Personal Responsibility and Work Opportunity Reconciliation Act of 1996

In 1996, after nearly three decades of gridlock, the stalemate over public assistance in the United States was dramatically broken when President Bill Clinton agreed to sign the Personal Responsibility and Work Opportunity Reconciliation Act. The 1996 law ended “welfare as we knew it,” in Clinton’s words, by repealing the sixty-one-year-old cash-assistance program to low-income families with children, Aid to Families with Dependent Children (AFDC). The old policy was replaced with a block grant program, Temporary Assistance for Needy Families (TANF), that gave states substantial discretion over the use of funds; however, the law also required states to meet quotas in moving recipients from welfare to work and also imposed strict time limits and work requirements on recipients. In addition, the law reduced the real value of food stamps and imposed work requirements for single individuals receiving them. It also banned legal immigrants from receiving public assistance for five years. The immigrant ban served as the major source of budget savings that came from the law. Subsequent legislation reinstated some forms of immigrant eligibility but not for TANF.

A whole new world of “get-tough” welfare reform was initiated. Access to assistance was tightened, and welfare shifted from an income support program to a behavior modification regime. Welfare reform was quickly heralded a success primarily because it accelerated the already ongoing declines in the welfare rolls from a high of 14.2 million recipients in 1993 to 5.3 million in March 2002—the lowest level in over thirty years. Welfare reform has undoubtedly greatly reduced reliance on welfare. Yet whether welfare reform has been a positive influence in the lives of the mostly single mothers with children who relied on public assistance has been harder to determine. Some families were undoubtedly helped by the reforms to achieve self-sufficiency through paid employment; others found the reforms innocuous because they were already ready to move from welfare to work. A large number confronted new bureaucratic complexities and the hardships of trying to survive without public assistance while working a low-wage job. Still others fell through the cracks, leaving welfare, not working, relying more on family and friends, and hoping that charity and handouts could prevent them from succumbing to the oppressive weight of grinding poverty.

The 1996 law significantly was also heralded as being a milestone in a “devolution revolution” that turned back power from the federal government to the states. This achievement is also more complicated than the slogan suggests. First, strictly speaking, devolution involves the transfer of constitutional authority from a higher level of government to a lower level, and this did not happen with the 1996 law. Second, the Welfare Reform Act actually increased federal power over state welfare programs by requiring them to meet quotas or suffer severe financial penalties for failing to move enough welfare recipients off the rolls. Third, the law limited to five years the time a recipient could receive federally funded TANF benefits, required work after two years of receiving TANF, and limited the time one could count training and education as work-related activities. States were given great latitude, however, in developing the rules and program features for moving recipients off the rolls. Even the shift from AFDC to TANF funding involved both increased federal power and increased state discretion. First, the law increased federal power when it abolished AFDC and replaced it with TANF because now states only received a fixed block grant for financing their state programs and had to conform their programs to that amount or otherwise develop the additional financing on their own. Previously the federal government reimbursed states for a portion of the benefits they paid out according a formula that ranged from 50 to 80 percent of the total depending upon the income of the state. At the same time, however, the block grant frees states to not have to match funding (as long as a state maintains its spending at a previous level), and it frees states to spend the block grant money largely however it wants even to the point of not providing cash benefits to families but instead using it to fund charitable services, including those offered by faith-based organizations.

At the outset, many observers debated whether welfare reform would lead to a “race to the bottom” or free states to become “laboratories of democracy.” Some feared that states would enter into a competition to tighten access to assistance to avoid becoming a “welfare magnet” that attracted welfare recipients to move from more restrictive to less restrictive states. In fact, 16 states utilized an option under the 1996 law to establish durational residency requirements to discourage “welfare migration.” Research on welfare migration has in recent years, however, shown this phenomenon to be largely nonexistent with less than 10 percent of all poor single mothers with children under the age of 18 moving out of state in a five-year period and most of them not moving to higher-benefit states. Instead, when moving out of state these mothers are most likely to return to their birth state regardless of benefit levels so as to be close to family and friends. In addition, the U.S. Supreme Court in 1999 struck down the durational residency requirements as unconstitutional infringements on the right to travel. Whether states have become “laboratories of democracy” is also questionable. While states have varied in their development of welfare reforms, most have followed the federal line of using restrictive program rules as the main way to move recipients from welfare to work.

In fact, state policy choices under welfare reform are less tied to a “race to the bottom” or “laboratories of democracy” than to internal state characteristics. A number of research studies have documented that a variety of state factors are important in determining to what extent states will adopt the get-tough approach that the federal law encourages. Most troubling is the finding consistent across studies indicating that the racial composition of the welfare population in the state is the most important predictor of state policy choices under welfare reform. The more a state’s welfare population is nonwhite, the more likely it is that the state will pursue a get-tough approach to welfare reform imposing stricter time limits, harsher penalties, and limitations of benefits.

Welfare reform was enacted for five years and its reauthorization was delayed for several more as divisions grew in Congress about how to improve the program. Conservatives have wanted to increase work requirements and accelerate the process of moving recipients off the rolls. Liberals have wanted more funding for supportive services, in particular child care, so that single mothers will be better equipped to support themselves once they leave welfare for paid employment. Additional concerns include the large numbers of families that are eligible for food stamps, medical assistance, child care, and other services but are not getting them once they leave welfare. State budgetary problems continue to plague efforts to address all these issues. Governors in particular have become increasingly leery of new federal plans that might require them to do more with less. The federalism of welfare reform has turned in a different direction and states are beginning to rethink how far this experiment can go before it creates unbearable hardship for taxpayers as well as for the single mothers who are being required to now survive on low-wage work.

SEE ALSO: Block Grant; Devolution; Grants-in-Aid; Personal Responsibility and Work Opportunity Reconciliation Act of 1996; Racial Discrimination; Welfare Policy