Safety Net

‘People In Poverty Do Work’: What Paul Ryan Misunderstands About Poverty

This country has a penchant for plans to end poverty that do nothing to actually help families struggling to make ends meet.

This week marks the 20th anniversary of welfare reform, which created work requirements and other barriers for families who need the most basic cash assistance.  The legislation was aimed at getting people to become self-sufficient.  As then-President Bill Clinton put it, “No one who can work should be able to stay on welfare forever.”

Twenty years later, it’s clear that welfare reform has left more families with fewer resources. There has been a 75% drop in the number of Americans receiving cash assistance since 1996, and a sharp rise in the number of households with children with incomes of less than $2 per day.  There are 3 million American children who now live on no money for at least three months out of the year.

Now Republican House Speaker Paul Ryan wants to build on that disastrous legacy.

With his recently released poverty plan, the Speaker called for ending 11 antipoverty programs—including housing assistance, food assistance, and child care—and combining them into a single block grant (the preferred approach under welfare reform).

Ryan claims he is focused on moving people into full-time work—the surest way to get people out of poverty, he says. And it’s true—full-time jobs that pay well and provide benefits are indeed the best path to get out of poverty.

But that’s not what Ryan is promoting, and his solution—like welfare reform before it—would not have helped me. (Nor would his votes—at least 10 times—against raising the minimum wage.)

People in poverty do work.

In my years of receiving government assistance, I worked full-time and went to school full-time. I still needed help to pay for child care, food, utilities, and school. And that’s the problem with both welfare reform and Ryan’s poverty plan: they ignore the fact that people in poverty do work, but they face challenges that people with means do not. When you don’t have money, you can’t pay for car repairs, quality daycare, or work-appropriate attire. It’s harder to overcome criminal records or inadequate educations.

When my college classes began to interfere with my work as a housecleaner, where I barely made $9 an hour, I had to go to part-time.  But because of the work requirements added during the 1996 welfare reform, my part-time work status meant I received fewer benefits. My child care grant only covered the hours I was physically in class, so I ended up paying for child care myself. To make ends meet, I took the maximum allowed in student loans, $10,000 a year, and maxed out my credit cards. By the time I graduated, I was $70,000 in debt.

I am considered a success story because I was able to use my degree to support my family through freelance writing, without government assistance. But if I hadn’t fought for years to get a better education, I would still be working full-time for less than $10 an hour, receiving several forms of government assistance to make ends meet.

Politicians like the phrase “welfare to work.” Maybe they think it’s easy to find a job because they’ve never had to pound the pavement with a dozen resumes, spending days filling out applications, waiting for call backs, then interviews, only to find they start at just four hours a week—at $7.50 an hour.

Do all of that while you’re hungry, sleep-deprived, and experiencing stress of a level that has you in “survival mode.” Do that while you have children clinging to you during a phone interview. Then go out and try to find a daycare with openings that will take your government voucher—while stressing over feeding your children and yourself and caring for the housing you’re scared you might lose.

Then. Then reform welfare, Mr. Ryan.

 

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Safety Net

What Baton Rouge Can Learn from New Orleans About Bringing Flood Victims Home

In the wake of the nation’s worst natural disaster since Superstorm Sandy, flood recovery efforts are now underway in Baton Rouge: Electricity is operating in certain neighborhoods, damaged floors and walls are being removed from homes, and homeowners are beginning to deal with emergency assistance and insurance—or a lack thereof.

Soon, another aftereffect of the storm will sweep Baton Rouge communities: climate refugees—people who are displaced by climate change or natural disasters—will begin the daunting task of rebuilding their lives.

Louisianans are painfully familiar with this concept. In 2005, Hurricane Katrina displaced approximately 1.5 million people from Alabama, Mississippi, and Louisiana.  It was the second largest climate-driven exodus in US history—only the Dust Bowl exodus was larger. Roughly 40% of the people who fled the storm were unable to return to their pre-Katrina homes—and this burden was not shared evenly.

