Welfare as We Know It
All leading American
politicians, including President Clinton and Bob Dole, say they want to end
something called "welfare as we know it." What is welfare as we know it?
Aid
to Families with Dependent Children is the safety net for the poorest
American families with children. In 1994, AFDC provided cash assistance to
about 4.2 million single mothers and their children and about 335,000
two-parent families through the AFDC-Unemployed Parent program. AFDC costs the
federal government about $14 billion a year and states another $12 billion. Add
other federal expenditure for AFDC families--food stamps ($12 billion),
Medicaid ($17 billion, with another $13 billion in state spending), and
harder-to-calculate expenditure for housing, child care, social services, and
so forth--and total federal expenditure for AFDC families exceeds $50 billion a
year, or roughly 4 percent of federal outlays.
A bout one in seven American children is now on AFDC.
Of the 9.4 million children on AFDC in 1994, about 38 percent were
African-American, 21 percent Hispanic, and 33 percent non-Hispanic white. This
means that about four of every 10 black children were on AFDC, as were about
three out of 10 Hispanic children, and about 7 percent of white children.
Never-married mothers now head more than half of all AFDC households.
When AFDC started in the 1930s, two-thirds of children on welfare were there
because of the death or incapacitation of a parent. By 1975, children of
divorced or separated parents accounted for the majority of cases (about 56
percent), while the children of never-married mothers made up another third. By
1994, children of never-married mothers accounted for almost two-thirds of the
caseload, compared with only 30 percent for children of divorced or separated
parents, and 2 percent for the children of widows.
L ong-term welfare dependency is a serious problem.
According to estimates by the Urban Institute's Ladonna Pavetti, 62 percent of
recipients at any given time are in the midst of welfare spells that eventually
will last nine or more years. Many mothers, mainly divorced ones, spend a
relatively short period of time on welfare--leaving as soon as they can get a
job. But many others, especially unwed mothers who had their first baby as
teens and either dropped out of high school or have little work experience,
find it much more difficult to work their way off welfare. Thus, the increasing
percentage of never-married mothers on welfare probably has increased the
length of time the average welfare mother stays on the rolls. (See chart.)
More
immigrants are receiving welfare benefits. Illegal immigrants are not
eligible for AFDC, although their U.S.-born children are. Legal immigrants are
eligible, but during their first three years in the country they are presumed
to receive some assistance from their sponsor if they have one. Immigration has
not had a big effect on the AFDC caseloads of most communities, although it has
a substantial impact in places like California, where non-citizens account for
about 15 percent of all persons on the program. Immigration also has increased
federal spending for the indigent elderly and disabled under the Supplemental
Security Income Program. Between 1982 and 1993, the number of aliens getting
SSI benefits jumped from 128,000 (3 percent of recipients) to 786,000 (12
percent of recipients), at a cost of more than $3 billion a year. Eighty-five
percent of these non-citizen recipients come from three areas--Latin America
(39 percent), Asia (37 percent), and the former Soviet Republics (10
percent).
Over the last three years, 44 states have begun
reforming their welfare programs using "waivers" from the Clinton
administration. The most common provisions allow recipients who go to work or
get married to keep more of their earnings or stay on Medicaid longer. Other
common reforms reduce benefits if welfare mothers don't send their children to
school, don't keep their children's immunizations up-to-date, and so forth. In
recent months, however, 25 states have received waivers that go to the very
heart of the program : They end the absolute and unconditional
entitlement to long-term benefits. Five more states have similar waivers
pending. About half completely terminate cash benefits and about half trigger a
work requirement after a specific period on the rolls, usually 24 months or 36
months. Three others terminate benefits after a period of mandatory work.
States making these fundamental changes include some with the largest welfare
caseloads in the country--California, Illinois, Ohio, and Texas. New York will
probably join the list soon. In fact, time limits already cover over 60 percent
of the nation's welfare caseload.
Many waiver requests
submitted by states initially proposed an absolute termination of
benefits after the time limit. So far, however, the Clinton administration
has insisted that there be some sort of protection for long-term recipients.
The most common safety-net provisions exempt families from the time limit for
personal hardship (14 states), inability to find a job (13 states), the
caretaker's age (10 states), and the child's age (9 states).
After rising 32 percent
under George Bush (from 1989 to 1993), AFDC caseloads are now declining.
Between January 1994 and February 1996, the number of families on welfare
nationwide fell by 8.5 percent. President Clinton already is claiming credit
for this decline. He may be right, but the bite of these new rules will not be
felt for many years. Have recipients really changed their behavior in
anticipation of future penalties? Another explanation is the stronger labor
market for low-skilled workers. The decline in AFDC rolls started in 1994,
when, for example, the poverty rate among African-Americans declined from 33.1
percent to 30.6 percent.
