Welfare Reform 30 Years Later: How Has Government Assistance Changed? | American Enterprise Institute
This month marks the 30th anniversary of welfare reform legislated with bipartisan support by a Republican-controlled Congress and a Democratic President. No piece of social policy legislation has since passed with such a broad reach on a bipartisan basis. The 30-year anniversary is a good time to reflect on how government-provided cash assistance for low-income families has changed since August 1996. Despite attempts to paint welfare reform as failing the poor, child poverty rates remain near record lows—half of what they were in 1995, the year prior to welfare reform. Much of this success can be attributed to the reforms of 1996 and how the safety net has evolved since then.
To understand the complete picture of progress for children, we must look to the broader safety net. Welfare reform ended the traditional cash-welfare program, Aid to Families with Dependent Children (AFDC), an open entitlement program that discouraged work and marriage. AFDC was replaced by the Temporary Assistance for Needy Families (TANF) program, a block grant to states that gave them flexibility to operate their program but also required work and accountability.
Although welfare reform ended AFDC, it did not end the safety net. Evidence shows that despite TANF’s diminishing importance in the assistance of low-income families since 1996, the balance of the safety net has remained robust. Unlike AFDC, these benefits, including the earned income tax credit and food assistance, are meant to complement earnings rather than replace them. The additional support of these benefits along with earnings has ultimately aided many previously poor families out of poverty.
As Figure 1 shows, the share of poor, unmarried families receiving TANF declined dramatically after welfare reform. Yet almost all poor families have continued to receive assistance from either cash aid or the Supplemental Nutrition Assistance Program (SNAP). When considering the full safety net package, roughly the same share of poor unmarried families received some assistance in 2023 as in 1994, prior to welfare reform.
Source: TRIM3-adjusted Current Population Survey Annual Social and Economic Supplement (CPS ASEC) data.
Note: In 2014 the CPS ASEC introduced a new set of income questions to three-eighths of the survey population. Beginning in 2015, this change was fully implemented for all respondents. New changes included the removal of income screeners for SNAP and TANF questions, the separation of questions for income “source” and “amount”, tailored questions based on low income and senior reporters, distinguishing between retirement, disability, and survivor income, and focused questions for “Don’t Know/Refused” income responses. These changes to income reporting create a break in the historical trends. Thus, reporting from 2015 onward cannot be accurately compared to that of trends 2014 and prior. Estimates reflecting the new income change begin in 2015. Read more here. Because TRIM3 does not include EITC estimates for 2020-2023, we used CPS ASEC imputations.
Data deficiencies create challenges to accurately producing the trends identified in Figure 1. This is, in part, likely why so few understand the dynamics at play within the safety net. Benefit use is underreported on household surveys, including those conducted by the Census Bureau. On the other hand, administrative data for individual programs is difficult to link across the broader safety net throughout time. The result is that we often know about individual benefit program use at a given point in time but lack understanding of how this use fits within the broader scope of various safety net programs.
For this analysis, we used Urban Institute’s TRIM-adjusted dataset to estimate the receipt of cash aid and SNAP. TRIM3 uses administrative data to adjust the values of benefit receipt found in the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) – the US Census Bureau’s survey on income, employment, and other household characteristics. The goal is to capture a more accurate and reliable representation of benefit receipt for individuals. Although it is imperfect, it gives us a more reliable understanding of benefit receipt, which is typically unachievable with other data sources.
Importantly, these data show that while the mix of safety net benefits received by families has shifted across programs, overall government support reaches a similar share of poor families today as prior to welfare reform. As TANF receipt diminished, disability assistance (SSI), the earned income tax credit, and food assistance through SNAP has remained. The result is thirty years of declining child poverty rates.
