TANF

To me, it seems impossible to draw hard and fast lines between social insurance and public assistance.

—Arthur J. Altmeyer, aka “Mr. Social Security”¹

Temporary Assistance for Needy Familes (TANF) is conventionally thought of as a "welfare" program for parents with children—that is, a program that provides assistance to destitute non-workers who have no or very little work experience. This understanding of TANF—captured in the phrase "welfare to work"—keeps it from playing an effective role as part of America's larger system of social insurance. TANF should be thought of as a necessary part of America’s system of social insurance rather than as a welfare program that exists outside of, and has little in common with, that system.

Viewed at the federal level, TANF lacks many of the features that are common to most social insurance programs. It provides no federal guarantee of income support to beneficiaries. The block grant structure of the program, combined with its broad purposes and lack of requirements that funds be spent on any particular benefit, leave it having little in common even with other federally funded means-tested programs. However, the first purpose of the program, the provision of assistance so that “children can be cared for in their own homes” clearly establishes the social-insurance nature of the program.

The most common use of TANF funds is the provision of income supplements to “needy” families—families that lack adequate incomes due to unemployment or low earnings. Every state has a TANF program that provides such supplements, although there is great variation among states in the extent to which employed families with low earnings can receive income supplements, the amount provided to unemployed and employed families, and the requirements that families must meet in order to receive supplements.

If the core purpose of social insurance is to provide income security against common risks, there is little question that TANF income supplements are properly viewed as part of the American system of social insurance. Like other social-insurance programs, TANF income supplements provide families with protection against the risk of inadequate labor income inherent in a market economy. While it is true that TANF income supplements are generally conditioned on participating in various work, training, or social-services activities, such requirements are not inconsistent with social insurance. UI recipients, for example, may be required to register for work with the Employment Service and usually must be “able and available” to work. An injured worker receiving workers compensation benefits may be required to engaged in rehabilitation activities.

The conventional wisdom that TANF income supplements are “welfare” rather than social insurance is bolstered by the belief that most parents who receive TANF income supplements are able-bodied and have no work experience. This belief is incorrect. Most parents who receive (or should be receiving) help from TANF are workers. For example:

• More than two-thirds of families with below-poverty-level incomes included one or more workers in recent years.
• An HHS study of TANF beneficiaries in six states found that nearly 4 in 5 have worked at least half their adult years.
• Most families who receive TANF income supplements in a typical month are either working during that month, or are working at some point during the year in the year they receive TANF.

Of course, TANF income supplements are not limited to families with parents who are employed or have significant work experience. TANF is also an income supplement program for families with limited or no labor force experience, for example, very young parents who are still in school, recently divorced or separated parents (so-called “displaced homemakers”), and persons living in depressed areas with extremely limited job opportunities.

However, providing insurance for such individuals is not inconsistent with early historical understandings of social insurance. In an article in which he noted the conventional distinction between social insurance and public assistance, Arthur Altmeyer, went on to say: “Yet they are of the same kind, although people sometimes hold that those arising out of contributions paid by a person, or on his behalf, are the more valid. I do not believe that such a distinction can be made.” Similarly, in one of the first books written by an American on social insurance, Social Insurance: A Program of Social Reform (1910), Columbia Professor Henry Roger Seager explained that social insurance “consists in protecting wage-earning families which have developed standards of living from losing them, and in helping wage-earning families without standards to gain them.”

This is not to say that the TANF program as a whole should be thought of exclusively as a social insurance program. TANF funds are used for a variety of purposes other than supplementing the inadequate income of workers. Some of these purposes, such as the provision of child care, can be thought of as falling within the rubric of social insurance, while others, such as teen pregnancy prevention programs, clearly fall outside of the scope of social insurance since their primary purpose is not to provide protection against immediate economic insecurity.

One way to understand the importance of TANF income supplements in the American social insurance system is to consider how it fills gaps in “coverage” and benefit adequacy. In this sense, TANF is complementary to other social insurance programs that provide income support or supplements, including unemployment insurance (UI), the Earned Income Tax Credit (EITC), and SSI. Moreover, the existence of these programs does not eliminate the need for TANF supplements.

For example, TANF helps make what is sometimes called the “work support” system whole by ensuring that working families have supplemental protection against very low-earnings. For parents with low-wage or part-time jobs, TANF income supplements can make the difference between living above or below the poverty line. Moreover, because TANF income supplements are typically provided to working families on a monthly rather than an annual basis, they can play a more immediate role than the EITC in reducing hardships caused by low earnings or unemployment.

