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The Changing Face of Welfare

How the New System Offers Hope for the Underclass

When President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, he ended welfare, as most Americans have understood it. While a host of related federal programs — Medicaid, food stamps, Social Security Disability Insurance, Supplemental Security Insurance, and subsidized housing — remain untouched, the legislation essentially repealed Aid to Families with Dependent Children (AFDC), the cash assistance entitlement established UNDER Franklin D. Roosevelt. In place of AFDC, the legislation created Temporary Assistance to Needy Families (TANF), a new program that eliminates AFDC's entitlement scheme that has been blamed by scholars for everything from the rise in urban crime and illegitimacy to teen pregnancy and chronic dependency.

Among its many features, the 1996 legislation conditions TANF benefits upon employment for the able-bodied poor, while increasing funding for support services like childcare and transportation to help needy people secure and retain employment. The reforms further establish rules, guidelines, and targets for each of the fifty states, disbursing block grants — conditioned on state performance in moving welfare recipients into jobs — to underwrite new, state-customized welfare programs. For example, states were supposed to move 25 percent of all families receiving TANF into the workforce in 1997; the target for 1999 is 35 percent. These new arrangements surely represent an improvement over AFDC, which, by sending additional money to states with the highest caseloads, basically rewarded states for keeping residents on the public dole.

The federal reform law also makes available new resources for strengthening families and decreasing illegitimacy. The statute provides funds for abstinence-only sex education programs and initiatives that encourage the formation and maintenance of two-parent families. It even includes an illegitimacy reduction fund that provides a $20 million annual bonus to each of the five states with the greatest success in reducing out-of-wedlock births without increasing abortions. It permits states to adopt a "family cap" that would deny assistance to additional children born to a TANF-enrolled parent. It also requires teenage parents on TANF to participate in educational activities directed toward achieving a high school degree or a general education diploma. Unlike AFDC, TANF allows states to deny aid to teenage parents who refuse to live at home or in an approved, adult-supervised setting. At a minimum, these new rules and programs fix some glaring deficiencies of the old system and point the disadvantaged in a more promising direction.

The legislation, though, has two potential drawbacks. As much as it has moved many AFDC-enrolled women into the workforce, welfare reform has not led to similar results with a troubled segment of the underclass: unemployed black men, ages sixteen to twenty-four. The labor force participation rate by this group stood at only 23 percent in 1997. To what degree welfare reform solve this problem remains to be seen. In the long run, this glaring deficiency may work against the legislation's intention of strengthening marriage and the two-parent family — a key to overcoming poverty — among the underclass.

Secondly, some long-term welfare recipients — most of whom are single mothers — may need far more handholding than originally thought in order to comply with the new system's time lines. In the old system, recipients were largely passive: clients attended a few meetings per year with caseworkers, filled out forms, and answered questions; month after month, they received an aid check. Under the new system, recipients must be active: they must pay close attention to a variety of sometimes-confusing rules and expectations — or be sanctioned for noncompliance. These expectations are laudable, but some of the disadvantaged will need extra time and assistance to accomplish what the new system demands of them. Consider the unmarried mother of three children who lives in a high-crime public housing project, has never worked, reads at the fifth-grade level, has no telephone and limited access to transportation, has never kept an appointment book, and has a bit of a drinking problem. Without help, her ability to connect effectively with the new welfare bureaucracy — much less meet the demands of the work-a-day world — is limited.

This reality does not negate the legitimacy of mandating work in return for welfare benefits, but it raises the question of whether the legislation's work emphasis or its time limits should take priority, as many social workers claim the latter may need to be extended in order to accomplish the former. "It's not about babying people, it's about being realistic," says Deborah Darden, a Milwaukee woman who pulled herself off of welfare years ago and since then has been helping others to do the same. Her program, Right Alternatives, received rave reviews from Marvin Olasky, author of The Tragedy of American Compassion. Darden is no liberal, big government, "let's-go-back-to-the-old-system" advocate. Her no-excuses program demands personal responsibility. She knows more about people on welfare than any politician from either party. But she believes the new system should grant highly dysfunctional people more time than two years to achieve independence from aid.

