but this may be a spurious relationship. Child support payments have not increased to the level they should have increased (class). This neither confirms nor denies the effect of welfare reform on family structure. Overall, in the welfare reform debate of 1995, those who argued that the system must be ideologically changed to support work over welfare, in order to promote employment, decrease cost, and rejuvenate family structure, proved to be mostly correct.

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear

The_Bear

Reform to AFDC must be slow, for any drastic ideological change will turn out negative
Contrastingly, some people argued that AFDC needed to be changed, but that it was ideologically sound; any drastic ideological change to AFDC would be more negative than positive. They claimed that an ideological change to AFDC would increase the poverty rate among children and the hardest to employ, that there would not be enough jobs to support the rise in potential workers, and that such a change would not address the environmental issues that strongly influenced poverty rates.

Any ideological reform would throw many children and hardest to employ into poverty
Those that argued against the ideological reform of AFDC believed it would increase the poverty rate among children and the hardest to employ. It would increase their poverty rate because many single mothers would be unwilling to work, thus increasing the poverty rate of children. It would also increase the poverty rate of those unwilling or unable to work, because their benefits would be reduced without any corresponding gain in earned income. Therefore, these people argued, if the system was reformed so that there was a strong work requirement in order to receive benefits, the poverty rate among these poor would increase.

These fears, that the reforms would increase the poverty rate of children, proved unfounded. Since the inception of the reforms, from 1993 until 2000, many new single mothers became employed. The employment of never-married working mothers increased from about 45%, to about 66%; similarly, employment from single mothers has increased from about 60% to about 74%. Between those years, corresponding with this rise in female-headed families was also a rise of about 4000 dollars of total income, thus bringing them further out of poverty (Sawhill et al., 14/ 16). Thus, the reforms did work in decreasing the poverty rate among female-headed families, and by extension, the children in female-headed families.

Furthermore, support for day care increased. There was a realization that with the increasing amount of hours single mothers would be working, there would be an increasing amount of hours that they could not take care of their children. Thus, day care programs had their funding increased; from 1997 to 2000, federal funding for daycare increase from about 2 billion dollars, to about 8 billion dollars (Sawhill et al, 191). This had the effect of offsetting some of the problems that resulted from many single mothers becoming employed.

There was also a recognition that a select group of people would be unreachable by the ideological reforms, and as such, 20% of the block grant given to the states to finance their welfare rolls, was reserved for those who would be unable or unwilling to work. AFDC had been a program with a financing system that varied by amount of beneficiaries per state – states with more people receiving AFDC received more aid. TANF by comparison, was funded by block grants to states; the state was given a set amount of money for TANF per year. 20% of the block grant was reserved for those that would not benefit from the ideological reforms – largely, those unable or unwilling to work. Thus, the welfare reforms of 1996 represented the realization that while the ideological change of welfare was necessary, there were parts of AFDC that needed to be retained.

Non-ideological change of AFDC: lack of jobs needed for ideological change In addition to its effect on the hardest to employ and children, some people believed that a reform to AFDC that forced people to work would fail because there were not enough jobs for people to fill. Furthermore, those jobs that were available were not profitable. With the linking of benefits to work, if someone could not find work, they would not receive benefits or earned income, thus increasing poverty level. The fear that there would be a lack of jobs proved unfounded, for as was already shown, from 1993 to 1998, peoples’ incomes due to work increased, while their benefit level decrease, and total income stayed about the same. Furthermore, in the welfare reform of 1996, the EITC was strengthened, as has already been shown, to increase the profitability of work. Therefore, there were jobs, and those jobs became more profitable.

Non-ideological change of AFDC: proper change must be environmental
Although there was an increase in the amount of people employed as a result of the welfare reform, the jobs were largely unskilled and relatively low paying, even with the increases of the EITC. This happened because the poor had little education, and as a result, earned less from their jobs. This reduced the poverty rate, but did not eliminate poverty. The failure of the education system was not addressed in the welfare reforms that focused on personal responsibility and work.
Education level has been shown to be one of the greatest predictors of personal wealth; that is, the higher someone gets in education, the more money they are expected to make. In 1999, after the welfare reform of 1996, someone who completed only high school earned on average 11.83 per hour; someone who has completed college earned on average 20.58 per hour (Levitan et al., 168). This documents the drastic rise in expected income when education levels are increased. Thus, while work would pay much more than non-work in under the welfare reform, the jobs that were being filled were minimum wage jobs, and jobs that would not necessarily be able to truly free them from poverty. The EITC could not sufficiently make up this the difference between education levels. Thus, these people argued that any welfare reform needed to take into account environmental factors, such as the education system, which were a big cause of the existence of poverty. A problem such as bad education cannot be fixed quickly, however, if it problem was not addressed, any welfare reforms would be moot. In ten years, it is impossible to accurately tell whether or not this viewpoint was correct.
Conclusion: which viewpoint was closer to the truth
There was passionate debate over the welfare reform debate of 1995. Some people argued that AFDC should be ideologically changed, while others argued any ideological change would create more problems than benefits and would fail to address the fundamental causes of poverty. History has shown that AFDC was ideologically flawed; however, the transformation of AFDC into TANF, and the accompanying program reforms of EITC and childcare, also shows that focusing on work and personal responsibility exclusively would produce bad side effects that could be resolved without completely reforming AFDC. The ‘War On Poverty’ is not over. It is unclear if TANF is an adequate fix, or if it is a program that works very well during periods of economic growth or mild economic recession. There are further efforts needed to strengthening the education system, and other environmental factors, to ensure as much as possible that children grow up in a positive environment, and that people will eventually choose work over welfare.
Sawhill, Isabel V., et al. Welfare Reform and Beyond: The Future of The Safety Net. Washington, DC: Brookings Institution, 2002.
Levitan, Sar A., et al. Programs In Aid Of The Poor: Eighth Edition. Baltimore, Maryland: The Johns Hopkins University Press, 2003.
Mead, Laurence. The New Politics Of Poverty. 1992.

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear

The_Bear

i am finished with the paper, but sadly, I do not feel relieved, for I have a monstrous program to write in the form of TETRIS

gotta love finals.

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear

johnflesh

Wow, you certainly realize how uninformed you are when you read something like this, knowing relatively nothing coming in to the thread. You did a really good job with this as I was beginning to ask questions and later you then answered them.

So when is your first book?

The_Bear

haha no book. This is about the extent of it (others have written a lot more on this, I could give you some books that would be really useful to me. Of course, they are 5 pages single spaced so eh =). ).
You got any questions I haven't answered?

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear

johnflesh

I'm reading up on a few things concerning this and beyond 1995 to current. I don't have questions yet but I will. Appreciate it.

The_Bear

ahaha if one spends as long of a time writing this as I did, of course I'll be willing to answer any and all questions........

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear

Guyker

Bear, how did you do with this? What kind of comments did your prof respond with?

The_Bear

lol I haven't picked up the paper yet.

The ignorant ask "what is my effect on the world?"
The enlightened ask "What does the world know about itself?"

The Bear

I am The Bear
The Bear