Welfare Reform: A Mother's Work
When the 1996 welfare reform bill was being debated in Congress, there were numerous predictions from scholars, editorial page writers and politicians that a welfare system that demanded work, imposed sanctions and operated under time limits would result in huge declines in family income and increases in poverty and homelessness.</br></br>Now comes the U.S. Census Bureau with its data on family income and poverty for 2000, thereby permitting informed judgments about whether welfare reform is driving poor families into the Grate Society. For the seventh year in a row, poverty was down. Further, black and Hispanic households had their lowest poverty rates ever, and the overall child poverty rate was lower than in any year since 1976. Similarly, black and Hispanic households both set records for all-time high incomes.</br></br>How is the nation making such remarkable progress against poverty and low income? The Census Bureau report shows that an important part of the answer is that welfare reform has led to huge increases in work and earnings by single mothers and a revolution in how government helps the poor. No longer does government help the poor primarily by giving them welfare benefits. The new approach is to encourage, cajole and, if necessary, force poor and able-bodied parents to take jobs. Then, once they are employed, government provides help through a system of work supports that includes cash earnings subsidies, primarily through the Earned Income Tax Credit (EITC), medical insurance, food subsidies, child care and housing.</br></br>The Census Bureau data show how this new approach works. Consider the group of about 2 million families headed by mothers with incomes under $13,000. In 1993 this group earned on average only $1,400 and had welfare benefits (primarily cash and food stamps) of $4,400 (all figures are adjusted for inflation). By 2000, their earnings had increased by 130 percent, to $3,100, and their welfare benefits had declined by a quarter to $3,300. In addition, they enjoyed a 300 percent increase in EITC income. The net effect was that total income for these mothers and children rose by a quarter, to $8,600.</br></br>Now consider the group of 2 million mothers with incomes between $13,000 and $21,000, a group that includes many mothers leaving welfare. Earnings increased from $4,900 in 1993 to $11,700 in 2000. Similarly, EITC income increased by nearly 200 percent. Although the welfare income of mothers in this group fell by nearly 60 percent, their total income increased by more than $4,000, to $17,600.