Aside from the potential drawbacks, an assessment of welfare reform must begin with what it has accomplished in the lives of welfare recipients. Recent studies, focusing on the economic status of individuals who have left the welfare system, represent a good place to start. These include the "leaver" interviews with individuals who have exited the welfare system that have been conducted by seventeen states and by the Manpower Demonstration Research Corporation in Baltimore, Cleveland, Los Angeles, Miami, and Philadelphia. In addition, the Urban Institute has published a report, Families Who Left Welfare: Who are They and How are They Doing? heralded by the Washington Post as "the first thorough national assessment of welfare reform." Put together, these assessments reveal the following:

  • Most states have met or exceeded Washington's employment targets for individuals still receiving welfare. Data from the Department of Health and Human Services indicate that in 1998, states counted an average of 35 percent of TANF recipients working at least half time (5 percentage points more than required by Washington); some reported more than 55 percent in the work force. Nonetheless, these numbers show that the nation has a long way to go to reach the goal of getting all able-bodied recipients into a "work experience" program or job.

  • The welfare rolls have shrunken dramatically. Today, about 7.3 million families receive aid through TANF, down from 12.2 million when welfare reform was passed — a stunning 40 percent drop. In several states, the drop has been 70 percent or higher.

  • Most individuals no longer receiving federal cash assistance are working. Nationally, 60 percent of leavers were employed when interviewed by the Urban Institute. Leavers are typically employed in the service industry, earning an average of $5.50 to $7.50 per hour; one-third receives health insurance benefits. Not surprisingly, many still worry about their bills and lean on family and friends to make ends meet. Critics have therefore proclaimed the new system to be a sham that has merely turned the welfare poor into the working poor. This tedious perspective erroneously assumes that the welfare poor could miraculously reach the middle class without a stopover in the ranks of the working poor; it further fails to realize that the working poor are, in fact, better off than the welfare poor. The working poor are almost always better off materially, and, importantly, their self-respect rises, their children's self-esteem improves, and they are better positioned to receive help from charitable institutions who view them as the "deserving poor."

  • Although the Center on Budget and Policy Priorities claims that the poorest 10 percent of families headed by single mothers actually lost about $860 in annual income between 1995 and 1997, poverty has not increased for most segments of the low-income population.1 The Office of Management and Budget has found that single mothers in the poorest 40 percent of households received a total of $4 billion less in welfare income in 1997 than in 1993. But their earned income rose $4.3 billion and they received an additional $2.1 billion from the earned income tax credit.2 As welfare expert Larry Mead of New York University boasted at a recent Washington conference, "In the last few years, work levels by poor adults are up, income levels are up, and poverty is down — especially the black poverty rate, which is in free fall."3 Leavers interviewed by the Manpower Research and Development Corporation in several cities said they were better off working than they were on welfare. Most recipients liked the reforms and felt good about working, though they also expressed fears about "making it" when they hit their time limits.

While the Urban Institute and the Manpower Research Demonstration Corporation reports indicate how former welfare recipients are faring independent of aid, they do not say much about the effectiveness of welfare reform programs per se. How leavers are faring, and whether welfare reforms have succeeded, are two related but distinct queries. For instance, the Urban Institute surveyed women who had left the welfare rolls between January 1995 and November 1997. Although federal welfare reform legislation passed in August 1996, most states did not implement new programs until mid- to late-1997, suggesting that most participants in the study could not have been affected significantly by welfare reform. They either left the rolls before the law was signed, before the states actually implemented change, or were in the new system only a few months.

Any fair evaluation of the new state programs must observe leavers who were part of the old AFDC system but then — after participating in the new system for at least a year — exited the welfare rolls. A large, national study of such leavers, conducted at least one year since their exit, would better gauge to what extent welfare reform is working. Until more targeted studies of this nature are conducted, only tentative conclusions about the effectiveness of welfare reform are possible. In the interim, accumulated anecdotal evidence based upon my research in Milwaukee, Richmond, and Birmingham, provides clues to how the new state programs are faring, particularly among welfare recipients.

