Urban Injustice: How Ghettos Happen (14 page)
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Authors: David Hilfiker,Marian Wright Edelman
BOOK: Urban Injustice: How Ghettos Happen
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Although not well publicized, PRWORA also contained the most extensive revision of the food stamp program in twenty years. In addition to reducing funding across the board by about 3 percent, the legislation greatly restricted access to the program for adults without children, limiting them to three months of food stamps every three years. Since food stamps had previously been almost the only reliable source of additional income for these adults,
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it was a drastic change that received little public attention, which was surprising for a program that enjoys broad public support. Most people believe that even the “undeserving poor” should have food!
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it was a drastic change that received little public attention, which was surprising for a program that enjoys broad public support. Most people believe that even the “undeserving poor” should have food!
Under the Supplemental Security Income program (SSI), the families of disabled children receive up to $484 per month in cash assistance. Acting on the perception that SSI payments were being given for children who were not, in fact, disabled, eligibility standards were tightened under Welfare Reform, rendering approximately 15 percent of current recipients—135,000 poor children—ineligible.
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According to the Children’s Defense Fund, more than half of all applicants are being rejected under the new criteria.
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According to the Children’s Defense Fund, more than half of all applicants are being rejected under the new criteria.
Welfare Reform changed the nature of federal support for childcare by increasing funding, consolidating programs under block grants, and allowing up to 30 percent of TANF funding to be used for childcare work support.
The provisions to improve enforcement of child support by noncustodial parents were the most extensive parts of the 1996 legislation. The goals of these reforms were to increase the determinations of paternity, locate more noncustodial parents, and improve the enforcement of child support laws. Finally, there were cutbacks to various child nutrition programs.
Evaluations of the impact of PRWORA have been tentative for four crucial reasons. First, the legislation fails to mandate a comprehensive evaluation of the program. Required state reporting under the law is remarkably minimal. This makes assessment difficult, especially given the wide latitude and encouragement the states have received to craft innovative programs. There is no longer one national program to evaluate, but more than fifty regional ones. Some states have emphasized financial incentives to work. Minnesota, for example, gives cash assistance even to families whose income leaves them well over the official poverty level and offers recipients generous benefits. It also supplements job earnings with a state earned income tax credit and provides substantial work supports, including a childcare program available to many poor working families. The aim is to encourage higher work participation rates among families on the rolls and to increase total income by mixing earnings and assistance.
Other states, like Wisconsin, have emphasized caseload reduction. Strong work supports like childcare assistance are given, but the push is simply to get people off the rolls. Approximately 25 percent of families have left the Wisconsin program because of sanctions. Former governor Tommy Thompson, now Secretary for Health and Human Services in the administration of George Bush Jr., reported that the number of people receiving cash assistance had declined 93 percent since 1987, when Wisconsin began its own welfare reforms.
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Not surprisingly, the incomes of two-thirds of those who left the Wisconsin program remain below even the official poverty level.
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Not surprisingly, the incomes of two-thirds of those who left the Wisconsin program remain below even the official poverty level.
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In some states, it is hard to know what is happening because reporting has been so minimal.
The second reason that evaluation of the program has been difficult is that an important part of the legislation is the mandated time limit that permanently prohibits states from using federal money to give cash benefits to any family head-of-household for more than sixty months in her lifetime. Because the first families only met that sixty-month limit in late 2001, there is no data on what happens to these families. Since it has already been demonstrated that sanctioned families are far less likely to find employment than families that leave the rolls for other reasons, the impact of the time limits will most likely be harsh, but this cannot yet be evaluated.
A third reason it is difficult to evaluate the impact of the 1996 legislation is that its effects are hard to separate from those linked to a number of other federal and state legislative changes designed to “make work pay.” The most important of these were both federal and state earned income tax credits that effectively increase the income of the working poor and the increase in the federal minimum wage. Other such policies included expanded public health insurance for low-income children not receiving cash assistance, increased spending on childcare subsidies, and increased earned income “disregards” that allow welfare recipients to keep more of their earnings when they work while on welfare. While only the earned income tax credit and the increase in the minimum wage have had major impact on poverty, each of these policies increased to some extent the incomes of low-wage workers or provided them with other benefits.
