Welfare Reform Turns 20: What’s Working, What’s Not

(President Bill Clinton signs the Personal Responsibility and Work Opportunity Act on Aug. 22, 1996 / Photo: AP)

It’s hard to believe in a time of hyper-partisanship, but once upon a time bipartisanship prevailed to enact one of the most important changes to our country’s welfare system. Signed by President Bill Clinton on August 22, 1996, the Welfare Reform Act took the dramatic step of tightening eligibility requirements for recipients in order to ease government dependency and encourage greater self-sufficiency.

Yet despite the law’s success, Democratic policymakers are actively trying to undo many of the basic building blocks that have done much to change the way we think about poverty reduction.

With the legislation turning 20 this week, it’s worth looking back to see what’s working, what’s not — and what may be required to build on the seminal law.

Welfare Caseloads Have Declined

At the time of the bill’s signing, critics argued that the number of families and children living in poverty would surely increase. Instead, the opposite happened. As Ron Haskins of the left-leaning Brookings Institution writes:

“Welfare caseloads began declining in the spring of 1994 and picked up steam after the federal legislation was enacted in 1996. Between 1994 and 2004, the caseload declined about 60 percent, a decline that is without precedent.”

Emphasis on Work

The most important contribution of the 1996 law was its emphasis on work and employment. Instead of seeing welfare as a way of life, supporters of the bill — including President Clinton — recognized that work was essential to break the vicious cycle of poverty and dependence.

That rationale was validated soon after the bill was enacted into law, as hundreds of thousands of single mothers soon began reentering the workforce. As the right-leaning Heritage Foundation observed 10 years after the bill was signed into law:

“… As families left welfare and single mothers transitioned into work, the child poverty rate fell, from 20.8 percent in 1995 to 17.8 percent in 2004, lifting 1.6 million children out of poverty. The declines in poverty among black children and children from single-mother families were unprecedented.”

We’re Spending Nearly a Trillion Dollars a Year Fighting Poverty, But Poverty Remains

According to Michel Tanner, a scholar at the libertarian Cato Institute, if we tally up the amount of money we are spending nearly every year fighting poverty, the price tag tops $1 trillion a year. By Tanner’s estimate, that comes out to nearly $20,610 for every poor person, or $61,830 per poor family of three.

And yet, despite such considerable sums of money, nearly 15 percent of all Americans are living in poverty.

This suggests that money alone cannot reduce poverty. It is certainly a far cry of “ending welfare as we know it,” as Clinton declared when he signed the 1996 law.

Don’t Undo Work Requirements

As previously noted, one of the most important achievements of the 1996 Welfare Reform Act is that it prioritized work as a means of reducing poverty. President Clinton said as much saying that the bill would prove successful by “moving people from welfare to work, demanding responsibility, and doing better by children.”

Unfortunately, under President Obama’s administration, important work requirements have been weakened, opening the door to abuse. But, more importantly, the White House has moved federal policy away from temporary relief back toward to a way of life.

The Heritage Foundation describes the 2012 Obama administration changes this way:

“On July 12, 2012, the Obama administration’s Department of Health and Human Services issued a policy directive rewriting the successful welfare-reform law of 1996. The HHS directive strikes directly at Section 407, allowing states to waive the TANF work requirement — thereby gutting the program of its most critical reform element and savaging both the letter and the intent of the ’96 law.”

Build on Law By Recognizing that Poverty Fighting Requires Local Solutions

As policymakers reflect upon this important anniversary, it is absolutely critical that they understand that some of the most effective ways to reduce poverty will come not from Washington, D.C., but from local leaders and poverty fighters in small communities and big cities across the country.

Thankfully, Speaker of the House Paul Ryan (R-Wisc.) understands this and is summoning other lawmakers to visit communities and need and meet with the folks working on the front lines that understand that there are millions of stories waiting to be told in the Americans hurting in our country.

These pages have been documenting this in the groundbreaking series, Comeback, which profiles poverty fighters engaged in this noble work. Future welfare reforms must embrace these poverty fighters in a meaningful and substantive way.

Israel Ortega is a Senior Writer for Opportunity Lives. You can follow him on Twitter:@IzzyOrtega.