When the welfare system was overhauled 25 years ago, many experts predicted it would devastate families, especially those headed by single mothers. But data on what households are able to buy, including details of their housing and whether they have health insurance, suggest needy families headed by single moms have made economic strides.
That’s according to “The consumption, income and well-being of single mother headed families 25 years after welfare reform,” a working paper for the National Bureau of Economic Research. The full report is being published this month by the National Tax Journal.
That quarter-century welfare reform milestone comes at a time when close to 90% of Americans have received some direct federal aid themselves to help weather the impact of the pandemic, in the form of three rounds of stimulus payments.
While some research suggests a decline in families’ circumstances since the government’s welfare reform emphasized work and education over unconditional aid, study authors Bruce D. Meyer of the University of Chicago, Jeehoon Han from Zhejiang University in China and James X. Sullivan of the University of Notre Dame believe that largely stems from under-reporting of the assistance single mothers receive. They say families may look worse off than they are because benefits derived from Temporary Assistance for Needy Families, the Supplemental Nutrition Assistance Program and other safety net programs that provide key aid may be left out of self-reporting.
Their research finds single-mother households today are most likely living in houses comparable in quality to those of middle-class families at the time of welfare reform a quarter-century ago, though not necessarily comparable to those of the middle class today. More of them have health insurance and their “consumption-ability” overall has risen.
It adds up, the study says, to “strong evidence” that material circumstances of those families have improved since welfare reform, with the spending power of the most disadvantaged families rising more noticeably and faster than those in comparison groups.
Still, it’s important to note that the families in the study are “among the most deprived, least well-off families in the country,” said Meyer, an economist who is also a research associate at the National Bureau of Economic Research and a nonresident senior fellow at the American Enterprise Institute. The study found the average total annual consumption for a single mother with two kids in the bottom 10% in terms of consumption was about $14,000 in 2019.
The families studied can be classified as “working poor,” but still not as low-income as they used to be. “Their prospects are better because they’re working and they are living in better conditions than they would have been otherwise,” Meyer told the Deseret News.
Welfare reform 1996
When President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act into law in 1996, many predicted the reforms would bring dire consequences. Act opponent Sen. Daniel Patrick Moynihan, D-N.Y., warned it could lead to children being found frozen on city grates.
There were legitimate concerns that if a system is changed from unconditional support to one with support primarily for those who work, those who can’t benefit from all the work incentives could end up very deprived, Meyer said.
Aspects of the reform package for those low-income families include the earned income tax credit, child care subsidies, job training and expansion of Medicaid, among others.
Welfare reform basically changed cash welfare into block grants “which tended to involve more spending on child care and training and less on direct cash. The overall number of families helped declined quite a bit over this time, but we also dramatically expanded the earned income tax credit, increased Medicaid for children and to less extent adults and expanded spending on childcare and training,” Meyer said.
Most of the assistance benefited working single mothers, though Meyer said some help was still available to those who could not work for various reasons.
As ProPublica recently reported, the law froze federal funding available to states to help the poor and it “has not been increased since to account for inflation or changes in population or poverty rates.” The article cited demographics as well as the impact of a higher cost of living on families.
Single motherhood also changed in the years since welfare reform. Meyer said single mothers became more educated, the share with less than a high school diploma falling by half. The share who are Hispanic doubled.
Meyer said his team of researchers did not include women who are cohabiting, though they’re technically single. They studied families with children and just one adult at home.
Nor does the report include people who are homeless or who are incarcerated, “two especially deprived populations.”
What consumption shows
The trio of researchers decided the best evidence of material circumstances for families headed by single moms is what they can buy in terms of housing and food and clothing, as well as whether they can afford transportation and utilities. They looked at data from the Bureau of Labor Statistics between 1993, the immediate pre-reform years, to 2019.
Those with low education saw employment rise from 45% to 70% from the early 1990s to the late 1990s, Meyer said, and their cash welfare dropped in half during that time.
He said the houses and apartments that families receiving aid live in now are overall much nicer than before welfare reform. “They’re much more likely to have air conditioning, a dishwasher, a washer and dryer in the unit. They’re bigger and much less likely to have leaks or cracks in the walls or holes in the floors. All of those things have dramatically improved. To me, that’s the most tangible, well-measured indicator that people’s standard of living has gone up a lot.”
Meyer said they controlled for education to make sure welfare reform, not a boost in overall education, made the difference.
Was it welfare reform?
In an analysis for the Institute for Family Studies, Robert VerBruggen, an institute fellow and a fellow at Manhattan Institute, calls the new research “a solid blow against the ‘raging extreme poverty’ theory that’s taken root over the past five years or so.”
He wrote that “there are many consequences of welfare reform, some good and some bad, but as this new paper shows, driving lots of families into extreme poverty is probably not one of them.”
Not everyone hails welfare reform as a big success for impoverished families.
In Pennsylvania, for example, WITF TV reported that a coalition called “Meet the Need” that includes many who receive or used to receive the help thinks the safety net is unraveling. They suggest families need more cash assistance, better training programs, a smoother transition when they begin to work and that families should be able to save more than the $1,000 cap.
Among those who see improvements in the living standard of single mother households since the 1990s, there are also alternate theories on what helped.
For instance, at the 20th anniversary of welfare reform, Alan Barber of the Center for Economic and Policy Research reported that full employment was underway before Congress enacted welfare reform and that probably accounted for most of the gains.
In an online symposium for the Council on Contemporary Families in 2016, he noted that data from the Current Population Survey and Department of Health and Human Services TANF caseload report “tell a simple story. Never-married mothers with a high school degree or less increased their rate of work from the early to the late 1990s by nearly 40 percentage points.”
He said the trend “began well before the 1996 welfare reform, suggesting that the policy was not the source of the rises, but that other macroeconomics forces were helping these families do better.”
He wrote that “data, not ideology, will help us reduce poverty.”
Some experts — including a well-cited group at Columbia University — believe recent U.S. poverty would have been much worse as a result of the pandemic without the economic aid provided by the federal government by both the Trump and Biden administrations.
“Aside from Social Security, the Census Bureau reports that three key elements of pandemic relief had the largest anti-poverty impact, keeping tens of millions of Americans from poverty last year. Economic Impact Payments (or stimulus checks) kept 11.7 million individuals from poverty, unemployment benefits kept 5.5 million individuals from poverty, and the Supplemental Nutrition Assistance Program (SNAP) and school lunch (both of which also include expanded benefits available under the Pandemic-EBT program) kept 3.2 million individuals from poverty in 2020 alone. They also reduced hardship, including food insecurity, for millions more,” Columbia’s Center on Policy and Social Policy reported this week.
Meyer hopes policymakers and others realize that a combination of additional support when individuals are working, combined with an expectation that people will do things to improve their lives — like work or training or education — can work.
“The current tendency just to write checks unconditionally isn’t necessarily the best way to go. While that will have some beneficial effects to raise people’s living standards, it will discourage more beneficial actions to improve one’s circumstances through work or education or training or taking greater responsibility in general for one’s circumstances,” he said.