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Welfare Policy

Last Updated: 2006

Federalism has had a profound impact on welfare policy in the United States. States and the federal government have been partners in developing and implementing welfare policies, and state innovations have had significant impacts on the evolution of national policy. States were the first to create welfare programs, aimed at ensuring that mothers could be at home with their young children. Progressive reformers sought but failed to expand Civil War pensions into social programs for working men and their families. States began enacting early in the twentieth century mothers’ pensions laws that permitted widows to stay at home with their children, rather than send them to orphanages. Unlike other countries that created a paternalist welfare state, aimed at providing social insurance and assistance to industrial workers, the United States opted for a maternalist welfare state, aimed at women and children. As the depth and breadth of the Great Depression overwhelmed the capacity of states to help poor families, the New Deal responded to the problems of poverty and unemployment, the fear of social unrest, and the growing belief that poverty was not the result of individual character flaws but was a social problem that could affect anyone by calling for the federal government to take responsibility for helping to fund welfare (Skocpol 1992; Bryner 1998). As Martha Derthick argues in her book Policymaking for Social Security, in the twentieth century, cooperation replaced conflict in federalism, and welfare policy is a prime example of how the federal government and the states have worked together to address poverty, although not always harmoniously (1979, 45).

Title IV of the Social Security Act of 1935 created the Aid to Dependent Children (ADC) program. The purpose of the program was to assist states, through matching federal funds, to “broaden and supervise existing mothers’ aid programs.” ADC was primarily aimed at helping widows care for their children, but evolved into a program to help divorced, deserted, and never-married mothers and their children. The Social Security Act contained eleven titles that created seven new programs reflecting a mix of national and federal-state partnership policies. Two programs were insurance programs: a national program, Old Age and Survivors or Social Security, and a state-run effort, Unemployment Insurance. The former was a national program, the latter state-run. Six public assistance programs were created to give grants to states, each aimed at a different problem or disability: Old-Age Assistance, Aid to Dependent Children, Aid to the Blind, Maternal and Child Welfare (hospital, nursing, and public health services for mothers and children), Vocational Rehabilitation, and Public Health. ADC or welfare was aimed at providing help to children who had been deprived of support because of the death or absence of a parent and to help keep families that had lost their primary breadwinner together. Each program had relatively specific standards for determining eligibility that were to be strictly enforced. Minimum benefit standards were set by the law that provided only meager assistance, but states could be more generous if they chose to.

The original act anticipated that welfare would primarily help states provide cash to needy children who have at least one disabled, unemployed, continually absent from home, or deceased parent. As mentioned, it evolved to also serve divorced, deserted, and never-married mothers and their children. By 1960 one of four children on welfare had been born out of wedlock, half lived in families split by divorce or abandonment, and half were black. As the task became more complicated, and more federal programs were added to promote employment, state experimentation through waivers became more important. Frustration grew along with the complexity of the program, and welfare reform became a regular refrain of presidential congressional candidates. Support for Social Security and related programs aimed at reducing poverty among the elderly grew in popularity, but welfare came to be seen more and more of a problem by both Republicans and Democrats.

Welfare was renamed Aid to Families with Dependent Children (AFDC) in a 1962 amendment to the Social Security Act. That law also provided increased benefits to help reduce poverty and funded more vocational training for welfare recipients. Most importantly, the program began permitting states to apply for waivers from federal rules for experimental, pilot, or demonstration projects. Under this amendment, for example, states could require unemployed adults to join community work and training programs in order to be eligible for AFDC benefits. The tremendous expansion of the welfare state and public assistance programs in particular under Lyndon Johnson’s War on Poverty triggered a major effort at welfare reform under Richard Nixon. By 1969, the War on Poverty was criticized by Democrats and Republicans alike but for different reasons. For some, it was too costly and recipients had become permanently dependent on assistance rather than using it for temporary relief. For others, levels of benefits varied widely and most of the money never really reached the poor. The debate over welfare reform eventually shifted to alternatives for providing services to poor families. Reform was pursued through state experiments aimed at welfare recipients including a mandatory job search, efforts to provide work experience, training programs, and an incentives approach that sought to increase the financial return welfare recipients could gain from working.

Unlike in other policy areas in the 1960s and 1970s, where federalism became more oriented toward congressional cooptation and command, welfare policy continued to reflect federal-state cooperation. Jimmy Carter campaigned against Washington and pushed for devolution of welfare policy: in announcing his welfare reform initiative when he took office in 1977, he also promised to replace welfare with a totally new system but was unable to get Congress to go along with his changes. Ronald Reagan gave New Federalism and welfare reform new life in the early 1980s. The Reagan administration sought to delegate more discretion to states through block grants and gave states waivers from federal mandates that permitted them to place new restrictions on recipients. States began to experiment with “welfare to work” proposals. Arkansas, for example, developed an innovative program under Governors Frank White and Bill Clinton that required welfare recipients to take job search classes, look for jobs under the supervision of a caseworker, and, for a few recipients, do unpaid work for public and private employers for a short period of time. Reagan ran into opposition when he tried to impose a major shift of responsibility for welfare to the states. States were unenthused and Congress was hostile to the New Federalism idea of turning full responsibility for AFDC and food stamps to the states.

