TANF Benefits Still Too Low to Help Families, Especially Black Families, Avoid Increased Hardship

Temporary Assistance for Needy Families (TANF), the primary cash assistance program for families with the lowest incomes, is at its weakest point in the program’s history in most states. In 33 states, benefit levels have declined by at least 20 percent in inflation-adjusted value since TANF’s enactment in 1996. In every state, benefits are at or below 60 percent of the poverty line and fail to cover rent for a modest two-bedroom apartment.

"In every state, TANF benefits are at or below 60 percent of the poverty line and fail to cover rent for a modest two-bedroom apartment."

TANF does a poor job of providing assistance to Latino and especially Black children,^[1] whose parents and the communities in which they live are more likely to feel the devastating effects of COVID-19 and the resulting economic crisis. Black children are also more likely than white children to live in states where benefits are the lowest, continuing a trend that began under TANF’s predecessor, Aid to Families with Dependent Children (AFDC). Many states with high Black populations kept AFDC benefits very low.

The pandemic and economic crisis have laid bare the systemic racism that undergirds these past and present inequities. Black women, already working in some of the most tenuous jobs for the lowest wages, have experienced significant job losses since the crisis began, as have Latina women.^[2] In late June and July, 19 million children lived in a household that wasn’t getting enough to eat, that was behind or rent or mortgage payments, or both.^[3] Some 42 percent of Black households and 36 percent of Latino households reported experiencing such hardships (compared to 20 percent of White households). And with TANF benefits as low as they are, these families have few resources to support themselves when jobs are not available and they are not eligible for other benefits like unemployment insurance.

It’s crucial that all families with children have income to cover their basic needs not only in the current crises, but also for their children’s futures. Studies show that income matters for children’s long-term well-being. Financial stability gives them a better chance of growing up healthy and with the opportunity to thrive.^[4]

Many states have raised their TANF benefits in recent years, recognizing the importance of income for children’s long-term growth and development and the inadequacy of their existing benefits. Thirteen states plus the District of Columbia did so between July 2019 and July 2020 and several states have issued additional payments to TANF families in response to COVID-19. (See text box.) However, benefits in most states remain extremely low, hampering TANF’s ability to help families meet their basic needs during the current crises.

Addressing structural racism in TANF and investing in children’s futures will require states and Congress to invest additional resources in cash benefits. States should start by increasing benefit levels, which will require them to direct more of their TANF funds to basic assistance. They also should implement mechanisms to increase benefits annually to ensure benefits don’t lose value over time. These actions are especially important in states with the lowest benefit levels — states in which Black children are likelier to live. Increases in those states are an important step in undoing TANF’s racist foundations and ensure that future generations will experience greater economic stability. States will need more federal resources to make these investments.

This report, an annual update of state TANF benefit levels as of July 1, covers benefit changes that took effect between July 1, 2019, and July 1, 2020. The benefit levels cited here reflect the maximum monthly benefit for a family of three with no other income as of July 1, 2020; they may exceed what many families actually receive because families often do not receive the maximum TANF benefit. Family grants in six states (California, Connecticut, New York, Pennsylvania, Vermont, and Virginia) vary by geographic region. Unless noted otherwise, this paper reports the benefit level in the state’s most populous region.

13 States and D.C. Raised Benefits in Past Year

Thirteen states plus the District of Columbia raised their monthly TANF benefit levels between July 1, 2019 and July 1, 2020. (See Table 1.) Most increases were very small, under $20. This represents a continuation of a positive trend since 2013, a time in which 24 states and D.C. increased benefits at least once, with several states increasing benefits multiple times.

Three states took specific legislative or administrative actions to increase grants. Minnesota raised benefits by $100 in February 2020, the state’s first benefit increase since 1986. Vermont increased benefits for the first time in more than 20 years in August 2019. Its increase, from $640 to $699,^[5] was based on an increased basic need standard used to calculate benefits. Virginia raised its TANF benefit by 15 percent, from $442 to $508,^[6] the second benefit increase the state has enacted in the past two years.

Nine states and the District of Columbia raised benefits through annual or periodic adjustments to reflect changes in living costs or the federal poverty line. For example, Ohio raised benefits from $497 to $505 based on Social Security’s inflation adjustment. The New Hampshire benefit, tied to 60 percent of the poverty line, rose from $1,066 to $1,086 in March 2020. Similarly, Illinois’ benefit, tied to 30 percent of poverty, increased from $520 to $533. California’s benefit rose from $785 to $878,^[7] the second increase in a multi-step process to raise benefits to at least half of the poverty line. The Wyoming benefit, which keeps pace with inflation through the state’s cost-of-living index,^[8] increased from $697 to $712 in July 2020.

