Racing to the Bottom and Other Ironies
of Welfare Reform
Welfare reform is important on several levels. It is, for instance, arguably the most significant manifestation of the much heralded “devolution revolution” promised by the 1994 Contract with America.1 After years of complaining that the federal government had become too powerful, and after perennial calls for a “new federalism,” the Contract proclaimed that Congress was going to take real action and hand power down to the states.2 The result was the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).3 States were to be given the discretion to become the “laboratories of democracy” that they were often said to be.4 Skeptics cautioned that the states might well use their new-found discretion to intensify an ongoing “race to the bottom,” competing to see who could outdo the others in cutting back on welfare benefits so as to avoid becoming a “welfare magnet” that would attract low-income persons from other states.5
In the following chapter I argue that neither the concept of “laboratories of democracy” nor that of a “race to the bottom” does justice to the ironies of welfare reform. Instead, welfare reform deconstructs itself. First, I examine the issue of devolution to suggest that welfare reform does not provide as much state discretion as is often assumed. Also, I criticize the “race to the bottom” argument on the grounds that there is very little evidence for welfare migration because the real value of welfare benefits does not vary as much as is commonly believed. However, while welfare migration and the variation in benefits on which it is premised are not substantial, I do accept that state policy makers act as if they were. They are still wary of revising welfare in ways that might make their states welfare magnets. This wariness will intensify under welfare reform, especially since the devolution created by the 1996 legislation is questionable.