Evacuees who didn’t return to their home states were more likely to come from a lower-income household, or be unemployed, than their counterparts who did return home. Poorer New Orleans residents may have been forced to move further away, as indicated by cities as far as Philadelphia providing refuge for homeless Katrina victims, but distance wasn’t the only obstacle. The slow return of low-income housing—eight years after the storm, New Orleans still had less than half the number of pre-storm public housing units—kept the city’s disadvantaged population scattered at best and homeless at worst.

In addition to struggles with housing, poorer communities were also likely to suffer from pollution-linked physical health impacts, which are exacerbated by higher levels of psychological trauma and stress after an event like Hurricane Katrina. One study found that low-income Katrina survivors were twice as likely to suffer poor mental health outcomes as people with greater financial resources, and another noted that people who did not return to their communities had greater levels of depression than those who were able to return home.

The thousands of Baton Rouge area residents affected by this historic flooding will face the same struggle to return home that Katrina survivors experienced. Many of these survivors were already living in poverty before the floods hit. Of the 20 parishes that President Obama declared “a major disaster,” 17 had populations above the 14.8% national poverty rate, and half of the disaster-declared parishes had more people living in poverty than the state poverty average of 19.8%. Two affected parishes, St. Landry and Washington, had poverty rates near 30%.

Without efforts to bring residents of all income levels back home, the health and economic welfare of many low-income residents will likely worsen.

Leaders in the public, private, and non-profit sectors need to offer pathways home that can improve the lives of these residents and strengthen their communities.  This includes programs developed after Hurricane Sandy to shelter residents in their homes as quickly as possible, such as the Rapid Repairs program, and rental assistance for low-income households. Policies that identify and strengthen community organizations serving residents can also help people find assistance and shelter in a nearby community. Rehoming residents after an extreme weather event will also mitigate some of the exclusionary impacts of gentrification, which has been a contentious issue in New Orleans since Hurricane Katrina.

Government officials seemingly recognize the need to bring residents back to their communities by trying to make their homes habitable as quickly as possible. Whether these efforts will extend to low-income residents this time around remains to be seen.

Safety Net

The Libertarian Case Against the 1996 Welfare Law

In the years after former President Bill Clinton signed the 1996 Personal Responsibility and Work Opportunity Act and “ended welfare as we know it,” libertarians have been conspicuously quiet on welfare reform. For two decades, we toed the conservative line on program cuts, stiffer eligibility requirements, and block granting. The promise of smaller government cajoled us into deep spending cuts, too often starting with programs that support America’s most vulnerable.

As a result, we sacrificed the opportunity to define our own agenda—one based on the ideals of personal autonomy and equality under the law, and that stands up for communities marginalized by discriminatory laws and institutions.

In short, libertarians need to rethink their approach to poverty and welfare as they know it.

The current law has unintended consequences

To give credit where it is due, libertarians have begun to take issues of privilege seriously through causes like criminal justice and occupational licensing reform. But at the same time, libertarian and conservative groups have advocated for policies like drug testing benefit recipients and imposing stricter work and asset test requirements. This contradiction is more than a touch ironic—it’s difficult to argue that occupational licensing greatly reduces job availability for low-skill workers while pushing for stricter work requirements for jobs that don’t exist.

Supporters of work requirements would do themselves a favor by studying how they actually work in practice. Rather than being a tool to help families climb out of poverty, they often force recipients to take jobs with little opportunity for advancement to maintain their eligibility for assistance. Under TANF, for example, many parents are barred from counting attendance in a GED program toward their 20 hours of average weekly work. This actively discourages building skills for long-term career advancement, which might explain why conservative scholars who originally supported of the 1996 reform—from Christopher Jencks to Peter Germanis—have had quite public changes of heart.

As a block grant, TANF was conceived to embody the libertarian virtue of federalism by giving states broad discretion in how money is spent. However, its structure was easily gamed and turned into a slush fund for state discretionary spending. This often includes things having little to do with welfare, like marriage counseling and scholarship money for upper middle class families.

