State Welfare Benefits Continue Shrinking

Temporary Assistance for Needy Families (TANF) cash benefits for the nation’s poorest families with children fell again in purchasing power in 2014 and are now at least 20 percent below their inflation-adjusted 1996 levels in 38 states, our new report explains. As the country moves past the economic downturn and state revenues recover, states should halt the erosion of TANF benefits and begin restoring the purchasing power lost since TANF’s creation in 1996.

While eight states raised benefits between July 2013 (the start of fiscal year 2014 in most states) and July 2014, the remaining states didn’t, allowing inflation to continue to erode the benefits’ value. As of July 2014:

• The purchasing power of benefits for 99 percent of recipients nationally was below 1996 levels, after adjusting for inflation.
• In every state, TANF benefits for a family of three with no other cash income were below 50 percent of the poverty line. Most states’ benefits were below 30 percent of the poverty line. (See interactive map below.)
• In every state, benefits for a family of three with no other cash income were below the Fair Market Rent (the federal government’s estimate of the rent and utility costs of modest housing) for a two-bedroom apartment. In 29 states, they covered less than half of the Fair Market Rent.
• In every state except Alaska, the combination of SNAP (formerly food stamps) and TANF benefits for families receiving both falls below 75 percent of the poverty line.

Of the eight states that raised benefits in the past year (California, Connecticut, Maryland, Ohio, South Carolina, South Dakota, Texas, and Wyoming), all but California did so through annual or periodic adjustments that limit erosion due to inflation. Other states should consider adopting this approach — as well as benefit increases to make up at least some of the lost ground since 1996.

TANF recipients have a limited time on benefits, and most must participate in work or work-preparation activities. During this time-limited, work-focused window, TANF benefits need to better enable families to meet basic needs so they can focus on finding work and/or increasing their skills in order to leave welfare.