Governors, led by Bill Clinton (D-AR) and Michael N. Castle (R-DE), played key roles in keeping welfare reform on the agenda and pushing Congress to pass the Family Support Act of 1988, which promised to “turn the welfare program upside down” and result in “lasting emancipation from welfare dependency” (Congressional Quarterly 1989, 350–51). They forged common ground between conservatives, who came to accept that federal and state governments have a responsibility to provide education, training, and support services to help AFDC recipients obtain and keep jobs, and liberals, who came to see that mothers of even small children should work. “This is an indication of the new federalism,” said Governor Castle. “It’s a policy that actually began at the state level and then bubbled up to the federal level, as opposed to almost any health and social service policy in the last 60 years, which started at the federal level and went back down.” Senator Daniel Patrick Moynihan (D-NY) said that without the work of the governors, “there would be no [welfare reform] legislation. The experimental mode of the states and their enthusiasm is what brought [Congress] to the debate.” Then-Governor Bill Clinton argued that “this was a very unusual thing both at the level of involvement of the governors with the Congress and the level of bipartisan involvement from the states and federal government crossing together” (Rovner 1988, 21).

After 1988, welfare reform largely became a state venture. Under a 1962 amendment to the Social Security Act, state welfare programs could diverge from the federal requirements if (1) states received permission (a “waiver”) from the secretary of Health and Human Services, (2) the change was cost-neutral to the federal government, (3) the state submitted to rigorous evaluations, and (4) the program conformed to the general AFDC program objectives, but states did not begin seeking waivers for their welfare programs in large numbers until the 1980s. Limited evaluation funds provided little incentive for states to follow through with quality evaluations, but the waiver process and the resulting evaluations served as important sources of information about the strengths and weaknesses of alternative approaches to changing welfare (Birnbaum 1995, 12). The Bush I administration continued to encourage state experimentation. By 1996, 43 states had received welfare waivers.

Welfare reform in states during this period was largely been driven by two forces: budgetary constraints and the demand to check the growth of welfare rolls in the late 1980s and early 1990s, and conservative efforts to attack welfare as inconsistent with values of work and self-reliance. Within that context, however, states took different approaches to welfare reform in the late 1980s and early 1990s. For some, welfare reform required building a new system from the bottom up through pilot or model projects. Other states built new systems from the top down by redefining agency missions, changing administrative structures, and redrawing agency boundaries. Still others pursued incremental changes in the way welfare systems operate (Waldfogel 1994, 2). A second dimension of reform centered on the basic direction states took. Some chose to operate a low-cost program that reached a substantial portion of the caseload, while others provided more intensive, higher-cost services to a smaller, more specific group, and a third group included both general low-cost services and specific, higher-cost programs for much smaller groups. A third set of choices focuses on the goals of the welfare program. For some, the objective was to reduce poverty, including long-term efforts, where necessary, to help recipients gain basic education and job training and skills. Others emphasized job placement and moving recipients as quickly as possible into the workforce. The latter goal also overlapped with reducing spending on welfare (Friedlander and Gueron 1990). State experiments imposed time limits and work requirements, tightened child support enforcement, allowed working families to keep more of their income, eliminated benefit increases for mothers on welfare who have additional children, and coordinated welfare and other services.

Bill Clinton’s 1992 presidential campaign chose as one of its major planks the pledge to “end welfare as we know it.” Part of his political claim to fame was that as governor of Arkansas, he had led governors’ efforts to reform welfare. He proposed a new approach to welfare that would provide health care and job training to welfare recipients and, after two years, require work of those who are capable. If private employment was not available, community jobs would be provided. Welfare reform was an important element of Clinton’s electoral strategy. His focus on breaking the “culture of dependence” for the 20 to 25 percent of recipients who were enmeshed in a cycle of poverty and dependency was significant: finally, a Democrat was willing to take on the problem of the urban underclass, one of the most persistent and difficult public policy problems in the United States.

By the mid-1990s there was more of a consensus over what to do about welfare than at any earlier time, but the Clinton administration argued that health care reform must come before welfare reform, since lack of access to health care was a major cause of welfare participation. The health care initiative became bogged down and the failure of Democrats to reform welfare, while at the same time leading the criticisms of welfare, left the door open for Republicans. In September 1994, congressional Republicans released their “Contract with America,” a campaign manifesto to which virtually all Republicans running for the House swore allegiance. Among the proposals was a promise to reform welfare. Republicans effectively used the contract to focus attention on the failures of the Democratic Congress, and swept to an astounding victory in November. The debate over what kind of welfare reform the Republicans had in mind started immediately. The speaker of the House elect, Newt Gingrich, said that Congress should consider cutting off welfare recipients after sixty days and turning over more care for the destitute to private charities and orphanages. The Republican Congress and Democratic White House fought throughout 1995 as welfare policy became intertwined with a host of other contentious issues.

