Personal Responsibility And Work Opportunity Act - Welfare Reform Act Of 1996

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) is a United States federal law considered to be a major welfare reform. The bill was a cornerstone of the Republican Contract with America and was authored by Rep. E. Clay Shaw, Jr. (R-FL-22). President Bill Clinton signed PRWORA into law on August 22, 1996, fulfilling his 1992 campaign promise to "end welfare as we have come to know it".

PRWORA instituted Temporary Assistance for Needy Families (TANF), which became effective July 1, 1997. TANF replaced the Aid to Families with Dependent Children (AFDC) programâ€"which had been in effect since 1935â€"and supplanted the Job Opportunities and Basic Skills Training program (JOBS) of 1988. The law was heralded as a "reassertion of America's work ethic" by the U.S. Chamber of Commerce, largely in response to the bill's workfare component. TANF was reauthorized in the Deficit Reduction Act of 2005.

History

1930s to 1970s

AFDC caseloads increased dramatically from the 1930s to the 1960s as restrictions on the availability of cash support to poor families (especially single-parent, female-headed households) were reduced. Under the Social Security Act of 1935, federal funds only covered part of relief costs, providing an incentive for localities to make welfare difficult to obtain. More permissive Northern laws were tested during the Great Migration between 1940 and 1970 in which millions of people migrated from the agricultural South to the more industrial North. Additionally, all able-bodied adults without children and two-parent families were originally disqualified from obtaining AFDC funds. Court rulings during the Civil Rights Movement struck down many of these regulations, creating new categories of people eligible for relief.

Community organizations, such as the National Welfare Rights Organization, also distributed informational packets informing citizens of their ability to receive government assistance. Between 1936 and 1969, the number of families receiving support increased from 162,000 to 1,875,000.

After 1970, however, federal funding for the program lagged behind inflation. Between 1970 and 1994, typical benefits for a family of three fell 47% after adjusting for inflation.

Reasons for policy reversal

Attitudes towards women's roles

The legislation was designed to increase labor market participation among public assistance recipients. This represented a major departure from the protectionist legacy institutionalized in U.S. social welfare policy from the inception of "mother's pensions" beginning in the early 19th century. As such, the implicit message regarding "women's roles" was that full-time mothering was a luxury reserved only for people who could afford it.

Concern about dependency

The idea that the welfare-receiving poor had become too dependent upon public assistance also encouraged the act. The idea was that those who were on welfare for many years lost any initiative to find jobs. Those on welfare realized that taking up a job would mean not only losing benefits but also incur child care, transportation and clothing costs. Their new jobs probably would not pay well or include health insurance, whereas on welfare they would have been covered by Medicaid. Therefore, there are many reasons welfare recipients would feel discouraged from working.

1980s and 1990s

In the 1980s, AFDC came under increasing bipartisan criticism for the program's alleged ineffectiveness. While acknowledging the need for a social safety net, Democrats often invoked the culture of poverty argument. Proponents of the bill argued that welfare recipients were "trapped in a cycle of poverty." Highlighting instances of welfare fraud, conservatives often referred to the system as a "welfare trap" and pledged to "dismantle the welfare state." Ronald Reagan's oft-repeated story of a welfare queen from Chicago's South Side became part of a larger discourse on welfare reform.

Republican governor Tommy Thompson began instituting welfare reform in Wisconsin during his governorship in the late-1980s and early-1990s. In lobbying the federal government to grant states wider latitude for implementing welfare, Thompson wanted a system where "pregnant teen-aged girls from Milwaukee, no matter what their background is or where they live, can pursue careers and chase their dreams." His solution was workfare, whereby poor individuals, typically single-mothers with children, had to work to receive assistance. Thompson later served as Health and Human Services Secretary under President George W. Bush.

Passage of PRWORA was the culmination of many years of debate in which the merits and flaws of AFDC were argued. Research was used by both sides to make their points, with each side often using the same piece of research to support the opposite view. The political atmosphere at the time of PRWORA's passage included a Republican-controlled House of Representatives and Senate (defined by their Contract with America) and a Democratic president (defined by Bill Clinton's promise to "end welfare as we know it.")

