What do welfare reform and pandemic stimulus have in common?


When the welfare system was overhauled 25 years ago, many experts predicted it would devastate families, especially those headed by single mothers. But data on what households are able to buy, including details of their housing and whether they have health insurance, suggests needy families headed by single mothers have made economic progress.

This is according to “Consumption, Income and Well-Being of Single-Parent Families 25 Years After Welfare Reform,” a working paper for the National Bureau of Economic Research. The full report is published this month by the National Tax Journal.

This milestone in welfare reform comes at a time when nearly 90% of Americans have themselves received direct federal assistance to help weather the impact of the pandemic, in the form of three rounds of payments. stimulus.

While some research suggests a decline in the situation of families since the government’s welfare reform emphasized work and education rather than unconditional help, study authors Bruce D. Meyer of the University of Chicago, Jeehoon Han of Zhejiang University in China, and James X. Sullivan of the University of Notre Dame believe that this stems in large part from the underreporting of aid that receive single mothers. They say families may appear worse off than they are because the benefits derived from temporary assistance to needy families, the supplemental nutritional assistance program, and other safety net programs that provide assistance. key can be excluded from self-declaration.

Their research reveals that today’s single-parent households are most likely living in quality homes comparable to those of middle-class families at the time of welfare reform a quarter of a century ago, but not necessarily. comparable to those of the middle class today. They are more likely to have health insurance and their “capacity to consume” has increased overall.

This adds, according to the study, to “solid evidence” that the material situation of these families has improved since the reform of social assistance, the purchasing power of the most disadvantaged families increasing more significantly and faster than those in comparison groups.

Still, it’s important to note that the families in the study are “among the most disadvantaged and least affluent families in the country,” said Meyer, an economist who is also an associate researcher at the National Bureau of Economic Research and a non-resident. . principal investigator at the American Enterprise Institute. The study found that the average total annual consumption of a single mother with two children in the bottom 10% in terms of consumption was around $ 14,000 in 2019.

The families studied can be classified as “working poor”, but even less low income than before. “Their prospects are better because they work and live in better conditions than they otherwise would have been,” Meyer told Deseret News.

Social reform 1996

When President Bill Clinton enacted the Personal Responsibility and Work Opportunities Reconciliation Act in 1996, many predicted that the reforms would have dire consequences. Opponent to the act, Sen. Daniel Patrick Moynihan, DN.Y., warned it could lead to the discovery of children frozen on city gates.

There were legitimate fears that if a system shifted from unconditional support to supporting primarily those who work, those who cannot benefit from all the incentives to work could find themselves very poor, Meyer said.

Aspects of the reform program for these low-income families include the Working Income Tax Credit, child care grants, job training, and Medicaid expansion, among others.

Social assistance reform essentially turned cash assistance into block grants “which tended to involve more spending on child care and training and less in direct cash.” The total number of families assisted has declined significantly over this period, but we have also significantly expanded the earned income tax credit, increased Medicaid for children and to a lesser extent adults, and increased child care expenses. ‘kids and training,’ Meyer said.

Most of the help went to working single mothers, although Meyer said some help was always available for those who couldn’t work for various reasons.

As ProPublica recently reported, the law froze federal funding available to states to help the poor and it “has not been increased since to account for inflation or changes in population or poverty rates. “. The article cited demographics as well as the impact of a higher cost of living on families.

Motherhood alone has also changed in the years following welfare reform. Meyer said single mothers have become more educated, with the share with less than a high school diploma halving. The share of Hispanics has doubled.

Meyer said his team of researchers did not include women who cohabit, despite being technically single. They studied families with children and only one adult at home.

The report also does not include homeless or incarcerated people, “two particularly disadvantaged populations”.

What consumption shows

The trio of researchers decided that the best evidence of the material situation of families headed by single mothers is what they can afford in terms of housing, food and clothing, as well as whether they can afford transportation and facilities. public services. They looked at Bureau of Labor Statistics data between 1993, the years immediately preceding the reform, to 2019.

Low-educated people saw their jobs drop from 45% to 70% from the early 1990s to the late 1990s, Meyer said, and their cash well-being halved during that time.

He said the houses and apartments in which families receiving assistance live are on the whole much nicer than before the welfare reform. “They are much more likely to have air conditioning, a dishwasher, a washer and dryer in the unit. They are bigger and much less likely to have leaks or cracks in the walls or holes in the floors. All of these things have improved dramatically. For me, this is the most tangible and best measured indicator that people’s standard of living has increased a lot.

Meyer said they were monitoring education to make sure welfare reform, not an overall education boost, made a difference.

Was it a reform of social assistance?

In an analysis for the Institute for Family Studies, Robert VerBruggen, a fellow of the institute and a fellow of the Manhattan Institute, calls the new research “a blow to the theory of extreme poverty that has taken root over the past five years. last years or so. ”

He wrote that “there are many consequences of welfare reform, some good and some bad, but as this new article shows, driving many families into extreme poverty does not. probably not gone ”.

Not everyone hails welfare reform as a big success for poor families.

In Pennsylvania, for example, WITF TV reported that a coalition called “Meet the Need” which includes many people who are receiving or have received help believe the safety net is breaking down. They suggest families need more cash help, better training programs, a smoother transition when they start working, and families should be able to save more than the $ 1 cap. $ 000.

Among those who see an improvement in the standard of living of single mother households since the 1990s, there are also alternative theories on what has helped.

For example, on the 20th anniversary of welfare reform, Alan Barber of the Center for Economic and Policy Research reported that full employment was underway before Congress passed welfare reform and that that probably accounted for most of the gains.

In an online symposium for the Council on Contemporary Families in 2016, he noted that data from the Current Population Survey and the Department of Health and Human Services’ TANF Workload Report “tell a simple story. Single mothers with a high school diploma or less increased their work rate from the early to late 1990s by almost 40 percentage points.

He said the trend “started long before the 1996 welfare reform, suggesting that politics were not the source of the increases, but that other macroeconomic forces were helping these families do better.”

He wrote that “data, not ideology, will help us reduce poverty.”

Some experts – including a well-cited group from Columbia University – believe recent poverty in the United States would have been much worse as a result of the pandemic without the economic aid provided by the federal government by the Trump and Biden administrations.

“Social Security aside, the Census Bureau reports that three key elements of pandemic relief had the greatest anti-poverty impact, keeping tens of millions of Americans out of poverty last year. The Economic Impact Payments (or stimulus checks) have avoided poverty for 11.7 million people, unemployment benefits have kept 5.5 million people out of poverty, and the Supplemental Nutrition Assistance Program ( SNAP) and school lunch (both of which also include expanded benefits available under the pandemic-EBT program) averted poverty for 3.2 million people in 2020 alone. They also reduced hardship, including food insecurity, for millions more, ”Columbia’s Center on Policy and Social Policy reported this week.

Meyer hopes policymakers and others realize that a combination of extra support when individuals are working, combined with the expectation that people will do things to improve their lives – like work, education, or training. education – can work.

“The current trend of writing unconditional checks is not necessarily the best way to go. Although this has beneficial effects in raising people’s standard of living, it will discourage more beneficial actions to improve one’s situation through work, education or training or by taking greater responsibility in general for one’s situation ”, did he declare.


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