Asset tests have also not worked as intended. When the economist Lyman Stone dug into why coal workers in declining regions of Appalachia haven’t moved to find work, he realized Kentucky coal country contained 27 of the 71 counties where cash benefits exceed 40% of individual income. And, as he notes, TANF is not built to support mobility:

“Programs that discourage saving by stringently asset-testing benefits or by prohibiting hoarding (such as TANF or SNAP) trap beneficiaries in place, because migration has steep fixed costs in the form of transportation costs, lease deposits, and income to cover time spent looking for work.”

In other words, streamlining programs and liberalizing asset tests could actually make markets adjust better by reducing residency requirements and letting households save up for big life changes. Isn’t this the “opportunity and upward mobility” that House Speaker Paul Ryan’s poverty task force claims to desire?

Libertarians are typically skilled at identifying the unintended consequences of paternalistic government regulation. However, they have mostly signed off on—or at least not objected to— the House Republican plan to copy TANF’s broken design and paste it onto Medicaid, nutrition, and housing programs.

It’s time for a new approach

The absence of a positive libertarian agenda on poverty and welfare (besides the calls to abolish the welfare state entirely and leave charity to pick up the slack) dates back to the Reagan-era coalition that brought free market liberals and social conservatives under one tent. Conservative-Libertarian “fusionism,” as it became known, has been with us ever since. As a result, a typical proposal from a libertarian economist is to suggest creating a $20,000 tax exemption for high earners to redirect their income tax into charitable nonprofits—in essence, a massive subsidy to religious organizations disguised as a tax break.

Nonetheless, the alliance is due to break down. Libertarians’ aversion to paternalism and love for the rule of law should extend beyond opposition to trifles like soda taxes. It should include opposition to policies like drug testing for welfare recipients and the denial of nutrition assistance to people with criminal records, as well as support for direct cash assistance that allows individual sovereignty over one’s own spending decisions.

More generally, it’s time to abandon the idea that safety net programs inevitably create dependency and damage markets. Whether through a basic income guarantee or a universal child allowance, the best evidence shows that robust safety nets can cut poverty while encouraging the kinds of risk taking and entrepreneurship that lead to innovation, investment in human capital, and growth.

Poverty is not only a matter of material deprivation. It is also an affront to personal autonomy and equal dignity. No matter what your ideology, twenty years after the signing of the 1996 welfare law, the evidence is clear: TANF is no model.

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Safety Net

Everything You Wanted to Know About the 1996 Welfare Law but Were Afraid to Ask

Table of Contents

What’s TANF?
What’s a Block Grant?
Isn’t State and Local Control More Effective?
Does It at Least Help People Prepare for Work?
Why Does All This Matter?
So Where Do We Go From Here?

What’s TANF?

In 1996, Congress replaced the New Deal-era Aid to Families with Dependent Children (AFDC) with a new program called Temporary Assistance for Needy Families (TANF), under the guise of “ending welfare as we know it.”

The new law built on decades of anti-welfare sentiment, which Ronald Reagan popularized in 1976 with the racially-loaded myth of the “welfare queen.” In the two decades that followed, progressives and conservatives alike put forward reform proposals aimed at boosting work and reducing welfare receipt. Progressive proposals included expanded childcare assistance, paid leave, and tax credits for working families. Conservatives, on the other hand, tended to favor punitive work requirements—without any of the corresponding investments to address barriers to employment.

In 1996, after vetoing two Republican proposals that drastically cut the program’s funding, President Bill Clinton signed the Personal Responsibility and Work Opportunity Act into law. The new legislation converted AFDC into a flat-funded block grant—TANF—and sent it to the states to administer.

The law’s stated purpose was to move families from “welfare to work.” By that measure, supporters initially heralded TANF as a success during the strong, full-employment economy of the late 1990s. But too often, the narrative stops there, ignoring significant failings in the program that surfaced after the economy slowed down.

What is a block grant?

A block grant is essentially a pot of money that the federal government gives to state governments to administer a program subject to federal guidelines.