According to every poverty worker I interviewed in the last three years, welfare reform has succeeded in transitioning many capable, but unemployed individuals who were dependent upon AFDC into employment. The reason: new state welfare programs significantly increase the hassle factor of receiving public assistance. To continue receiving aid under TANF, former AFDC recipients were required to attend orientations about the new policies, complete job readiness courses, and submit reports on their mandatory job search activities. After discovering these new requirements, some capable, but unemployed individuals decided to avoid the rigmarole, closed their aid cases, and found jobs. While official statistics are not available, every poverty worker I interviewed had known of at least a few of these cases and were not surprised by the immediate plunge in the caseload following the reforms. "When welfare reform first started, I knew that 10 to 15 percent [of the caseload] was going to drop off the top, because I knew that at least that many on welfare could get a job. And they did," observed Bill Locke, executive director of Community Enterprises of Greater Milwaukee, who has been working with low-income men and women for more than fifteen years.

Some of these "Capable Marys" chose welfare over employment in order to complete high school or attend college. Reform critics complain that the new welfare rules may curtail efforts to acquire an education that could pave the way to stable jobs with benefits. But the new rules do not require a Capable Mary to quit school; they only require twenty to thirty-five hours of work per week. While this may pose a hardship for those wishing to stay in school, some low-income, single mothers not on welfare have done this all along. Before the 1996 reforms, some low-income mothers signed up for the dole and attended school while others eschewed public assistance, worked full-time, and attended school at night. The new system requires the former group to walk the path of the latter.

Criticisms of welfare reform's work-first emphasis would make sense only if the education and training programs of the old system actually lifted families out of poverty. But according to the Economist, that rarely happened:

In a growing body of research, economists have compared groups of unemployed people who enter government-training schemes with similar groups who do not. In almost every case, these studies have found that the schemes have failed to improve either the earnings or the employment prospects of their clients. After surveying the results of various training programs for unemployed adults, the training-friendly [Organization for Economic Cooperation and Development] was forced to conclude in 1994 that there is "remarkably meager support for the hypothesis that such programs are effective."4

The old welfare system was woefully inadequate when a low-income, working person who struggled along independent of public assistance hit a major financial bump — whether a car accident, a daycare crisis, or a child's prolonged illness. Whatever the misfortune, when a "Crisis Mary" confronted a significant financial need she could not meet, her only option was to quit working and sign up for monthly cash assistance. If she needed $1200 for car repairs and if her welfare check were $300 monthly, Crisis Mary had no hope of ever saving enough for the repairs. Her exigency, and the old system's inability to help her overcome it, meant that working Mary became welfare-reliant Mary, a position she never really wanted. To address the situation, Virginia Governor George Allen's welfare reform designers created a "diversionary assistance" fund. Under its rules, a Crisis Mary can access an up-front cash grant, worth up to six months of public aid, to enable her to fix her problem and remain employed. In return, she must sign an agreement pledging not to apply for further state aid for six months. Under federal reforms, other states have imitated Virginia.

While the new system has been most effective in dealing with the Capable Marys and the Crisis Marys, its achievements with "Struggling Marys" — recipients who repeatedly move between employment and welfare — have been more modest. This third and largest segment of the welfare caseload confronts personal and structural obstacles to self-sufficiency; many Struggling Marys lack the life skills or basic work skills necessary to retain employment and make ends meet. They may not know how to balance their job and family or may not possess the skills necessary to cope with stress at work. Some of these women may have learning disabilities or are functionally illiterate. Or they struggle with depression or alcohol and drug abuse. Others are victims of a family member's or neighbor's sin; some have seen their lives shattered by domestic or neighborhood violence.

Struggling Marys also face structural barriers. Public transportation between their homes and viable jobs may be poor or nonexistent. Lack of affordable housing is a problem as well as the decline in factory jobs for hard-working but poorly educated people. The new welfare system has not solved all these problems, but it stands a better chance of addressing them than did the old one. Under the reforms, states enjoy wide latitude to create new and more flexible programs; they have more money to spend on the biggest structural barriers: daycare and transportation. Most states also have policies by which caseworkers help recipients design personal responsibility plans, tailored to identify and overcome the particular obstacles they face in securing steady employment. Most importantly, the new system recognizes that individual behavior and attitudes do matter, that government's ability to address these personal barriers is limited, and that civil society can make a difference. In many states, government welfare agencies are looking to the business, nonprofit, and faith communities for help in providing welfare recipients with life skills training, employment opportunities, and post-employment mentoring.