Similarly, TANF helps fill gaps in disability insurance coverage. Supplemental Security Income (SSI) provides income support to persons with disabilities who are not eligible for Social Security disability insurance or are eligible for very modest benefits. SSI is limited to individuals, however, and thus does not provide supplemental income for children of a parent with a disability. The SSI eligibility criteria are stringent.  SSI’s definition of “disability” is the same as that used in Social Security. A person must have a physical or mental impairment that will last at least 12 months or is expected to result in death. In addition, the person must prove that he or she is not able to engage in any “substantial gainful activity” as a result of the impairment. The definition is stricter than definitions commonly used in private disability insurance.  It also is stricter than definitions used in many public employee benefit systems for federal, state, or local employees.

In my next post in this series, I'll discuss how understanding TANF as a part of a larger system of social insurance can provide a better lens for thinking about the program's future.

Three cheers for the NY Times ed board for writing an editorial pointing out that for so long as low-wage jobs are no better at alleviating poverty than cash assistance used to be, it’s the role of an effective government to correct the market failure by providing employment benefits.

Welfare reform has often been touted as a triumph of market incentives. But when it passed in 1996, government was deeply involved, offering supportive policies and programs, including a higher minimum wage, expanded aid for child care, a big expansion in the earned income tax credit to ensure that work paid better than welfare, and an extension of health insurance to all low-income children.

So, I’m going to take a little bit of exception to Shawn’s recent entry when he says that welfare reform is “short-hand for an important and progressive shift in American social policy… toward a recognition that most poor parents are workers with jobs that don’t pay enough to make ends meet.” I think it’s more accurate to say that this is what welfare reform has the potential to be at its best. And we shouldn’t lose sight of the fact that there are plenty of social conservatives who would like nothing more than to ensure that welfare reform lives up to its worst.

I plan on doing some blogging on the so-called "10th Anniversary of Welfare Reform" (it's really the 13th Anniversary of the Welfare Reform—the most important policy element of welfare reform, the expansion of the EITC, happened in 1993—but whatever) later this month. Until then, I recommend you read this MaxSpeak posting in which Max takes on one of the dumber recent op-eds on the subject.

This USA Today article published on the 10th anniversary of House passage of the welfare bill is a CLASSIC example of media creating and perpetuating public perception on poverty.

Most readers will "file" this story as soon as they see the word welfare in the title - because they already know this story. (Like, you know, it’s all about “lazy dependent people and failed government programs”, basically.) The "real people" faces at the beginning of the article are likely to confirm these readers' beliefs.

The reporter starts the article with the example of one welfare recipient some might consider a failure, followed by another former recipient presented as a success. Many readers will see the first - Michelle - as having made some poor choices; they'll see her failure to stay in one job as some failing of her own. The second example - Mary - confirms the readers' belief that "anyone can make it if they just work hard enough". These conclusions are consistent with the dominant frames about personal responsibility - frames that fail to help people understand the systemic and economic issues involved: For example, "Poverty is an individual – not a systemic – problem”; and "People are poor because of bad choices, moral weakness, or character flaws."

This article doesn't in any way move the debate forward.

APHSA has posted a copy of the new TANF rules. The rules will be published in the Federal Register tomorrow with a 60-day public comment period.

From an AP story about the Oklahoma race for Governor, we learn more about the conservative talking points. And observe how the media reinforces a dominant narrative:

Republican Rep. Ernest Istook, known for pushing prayer in schools and other conservative causes, says Democratic Gov. Brad Henry has led Oklahoma down the wrong path by enacting a lottery and promoting more government.

…..He said the lottery and tribal gaming programs backed by Henry are not producing enough money to pay for their social costs. He also said Henry had betrayed the people by getting a $1 tobacco tax passed that mostly benefits tribes who pay at a low tax rate.

While saying Henry wants to ``throw money'' at problems, Istook said he would promote personal responsibility over government programs, which he blamed for creating more social ills than they fix.

….``We never finished the job of welfare reform,'' Istook said of one of his priorities as governor. He suggested time limits that were placed on the Aid to Families with Dependent Children program should also be placed on such things as food stamps, housing subsidies and Medicaid.
….
He said with so many people on the government dole, it has exacerbated the immigration problem by creating a surplus of jobs that serve as a magnet to attract illegal immigrants from Mexico.

....As governor, Istook said he would use his connections in Washington to get federal waivers to change some state welfare programs.

``I realize that some people don't like the idea of taking an unglamorous job, but it's better than asking the taxpayers to support you, which causes millions of dollars of public assistance as well as billions to deal with illegal immigrants, that want to take the jobs.'' ….

The federal legislation that established TANF will be ten years old this August. In making the case that TANF has "worked", supporters of the law commonly point to the decline in poverty that occured in the 1990s. They have less to say about rising poverty between 2000 and 2004 (the most recent year for which we have poverty data).

An interesting new research paper by Austin Nichols of the Urban Institute looks at both the decline in poverty in the 1990s and the more recent rise in poverty. Nichols concludes that "the drop in child poverty during the 1990s seems to be largely due to improvements in the job market, especially for less-educated workers ...." As for the increase in poverty since 2000, Nichols finds that it had less to do with declining work effort and more to do with "the minimum wage (especially for less-educated families) and local unemployment rates."