One of the key limitations of block grants is that they can lose value over time. The TANF block grant, for example, has been flat-funded at $16.5 billion since the law was first implemented 20 years ago. In other words, despite the rising cost of living, TANF’s funding hasn’t increased at all. As a result, it has lost more than one-third of its value since 1996, leaving fewer low-income families able to access the help they need. Fewer than one in four families with children living below the federal poverty line are helped by TANF today—down from more than two-thirds in 1996.

Another major limitation is that block grants are unable to respond to economic downturns. During the Great Recession, the number of families helped by TANF barely budged—the number of unemployed workers spiked by nearly 90%, but families able to access TANF only ticked up by 16%. TANF’s failure to respond to rising economic hardship not only hurts struggling families; it takes away a critical tool to lessen the impact of recessions.

Isn’t state and local control more effective?

Not in TANF’s case. There’s very little accountability with regard to how states must spend this money, so many states treat the program like a slush fund by diverting the funds to a range of other purposes—including closing budget gaps.

As a result, just 1 out of every 4 TANF dollars goes to income assistance for poor families with kids—policymakers, the public, and the media lack even the most basic information on where the rest of the funds go. By comparison, over 95% of Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) dollars go to helping struggling families purchase food.

Does it at least help people prepare for work?

Not well. Preparing people for work was one of the stated goals of the 1996 welfare law, but only 8% of TANF’s funding goes to employment preparation services. What’s worse, states aren’t actually required to track whether TANF recipients get jobs—employment isn’t even an outcome that gets measured (nor is poverty reduction, for that matter).

Conservatives claim the law gives states flexibility, but states face stiff constraints when it comes to helping participants prepare for and find work. For example, states aren’t allowed to provide “job search and job readiness assistance” for more than four consecutive weeks and six weeks in the entire year—no matter how hard someone is looking for work. In addition, vocational training only counts towards required work activity for 12 months. It’s no wonder that governors from both parties have requested greater flexibility in designing work programs for TANF.

Why does all this matter?

Great question. TANF’s shortcomings don’t just matter to the millions of poor families with kids who aren’t getting the help they need through the program. A full 70% of Americans will need to turn to the safety net at some point—whether it’s TANF, nutrition assistance, Supplemental Security Income, or Unemployment Insurance. Without these programs, our nation’s poverty rate would be nearly twice as high as it is today.

But despite TANF’s dismal record, many congressional Republicans want to model effective antipoverty tools, including nutrition assistance and housing aid, after TANF—by converting them to block grants.

In total, Speaker Ryan has called for ending 11 antipoverty programs—including housing assistance, food assistance, and child care—and combining them into a single block grant. Just like TANF, the funding would be fixed—making it woefully unresponsive to recessions or changes in the unemployment rate.

So where do we go from here?

To begin with, the federal government should require states to spend a certain share of TANF funds on the law’s core purposes—income assistance, child care, and work programs. Requiring states to spend even half of TANF funds on these priorities would ensure that more families get the help they need. We should also hold states accountable for meaningful outcomes such as actually helping TANF recipients get jobs, and reducing poverty.

In addition, Congress should stop rewarding states for ending aid to families in need. Right now, states receive a so-called “caseload reduction credit” for reducing the number of people they help—regardless of whether they have jobs when they leave the program. In effect, instead of giving states incentives to provide needed assistance, we’re doing the opposite.

We also need to increase benefits so that families can meet their basic needs. In no state are benefits equal to even half the austere federal poverty level (the maximum benefit was about $10,000 per year for a family of three in 2015).

Strengthening TANF is critical to ensure that our nation’s safety net provides adequate protection against life’s unpredictability. But it is just one part of a broader antipoverty agenda.

Building an economy that works for everyone—not just the wealthy few—will require creating good jobs and ensuring a living wage; adopting work-family policies that ensure parents are not forced to choose between work and caregiving; putting childcare and high-quality education within reach for all families; and removing barriers to opportunity so that all families have the opportunity to succeed.