2012

In July 2012, the Department of Health and Human Services released a memo notifying states that they are able to apply for a waiver for the work requirements of the TANF program, but only if states were also able to find credible ways to increase employment by 20%. The waiver would allow states to provide assistance without having to enforce the work component of the program, which currently states that 50 percent of a state's TANF caseload must meet work requirements. The Obama administration stated that the change was made in order to allow more flexibility in how individual states operate their welfare programs. According to Peter Edelman, the director of the Georgetown Center on Poverty, Inequality and Public Policy, the waivers would reduce restrictions that increase the difficulty for states in helping TANF applicants find jobs.

The change has been questioned by Republicans including Dave Camp, chairman of the House Ways and Means Committee and Orrin Hatch, who requested further details from HHS over concerns that the memo would remove the main focus of PRWORA. Mitt Romney attacked the measure, saying that Obama was "gutting welfare reform". However, PolitiFact stated that Romney's claim was "not accurate" and "inflames old resentments", giving it a "Pants on Fire" rating. CNN also reported that assertions that Obama was "taking the work requirement off the table" was false. In response to Republican criticism, Kathleen Sebelius, the Secretary of Health and Human Services said that states, including some with Republican governors, had previously asked Congress to allow waivers.

Passage in 104th Congress

A central pledge of Clinton's campaign was to reform the welfare system, adding changes such as work requirements for recipients. However, by 1994, the Clinton Administration appeared to be more concerned with universal health care, and no details or a plan had emerged on welfare reform. Newt Gingrich accused the President of stalling on welfare and proclaimed that Congress could pass a welfare reform bill in as little as 90 days. Gingrich promised that the Republican Party would continue to apply political pressure to the President to approve welfare legislation.

In 1996, after constructing two welfare reform bills that were vetoed by President Clinton, Gingrich and his supporters pushed for the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), a bill aimed at substantially reconstructing the welfare system. Authored by Rep. E. Clay Shaw, Jr., the act gave state governments more autonomy over welfare delivery, while also reducing the federal government's responsibilities.

It started the Temporary Assistance to Needy Families program, which placed time limits on welfare assistance and replaced the longstanding Aid to Families with Dependent Children program. Other changes to the welfare system included stricter conditions for food stamps eligibility, reductions in immigrant welfare assistance, and recipient work requirements.

Gingrich and Clinton negotiated the legislation in private meetings. Previously, Clinton had quietly spoken with Senate Majority Whip Trent Lott for months about the bill, but a compromise on a more acceptable bill for the President could not be reached. Gingrich, on the other hand, gave accurate information about his party's vote counts and persuaded the more conservative members of the Republican Party to vote in favor of PRWORA.

President Clinton found the legislation more conservative than he would have preferred; however, having vetoed two earlier welfare proposals from the Republican-majority Congress, it was considered a political risk to veto a third bill during a campaign season with welfare reform as a central theme. As he signed the bill on August 22, 1996, Clinton stated that the act "gives us a chance we haven't had before to break the cycle of dependency that has existed for millions and millions of our fellow citizens, exiling them from the world of work. It gives structure, meaning and dignity to most of our lives".

After the passage of the bill, Gingrich continued to press for welfare reform and increasing employment opportunities for welfare recipients. In his 1998 book Lessons Learned the Hard Way, Gingrich outlined a multi-step plan to improve economic opportunities for the poor. The plan called for encouraging volunteerism and spiritual renewal, placing more importance on families, creating tax incentives and reducing regulations for businesses in poor neighborhoods, and increasing property ownership for low-income families. Gingrich cited his volunteer work with Habitat for Humanity as an example of where he observed that it was more rewarding for people to be actively involved in improving their livesâ€"by building their own homesâ€"than by receiving welfare payments from the government.

Provisions

PRWORA proposed TANF as AFDC's replacement. The Congressional findings in PRWORA highlighted dependency, out-of-wedlock birth, and intergenerational poverty as the main contributors to a faulty system. In instituting a block grant program, PRWORA granted states the ability to design their own systems, as long as states met a set of basic federal requirements. The bill's primary requirements and effects included the following:

• Ending welfare as an entitlement program;
• Requiring recipients to begin working after two years of receiving benefits;
• Placing a lifetime limit of five years on benefits paid by federal funds;
• Aiming to encourage two-parent families and discouraging out-of-wedlock births;
• Enhancing enforcement of child support; and
• Requiring state professional and occupational licenses to be withheld from illegal immigrants.

