NC Budget and Tax Center, TANF 20 Years Later

Welfare reform doesn’t reflect our best ideas about addressing poverty

This blog is the 4th post in a series that will detail how lawmakers have weakened Temporary Assistance for Needy Families (TANF) over the past 20 years, explain why TANF is a cautionary tale rather than a model for other work and income support programs, and map out a better way forward.

As North Carolina and the country continue to contend with elevated poverty levels despite seven years of an economic recovery, many have suggested that the principles of the 1996 reform of welfare (then AFDC, now Temporary Assistance for Needy Families or TANF) should serve as a model for addressing poverty in our state and nation.

The changes, made 20 years ago this week, to the way in which we ensure that people living in poverty can meet their most basic needs and have a pathway out of poverty were based on three core ideas:  that work was the pathway out of poverty, that states would know best how to meet the needs of their communities, and that services—from training to marriage counseling—could effectively replace cash assistance. While these ideas may not have been inherently wrong, they resulted in concrete policy directions:  time limits, work requirements, block granting and funding for services to agencies over direct payments to poor people.

A review of the evidence suggests that the guiding ideas behind welfare reform fail to deliver better economic outcomes across the board and have in fact increased the number of people living in deep poverty,  fallen short in times of economic distress and generated a whole host of unintended and negative consequences because poor households continue to lack income to meet basic needs.

It is these same ideas that have been suggested for every program that seeks to deliver support to low-income households, from food assistance to Medicaid.

Here are the problems with these specific ideas about poverty and the policy choices that stem from them:

  1. Time limits ignore the reality of today’s labor market: Arbitrary time limits on how long someone can receive public benefits ignore the reality that different times and different people require different support. An economic downturn where there are no jobs or not enough jobs can mean that a person could lose benefits despite doing their best to find work. Being well-positioned to move into a job may take skills training, while others may have different barriers that make it necessary to take more time to make that move to work sustainable.
  2. Work doesn’t guarantee economic security: In the 1990s, there may have been good reason to believe that the economy could deliver good-paying work, but the overwhelming evidence now is that many North Carolinians are working and still living in poverty—and that number is growing. Requiring work without considering how that work will meet a household’s needs or provide a pathway to the middle class pushes the costs of sustaining working families up or over to other areas. It also fails to fully address the hardships of poverty.
  3. All states are not created equal: Flexibility for state administration of programs may seem like a good idea, but without strict guidelines it is possible for some states to make the barriers higher and the support less for people living in poverty.  Every effort to catch up to the national average on most indicators of high poverty requires more inclusive policies, yet North Carolina policymakers have sought exclusion instead:  drug-testing recipients of public benefits, banning the state from seeking waivers from time limits in times of high unemployment, and making it more difficult to administer programs according to efficient best practices. The idea of block grants (whose value is frozen in time) has proven to cement the regional separation in economic outcomes rather than catalyze innovation that would drive better ones.
  4. Poor people need money: At base what poor people and households need is money.  Money gives them the ability to make the decisions necessary to meet their families’ needs—like rent, gas, and utilities.  When policymakers deliver assistance through services and support, it can help boost results, but it can’t replace the need that households have to be able to move money to the greatest demand in their lives.

It is disturbing that lawmakers in Congress are pushing to replicate the TANF block grant model to other work and income supports, which would likely increase poverty and hardship. It is even more disturbing that North Carolina policymakers have proposed adopting or adapting many of these ideas at the state level as well. Such proposals should be rejected.  The true measure of our economic success is not pushing poverty into new places or new depths, but strengthening our middle class and community vitality.

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