Sapping of welfare success feared

Hopkins scholar suggests that economy may pose problems

January 21, 2001|By Nina Bernstein | Nina Bernstein,NEW YORK TIMES NEWS SERVICE

Four years after the national overhaul of welfare, economists and welfare researchers are questioning some of the truisms of its shrinking rolls, including the belief that people who got off the rolls were the ones best prepared to work and that the caseload increases that inspired the overhaul were caused by a rising number of single mothers on relief.

An analysis of several studies suggests that the women who have been most likely to leave the welfare rolls include many with difficulties - such as with serious health problems - that make them more likely to be thrown off for violating stricter rules, Robert A. Moffitt, a professor of economics at the Johns Hopkins University, said at a recent conference of welfare researchers and economists sponsored by the Federal Reserve Bank of New York.

By the same token, Moffitt said, many of the women best able to find work are still on the rolls because some states, such as California, have chosen to reduce benefits gradually for mothers who work while on welfare.

Historical trend

Historically, welfare caseloads have followed the economy, rising with unemployment and shrinking when more jobs and better wages are available. When caseloads rose sharply from 1990 to 1994, there was widespread concern that dependence on welfare had become a chronic problem of dependency by single mothers, rather than a temporary effect of bad times or life crises. That belief became a driving force behind Congress' decision in 1996 to end welfare as something people were entitled to if they met certain criteria.

But researchers who have since investigated the increase in caseloads of the early 1990s found that most of it did not come in the core program of benefits paid to single mothers and their children, said another expert, Rebecca Blank, a professor of public policy at the University of Michigan who evaluates a wide range of welfare studies under federal contract.

Instead, much of the change occurred because two-parent families became eligible for welfare in all 50 states, and there was a rapid rise in cases in which only children received benefits, including American-born children with parents who were undocumented immigrants, and children of the crack epidemic who had been taken in by relatives.

Picture after overhaul

Even the most ardent proponents of the federal welfare overhaul of 1996 could not have imagined a rosier national picture four years later.

The number of people on public assistance is half what it was at its peak in 1994. More recipients have found jobs. And the majority of low-skilled women appear to have increased their incomes, although evidence suggests that the most disadvantaged are suffering more.

But there is a glaring problem with this vision of success. Researchers responsible for evaluating welfare studies are cautioning policy-makers that it is impossible to tell how much in the picture reflects welfare policy changes, and how much is the product of an extraordinary economic boom that now shows signs of faltering.

Just when welfare changes were taking place, the opportunities for and rewards of work increased significantly nationwide, not only because of a general economic boom, Blank emphasized, but because of increases in the minimum wage and in the earned income tax credit.

Starting in the mid-1990s, wages among less-skilled workers began to rise for the first time in two decades. All these changes were "serendipitously producing a very large change in the rewards from and incentives to work, particularly among less-skilled women," she said.

"The public is notoriously ambivalent about issues relating to poverty and welfare," said Matthew Diller, a Fordham University law professor. "Americans both want people to leave the welfare rolls and want to prevent hardship, particularly among children."

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