In granting states wider latitude for designing their own programs, some states have decided to place additional requirements on recipients. Although the law placed a time limit for benefits supported by federal funds of no more than two consecutive years and no more than a collective total of five years over a lifetime, some states have enacted briefer limits. All states, however, allowed exceptions to avoid punishing children because their parents have gone over their respective time limits. Federal requirements have ensured some measure of uniformity across states, but the block grant approach has led individual states to distribute federal money in different ways. Certain states more actively encourage education; others use the money to help fund private enterprises helping job seekers.

The legislation also greatly limited funds available for unmarried parents under 18 and restricted any funding to all immigrants. Some state programs emphasized a shift towards work with names such as "Wisconsin Works" and "WorkFirst." Between 1997 and 2000, enormous numbers of the poor have left or been terminated from the program, with a national drop of 53% in total recipients.

According to the House Ways and Means Committee, "The major goal of Public Law 104â€"193 is to reduce the length of welfare spells by attacking dependency while simultaneously preserving the function of welfare as a safety net for families experiencing temporary financial problems." A major prong in this effort was to improve child support collection rates in an effort to move single parent families off of the welfare rolls, and keep them off. According to the Conference Report. "It is the sense of the Senate that â€" (a) States should diligently continue their efforts to enforce child support payments by the non-custodial parent to the custodial parent, regardless of the employment status or location of the non-custodial parent".

The reformed child support program attacks this problem by pursuing five major goals: automating many child support enforcement procedures; establishing uniform tracking procedures; strengthening interstate child support enforcement; requiring States to adopt stronger measures to establish paternity; and creating new and stronger enforcement tools to increase actual child support collections. The law envisions a child support system in which all States have similar child support laws, all States share information through the Federal child support office, mass processing of information is routine, and interstate cases are handled expeditiously. Section III (Child Support), Subtitle G (Enforcement of Child Support) contains 14 enforcement measures to improve the collection of child support, including potential denial or revocation of passports. One provision required the State Department to refuse or revoke passports for anyone who owed more than $5,000 in child su pport. Those provisions were upheld in Weinstein v. Albright (2001), Eunique v Powell (2002), In re James K. Walker (2002), Dept of Revenue v Nesbitt (2008), Risenhoover v. Washington (2008), Borracchini v. Jones (2009), and Dewald v. United States (E.D. MI 2009).

Immigrant welfare

A lesser known provision of PRWORA made immigrants entering the United States ineligible for federal welfare funds for five years after arriving in the United States. In light of the restrictions to federal funding under the law, states were allowed to grant aid out of their own funds to address the welfare needs of immigrants.

Benefit programs

Two of the key policies under PRWORA are the inclusion of immigrants in Temporary Assistance for Needy Families (TANF) and Medicaid. In 2009, 22 states had extended TANF benefits and Medicaid to immigrants. Five states, California, Hawaii, Minnesota, New York, and Washington, provide assistance to some non qualified immigrants. Oftentimes, these policies have had discriminatory effects towards minorities. Race has a strong negative correlation for TANF assistance granted to immigrants. States with large African American populations were more likely to exclude immigrants from the assistance program due to greater competition over welfare expenditures. In addition, the immigrant population has a positive correlation with the inclusion of Medicaid coverage considering the positive correlation between higher poverty and inclusion.

Costs to inclusion

A large body of research examines the way that racial composition, welfare structure, and immigrant population determine how states include immigrants in welfare. Research shows that a larger percentage of African-American recipients leads to stricter rules governing initial eligibility, less flexibility in welfare work requirements, and lower cash benefits to welfare recipients. There is also a negative relationship between cash benefit levels and percentage of welfare recipients. In analyzing the effects of PRWORA, Hero and Preuhs find that the most inclusive states offer more assistance and welfare generosity to immigrants. These states, however, face challenges in allocating funds due to a larger minority population and cut individual benefit levels per recipient. Moreover, these states assess the costs for inclusion based on racial compositions in the state. In terms of TANF benefits, the most inclusive states have had the largest decline in benefit levels. For example, Calif ornia has seen a 22.6% decrease in TANF benefit levels for a family of three.