Finally, from 1996, when the law was passed until the end of 2000, the United States economy enjoyed an uninterrupted boom of staggering proportions that increased employment, reduced poverty, and increased both state and local tax coffers. Unemployment fell to historic lows, making it easier for poor people to get jobs. Because of the hot economy, states took in more tax money, while having to deal with less poverty, than is likely to be the case in years to come. Since the amounts of the TANF block grants were based on state needs during the base period 1994-95, when we were coming out of a recession (and the need for assistance, therefore, relatively greater), the states have until now received proportionally more, in both tax revenue and block grants, per poor person than they will now that the economy is undergoing one of its periodic slowdowns. With more income and fewer recipients the states
should
be doing quite well. The real test will come in the next few years as the country experiences the effects of the current economic slide. States have already begun cutting programs because of dwindling resources and projected increases in caseloads.
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should
be doing quite well. The real test will come in the next few years as the country experiences the effects of the current economic slide. States have already begun cutting programs because of dwindling resources and projected increases in caseloads.
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Since the “success” of the welfare reform legislation depends so completely on the goals one considers important, evaluation is bound to be controversial. While the extraordinary growth of the economy during the first five years of the legislation impairs any attempt at definitive evaluation, some results are nevertheless clear.
If the primary goal of welfare reform was to devolve responsibility for welfare from the federal government to the states, the PRWORA has been an unqualified success!
If the primary goal of welfare reform was “to end welfare dependence” (usually meaning to reduce welfare rolls), the legislation far exceeded anyone’s expectations. Nationwide, rolls are down more than 50 percent, from 5 million families in 1994 to 2.2 million in June 2000, a remarkable change. Equally important, between 1994 and 2001 the employment rate for single mothers rose from 59 percent to 74 percent.
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While a strong economy and work supports not included in PRWORA are certainly part of the explanation for this rise, there are good reasons to believe that the legislation played a major role as well. For example, no similar change in welfare participation or single-parent employment rates was recorded under AFDC during the economic boom of the 1980s. Since the block grants amounts are constant, this decline in caseloads has meant that states are awash in funds to use for other purposes, including work supports.
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While a strong economy and work supports not included in PRWORA are certainly part of the explanation for this rise, there are good reasons to believe that the legislation played a major role as well. For example, no similar change in welfare participation or single-parent employment rates was recorded under AFDC during the economic boom of the 1980s. Since the block grants amounts are constant, this decline in caseloads has meant that states are awash in funds to use for other purposes, including work supports.
If, on the other hand, the primary goal of welfare reform had been to lift people out of poverty, matters would be far less clear. It is certainly true that the overall poverty rate has been declining steadily, from 15.1 percent in 1993 to 11.3 percent in 2000, and the poverty rate among African Americans, Hispanics, and other minorities, while still appalling, has been declining at an even more rapid pace. The level of childhood poverty is, by many measures, the lowest in a generation. The role that the welfare reform legislation has had in this decline, however, is unclear. By the middle of 2001, when the first effects of the economic slow-down were felt, the poverty rate increased again to approximately 11.8 percent, and greater increases are expected. The problem is that working parents who have left the rolls typically have low earnings, with a median wage (among those who are working) of $7.15
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an hour and annual earnings around $8,000 to $12,000 (because most do not work full time, year-round), not enough to bring even the smallest family above the poverty level and certainly not enough to live on.
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an hour and annual earnings around $8,000 to $12,000 (because most do not work full time, year-round), not enough to bring even the smallest family above the poverty level and certainly not enough to live on.
More ominous, it appears that forty percent of families that leave the rolls end up with neither job nor cash assistance. In some states, the use of sanctions—reducing or eliminating assistance for noncompliance with program rules—has accounted for a large part of those leaving welfare. Although very few states have followed sanctioned families to find out what happens to them, studies show that sanctioned families tend to have multiple barriers to employment—little education or work history, higher incidences of mental and physical illnesses and disabilities, inability to speak English, or the need to care for a disabled parent or child in the home.
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An Urban Institute study found that among those who left TANF with three or more such barriers only 9 percent were working.
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(Among all parents leaving welfare, approximately half are working at any given time.) A recent study in Michigan found that those who were forced from TANF because of sanctions were also more likely than those who left for other reasons to have been victims of domestic violence and to be mentally ill. In a three-city study, 93 percent of families forced from TANF because of sanctions remained in poverty.
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An Urban Institute study found that among those who left TANF with three or more such barriers only 9 percent were working.
