First, some concepts:

Federalism-what is it? devolution, a shift in authority from the federal to the state level--the money still comes from the feds, but often in the form of block grants, which are fixed amounts of money that states have some latitude in how they will spend (in this case, to assist eligible welfare recipients).
Entitlements are available to anyone who qualifies--AFDC was an entitlement program. Entitlements means less predictability with respect to budgets--it is not fixed, as are block grants. It's important to keep in mind that AFDC's replacement, TANF, is block grant-based.

What is the relationship between a state's economy and how far TANF block grants can go?

Some preliminary outcomes of reform

• Welfare rolls have decreased-from 5 million families in 1995, to 2.1 million in 2001, according to the Urban Institute.
• There seem to have been no major shifts in well-being when comparing welfare families with 'workfare' families (those having left welfare for work);
• Many people who are working are not receiveing benefits for which they're eligible;
• Family structure changes? According to Alan Weil in another article, these have been modest. Conservatives might say that they weren't funded initially--one of the reasons that the Bush Administration this year put $300 million into funding state-level experiments to promote marriage, teenage abstinence, and reductions in out-of-wedlock births.
• Weil's article lists 10 preliminary things to know about welfare reform:

1. It has taken hold--states quickly found ways to promote 'work first,' support work, require recipients to look for work, limit the duration of benefits (10 states reduced the 5-year lifetime limit), and communicate changes to case workers, agencies, and recipients.
2. The caseloads are dynamic--most are short-term, but there are still many recipients who are on again, off again, and there is also a chronic population.
3. A higher proportion of welfare recipients are working than in the past. This especially applies to single mothers. EITC has been one contributing factor--you don't get it unless you work.
4. Those leaving welfare are mostly working, but for low wages.
5. Money is going into programs that support work (especially child care, transportation, tax credits, and marriage promotion).
6. (however) The work support system doesn't always meet needs of those who it serves. One out of seven people leaving welfare--15%--reports no visible means of support. No one is quite sure what this means, yet.
7. TANF has been less effective than AFDC in supporting the poorest populations. There are more people living in 'deep poverty.' In other words, there is a subset of the population not benefiting from the 'workfare' approach.
8. Changes in family structure are 'modest.' Teen birth rates have been decreasing since the early 1990s, so efforts to attribute this to welfare reform are less than genuine.
9. Effects of welfare reform on children are unclear. This is a tough one to measure. If parents go to work, one might foresee problems. But at the same time, there may be more income available to the family. The jury is out, and may be for some time--collecting the right kinds of data is difficult. Child-only cases represent higher proportion of total cases-they've stayed stable, increased, while family totals have gone down (time limits and work requirements don't apply for children--what does this mean with respect to cost savings?)
10. Effects on subsets of the population are varied. Immigrants seem to have been hurt by reform, more so in some states than others (California is the most generous, but immigrants aren't flocking there).

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Booms and busts (the 'virtuous vs vicious' cycles)

The U.S. economy did very well in the mid 1990s, until about the turn of the decade. This works fine for block grants--more people are in the workforce, unemployment is down, and there are higher benefits for those on welfare. However, when economies declined in the last couple of years, especially since 9/11, social services have taken hits. TANF grants were designed to be distributed among 3 different functions--cash assistance for neediest families, job search/work support programs (child care, transportation, etc.), and services to help those who face barriers (e.g., education, training). However, with less money coming into the state through income tax and presumably (for most states) sales taxes, since people have less money to make purchases, more has to go to cash assistance. This affects the very design of welfare reform. In a sense, the three functions can cannibalize each other, and those who need the money most are not getting the other types of supports they might need, and those trying to get off welfare may see reductions in levels of benefits.

In periods of economic downturn--the linchpin of reform--supporting work--is likely to be underfunded. This also suggests that evaluating welfare reform's success will take a while--how resilient is it in the face of changes in the economy, unemployment, etc.?

Welfare to work--what's happened?

More people are working now-at least 50% of people who left welfare in late 1990s.

Are they better off?

• Half of these jobs are in service sector
• Median wage is $7.25/hr (benefits??)-what doesn't this tell us? What does it tell us about measurement?
• Only 27% of workers receiving food stamps (34% Medicaid)-more are eligible but not getting them
• 25% of people who left welfare and are working full time are still below poverty line
• 22% of those who left between 1997-99 are back on welfare
• Have benefits kept up with inflaction (hint: no)

As for current welfare recipients:

• As Weil says, more are working than under AFDC;
• There is less punishment of incentive (however, as has been pointed out in class, going to school may lead to a reduction or elimination in benefits; going into a low-wage job, no);
• Over half of current recipients who are working work 35 hrs or more/week
• Still many people are moving on and off of welfare (but now there's time limits)-1/4 to 1/3 of those leaving in a given quarter were back on in some form the next year
• There are critical barriers preventing/discouraging many from seeking work: poor health (physical or mental-46%); low formal education (38%); young children (under 1 yr-19%); low English proficiency; lack of work experience
• For those off of TANF who are working, there are still problems, but to a lesser degree: poor health (30%); low formal education (27%); child under 1 yr (11%); What are the odds those off TANF are better off?

The long term recipients-the chronically poor--are more likely to suffer from at least two of the following:

• Low formal education
• functional literacy
• lack of work experience, job skills
• health problems, substance abuse
• children with health problems
• domestic violence
• transportation and child care issues

Source: Weil, Alan. 2002. Ten things everyone should know about welfare reform. New Federalism: Issues and Options for States: Series A, No. A-52. Washington, DC: The Urban Institute. Available online at http://www.urban.org/UploadedPDF/310484.pdf