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Safety Net

Rep. Doggett: ‘It’s Time to Fix the Broken Welfare System’

Twenty years ago today, legislation promising to “end welfare as we know it” became law.  I voted for that bill, which created a program called Temporary Assistance for Needy Families (TANF).  I believed that it would help more people move from welfare to good-paying, long-term jobs that would support families and reduce poverty.

Unfortunately, the program has failed to deliver on its promise, and it has left some families in even worse condition.

Since TANF was signed into law in 1996, the number of children living in extreme poverty—defined as no more than $2 per person per day—has doubled, from 1.4 million to 2.8 million children. That’s evidence of a failed approach, not a successful model we should apply to other federal programs, as many Republicans would now like to do.

Our country is capable of developing a system that will create brighter futures for poor families with children; ensuring a robust safety net for families when they can’t work; and preparing impoverished parents to succeed in today’s labor market.

To achieve these goals, here’s what we need to do:

First, we must hold states accountable for properly spending the funding they get from Washington. A key premise underpinning TANF was that if states were given more flexibility they would do a better job providing families with a strong safety net when they can’t work and they need help to obtain a good job.  But two decades of evidence has shown that when states get a pot of money accompanied by few federal standards, they will act in their elected leaders’ self-interest, not in the interest of poor children and their families.

The TANF block grant has thus become welfare for states.

The TANF block grant has thus become welfare for states. Most of them use the money once provided directly to poor families to instead plug state budget holes—some of which were created when these same states enacted tax cuts that mostly benefit the wealthy. In 2015, states spent only about half of their TANF funds on the program’s core purposes—work preparation, child care, and direct assistance. My own state of Texas, which so often neglects disadvantaged children, spent less than 14 cents of every TANF dollar towards these ends. Nationwide, states are spending only about 1 cent of every TANF dollar on education and training for recipients to find long-term and good-paying employment.

That’s not what Congress envisioned, and we need to ensure meaningful accountability.

Second, we need to eliminate provisions that restrict access to the education and training that low-income parents need to succeed. TANF recipients—mostly single parents raising their children—should not be denied the opportunity to pursue education and training that will prepare them for better jobs.  And yet, in many states a parent receiving TANF assistance would not be able to attend a community college or university to obtain the skills they need for a family-supporting career. Instead they might be forced into a for-profit job-training program in a low-wage industry, or a work assignment with no promise of upward mobility.

Preparing disadvantaged individuals for jobs that are in demand offers significant long-term payoffs. For example, Project Quest in San Antonio has enabled many individuals to escape poverty by training for in-demand jobs that pay a living wage, in sectors such as health care and bioscience, information technology and security, and aerospace. We need to ensure that struggling individuals have access to those kinds of high-quality opportunities.

By 2014, TANF reached just 23 of 100 poor families.

Third, we need to hold states accountable for providing a safety net for families who either can’t work or can’t find work. The 1996 welfare law contained a number of incentives for states not to serve families who need cash assistance—and states have responded by serving fewer and fewer. In 1996, for every 100 families with children living in poverty, 68 received cash assistance. By 2014, TANF reached just 23 of 100 poor families. Texas is one of a dozen states that provide income assistance to less than one in ten poor families with children.

Moreover, the value of TANF funding has fallen by more than one-third since 1996 because it was never adjusted for inflation. We must therefore provide more, and change the incentives so that states are encouraged to assist more families—those who are able to transition to work, and those who need assistance because they are unable to work.

TANF was enacted 20 years ago on a bipartisan basis.  It’s past time for us to revisit the law and improve it on a bipartisan basis as well.  Unfortunately, congressional Republicans continue to reject any genuine change, content to talk about reform but offering only kinder talk with less help. Indeed, Speaker Ryan would double-down on this broken system to make other types of assistance—such as housing and nutrition—even harder for struggling families to obtain.

We need to heed the lessons of the past two decades and create a new approach—one that will truly put good jobs within reach, while strengthening the safety net to keep families from falling into poverty when they are experiencing hard times.

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