The new system's greatest challenge lies with long-term aid recipients, who might be called "Trapped Marys." Success in these instances probably will consist in getting a Trapped Mary into a "work experience" placement, then into a minimum wage job. Hopefully, she will then graduate into full-time employment that brings her at least into the ranks of the working poor, with help from the earned income tax credit. Some women in this category have progressed further than this in three years. But most of the former Trapped Marys I have known needed five to seven years to position themselves solidly in the working class. Every one of them was enmeshed in a web of supportive friendships that enabled them to climb to self-sufficiency even after they had stumbled. Consequently, welfare reform programs should encourage women in this category to connect with local institutions, including churches and nonprofits, that can provide supportive relationships when public assistance runs out.

While social welfare policies primarily affect the various kinds of individual aid recipients, they also affect the families of the working poor, the governmental agencies administering welfare programs, and institutions of civil society, including social service nonprofit organizations. Welfare reform's most profound influence is seen here. Experience in Wisconsin indicates that welfare reform may have set in motion a positive reshaping of family life in some low-income households. Put simply, welfare reform is encouraging the development of a more structured lifestyle through the discipline of employment. The comments of welfare observers in Milwaukee are illustrative. "Home life is getting more structured. 'It's 8:30 P.M. — time to go to bed. It's morning — time to get up,'" reports Vicky Hill, director of the King Day Care Center. Anthony Taylor of the city's Westside Housing Cooperative concurs. "Before, there were lots of people walking the streets at 11 or 12. Now, you see a thrust of people between 6 A.M. and 8 A.M. and again between 3:30 and 6 P.M. The kids seem better behaved, and there's less nuisance and truancy in the area."5 Reform is also making parents into responsible role models. "It's positive for the kids to see their parents have a work ethic, to see Mom going out and being productive," comments social worker Maxine Winston of Keefe Avenue Elementary School. This modeling may instill healthy work habits into the next generation, as many individuals who are finding the transition from welfare to work most difficult grew up in welfare-reliant homes.

Former welfare recipients I interviewed understand the importance of their example to their children. Jennifer Lockett of Greenville, Mississippi, was on welfare for nine years before welfare reform. She accepted a job at the Greenville Clinic and has earned two promotions in three years. "I want my children to see Mom doing right," Lockett stresses. "I don't want them to come back and say, 'Momma, you fussin' at me about this, but everything I'm doing, I'm doing because you're doing it.' I want them to be able to say, 'My momma raised me well.'" But children are not the only ones affected by a mother's work — fathers and boyfriends are too. In some cases, a mother's increased economic stability — and the boost that it gives her self-respect — motivates her to throw out a parasitic boyfriend. In other cases, women who have taken jobs become more insistent that their boyfriends or their children's fathers start pulling their own weight.

New federal laws under welfare reform now reinforce that demand. Two new national registries — one of all child support cases and one of "new hires" — help states locate deadbeat fathers. Welfare reform also insists that states work harder to identify the paternity of children receiving TANF and permits states to cut off food stamps for mothers or fathers unwilling to cooperate. Most importantly, the new law requires states to pass legislation that withholds, suspends, or restricts driver's licenses and professional licenses from fathers in arrears in child-support payments. This procedure for increasing child support collections has already proven effective; in those states that implemented similar rules, child support collections have risen 80 percent, from $8 billion in 1992 to $14.4 billion in 1998.6

Less noticeable, but just as real, are the new demands that welfare reform has placed upon government welfare agencies. Most state agencies have a new mission — to help poor people become self-sufficient; yesterday's eligibility workers are today's employment specialists. This obviously more fulfilling mission has not only boosted the morale of caseworkers and welfare recipients, but also has stimulated new pragmatism, creativity, and humility.7 Where the old system focused on process, the new system insists on performance, judged by objective indicators, while simultaneously granting states greater freedom and flexibility.

Wisconsin has used its freedom to privatize the welfare system in several localities. Formerly, county welfare agencies held a monopoly on the provision of social services. This amounted to an administrative entitlement, since the state simply reimbursed counties for expenses they incurred in operating programs — regardless of results.8 Under Governor Thompson's W-2 program, private agencies were allowed to bid for the right to deliver welfare services, motivating county agencies to improve their performance so as not to lose their state contracts. In New York and California, welfare reform has increased the state's use of "pay for performance" contracts between government agencies, for-profits, and nonprofits seeking to provide services to welfare recipients. Under these contracts, the organization receives payment only when it has attained specified objectives. For example, a nonprofit organization running a training program that prepares welfare recipients for clerical jobs might receive payment for each graduating participant. The organization would receive an additional payment for each participant's placement in an unsubsidized job and a final payment at each participant's three-month anniversary on that job.

