Welfare Reform: Reduced Poverty & Unwed Childbirth

When what you've been doing isn't working, it is time to try something new. In 1996 Congress enacted a welfare reform program that many forecast was doomed to fail. It has actually been very successful.

Welfare Reform Turns Ten: Evidence Shows Reduced Dependence, Poverty:
". . . President Johnson’s War on Poverty had failed to reduce welfare dependence. From 1965 to 1994, AFDC caseloads rose steadily, reaching a height of 5 million families on the rolls. Because prolonged welfare dependence has negative effects on the development of children, welfare reform was intended to disrupt inter-generational dependence by moving families off the welfare rolls through increased work and marriage. Welfare caseloads began to decline in earnest after 1996 and have fallen by 56 percent since then.President Johnson’s War on Poverty had failed to reduce welfare dependence. From 1965 to 1994, AFDC caseloads rose steadily, reaching a height of 5 million families on the rolls. Because prolonged welfare dependence has negative effects on the development of children, welfare reform was intended to disrupt inter-generational dependence by moving families off the welfare rolls through increased work and marriage. Welfare caseloads began to decline in earnest after 1996 and have fallen by 56 percent since then.

This decline in welfare dependence coincided with the increase in the employment of single mothers. These trends have been particularly dramatic among those who have the greatest tendency to long-term dependence: younger never-married mothers with little education. During the late 1990s, employment of never-married mothers increased by nearly 50 percent, of single mothers who are high school dropouts by 66 percent, and of young single mothers (ages 18 to 24) by nearly 100 percent. Welfare reform impacted the whole welfare caseload, not just the most employable.

Not surprisingly, 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. Neither poverty level had changed much between 1971 and 1995. By contrast, six years after PRWORA was enacted, these two poverty rates had fallen to their lowest levels in national history, from 41.5 percent to 30 percent for black children and from 53.1 percent to 39.8 percent for children from single-mother families.

Since welfare reform, the once explosive growth of unwed childbearing has ended. The unwed birthrate was 7.7 percent in 1965 and increased about one percentage point per year for the next thirty years. Had this rate of increase been sustained, the unwed childbearing rate would have hit 41.6 percent by 2003, but welfare reform interrupted this process. Between 1995 and 2003, overall unwed childbearing inched upward by only 2.4 percentage points, a fourth of the pre-reform rate of increase. The black unwed childbearing rate actually fell from 69.9 percent in 1995 to 68.2 percent in 2003.

Opponents of reform would like to credit many of these positive changes to a good economy, but the evidence for this interpretation is not strong. While a healthy economy did contribute to the progress charted in welfare dependence, employment, and poverty, good economic conditions alone would not have produced the striking changes that occurred in the late 1990s.

Historically, periods of economic growth have not resulted in lower welfare dependence. Indeed, during two episodes of economic expansion, the late 1960s and the early 1970s, welfare caseloads actually grew substantially. Only during the 1990s boom did caseloads drop appreciably. While a slowed economy may have affected the rate of caseload reduction since 2001, it is important to note the vast difference in trends before and after welfare reform. In the days of AFDC, welfare rolls remained flat or rose during periods of economic growth and rose substantially during recessions. Since PRWORA, caseloads have plummeted in a robust economy and declined slowly during a recession.
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Welfare reform has been successful. However, that success has been limited by several factors. First, welfare reform in 1996 addressed only one of the more than fifty means-tested federal welfare programs, AFDC. Second, the federal work requirements that pushed the states to promote work and reduce welfare dependence have always been too lenient, resulting in lax state work programs once the minimum federal standards have been met. Third, while the law set clear goals to reduce out-of-wedlock childbearing and strengthen marriages, nearly all states’ bureaucracies simply ignored these goals.

To continue and extend the success of welfare reform, future efforts should focus on the following goals: 1) strengthen TANF work requirements; 2) establish work requirements in parallel welfare programs; and 3) fortify the Healthy Marriage Initiative."