INTRODUCTION According to the U. S Census Bureau 46. 2 million Americans are under the poverty line, that’s 15. 7 percent of the population. This country has done a lot to help the poor, so, why is poverty rising? Are the anti-poverty programs that are now in place not working? The Center on Budget reports that our anti-poverty efforts were effective in keeping millions of Americans out of poverty in the current economic crisis.
Existing policies and new initiatives kept people from falling into poverty; these programs reduced the severity of poverty. TANF was created by the 1996 welfare reform law to replace AFDC (Aid to Families with Dependent Children). Under the TANF structure, the federal government provides a block grant to the states, which use these funds to operate their own programs.
States can use TANF dollars in ways designed to meet any of the four purposes set out in federal law, which are to: “(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (4) encourage the formation and maintenance of two-parent families. This paper will examine the TANF program from inception to determine how effective the program has performed. REVIEW OF LITERATURE TANF’s early years witnessed dramatic declines in the number of families receiving cash assistance, and a great increases in the share of single mothers working, especially those with less than a high school education. But since then, nearly all of the employment gains have disappeared, and TANF caseloads have responded only modestly to increased need during this current economic crisis.
However, because relatively few families receive TANF and benefits are very low, TANF plays a much more limited role in helping families escape poverty or deep poverty today than AFDC did. Over the last 16 years, the national TANF caseload has declined by 60 percent, even as poverty and deep poverty have worsened. While the official poverty rate among families declined in the early years of welfare reform, when the economy was booming and unemployment was extremely low, it started increasing in 2000 and now exceeds its 1996 level.
TANF caseloads are going down while poverty is going up means that a much smaller share of poor families receive cash assistance from TANF than they did prior to welfare reform. TANF cash benefits have not kept pace with inflation and are below half the poverty line in all states. Studies examining the impacts of welfare reform tell a mixed story. The most widely cited impacts of welfare reform are the decline in the welfare caseload and the increase in the employment rate of single mothers.
The national welfare caseload reached its peak in 1994, with 5. 1 million families receiving welfare. In June 2000, the caseload declined to 2. 2 million, more than 50 percent reduction since the peak in 1994, and about 60 percent of those who left welfare were working. The employment rate of single mothers has risen to a historically high level, and by 1999, 71 percent of single mothers were employed, exceeding that of married mothers. Not all these changes can be ascribed to the welfare reform, of course.
Strong economy and public policies that “make work pay” also played a substantial role in both the decline of the caseload and the increase in employment. The impact on earnings and income is less encouraging. Former welfare recipients who left welfare for employment typically enter jobs with low wages and do not receive employer-provided benefits such as health insurance, paid sick leave, or vacation. For many families the total income has increased very little, as the increase in the earnings is offset by the loss of welfare benefits.
Another concern is that although overall poverty rate and child poverty rate have declined to the lowest level since 1979, they have not fallen as much as the caseload. The incomes of the poorest one-fifth of single-parent families have continued to fall, and many poor families have become poorer. Compared with the evaluations on caseload, employment, and poverty, the impacts of the 1996 reform on family formation have received much less attention, and the few studies that have taken place show little impact. METHODOLOGY This paper is a third party analysis of the TANF program.
Despite the importance of welfare policy, for many years information was limited on the later economic well-being of those who had been welfare recipients. National studies of families leaving AFDC document substantial poverty and dependence among those who left welfare. Given state policy variation under TANF, recent analysis has often examined the economic well-being of those who left a particular state’s TANF program. Although comparison across studies presents substantial difficulties some approximate comparisons can be made.
The studies tend to show high levels of poverty. RESULTS AND DISCUSSION Temporary Assistance for Needy Families (TANF) was structured to move parents off welfare and into the workforce with basic work-related skills. There have been more than 8 million TANF recipients since the program was created in 1996, and the monthly caseload is about 2000000. At least 250000 cases have been closed because of state or federal time limits rather than because recipients had achieved work readiness and financial independence within the program’s federally mandated 5-year lifetime limit.
The recipients were dropped, and we do not know what has happened to them. SUMMARY, CONCLUSION AND SUGGESTIONS Major changes in TANF’s structure are unlikely in the near future; policymakers should consider certain improvements during reauthorization of the program that would reduce states’ incentive to serve as few people as possible in their TANF programs. The work participation rate has proven an ineffective performance measure for TANF. In addition, the caseload reduction credit discourages states from serving the families most in need of assistance.
A better approach would be to identify a new performance measure that rewards states for positive outcomes such as increasing employment or earnings or improving recipients’ education and skills. Such a measure would maintain the program’s emphasis on work without rewarding states for simply removing needy families from the TANF caseload or barring their entry into it. Also, the performance measure should adjust automatically to reflect the availability of jobs; states cannot be expected to meet the same employment-related outcomes when unemployment is high as when it is low.