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Diana M. Zuckerman [*]
Welfare reform has had dramatic repercussions for millions of adults and children in the country. So far, the results of the "natural experiment" of welfare reform have shown both benefits and problems. Although welfare reform became law in 1996, there have been legislative revisions and other policy changes aimed at making the law more effective and less punitive. The latest research indicates that welfare reform has had a major impact on the number of people who are receiving welfare benefits but not on the income of former welfare recipients. Research also suggests that there are families who are suffering as a result of welfare reform. In this article, I discuss how welfare reform has evolved and the implications for policy changes in the future.
Welfare reform has been an enormous "natural experiment" that has affected the lives of millions of families. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed welfare benefits from an entitlement program aimed at assisting the families of unemployed single mothers into a temporary assistance program geared toward getting those single mothers into the workforce as quickly as possible. Because the program was designed primarily for single mothers with dependent children under the age of 18, welfare reform has influenced the lives of millions of young women and children. Thus far, the dramatic changes in the law have not had the devastating impact that many researchers and policy experts predicted.
Welfare reform policies have been enmeshed with election year politics, especially during the last three presidential elections (1992, 1996, and 2000). In 1992, candidate Bill Clinton promised to change "welfare as we know it." At that time, Aid to Families with Dependent Children (AFDC) was widely criticized because it fostered dependency and created a subculture that lacked the role models of working parents. There was considerable concern, however, that the 1996 congressional proposal for welfare reform was dangerous because women on welfare would not be able to find and keep jobs. Many progressive advocacy groups made dire predictions about what would happen to the families that would lose their welfare benefits if the 1996 bill became law. President Clinton and many of his policy experts shared these concerns, but in August 1996, Clinton reluctantly signed the welfare reform bill into law. His signing of a bill that was designed primarily by the Republican-controlled Congress was considered an election year necessity after the defeat of many Democrats in the 1994 elections. After the President was reelected, as the economy improved and his approval ratings reached new heights, the Clinton administration was able to make some changes to welfare policies. And in 2000, President Clinton and Vice President Gore have pointed to the drop in welfare recipients and their continuing legislative efforts to support families making the transition from welfare to work as evidence that welfare reform has been a success for which they should receive credit.
The President and Congress made substantial legislative and policy efforts after 1996 that contributed to the success of welfare reform (White House, 2000). For example, the 1997 Balanced Budget Act included $3 billion in fiscal years 1998 and 1999 for welfare-to-work grains to help states and local communities move long-term welfare recipients and certain noncustodial parents into unsubsidized jobs. Funds could be used for job creation, job placement, and job retention efforts, including wage subsidies to private employers and other critical postemployment support services. Indian tribes could also receive up to $30 million of the welfare-to-work funds. For fiscal years 1998 and 1999, the federal government awarded 190 competitive grants to support local strategies to help noncustodial parents and individuals with limited English proficiency, disabilities, or substance abuse problems, or who have been victims of domestic violence find and keep jobs.
In a different kind of effort to help welfare recipients find jobs, the Welfare-to-Work Tax Credit, enacted in 1997, offers employers incentives to hire individuals on welfare. The law provides a credit equal to 35% of the individual's first $10,000 in wages in the first year of employment and 50% of the individual's first $10,000 in wages in the second year, for a total credit of up to $8,500. This credit complements the Work Opportunity Tax Credit, which offers a credit of up to $2,400 for the first year of wages for eight groups of job seekers. From 1997 to …