Welfare reform has also stimulated a newfound humility that is resulting in innovative and expanded public-private partnerships. Government bureaucracies are seeking cooperation from employers, who can offer training and jobs to welfare recipients, and from grassroots organizations that can provide personalized, intensive, long-term support to welfare recipients who face many barriers to job and financial stability. For example, the Welfare to Work partnership boasts twelve thousand member companies that collectively have hired 410,000 welfare recipients.9 United Airlines, the Marriott Corporation, and United Parcel Services have established specialized training programs and offer creative transportation and daycare assistance programs for welfare recipients. Welfare reform also appears to be at least partially responsible for stimulating companies to launch creative, family-friendly innovations such as flex time and new on-site daycare centers, as well as on-site literacy, English-as-a-second-language instruction, and general-education-diploma classes.

But even with businesses offering new opportunities, clients will not succeed if they lack the basic life and work skills necessary to retain employment. Even the most motivated government caseworkers have only limited time to serve the Struggling and Trapped Marys; caseworkers are, therefore, eager for help from volunteers and staff at community-based and faith-based organizations that can provide clients with love, personal attention, practical helps, and moral accountability. The dramatic increase in partnerships between welfare bureaucracies and faith-based organizations and churches attests to the government's willingness to look outside itself for answers.

Welfare reform is also strengthening private aid organizations. Unlike the old system, welfare reform has publicly highlighted the role of civic institutions in addressing moral-cultural issues. Through the Charitable Choice section of the legislation, the reforms facilitate new financial partnerships between government and faith-based organizations while protecting the organizations' religious character. Prior to welfare reform, government dollars almost inevitably brought secularizing influences upon religiously based social-service providers. Now, faith-based organizations, partnering with government, can retain a religious mission, determine their governing board without state interference, maintain a religious atmosphere in facilities, and consider religion as a factor in hiring practices.

Welfare reform has also removed the "expectation-less" public safety net that used to hinder the efforts of effective nonprofit organizations that insisted the poor take initiative, improve their skills, or change their habits in order to prosper. "With W-2 compared to AFDC, there's a night and day difference for the better," says Barbara Vanderburgh, executive director of Joy House, Wisconsin's second largest homeless shelter for women. "The old system was horrible. We'd have these programs, classes — parenting, filling out applications, talking about jobs. And the women's response was usually, 'Hey yeah, that's nice but it's not for me. My check's coming.'" Now the women are motivated. Vanderburgh explains: "There isn't a choice [to remain dependent] anymore. Frankly, it took an extraordinary individual under AFDC to pull herself up and out."

Welfare reform has not only cleared the way for effective religious groups to flourish, but the rancorous public debate over welfare policy has challenged some church leaders to turn their ineffective programs around. Program leaders have realized that they often made the same mistakes as government: offering material goods and money when personal engagement, instruction, and mentoring were needed; engendering dependency; and enabling irresponsibility by well-intentioned but misguided charity. Now these churches are engaged in a healthy remodeling of their benevolence practices.

Welfare reform clearly has sought to put the United States on a road to ending destructive multi-generational dependency by the able-bodied, the subsidizing of teen pregnancy, the monopoly of government bureaucracies over welfare administration, and the cheap and harmful "benevolence" of misguided private charities. Yet welfare reform may also achieve something less noticeable but equally important; it may help desegregate the underclass from the rest of society. In two directions, welfare reform is helping to connect the disadvantaged with the successful for the first time in a generation. First, welfare reform has encouraged the welfare-reliant poor to enter the mainstream economy. As Wisconsin Governor Tommy Thompson noted:

Separating families in poverty from other economic classes isolates recipients from their communities. W-2 creates a true melting pot of job seekers from all economic levels and unites former welfare recipients with the rest of the unemployed population.10