Benefits Remain Far Below Poverty Line

Despite these increases, TANF benefits still leave family incomes at or below 60 percent of the poverty line in every state.^[9] (See Figure 1 and Appendix Table 2.) In 1996, 16 states had benefit levels at or below 30 percent of the poverty line; today, 33 states do. In 18 of those states, benefit levels are at or below 20 percent of the poverty line — that is, $362 a month or less. Even TANF and Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits together fail to lift a family of three out of poverty in every state. (See Appendix Table 5.)

Figure 1

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Nationally, TANF benefits have fallen substantially in value and do far less to help families escape “deep poverty” (family incomes below half of the poverty line) than in 1996. In all but three states, a poor family relying solely on TANF to provide the basics for their children — such as during a period of joblessness, illness, or disability — has less purchasing power with its benefits today than when TANF was created. Since 1996, benefits have fallen by 20 percent or more in 33 states, after adjusting for inflation. (See Figure 2 and Appendix tables 2 and 3.) In many states the decline has been dramatic.

Figure 2

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This decline follows a quarter-century of major declines in the real value of benefits provided through AFDC. Between 1970 and 1996, AFDC benefits fell by more than 20 percent in every state but one and by more than 40 percent in two-thirds of the states, after adjusting for inflation,^[10] leading to the gradual weakening of AFDC as an anti-poverty program. The median AFDC benefit in July 1970 lifted a family of three above 70 percent of the poverty line,^[11] twice what it did in July 1996. The median benefit as a share of poverty further fell when TANF replaced AFDC; the median benefit in July 2020, $492, represents only 27 percent of the poverty line.

Benefits Cover Only Fraction of Modest Housing Costs

While TANF benefit levels have risen slightly, the cost of housing in most areas also continues to rise, substantially in some areas.^[12] In every state, the monthly TANF benefit for a family of three is well below the estimated cost of a modest two-bedroom apartment and utilities, based on the Department of Housing and Urban Development’s (HUD) fair market rents.^[13] It is less than half of the fair market rent in 32 states plus D.C., compared with only seven states in 1996. Between 1996 and 2020, the median state fair market rent rose from $543 to $1,015, while the median TANF benefit rose from $377 to only $492.^[14] (These figures are in nominal dollars.) In all but two states, TANF benefits covered a smaller share of housing costs in 2020 than in 1996. (See Figure 3.)

Only 17 percent of TANF families receive HUD housing assistance.^[15] Some states provide small additional funds to help families cover housing costs, but these rarely cover the large gap between TANF grants and rents. TANF benefits cover an especially small share of housing costs in states where Black and Latino children are likelier to live.

Because decent housing can prove expensive, TANF families without housing assistance often live with families and friends and contribute what they can to rent and utilities. Or they opt for more affordable but substandard housing. As a result, they have high rates of housing instability, resulting in frequent involuntary moves, eviction, or homelessness.^[16] Such instability can harm both adults and children and is associated with poor school performance, poor cognitive development, increased health risks, and mental health problems.^[17]

Figure 3

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State Benefit Decisions Rooted in Historical Racism, Have Disparate Impacts

"A majority (55 percent) of Black children in the country live in a state with TANF benefits at or below 20 percent of the poverty line."Low TANF benefits, which disproportionately affect the benefits available to Black children, are rooted in historical racism. Black children are likelier than Latino and white children to live in the states with the lowest benefit levels. (See Appendix Table 6B.) A majority (55 percent) of Black children in the country live in a state with benefits at or below 20 percent of the poverty line, compared to 41 percent of Latino children and 40 percent of white children.^[18] And while some states may have lower costs of living than others, we see a similar trend when considering housing costs. Nearly half (49 percent) of Black children and 38 percent of Latino children live in states with benefits that cover less than one-third of the housing costs for a modest two-bedroom apartment, compared to 29 percent of white children.^[19] (See Appendix Table 6B.) Many of these extremely low-benefit states had some of the lowest benefits under AFDC, and in almost every instance, leave a family deeper in poverty today than they did in the past.

