This week marks the 20th anniversary of “welfare reform,” the 1996 law passed by Congress and administered by President Bill Clinton that strictly limited the amount of federal cash assistance that the poorest Americans can receive — transforming the Aid for Families with Dependent Children program into the more restrictive Temporary Aid for Needy Families.
One of the main impacts of the law was to help double the number of American households living in extreme poverty in America — defined as living on less than $2 a day…
Luke Shaefer, a University of Michigan Social Work professor and one of the researchers who documented the rise in extreme poverty since the passage of welfare reform, told The Intercept that the claims of reduction in poverty and increase in employment were more true up until 2000. “Single moms did go to work, but it is unclear if welfare reform had much to do with it,” he said. The Earned Income Tax Credit “expansion is much more clearly important. And we know that the moms who left welfare were not any better off for it, and in some cases a lot worse off.”
Shaefer worked with sociologist Kathryn Edin on a book released last year that found before welfare reform, more than a million households with children were being kept out of extreme poverty thanks to federal assistance. By 2011, that had dropped to about 300,000. The researchers estimated that 1.5 million American households, including 3 million children, are today living at or below extreme poverty — double the number that it was in 1996.
The impact of welfare reform was particularly severe on women and minorities, with many female-headed families losing income and women being forced into low-wage work without benefits.
Shaefer points to research from Jim Ziliak, a prominent economist who studied the issue for the National Bureau of Economic Research. “Taken together, the results from leaver studies, demonstrations, and from national samples suggest that many women were worse off financially after welfare reform,” he writes. “Especially at the bottom of the distribution.”