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Doubling of Extreme Poverty Belies Welfare Reform Success Claims

As Congress seeks agreement on overhauling Temporary Assistance for Needy Families (TANF), lawmakers must address TANF’s dismal failure to help the poorest Americans, many of whom are desperately trying to find work, as documented in the new book $2 a Day.  Authors Kathryn Edin and Luke Shaefer found that the number of families surviving on cash incomes of no more than $2 per person, per day in any given month more than doubled, to 1.5 million, in the decade and a half after the 1996 welfare law created TANF (see graph).  Nearly 3 million children lived in those extremely poor households.

Edin and Shaefer trace the rise in extreme poverty to the weakening of the cash safety net for families when the TANF block grant replaced Aid to Families with Dependent Children.  One parent, asked why she didn’t receive TANF, replied, “What is that?”; another said, “They are not giving that out anymore.”  That’s not surprising, since TANF reaches so few families. 

For every 100 families in poverty, only 26 received cash assistance from TANF in 2013 — down from 68 families in 1996.  In ten states, fewer than ten families received TANF cash assistance for every 100 poor families. 

The $2 per person per day standard, which the World Bank uses to measure extreme poverty across the globe, amounts to about 12 percent of the U.S. poverty line, or about $180 per month for a family of three.  Edin and Shaefer provide a devastating account of what life is like for families that don’t have money to pay the rent, keep the utilities on, or even buy second-hand clothes for their children. 

Yet despite the harsh realities facing families whom welfare reform has left behind — selling plasma for $30 twice a week, spending hours collecting scrap metal to earn a few dollars, “trading” sexual favors for rent money — some conservatives continue to tout welfare reform as a success and a model for other programs.   

The 1996 welfare law essentially assumed that the economy would produce enough jobs that match the skills of the parents required to work.  But Edin and Shaefer found people desperate for work and a cash safety net so rare that families didn’t even know it existed. 

Their proposed solutions include a guaranteed job and a robust safety net if work fails.  We’re long overdue for policy changes to improve TANF, they argue:

The $2-a-day poor are willing — even eager — to work.  But the low-wage labor market is failing them with too few jobs, inadequate hours, and unsafe working conditions.  If our stories are any guide, the long-term consequences for children are particularly high.  Is that a price we’re willing to pay for hanging on to an approach to welfare that is two decades old?