Governors played a major role in the development of welfare proposals. Their power was a function of the alignment of governors who sought more flexibility and fewer mandates with Republicans in Congress who were in favor of a smaller national government. Republican governors also had some experience as welfare reformers and argued they knew more than members of Congress about how to remedy welfare’s defects. State successes with reducing welfare through work programs, time limits, and caps on benefits to children born to mothers on welfare were exactly the kinds of solutions members of Congress were looking for, and Republican governors from Wisconsin, Massachusetts, and other states with extensive welfare reform programs in place worked closely with members of Congress.

After a deadlock over the federal budget and other disputes had led to two presidential vetoes of welfare bills, governors developed a bipartisan proposal for welfare reform that reenergized the federal debate. In April 1995, a group of Republican governors began meeting to consider a welfare reform plan that would reject many of the central and most contentious issues in bills passed by Congress in 1995. Their plan, like the House bill, would eliminate the AFDC program and replace it with a lump-sum payment to the states. But unlike House Republicans, whose program of block grants contained numerous restrictions, the proposal would hand the money over to the states with few strings attached. All fifty governors issued a welfare reform proposal in February 1996, and Republican congressional leaders worked with governors to come up with a proposal acceptable to them and to the Clinton administration. The impending 1996 presidential election created an incentive for everyone in Washington to show they could address a difficult issue, and the new welfare law was passed in August 1996, replacing AFDC with Temporary Assistance to Needy Families. The law gave states considerable discretion as it replaced AFDC with a block grant, but also imposed a host of requirements on states, such as requiring them to spend on welfare at least 75 percent of what they had spent in the past and place at least 50 percent of their caseload in jobs by 2002. Cooperative federalism was still the dominant framework, but as would-be welfare reforms continued to be frustrated due to the intractability of some problems, Congress made aggressive use of federal strings attached to block grants as a way to compel states to take aggressive action.

Nevertheless, states continue to experiment with welfare policy. To encourage work, for example, they have experimented with eligibility rules, self-sufficiency programs, the structure of benefits, time limits, sanctions, the provision of support services, and participation requirements. The amount that states spend on cash assistance fell from 77 percent of total spending on welfare programs in 1997 to 44 percent in 2002, and the proportion of spending for services such as child care, training, and education rose from 23 percent to 56 percent. Welfare has largely been transformed into an employment program. The number of people receiving assistance has fallen from more than 14 million people in 1994 to 5 million in 2002. The 1996 law was scheduled to be reauthorized in 2002 (as of September 2005 reauthorization had not occurred), Congress and the states have been unable to resolve controversies surrounding difficult issues of reducing out-of-wedlock pregnancy, encouraging two-parent families, strengthening marriage, and helping recipients who have significant barriers to employment, and states continue to grapple with these difficult issues. Their successes and failures will provide the basis for the next round of welfare policy making by the national government, and the state experimentation is critical in policy areas like welfare policy where it is not clear how best to solve difficult problems. But that also means that recipients of assistance who are residents of innovative and effective states get help in becoming more self-sufficient while those in other states may not get the support they need.

SEE ALSO: Block GrantsContract with AmericaCooperative FederalismDevolutionFederal-State RelationsGovernors and FederalismGrants-in-AidHealth Care PolicyNew DealNew Federalism (Nixon)New Federalism (Reagan)Nixon, Richard M.Racial DiscriminationReagan, RonaldSocial Security Act of 1935U.S. Congress


“After Years of Debate, Welfare Reform Clears,” Congressional Quarterly (1989): 349–64; Matthew Birnbaum, Policy, Planning and Social Experimentation: The Sad Case of the Wisconsin 100-Hour Rule Experiment (Madison: Department of Urban and Regional Planning, University of Wisconsin–Madison, 1995); Gary Bryner, Politics and Public Morality: The Great American Welfare Reform Debate (New York: Norton, 1998); Daniel Friedlander and Judith M. Gueron, Are High-Cost Services More Effective than Low-Cost Services? Evidence from Experimental Evaluations of Welfare-to-Work Programs (New York: Manpower Demonstration Research Corporation, 1990); Julie Rovner, “Welfare Reform: The Issue That Bubbled Up from the States to Capitol Hill,” Governing (December 1988): 17–21; Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States (Cambridge, MA: Harvard University Press, 1992); and Jane Waldfogel, Integrating Child and Family Services: Lessons from Arkansas, Colorado, and Maryland (Cambridge, MA: Malcolm Wiener Center for Social Policy, Kennedy School of Government, Harvard University, 1994).