TANF’s not all right

Nearly 20 years after the watershed 1996 welfare law, something is not right. The Temporary Assistance for Needy Families (TANF) program that replaced Aid to Families with Dependent Children (AFDC) in 1996 was intended to reduce poverty, primarily by improving employment and earnings outcomes for disadvantaged families. At the time, there was hope among some that the new, flexible welfare grant to states would lead to experimentation and more effective solutions to provide both a safety net and a ladder of opportunity. Though TANF seemed promising to some in its first four years, evidence from the last 15 raises alarms and suggests a need for new strategies to help disadvantaged families.

Alongside the booming labor market, enlarged tax credits, and expanded child care assistance in the late 1990s, the 1996 law appeared to some to have been largely successful. By 2000, the official poverty for children had fallen to a two-decade low, and prime age, never-married mothers with limited education had closed a 25-percentage-point gap in employment rates between similar women without children. During the weaker economy that followed, however, childhood deep poverty rose significantly, and while this can’t necessarily be attributed fully to TANF, research suggests that the program isn’t doing its part to help low-income families succeed.

Let’s start with how little TANF does to reduce poverty and deep poverty (i.e. living below half the poverty line) today. The Center on Budget and Policy Priorities (CBPP) finds that TANF benefits lifted just 1.4 million people out of poverty in 2005, compared to 5.1 million and 4.0 million by the Earned Income Tax Credit (EITC) and SNAP (formerly food stamps) respectively. Similarly, CBPP finds that AFDC lifted 62 percent of otherwise deeply poor children above half the poverty line in 1995, while TANF lifted just 21 percent out of deep poverty in 2005. This is particularly troubling, since early childhood poverty causes short- and long-term harm, which in turn poses enormous costs to our economy.

TANF’s poverty-reducing impact has dwindled in part because it reaches a very small share of people in poverty and its benefits have become meager. Just 25 out of every 100 families with children in poverty received TANF benefits in 2012, compared to 68 out of 100 in 1996. TANF benefits are so small that by 2014, they failed to afford fair market rent in every state.

And even as need grew dramatically during the largest recession since the Great Depression, assistance through TANF barely budged.

We wouldn’t necessarily worry about this declining role for TANF’s cash assistance in reducing poverty if TANF were effectively preparing disadvantaged families for labor market success. In reality, states largely failed to take advantage of their expanded flexibility to experiment in a rigorous and accountable way, instead diverting fungible dollars away from initiatives that offer job preparation and placement in adequate employment opportunities. TANF programs are measured by how few people participate, not how many succeed.

To be sure, other programs partially filled some gaps created by TANF. The SNAP program responded robustly during the Great Recession. Research suggests that the introduction of food stamps improved long-term health and educational outcomes for children born in the 1960s and 1970s. Similarly, the Earned Income Tax Credit (EITC) has expanded to further promote employment and supplement earnings, in turn shrinking child poverty and boosting infant and maternal health, educational achievement, adult earnings, and even retirement security. Data revealing the rise in childhood deep poverty already account for these two programs, however.

It’s clear that we need new strategies in place for helping low-income families prosper, and one approach is truly refocusing TANF on work. The pre-TANF New Hope Project in Milwaukee significantly improved parents’ employment and earnings and children’s outcomes, with society’s gains easily exceeding the program’s costs. Yet no state has followed through and implemented New Hope’s proven package of offering anyone who is willing to work full-time the jobs, benefits, and supports needed to stay out of poverty. With disadvantaged workers facing an increasingly inflexible and unforgiving labor market, successful ideas with bipartisan support like subsidized jobs, sector-based job training, increased access to early learning and care, and an expanded Child Tax Credit may offer a path forward for establishing a New Hope-style social contract.

Like SNAP and the EITC, TANF should offer families both economic security and opportunity. For many, TANF increasingly does neither. It’s time for policymakers to consider new strategies, including refocusing TANF itself on employment and child well-being outcomes, to help reverse the tide.

Dutta-Gupta is director of Project on Deep Poverty at the Georgetown Center on Poverty and Inequality, id141@law.georgetown.edu. Grant is program assistant at Project on Deep Poverty at the Georgetown Center on Poverty and Inequality, kag245@law.georgetown.edu.