The 1996 reform, which was passed by a Republican Congress and signed by Democratic President Bill Clinton, ended the federal entitlement to welfare benefits and transformed the system into a series of state-run programs funded by U.S. government grants. The new programs imposed limits on the amount of time recipients could stay on welfare -- generally two consecutive years, or five over a lifetime. They also required many recipients to look for work or participate in training programs before they could receive their checks. In the first few years after the law passed, as the economy moved toward full employment in the late 1990s, millions left the welfare rolls for jobs.
There were 4.9 million people on welfare at the end of 2003, down 3 percent from the year before and less than half the 12.2 million total from August 1996. The poverty rate also dropped in the first few years after the legislation's passage, from 13.7 percent in 1996 to 11.3 percent in 2000.
But since 2001, even as the welfare rolls declined, the poverty rate has increased, climbing to 12.5 percent last year, or 35.9 million people. Of those, 12.9 million were children. The number of families in deep poverty rose 10 percent, to 3.2 million in 2003. The percentage of single-mother families living in poverty also jumped, to 28 percent from a recent low of 25.4 percent in 2000.
Lawrence Mishel, president of the Economic Policy Institute, said the rise in poverty can be traced to a poor job market coupled with a social safety net that doesn't do enough to help those who can't find work. Mishel said public assistance has been shifted away from helping the jobless with welfare and toward giving a boost to those working in low-income jobs through programs like the earned-income tax credit. That's fine when the economy produces millions of new jobs, he said, but not when it's sputtering. "You can imagine welfare reform as a fair-weather ship," Mishel said. "It does okay at 4 percent unemployment, but not very well when you're in a recession."
The Bush administration disagrees, arguing that the safety net has changed, not disintegrated. The old system, said Assistant Secretary for Children and Families Wade F. Horn, "systematically seduced people into generations of welfare dependence." The new system, by contrast, gives people who have been laid off a temporary lift until they are able to get back into the job market, he said. "When you become part of the economic mainstream, the safety net for you is not cash welfare. It's unemployment insurance," Horn said.
He said Bush wants further welfare reform through a reauthorization of the 1996 law that would implement tougher work requirements and encourage welfare recipients to take full-time, not part-time jobs. Horn said full-time work is more likely to lift people out of poverty, but the legislation has been bottled up in Congress. Horn blamed Senate Democrats for the delay.
One Senate Democrat, presidential nominee John F. Kerry of Massachusetts, has been among those pushing for the legislation to include more money for child care. Allison Dobson, a Kerry campaign spokeswoman, said Bush's proposals do little good at a time when full-time jobs are scarce. "The best way to help families that are struggling is to get them a job. And that's one thing the president has been unable to do," she said.
Horn said this year's positive job numbers, which picked up considerably in the spring before stalling over the summer, will likely cause a decline in poverty for 2004.
But some advocates for low-income workers doubt that poverty will fall as long as the kinds of jobs being created lack adequate pay and benefits. "The real issue is whether the people who come off the rolls and go to work can support their families," said Beth Shulman, author of "The Betrayal of Work." Shulman said that without an increase in the minimum wage and more flexible leave-of-absence laws, some parents aren't going to be able to make work pay off, so they will turn to public assistance.
And when they do, many will be persuaded to keep looking elsewhere. "The states are trying to discourage people in every way they can from going on welfare," Besharov said. "The level of hassle, the level of 'do you really, really, really want to get on welfare?' has increased." Besharov said that strategy encourages people to consider other sources of support first and helps end a cycle of dependence.