Immigrant population density and states’ immigrant Medicaid eligibility rules interactively shape the native-foreign born Medicaid coverage gap. States with lower immigrant populations have negative and significant marginal effects on the native-foreign inequality in Medicaid coverage. Additionally, immigrant eligibility is conditional on the annual changes of states’ immigrant population density; where states with decreases in foreign-born population densities have negative effects on eligibility. Immigration brings states with exclusive Medicaid policies and a small immigrant population increases in the participation gap between native and foreign populations. In states with inclusive Medicaid policies and small immigrant population, immigration does not affect the participation gap. In states with a large immigrant population, immigration decreases social inequality regardless of the Medicaid policy.

Addressing concerns

Increases in descriptive representation for Latinos offsets the negative effects of Latino population size on social welfare policy. A minority voice in representative bodies acts a mechanism for interest representation and mitigates the effects of racial resentment. Regardless of incorporation, welfare effort and TANF benefits decline as the Latino population grows from a nominal size to 10 percent of the population. After that point, incorporation influences policy in a distinct manner. While incorporation is a function of population, it is not perfectly responsive considering the populations that would perceive benefits (i.e. population greater than 10%) only grew from five states in 1984 to ten in 2001. The remaining states exhibited negative relationships between Latino population and welfare generosity with legislative incorporation not overcoming this phenomenon.

The last major reform effort of PRWORA was in 2002 when the Senate Finance Committee approved a bill to reauthorize legislation to restore some of the benefits stripped by the act. The bill reauthorized federal funds for TANF and healthcare services. The House, however, failed to authorize the bill.

Ban on food stamps for drug felons

One component of the PWRORA was a lifetime ban on the use of food stamps through the Temporary Assistance for Needy Families program for people convicted of drug felonies. Although it applied to all 50 states by default, states were also given the option to opt out of the ban. As of 2014, 40 states had opted out of this policy, while ten had not.

Criticism

Frances Fox Piven said that the problem with AFDC was not a problem with the welfare system, but with low-wage work:

Logically, but not in the heated and vitriolic politics created by the attack on welfare, a concern with the relationship of welfare to dependency should have directed attention to the deteriorating conditions of the low-wage labor market. After all, if there were jobs that paid living wages, and if health care and child care were available, a great many women on AFDC would leap at the chance of a better income and a little social respect.

Three assistant secretaries at the Department of Health and Human Services, Mary Jo Bane, Peter B. Edelman, and Wendell E. Primus, resigned to protest the law. According to Edelman, the 1996 welfare reform law destroyed the safety net. It increased poverty, lowered income for single mothers, put people from welfare into homeless shelters, and left states free to eliminate welfare entirely. It moved mothers and children from welfare to work, but many of them are not making enough to survive. Many of them were pushed off welfare rolls because they didn't show up for an appointment, because they could not get to an appointment for lack of child care, said Edelman, or because they were not notified of the appointment.

Feminist critics, such as Barbara Ehrenreich, said that PRWORA was motivated by racism and misogyny, using stereotypes of lazy, overweight, slovenly, sexually indulgent and "endlessly fecund" African-American welfare recipients. PRWORA assumed that out-of-wedlock births were "illegitimate" and that only a male could confer respectability on a child, said Ehrenreich. PRWORA dismissed the value of the unpaid work of raising a family, and insisted that mothers get paid work, "no matter how dangerous, abusive, or poorly paid".

Another criticism placed on the PRWORA by some scholars is that its transition to work provisions negatively affects low-income mothers enrolled in the program ability to find a job. It affects them because the single mothers enrolled in TANF tend to have lower rates of literacy, and therefore finding employment that within the time frame of the "workfare" component becomes more difficult, or leads to underemployment. The scholars who make this point also relate the underemployment to lower income rates among single-mothers enrolled in TANF, defeating the purpose of the transition to work provisions.

Consequences

Welfare and poverty rates both declined during the late 1990s, leading many commentators to declare that the legislation was a success. An editorial in The New Republic opined, "A broad consensus now holds that welfare reform was certainly not a disasterâ€"and that it may, in fact, have worked much as its designers had hoped."

