August 18, 2001

WELFARE STUDY PROVIDES GOOD NEWS INDEED

Opponents of welfare reform warned dire consequences would follow the end of welfare as we used to know it, predicting a million children thrown into the streets to starve.

Didn't happen. And in retrospect, we can see that there was no reason to expect it. In states that had begun to experiment with reform several years before the federal law passed in 1996, no such consequences had been observed.

Nothing daunted, however, critics retreated to the position that the women who were leaving welfare rolls for the workplace were the ones with the best chances of success, while the population left behind became ever more disadvantaged and less capable of becoming self-sufficient.

Turns out, that didn't happen either. In a study for the Manhattan Institute, economists June E. O'Neill and M. Anne Hill of the Center for the Study of Business and Government at Baruch College of the City University of New York document that groups with the highest rates of welfare dependence show the largest declines, in absolute numbers, of welfare participation and the largest increases in employment. The entire report is available on the Web at manhattaninstitute.org.

The total welfare caseload is going down as fast as it went up. It first reached 1 million families in 1965, more than doubled to 2.2 million in 1970, only five years later, and added another million by 1972. Then it crept up to a peak of a little over 5 million in 1994.

By 2000, the 2.2 million total was down to what it had been in 1970 -- and sharply lower in relative terms, since the nation's population grew by 40 percent over those three decades.

The decline in welfare began in all categories in 1993, when for the first time a substantial share of recipients were covered by state reform policies. From 1993 to 1999, the proportion of single mothers on welfare dropped from 35.1 percent to 15.4 percent.

But within that group, over the same period, there are marked disparities

For never-married mothers, participation fell from 49.1 percent to 22.2; for previously-married mothers, from 25.4 to 9.6 percent.

For high-school dropouts, participation fell from 56.3 to 32.2; for mothers with at least a year of college, from 22.4 to 8.4 percent.

Similarly, the drops were largest for the youngest mothers and those having the youngest children.

And though race is not, strictly speaking, a disadvantage, black participation rates fell from 44.4 percent to 19.7, while white rates decreased from 26.7 to 10.6.

O'Neill and Hill point out that welfare reform changes the incentives to go on welfare most dramatically for those who would have been most likely to become long-term recipients.

Some may have decided, given the lifetime limit, ``to postpone entry to save up the five-year welfare allotment for a rainy day.''

Others ``may be shocked into rethinking their life situation and follow a different path - stay in school longer; otherwise acquire more work skills; postpone a first birth.''

Motivating just such rethinking was of course one of the goals of the 1996 reform. The law reflected a growing social consensus, supported by state reform efforts, that welfare was a trap, not a benefit; it deliberately changed the incentives in such as way as to convey that message to potential recipients.

Early reports from the 2000 census suggest that many young women have indeed gotten the message. One study found that the proportion of black children living with their two married parents had increased from 34.8 percent to 38.9 percent over five years.

As welfare participation declines, young girls are more likely to grow up knowing more mothers who work, their own or relatives or neighbors. One reason for O'Neill and Hill's results may be that this indirect effect is likely to be most powerful precisely where participation had previously been highest.

Welfare reform is up for reauthorization next year, and we can expect more sky-is-falling rhetoric. Compelling evidence to the contrary is good news.

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