Here's why I don't think it's puzzling that conservatives oppose child care funding: they don't want the federal government to be stuck with the cost of these reciprocal employment benefits. So, they endeavor to stigmatize the parents and make it easier to cut/harder to defend federal funding for child care.

This motivation explains why the debate over reauthorization of the Temporary Assistance (welfare!) block grant turned into a debate about work requirements for the remaining few, non-working cash assistance recipients - when many more low-wage workers were the true beneficiaries of the block grant. These workers got help with child care, transportation, and other employment benefits. In order to reduce support for the block grant and its benefits to low-wage workers - conservatives focused all of the public debate on cash assistance issues: work requirements, etc. Thus, the debate was as though state and local policymakers STILL used all the funding for "welfare checks" - just like 1996. Conservatives understand that there was public support for "making work pay" and they wanted to avoid a debate over the inadequacy of funding for those services.

And they succeeded. They are just on to the next phase of their campaign now: stigmatizing what's left of the federally funded system of employment benefits for low-wage workers.

In this editorial, entitled “Welfare by Another Name”, Investor’s Business Daily urges Republicans to “slow the growth of the Earned Income Tax Credit right now”. This editorial is the latest salvo in the conservatives’ campaign to end public funding of work supports for low-wage employers and workers. See Avoiding the Welfare Trap , (March 4, 2006). The editorial’s author offers the now familiar argument that low-wage workers are the new welfare recipients.

A couple of years ago I wrote a paper for CBPP that synthesized a body of recent research on welfare reform (mostly conducted after 2000). Much of this research raised questions about the conventional wisdom that welfare reform was an uneqivocal success. Probably because it didn't jibe with the conventional storyline about welfare reform that was developed in the late 1990s, this research has gotten less attention than it should in media and policy circles.

A research paper published in most recent issue of the respected journal Health Services Research provides one more piece of evidence that should raise doubts about the conventional wisdom on welfare reform.

In February, Bush administration officials extended their campaign to label low-wage workers as dependent welfare recipients. Department of Health and Human Services Secretary Michael O. Leavitt announced plans to eliminate the Child Care Bureau and merge administration of the child care block grant with the Temporary Assistance to Needy Families Block Grant. In a letter to Congress, Leavitt described the decision as necessary “to improve communication with internal and external customers and better provide technical assistance relative to the block grant programs administered by these two offices.” Leavitt also reveals the administration’s plan to ensure that the child care block grant is increasingly perceived as just another welfare program: “The enhanced work requirements under the Deficit Reduction Act [AKA, reauthorization of the Temporary Assistance to Needy Families Block Grant] will require close coordination between the Temporary Assistance to Needy Families programs and the child care programs to assure that states are able to move current welfare recipients into employment.”

This is bad news. And it is a reminder of the need to consider carefully our next steps with long-term public perception in mind.

The notion that increases in nonmartial births have been driven by the AFDC (now TANF) program played an important role in arguments made by proponents of block granting AFDC in the early 1990s. The research support for this claim has always been weak. In 1998, economist Robert Moffitt conducted an extensive review of econometric research on the matter. While he conducted from his review that welfare was likely to have "some" effect on family structure, he also acknowledged the "considerable uncertainty in the literature" and the "large number of studies reporting insignificant estimates." More generally, nonmartial births rose in the late 70s and the 80s, even as the real value of (already low) welfare benefits declined, the reverse of what one would expect looking if there was a relationship between benefits and nonmartial births.

Doug is absolutely right that progressives need to start working on a new TANF story and that this story needs to be more focused than the various ones that we've been telling to date.

I'm less certain about whether I agree with the frame he proposes--"they want to cut people off, we want to move them into real jobs"--or with his proposal to push for adding an employment credit to the work rates, although that wouldn't be a bad thing in the short term.

My personal sense is that we sound terrible whenever we try to articulate why it’s a bad thing for Congress to increase the TANF work rates or to adopt policies that have the effect of "cutting people off" of welfare.

As people work through the implications of the provisions of -- absent a surprise in the House -- the final version of TANF reauthorization included in the reconciliation bill, a thought on a message point for the inevitable critiques.

There are a host of problems with the bill so those progressives who comment on it will have many criticisms to offer. But in the current media environment -- that is, one where journalists interested in national welfare policy and politics are few and far between -- it will be important for progressives to have some priorities, to focus criticism in as consistent a manner as possible. Otherwise, they are unlikely to be heard. Given that the bill appears likely to cause states all sorts of problems in the coming years, having a consistent story to tell will help when the debate revives in '07 or '08 (if not sooner.) Progressives should start shaping their story for the next debates, as depressed as they may be, in the way they try to get this legislation described. This isn't a "wait until 2009" situation, not with the potential for state penalties in the near future.