The politics underlying the initial design of AFDC (originally Aid to Dependent Children or ADC^[20]) set the course for racial disparities in its implementation over time. As Congress debated the Social Security Act, the Southern congressional delegation at the time (a crucial bloc in both chambers) successfully insisted on ADC/AFDC provisions that vested control of the program to state and local officials, thus protecting the white supremacist socioeconomic order of the Jim Crow South from the perceived threat of an expanded federal government.^[21] Among the powers Southern lawmakers won for state and local authorities was the ability to set eligibility policies and benefit levels. This effectively limited participation for Black families and others they deemed undeserving and ensured that cash assistance did not compete with cheap, often agricultural or domestic, Black labor.^[22]

Between the mid-1930s and the early 1960s, the most visible way states’ ADC/AFDC programs discriminated against Black families was preventing them from accessing the program. And if Black families managed to access the program, some states deliberately paid Black families less than white families.^[23] Some Southern states lowered or cut off benefits during the planting or harvesting seasons to coerce Black parents and children as young as 7 to work in the fields for extremely low wages.^[24] By 1958, 20 states^[25] (15 of them Southern^[26]) had implemented “maximum family grants” — a ceiling set irrespective of family size^[27] — as another strategy to keep benefit costs for recipients low. The states with the lowest average benefits at the time were Alabama, Florida, Mississippi, South Carolina, and Texas; all were well below the national average of $99.83 (in nominal dollars; see Table 2).

During the 1960s and 1970s, advocacy from the Welfare Rights Movement and victories in the Supreme Court by legal service organizations helped limit states’ ability to add eligibility conditions.^[28] But states maintained the authority to set benefits. In 1970, the South generally had lower maximum payments the rest of the country. (See Figure 4.) Additionally, studies consistently find that between the 1960s and 1990, states with higher Black populations or higher shares of Black families on the caseload had lower average AFDC benefits. This trend was predominant in but not exclusive to the South. ^[29] Between 1982 and 1996, a state’s Black population was a strong predictor of the state’s benefit levels. This remained true even after controlling for the state’s ideological leanings: conservative and liberal states with high Black populations had lower average benefits than their peer states with low Black populations. ^[30]

Figure 4

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States’ flexibility to set benefits without meeting any federal requirements has allowed states to continue their past racist policies, where current benefits are extremely low. (See Figure 4.) The end result is that TANF does far less than it could to help Black families — and especially Black children — to weather crises like the pandemic and to stave off hardship that can have long-term, negative consequences for children.^[31] Moreover, these policies rooted in historical racism don’t just affect Black families — they affect all families facing a crisis or struggling to pay for the basics.

TANF Benefit Increases Needed During Crisis to Help Children Long Term

The COVID-19 economic crisis has led to dramatic increases in joblessness and hardship. In late June and July 2020, 19 million children (1 in 4) lived in households that were behind on housing payments or that did not get enough to eat because the family couldn’t afford food, or both.^[32] The burden is falling on Black and other children of color the most.^[33]

"Experiencing poverty and hardship, even briefly, has detrimental, life-long impacts on children."Many studies have shown that experiencing poverty and hardship, even briefly, has detrimental, life-long impacts on children. Researchers have linked stress caused by a scarcity of resources to lasting negative consequences for children’s brain development and physical health.^[34] Income support programs can improve children’s academic, health, and economic outcomes, the National Academies of Sciences’ report on reducing childhood poverty finds.^[35] Even relatively small infusions of cash, like those from TANF, can make a difference.^[36]

Unfortunately, even before the pandemic and resulting recession, TANF did not do enough to stabilize families in poverty. This policy failure has meant that families with the lowest income don’t get the support they need to make ends meet. In particular, TANF families often find themselves in poor housing conditions with few resources to pay for even a modest apartment. This can lead to overcrowded housing situations or homelessness. And because nationally Black children are likelier than white children to live in the states with the lowest TANF benefits, their families may have access to fewer resources when they need them. This could result in increased hardship which puts poor them at greater risk of negative outcomes. More must be done to maximize TANF’s effectiveness.

Given the history of cash assistance programs in this country and what the science tells us about child development, states and federal policymakers need to improve the adequacy of TANF benefit levels. Higher benefits, especially in high-Black-population states, for all families in poverty would have a meaningful impact on children’s futures.

• States should reinvest TANF and maintenance-of-effort (MOE) funds back into basic assistance and provide higher cash grants for participating families.^[37]
• States should establish mechanisms to prevent benefits from eroding in the future.^[38] Adjusting TANF benefits yearly in step with inflation can maintain families’ purchasing power and help them meet basic needs. This not only improves the lives of parents and children receiving TANF, but also helps local communities, as poor families quickly put that money into the local economy.
• While states can take action on their own to ensure families have enough to afford the basics, they are unlikely to do so without additional resources, especially now when states are facing significant revenue shortfalls and increased needs because of the pandemic. Therefore, Congress should invest more funds into state TANF block grants and require that new monies be directed toward basic assistance. These actions would give states more resources to support grant increases and ensure those resources do not erode over time.