The legislation required healthy welfare recipients to work or go to school. The law also imposed a five-year lifetime benefits cap, and required participants to sign a personal responsibility statement.
In several of the states where solid welfare-recipient studies were the norm, the changes to the law revealed some ugly truths about the old program. In some places, 60 percent of recipients dropped out of the system because they would not work or sign the personal responsibility statement. This was partly because many already had jobs, but the caricature of the welfare queen proved right enough to give everyone pause.
Welfare rolls today remain a small fraction of the pre-1996 levels. Today's recipients are mostly women in their 20s and 30s who recently have become single parents. Very, very few lose benefits due to the five-year limit they are off the program long before that. The welfare queen is gone, and we are all the better for it.
The 1996 Welfare Reform Act also extended many benefits, including Medicaid, to the working poor. This is a great public-policy achievement. By allowing folks to retain health care, it reduced a huge barrier for poorer workers from entering the work force. For most of these workers, the only upward path was, and is, through work.
From 1996 to now, the ranks of low-wage workers have swelled. Workers who previously would have been on public assistance or labored in the shadow economy entered formal labor markets.
This provided the statistical argument that wages for low-wage workers were stagnant or dropping over the past decade or so. However, like many political arguments, it fails to recognize the huge benefits to both society and the low-wage workers of making productive labor a possibility.
Another result of this landmark legislation is that both public debate and public policy toward the working poor, and those in poverty, is far more complex and nuanced than it ever has been.
The unfortunate truth is that for folks stuck in poverty, and poor-paying work, economic policy offers no good options. In the long run, businesses look for the right workers, so job attraction won't directly help folks whose skills and education already place them into the ranks of the impoverished.
The fixes for poverty, and low-wage workers, are hard, deliberate and done family by family. This is why the cost of the welfare program didn't plummet with lower enrollment. Those still on the rolls needed all the available services. Sadly, this also means the likely effect of government on poverty and low-wage work will be largely ineffective.
Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at email@example.com.