Within five years of the enactment of TANF, caseloads dropped by approximately 50%. As caseloads plummeted, employment and earnings among low-income single parents surged upward. Employment of never-married mothers increased by 50%, employment of single mothers with less than a high-school education increased by two-thirds, and employment of young single mothers between the ages of 18 and 24 approximately doubled. Child poverty among the demographic groups most affected by the new policy also fell dramatically. For a quarter-century before the reform, poverty among single mothers and among black children had remained stubbornly high. Immediately after the reform, poverty among both groups experienced a dramatic and unprecedented decline, reaching all-time lows. The welfare reform enacted in 1996 had three main elements, of varying degrees of effectiveness. First, the reform placed a five-year time limit on the receipt of TANF benefits. But the time-limit policy contained large loopholes; in the 15 years since welfare reform’s enactment, only about 2% of TANF recipients have been removed for reaching the five-year limit. Overall, the requirement has had little or no impact on caseload reduction.
The second main component of the reform, which changed the funding structure of cash welfare, had a greater effect. The old AFDC program was an open-ended entitlement: If caseloads went up, state governments received more federal funds. The new TANF program, by contrast, used a fixed, block-granted funding system. If caseloads increased, state governments were forced to bear the extra cost. If caseloads fell, however, state governments had to receive their fixed amounts of federal funding and could use the surplus for other state projects. This policy created enormous financial incentives for states to reduce lifelong welfare dependency among their populations.
But it was the third element — mandatory work requirements — that had the greatest impact. The 1996 law required that roughly a third of people on the TANF rolls in each state work or prepare for work as a condition of receiving aid. The TANF work requirements were the real motor behind welfare reform — the main reason that caseloads fell rapidly during the five years following the law’s enactment.
Under Section 407, around 30% to 40% of the “work eligible” adult TANF caseload (defined as non-disabled adults receiving TANF benefits) is required to engage in “work activities.” (The law nominally requires that 50% of this caseload be engaged, but provides a variety of exemptions and deductions that substantially reduce the effective participation rates.)
“Work activities” are defined very broadly to include unsubsidized employment, government-subsidized employment, on-the-job training, up to 12 months of vocational education, community-service work, job searches (for up to six weeks) and job-readiness training, high-school or GED education for recipients under age 20, and high-school or GED education for those 20 or over if combined with other listed work activities. Eligible individuals are required to engage in such activities for 20 hours per week if they have children under age six in the home and for 30 hours per week if they do not. Subject to the overall participation rate, states are free to determine which recipients will be required to engage in work activities.
On July 12, 2012, the Obama administration’s Department of Health and Human Services issued a policy directive rewriting the successful welfare-reform law of 1996. The HHS directive strikes directly at Section 407, allowing states to waive the TANF work requirement — thereby gutting the program of its most critical reform element and savaging both the letter and the intent of the ’96 law. This move was not just counterproductive, but illegal. In establishing welfare reform, Congress