Welfare Reform and Inequality: The TANF and UI Programs
Peterson, Janice, Journal of Economic Issues
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 significantly changed the nature of income support for poor families in the United States with the elimination of Aid to Families with Dependent Children (AFDC)-- the cash public assistance program designed to serve (primarily) poor, single-mother families--by replacing it with the Temporary Assistance to Needy Families (TANF) program. This legislation introduced a variety of changes in both the administration and financing of income support for poor families, as well as changes in eligibility requirements and benefits. The law shifted public assistance to poor families from a "federal entitlement program" to a program of "fixed block grants" administered by the states, it required that a percentage of TANF recipients in each state meet certain "work participation requirements" after two years, and it established a cumulative five year time limit on the receipt of cash assistance (with exemptions possible for up to 20 percent of fami lies). States may choose to implement a shorter time limit, and 20 states have done so [Blau, Ferber, and Winkler 1998, 302; Hobbie et al. 1999 21; Gornick 1999, 49].
These policy changes, in conjunction with a strong economy, have led to a substantial decline in the number of families receiving cash public assistance, and declining "welfare caseloads" have led politicians at all levels of government to declare welfare reform "a success." In April 1999, President Clinton hailed the "continuing decline in the number of welfare recipients," which had reached its lowest level in 30 years [Kamen 1999]. He continued on with his praise to note that "'April 15th may not be the most favorite day for Americans, but for these people' some of them paying taxes for 'the very first time in their lives,' the income tax deadline day is 'a cause for celebration"' [Kamen 1999]. In early December 1999, when welfare reform bonuses were given to states for moving the most welfare recipients into jobs, President Clinton again "trumpeted declining welfare rolls," stating that "Most people who get jobs are keeping them. They're getting raises and paying taxes, and teaching their children to hon or the dignity of work" [Meckler 1999].
At the time the welfare reform bonuses were announced, The Buffalo News published an article on welfare reform "success stories" in Erie County. New York. It featured the story of Ms. Sims. a 37-year-old mother with a seven-year-old daughter, who left welfare with a $6.75 an hour job as a cook for the federal Head Start program. Working a full 37-hour week Ms. Sims earns $239.75, or $959 a month before deductions, and with the provision of medical benefits and the availability of family members to provide child care, she is "getting by." Ms. Sims states that she is glad to be off welfare but wants people to understand that she is still poor. She says: "From what I hear, a lot of us who went off welfare are still poor. They call us 'working poor,' and let me tell you, it's not easy" [Palazzetti 1999].
Just how hard it is, is being documented by a growing literature examining the impacts of welfare reform [see, for example, Primus et al. 1999; Sherman et al. 1998]. This paper is concerned with one of the many questions that arise from these studies: What happens when one of the welfare reform "success stories," a single parent such as Ms. Sims who has left the TANF program for wage work, loses her job? That is, what is the nature of the unemployment safety net for former TANF recipients?
Given the rhetoric of President Clinton and others, celebrating the transformation of former welfare recipients from "dependent welfare mothers" into "dignified, tax-paying breadwinners," one might expect that former TANF recipients would have the protections that are generally assumed to cover working Americans, such as Unemployment Insurance (UI). Such an expectation is, however, very incorrect. …