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(Among all parents leaving welfare, approximately half are working at any given time.) A recent study in Michigan found that those who were forced from TANF because of sanctions were also more likely than those who left for other reasons to have been victims of domestic violence and to be mentally ill. In a three-city study, 93 percent of families forced from TANF because of sanctions remained in poverty.
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A major unanticipated and deleterious effect of welfare reform has been the steep decline in participation in both the food stamp and Medicaid programs. Prior to the legislation, a family qualifying for cash benefits was almost automatically enrolled in both Medicaid and the food stamp program. The stated intention of the 1996 law was to keep these non-cash supports in place as people moved off the welfare rolls.
These unexpected declines in food stamp and Medicaid participation appear to have a number of causes. First, income requirements in some states have kept many former AFDC recipients off Medicaid. In half the states, a working mother with two children is ineligible for Medicaid if she earns more than $9,780 a year, an amount that nonetheless leaves her family nearly $5,000 below the official poverty line.
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In some states, the eligibility cutoff is even lower. Second, many former AFDC recipients were under the mistaken impression that they were no longer eligible for food stamps and/or Medicaid when they lost their cash benefits, and it is clear that some states did little to correct this misunderstanding. In fact, many caseworkers were under the impression that they were to de-emphasize the right to maintain access to food stamps or Medicaid. Finally, in many other cases it appears that the application and renewal processes were too difficult and time consuming for parents who were now working full time. If it takes the better part of a day or several different visits to renew one’s food stamps, most employees at entry-level jobs have to make a choice between keeping their jobs and keeping the food stamps.
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In some states, the eligibility cutoff is even lower. Second, many former AFDC recipients were under the mistaken impression that they were no longer eligible for food stamps and/or Medicaid when they lost their cash benefits, and it is clear that some states did little to correct this misunderstanding. In fact, many caseworkers were under the impression that they were to de-emphasize the right to maintain access to food stamps or Medicaid. Finally, in many other cases it appears that the application and renewal processes were too difficult and time consuming for parents who were now working full time. If it takes the better part of a day or several different visits to renew one’s food stamps, most employees at entry-level jobs have to make a choice between keeping their jobs and keeping the food stamps.
A study by the nonpartisan Urban Institute found that half the families that lost cash assistance also lost food stamps, although the income of the vast majority would have allowed them to continue to qualify for the program. Even more troubling, among very-low-income families (less than 50 percent of poverty level), over half no longer received food stamps.
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Similar studies by the Center for Budget and Policy Priorities show that more than a third of the children (and more than half of the parents) of those families leaving welfare also lose Medicaid, although the vast majority still technically qualify.
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Since both food stamps and Medicaid are in-kind benefits, neither counts when officially determining poverty. Thus while families that lose these benefits are clearly “poorer,” there will be no change in the usual poverty statistics. Their substantial losses are statistically invisible.
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Similar studies by the Center for Budget and Policy Priorities show that more than a third of the children (and more than half of the parents) of those families leaving welfare also lose Medicaid, although the vast majority still technically qualify.
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Since both food stamps and Medicaid are in-kind benefits, neither counts when officially determining poverty. Thus while families that lose these benefits are clearly “poorer,” there will be no change in the usual poverty statistics. Their substantial losses are statistically invisible.
Families that leave TANF for work become poorer in other ways, too. As everyone knows, there are expenses connected to maintaining a job, most notably childcare. While many states have attempted to provide free childcare for those leaving the rolls, available estimates are that these programs accommodate only 12 percent of the need.
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Mothers with incomes below the poverty level spend an average of 23 percent of their income on childcare,
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meaning that they are automatically $2,500 to $4,000 poorer, figures that won’t show up in official poverty statistics either.
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Mothers with incomes below the poverty level spend an average of 23 percent of their income on childcare,
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meaning that they are automatically $2,500 to $4,000 poorer, figures that won’t show up in official poverty statistics either.
While the overall poverty rate is declining, those who remain poor are even poorer than before. The “poverty gap” is the amount of money that would have to be distributed to all poor families in order to bring each up to the poverty level. While the poverty rate has declined substantially since the Welfare Reform Act passed, the poverty gap for single-parent mothers who were poor worsened from $5 billion to $6.3 billion. Since there are also fewer families left below the poverty level, those that remain are consequently even poorer than before. Other statistics show that the average income of those who remain poor has been declining. All of these figures, of course, came during a period of unparalleled economic expansion that appears to be over.
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