Impact on federal budget

CBO estimated in March 1999 that the TANF basic block grant (authorization to spend) would total $16.5 billion annually through 2002, with the amount allocated to each state based on the state's spending history. These block grant amounts proved to be more than the states could initially spend, as AFDC and TANF caseloads dropped by 40% from 1994 to 1998 due to the booming economy. As a result, states had accumulated surpluses which could be spent in future years. States also had the flexibility to use these funds for child care and other programs. CBO also estimated that TANF outlays (actual spending) would total $12.6 billion in fiscal years 1999 and 2000, grow to $14.2 billion by 2002, and reach $19.4 billion by 2009. For scale, total spending in FY 2000 was approximately $2,000 billion, so this represents around 0.6%. Further, CBO estimated that unspent balances would grow from $7.1 billion in 2008 to $25.4 billion by 2005.

Economic impact

The law's effect goes far beyond the minor budget impact, however. The Brookings Institution reported in 2006 that: "With its emphasis on work, time limits, and sanctions against states that did not place a large fraction of its caseload in work programs and against individuals who refused to meet state work requirements, TANF was a historic reversal of the entitlement welfare represented by AFDC. If the 1996 reforms had their intended effect of reducing welfare dependency, a leading indicator of success would be a declining welfare caseload. TANF administrative data reported by states to the federal government show that caseloads began declining in the spring of 1994 and fell even more rapidly after the federal legislation was enacted in 1996. Between 1994 and 2005, the caseload declined about 60 percent. The number of families receiving cash welfare is now the lowest it has been since 1969, and the percentage of children on welfare is lower than it has been since 1966." The effe cts were particularly significant on single mothers; the portion of employed single mothers grew from 58% in 1993 to 75% by 2000. Employment among never-married mothers increased from 44% to 66%. The report concluded that: "The pattern is clear: earnings up, welfare down. This is the very definition of reducing welfare dependency."

Criticism

Critics of the law argue that poverty in America increased from 1979 onward after Reagan's presidential campaign criticized deficit spending and that the temporary large reduction in the number of people collecting welfare was largely a result of steady and strong economic growth in the years following enactment of the law. Political scientist Joe Soss questions the definition of success, asking whether "success", as measured by caseload reduction, was merely a political construction for policy makers to easily claim credit in front of their constituencies. In analyzing the effects of welfare reform, he notes that caseload reduction is not very demanding, especially compared to improving material conditions in poor communities:

The TANF program does not offer benefits sufficient to lift recipients out of poverty, and despite a strong economy, the majority of families who have moved off the TANF rolls have remained in poverty. Considerations of another traditional economic goal, reduction of inequality, only makes matters worse. Welfare reform has coincided with massive growth in income and wealth disparities; it has done little to slow the expansion of inequality and may have actually accelerated the trend. Has welfare reform created job opportunities for the poor? Has it promoted wages that allow low-wage workers to escape poverty? In both of these areas, the economic story remains the same: we have little evidence that reform has produced achievements that warrant the label of success.

Jason DeParle of the New York Times, after interviews with single mothers, said that they have been left without means to survive, and have turned to desperate and sometimes illegal ways to survive, including shoplifting, selling blood, scavenging trash bins, moving in with friends, and returning to violent partners.

Diana Spatz, executive director of Lifetime, a statewide organization of low-income parents in California, advocates for the repeal of PRWORA because it prevents women from doing what she did prior to its passage, earn her bachelor's degree while supported by welfare.

Earned Income Tax Credit Effect

Besides the economic trends occurring during the passing and implementation of PRWORA; researcher's cannot exactly pinpoint to the exact factors that led to the decrease in enrollment in AFDC/TANF, even in times of economic downturn. Some Labor Economists argue that the continuing decline in AFDC/TANF enrollment was not due to a rise in the standard of living but offset by an exponential growth in the Earned Income Tax Credit, that by 2012 was the largest cash-benefit entitlement program in the United States.

Dot Com Bubble and Crash of 2008

The first real tests for the effects on income and household financial health under PRWORA were the recession caused by the 2001 tech bubble crash and the 2008 economic meltdown cause by the housing bubble and the instability of the financial markets. During these two periods of economic problems, the enrollment in TANF followed a downwards trend. But macroeconomic indicators like the unemployment rate, the number of children in poverty and extreme poverty, and single-parent households below the poverty line followed an upwards trend with sharp increases during the late 2007-2009 recession. Indicating that enrollment in the program didn't track poverty, critics of welfare reform point to this as a failure of the PRWORA.