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Welfare Reform in the United States

From Handouts to Employment

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From the Great Depression of the 1930s, until 1996, welfare in the United States consisted of little more than guaranteed cash payments to the poor. Monthly benefits -- uniform from state to state -- were paid to poor persons -- mainly mothers and children -- regardless of their ability to work, assets on hand or other personal circumstances. There were no time limits on the payments, and it was not unusual for people to remain on welfare for their entire lives.

By the 1990's, public opinion had turned strongly against the old welfare system. Offering no incentive for recipients to seek employment, the welfare rolls were exploding, and the system was viewed as rewarding and actually perpetuating, rather than reducing poverty in the United States.

The Welfare Reform Act
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 -- A.K.A. "The Welfare Reform Act" -- represents the federal government's attempt to reform the welfare system by "encouraging" recipients to leave welfare and go to work, and by turning over primary responsibility for administering the welfare system to the states.

Under the Welfare Reform Act, the following rules apply:

  • Most recipients are required to find jobs within two years of first receiving welfare payments.

  • Most recipients are allowed to receive welfare payments for a total of no more than five years.

  • The states are allowed to establish "family caps" that prevent mothers of babies born while the mother is already on welfare from receiving additional benefits.

Since enactment of the Welfare Reform Act, the role of the federal government in public assistance has become limited to overall goal-setting and setting performance rewards and penatlies.

States Take Over Daily Welfare Operations
It is now up to states and counties to establish and administer welfare programs they believe will best serve their poor, while operating within the broad federal guidelines. Funds for welfare programs are now given to the states in the form of block grants, and the states have much more latitude on deciding how the funds will be allocated among their various welfare programs.

State and county welfare caseworks are now tasked with making difficult, often subjective decisions involving welfare recipients' qualifications to receive benefits and ability to work. As a result, the basic operation of the nations' welfare system can vary widely from state to state. Critics argue that this causes poor people who have no intention of ever getting off of welfare to "migrate" to states or counties in which the welfare system is less restrictive.

Has Welfare Reform Worked?
According to the independent Brookings Institute, the nationwide welfare caseload declined about 60 percent between 1994 and 2004, and the percentage of U.S. children on welfare is now lower than it has been since at least 1970.

In addition, Census Bureau data show that between 1993 and 2000, the percentage of low-income, single mothers with a job grew from 58 percent to nearly 75 percent, an increase of almost 30 percent.

In summary, the Brookings Institute states, "Clearly, federal social policy requiring work backed by sanctions and time limits while granting states the flexibility to design their own work programs produced better results than the previous policy of providing welfare benefits while expecting little in return."

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