<html><div style='background-color:'><DIV> <P>It's an obvious fraud. Any study that discounts the effects of relative economic prosperity in reducing poverty, an utterly robust result, is mere apologetics, ideology of the most vulgar sort. --jks<BR><BR></P></DIV> <DIV></DIV> <DIV></DIV>>From: Jacob Segal <JPSEGAL@RCN.COM> <DIV></DIV>>Reply-To: lbo-talk@lists.panix.com <DIV></DIV>>To: <LBO-TALK@LISTS.PANIX.COM> <DIV></DIV>>Subject: Gaining Ground? Measuring the Impact of Welfare Reform on Welfare and Work <DIV></DIV>>Date: Sat, 28 Jul 2001 06:21:04 +0800 <DIV></DIV>> <DIV></DIV>>Any comment on this Manhattan Institute study? <DIV></DIV>> <DIV></DIV>>Full report at <DIV></DIV>>http://www.manhattan-institute.org/html/cr_17.htm <DIV></DIV>> <DIV></DIV>>Jacob Segal <DIV></DIV>> <DIV></DIV>>Gaining Ground? <DIV></DIV>>Measuring the Impact of <DIV></DIV>>Welfare Reform on Welfare and Work <DIV></DIV>> <DIV></DIV>>June E. O¹Neill <DIV></DIV>>Department of Economics and Finance <DIV></DIV>>and Center for the Study of Business and Government, <DIV></DIV>>Baruch College, CUNY <DIV></DIV>> <DIV></DIV>>M. Anne Hill <DIV></DIV>>Department of Economics, Queens College, CUNY <DIV></DIV>>and Center for the Study of Business and Government, <DIV></DIV>>Baruch College, CUNY <DIV></DIV>> <DIV></DIV>> <DIV></DIV>>EXECUTIVE SUMMARY <DIV></DIV>> <DIV></DIV>>The report¹s main findings are as follows: <DIV></DIV>> <DIV></DIV>>* The number of families on welfare declined by 50 percent between the <DIV></DIV>>passage of welfare reform legislation in August, 1996 and the date for the <DIV></DIV>>most recent caseload statistics, September, 2000. <DIV></DIV>>* Most of the women heading these families have gone to work, contrary to <DIV></DIV>>the expectations of many welfare reform critics. The proportion of single <DIV></DIV>>mothers who work has increased dramatically since welfare reform, nearly <DIV></DIV>>matching the proportion leaving welfare. <DIV></DIV>>* Regression results indicate that Temporary Assistance to Needy Families <DIV></DIV>>(TANF), the federal program created in 1996 pursuant to the welfare reform <DIV></DIV>>law, accounts for more than half of the decline in welfare participation and <DIV></DIV>>more than 60 percent of the rise in employment among single mothers. <DIV></DIV>>* These results also show that although the booming economy of the late <DIV></DIV>>1990s contributed both to the decline in welfare and to the rise in work <DIV></DIV>>participation among single mothers, that contribution was relatively minor <DIV></DIV>>compared to the contribution of TANF, accounting for less than 20 percent of <DIV></DIV>>either change. <DIV></DIV>>* The decline in welfare participation was largest for groups of single <DIV></DIV>>mothers commonly thought to be the most disadvantaged: young (1829) <DIV></DIV>>mothers, mothers with children under seven years of age, high school <DIV></DIV>>dropouts, black and Hispanic single mothers, and those who have never been <DIV></DIV>>married. <DIV></DIV>>* Employment gains have also been the largest among disadvantaged single <DIV></DIV>>mothers: mothers who have never married, mothers between the ages of 18 and <DIV></DIV>>29, mothers with children under seven years of age, high school dropouts, <DIV></DIV>>and black and Hispanic mothers. <DIV></DIV>>* TANF¹s beneficial effects extend even to the most disadvantaged <DIV></DIV>>portions of the welfare-eligible population. TANF accounts for 40 percent of <DIV></DIV>>the increase in work participation among single mothers who are high school <DIV></DIV>>dropouts; 71 percent of the increase in work participation among 1829 year <DIV></DIV>>old single mothers; and 83 percent of the increase in work participation <DIV></DIV>>among black single mothers. <DIV></DIV>> <DIV></DIV>>INTRODUCTION <DIV></DIV>> <DIV></DIV>>The history of welfare reform in the United States has recorded many <DIV></DIV>>failures and few successes. To the surprise of many observers, however, we <DIV></DIV>>now appear to be witnessing a major policy success. Between January of 1994 <DIV></DIV>>and September of 2000, eight and a half million people left the U.S. welfare <DIV></DIV>>rolls and the proportion of the total population on welfare declined from <DIV></DIV>>5.5 percent to 2.1 percent, a level not seen since the early 1960s. Equally <DIV></DIV>>important, during the same time period single mothers‹the dominant group of <DIV></DIV>>welfare beneficiaries‹greatly increased their work participation as their <DIV></DIV>>welfare participation declined. Thus, the past six years have seen dramatic <DIV></DIV>>progress. <DIV></DIV>> <DIV></DIV>>These dramatic changes in welfare and work occurred during a time of radical <DIV></DIV>>change in welfare policy itself. The most notable feature of that change was <DIV></DIV>>the passage in August, 1996, of the Personal Responsibility and Work <DIV></DIV>>Opportunity