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As I discuss in my new paper, “Poverty after Welfare Reform,” child-poverty rates are not only unambiguously lower than in 1996, they are at an all-time low.
A major part of the Germanis critique focuses on the fairly undisputed fact that few states have been especially innovative or attentive in trying to move TANF recipients into jobs (and that is putting it nicely).
Because states have fallen down on the job in this regard, many liberals, Peter Germanis, and even a few libertarians have concluded that PRWORA must have failed in encouraging single mothers to work.
The handful of papers that adjudicate between the effect of reform (and the state waivers before 1996) and other factors find that welfare reform was at least as important as the 1993 expansion of the Earned Income Tax Credit (or EITC, a subsidy for low-income workers) in reducing welfare receipt, both of which were larger factors than the improving labor market.
The EITC was the most important factor behind rising employment among single mothers, but welfare reform was roughly as important as the economy.
It fell thereafter, but it remains around 55 percent today.
Among never-married mothers, employment rose from less than 45 percent in 1992 to about 65 percent in 2000. During the period in which single mothers’ employment jumped, it rose modestly among married mothers and not at all among single childless women.My own figures, which I argue treat health benefits and inflation more appropriately, find a rise from 0.9 percent to 2.0 percent, with the rate falling to 1.7 percent by 2012 (lower than in 1997).Both CBPP’s and my figures rely on a variety of imputations and ignore the problem of underreported earnings. But strong conclusions from the data are not merited, given the low levels and small changes involved.Even the Center on Budget and Policy Priorities (CBPP) — one of the groups more critical of welfare reform — finds that, at a minimum, the top 80 percent of children in single-mother families saw an increase in family income between 19.In fact, the second-poorest tenth of these children saw their income rise, and the poorest tenth experienced a decline of 6 percent (about 5) when the best cost-of-living adjustment is used.In this essay, I want to lay out a specific empirical case affirming the success of welfare reform — 20 years old as of last week.As I discussed in the previous article, no one can claim to have a rock-solid case that welfare reform did more good than harm, and no one can claim an equivalently strong case for the reverse.But PRWORA might have increased employment in at least three ways.It might have led states to invest in welfare recipients and to actively assist them in finding work.First, child poverty declined, and this decline occurred concurrently with dramatically falling welfare rolls and increasing work among single mothers.That doesn’t prove causality by any stretch, but my conclusions about the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) would be very different if all three of these trends hadn’t coincided.