As one of W-2's architects, Jason Turner, put it, "Work connects poor people to the larger society." Observers have begun to notice. "The AFDC world was very insular. I don't think people left their neighborhoods much," said Nancy Nestler of Milwaukee's Multicultural High School in an interview with the Journal Sentinel. "Now we're seeing a lot of mobility, people getting out more, families having a lot more exposure to services like counseling and parenting classes."11 Moreover, welfare reform has made it easier for strivers in the underclass to pursue this integration by undercutting the pernicious "crayfish syndrome." Folk wisdom claims that when a crayfish attempts to climb out of a bucket, other crayfish will pull him down. Welfare recipients who sought to improve themselves sometimes experienced a similar phenomenon. When Richmond public housing resident and welfare recipient Clarissa Crews set out to get her general education diploma in the early 1990s, her neighbors harassed her: "Who do you think you are? You think you're better than we?" Today's work requirements make the crayfish syndrome moot. The new system insists that all welfare recipients better themselves; strivers like Crews cannot be singled out for ridicule.

Second, welfare reform is promoting new kinds of private charitable activity that nudge the non-poor toward the poor. According to Jason Turner, a commissioner of the New York City Human Resources Administration, the general prosperity of the American economy, as well as the practice of warehousing the poor in public housing projects far removed from the privileged classes, has permitted the middle and upper classes to engage in essentially anonymous charity.12 Now, however, welfare reform forces recognition that "commodity-based" mercy is inadequate. Some cash and an interview outfit might help a Struggling Mary, but what she really needs is someone to watch her kids, coach her for that job interview, and help her arrange transportation if she receives a job offer. That requires the American people to live out the kind of mercy offered by a father of the ancient Christian church, Gregory of Nyssa: "Mercy is a voluntary sorrow that joins itself to the suffering of another." Through welfare-to-work mentoring programs, upper-middle class suburbanites can build bridges to impoverished inner-city residents. By putting a particular name to and face on "the poor," relational ministries move the successful Americans beyond the attitude of "it's their problem, not my problem." By encouraging the prosperous to join in the struggles of the poor, welfare reform may help rescue American society from the unmitigated self-indulgence and crass commercialism of the age. Recapturing a commitment to others beyond a small inner circle of friends and family may prove an essential step in avoiding the traps of self-centeredness, materialism, alienation, and despair. Put differently, welfare reform may help the poor escape material poverty while helping the rich escape spiritual poverty.

Dr. Sherman, an adjunct fellow of the Center for Civic Innovation at the Manhattan Institute, is director of urban ministries for Trinity Presbyterian Church in Charlottesville, Virginia. She earned a Ph.D. in economic development and foreign affairs at the University of Virginia.




  1. Judith Haveman, "Most Adults Find Jobs After Leaving Welfare," The Washington Post, May 27, 1999, p. A26.
  2. Ron Haskins, "Welfare Reform is Working," The American Enterprise, January-February 1999, p. 65.
  3. Larry Mead, in an address delivered at the "Next Steps in Welfare Reform" conference sponsored by the Center for Civic Innovation of the Manhattan Institute, Washington, D.C., April 14, 1999.
  4. "Why Training Rarely Works," The Economist, April 6, 1996, p. 19.
  5. Cited by Michele Dreyfus, "Making the Bus to Make a Living on W-2," The Milwaukee Journal Sentinel, June 28, 1998.
  6. "Clinton Announces $150 Million Initiative to Help Fathers Support Their Children," Fatherhood Today, Spring 1999, p. 9.
  7. Haskins, "Welfare Reform is Working," p. 63.
  8. David Dodenhoff, "Privatizing Welfare in Wisconsin: Ending Administrative Entitlements: W-2's Untold Story," Wisconsin Policy Research Institute, January 1998, p. 1.
  9. Hanna Rosin and John F. Harris, "Welfare Reform is on a Roll," The Washington Post, August 3, 1999.
  10. Tommy G. Thompson, "Introducing the End of Welfare," May 28, 1996.
  11. Cited by Michele Dreyfus, "Making the Bus."
  12. Jason Turner, in an address delivered at the "Next Steps in Welfare Reform" conference sponsored by the Center for Civic Innovation of the Manhattan Institute, Washington, D.C., April 14, 1999.

    Submitted by: Amy L. Sherman *

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