Reconciliation Act (PRWORA), which terminated Aid to Families <DIV></DIV>>with Dependent Children (AFDC), the nation¹s basic welfare program since the <DIV></DIV>>1930s, and replaced it with Temporary Assistance to Needy Families (TANF). <DIV></DIV>>TANF is a striking departure from the past. Under AFDC an eligible family <DIV></DIV>>was entitled to an income from welfare as long as it had a child under the <DIV></DIV>>age of 18 present in the home. Under the new law, welfare is no longer an <DIV></DIV>>entitlement either in terms of its financing or its philosophy. As its name <DIV></DIV>>suggests, TANF is intended to serve as a temporary helping hand. TANF <DIV></DIV>>benefits are restricted to a lifetime limit of five years, and all adult <DIV></DIV>>recipients must fulfill a strict work requirement. <DIV></DIV>> <DIV></DIV>>PRWORA did not have an easy passage. Many welfare rights groups bitterly <DIV></DIV>>contested the ³tough love² character of the policy reforms which had been <DIV></DIV>>written into the legislation by the Republican-dominated Congress. Three <DIV></DIV>>high level officials in the Clinton Administration resigned in protest. <DIV></DIV>>Nonetheless, President Clinton eventually signed the bill into law. Critics <DIV></DIV>>expected the worst. Writing in the New Republic, Katha Pollitt said,² . . . <DIV></DIV>>we know how welfare reform will turn out, too: wages will go down, families <DIV></DIV>>will fracture, millions of children will be more miserable than ever.²1  <DIV></DIV>> <DIV></DIV>>The apparent failure of these predictions to come true has not stopped <DIV></DIV>>welfare reform critics. As increasingly positive news has been reported, <DIV></DIV>>critics of PRWORA have faced off with reform proponents over what is <DIV></DIV>>responsible for the record-breaking decline in the welfare rolls. Critics <DIV></DIV>>have alleged that most of the credit is due to the booming economy of the <DIV></DIV>>late 1990s, while reform proponents have contended that the law itself was <DIV></DIV>>the primary cause of these positive developments. Some critics concede that <DIV></DIV>>the law has reduced welfare rolls but claim that the result has been the <DIV></DIV>>impoverishment of families. Proponents point to the dramatic increase in <DIV></DIV>>work participation among those formerly receiving welfare. As of yet, <DIV></DIV>>however, there has been little definitive evidence to resolve the debate.2  <DIV></DIV>> <DIV></DIV>>This report is the first in a series documenting the actual results of <DIV></DIV>>welfare reform. Here we examine in detail the changes that have occurred in <DIV></DIV>>the welfare and work participation of single mothers. We ask whether single <DIV></DIV>>mothers with the greatest socio-economic disadvantages have left welfare and <DIV></DIV>>entered the labor force to the same degree as mothers with more education <DIV></DIV>>and skills. Equally as important, we use regression analysis to estimate the <DIV></DIV>>extent to which welfare reform efforts themselves can explain the changes in <DIV></DIV>>welfare and work, taking account of the booming economy and many other <DIV></DIV>>relevant factors. Our main conclusions are as follows: <DIV></DIV>> <DIV></DIV>>* Contrary to the concerns of many critics, women who are thought to be <DIV></DIV>>least able to become self-sufficient have left the welfare rolls in large <DIV></DIV>>numbers since the mid 1990s. Single minority mothers who never married and <DIV></DIV>>those who dropped out of high school were among those with the largest <DIV></DIV>>absolute declines in welfare participation. <DIV></DIV>>* Single mothers entered the work force nearly as quickly as they have <DIV></DIV>>left the welfare rolls. Large increases in work participation were made by <DIV></DIV>>those with educational and other disadvantages, mirroring the pattern of <DIV></DIV>>change in welfare participation. <DIV></DIV>>* TANF is the most important single factor accounting for the decline in <DIV></DIV>>welfare and the rise in work participation among single mothers in the years <DIV></DIV>>since TANF was implemented. Regression results show that TANF accounts for <DIV></DIV>>half of the decline in welfare participation and more than 60 percent of the <DIV></DIV>>rise in employment among single mothers. The decline in unemployment‹which <DIV></DIV>>we use as a proxy for the booming economy‹during the TANF period accounts <DIV></DIV>>for less than 20 percent of either the decline in welfare or the increase in <DIV></DIV>>work. <DIV></DIV>> <DIV></DIV>>These results strongly suggest that the positive news of the last few years <DIV></DIV>>is primarily the result of the passage of PRWORA. <DIV></DIV>> <DIV></DIV></div><br clear=all><hr>Get your FREE download of MSN Explorer at <a href='http://go.msn.com/bql/hmtag_itl_EN.asp'>http://explorer.msn.com</a><br></html>