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The major flaw in President Clinton’s welfare reform that almost no one noticed

(AP Photo/Seth Wenig)

This story has been updated.

Shavonna Rentie's father raised her on what he earned working at McDonald's, along with welfare and food stamps. When she was 15, President Clinton signed a law that changed all of that, replacing welfare with a complex new system that fostered vocational training.

The new law encouraged Rentie's father to go to school and become a mechanic. Seeing him get the job he wanted "pushed me to go for what I really want to be," Rentie said.

It was exactly as the writers of the law had planned: Welfare reform would help parents receiving welfare set a better example for their children. The children, in turn, would grow up with broader ambitions, free from the generational cycle of poverty and dependence on government — at least, that's what policymakers intended.

Today, Rentie is looking for a job. She and her four children receive food stamps and housing assistance. Like her father, she participated in the new welfare system that Clinton's changes established, but her experience "wasn't as positive," she said.

While offering some recipients valuable help to train and find jobs, Clinton's changes also imposed strict new rules. Rentie — who was in school while receiving welfare — was required to volunteer several hours each week, file stacks of paperwork and regularly make her way 15 miles from her home in Tulsa to the welfare office for meetings with caseworkers.

"It seems a little more of a hassle than it is a help," Rentie said. The program is not really a hand up or a handout, she added: "It’s like another hand pressing you down."

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Rentie quit the rolls. The checks weren't worth the trouble, and the program wasn't making it easier for her get ahead in a labor market that has become increasingly unforgiving for workers in her situation.

In the two decades since Clinton signed that law overhauling the country's welfare system in August 1996, his decision has been debated and scrutinized, celebrated and excoriated. Proponents thought that when parents were required to work and were pushed to develop their skills, their children would learn by example and succeed in the labor market as adults. 

Yet a new study shows that, despite the changes, the intergenerational transmission of poverty has only accelerated. Children raised on welfare after reform are even more likely to depend on public assistance as adults than the previous generation. In this sense, Clinton's welfare reform failed to accomplish one of its main goals: to give young people a better chance to provide for themselves without the government's help.

Breaking a cycle

"I have a plan to end welfare as we know it — to break the cycle of welfare dependency," Clinton said in a 30-second television spot during his 1992 presidential campaign.

In this 1992 campaign ad, then-presidential candidate Bill Clinton spoke about his plans to "break the cycle of welfare dependency." (Video: Clinton/Gore '92 Committee)

Critics of the system argued that welfare recipients found it easier to live on the government's dime than to look for jobs, and their children never learned the importance of hard work.

Some poverty experts objected. Researchers Kathryn Edin and Laura Lein found that many beneficiaries were working but kept their incomes secret to continue receiving welfare. They needed both sources of money to survive, the researchers found.

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In other cases, Edin found that many mothers receiving welfare thought it was wrong to be at work rather then spending time with their children.

During the first years of welfare reform, which requires most recipients to work or participate in vocational training, the number of mothers in the formal labor force skyrocketedAmong never-married mothers with no more than a high school diploma, the share participating in the workforce increased from 64 percent in 1996 to more than three-quarters in 2000 — the same as the share of similarly educated women with no children to look after.

There were probably several reasons for the shift besides the strict new rules: a robust economy in which work paid well, increasing tolerance of women in the workforce and a tax credit that Clinton had expanded in his administration that increased wages. The number of unmarried mothers in the formal labor force had started increasing before welfare reform.

Growing up, these mothers' children watched them go to work. Now that these children have become adults, however, they are more likely to rely on public assistance than previous generations who grew up with traditional welfare, the new research suggests.

"Despite all this good behavior, people aren’t finding it any easier to get ahead now then in the past," Edin said.

Getting ahead

The new research, a working paper by economists at the University of Kentucky, focuses on the relationships between mothers and their daughters. Using data from a major national survey, they identified mothers who received payments under the traditional welfare system (which was called Aid to Families With Dependent Children) or under the new system that replaced it (called Temporary Assistance for Needy Families). Then the researchers looked ahead to see whether their daughters, as adults, received various forms of public assistance — cash, food stamps or disability payments.

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The chance that those women would receive assistance in the form of cash declined precipitously. Following welfare reform, the number of people on the rolls declined by half in just four years, to 6.3 million in 2000. Today, fewer than a quarter of families in poverty are estimated to receive cash assistance.

Many of these families, however, are still unable to make ends meet, and they are relying on other forms of public assistance. Indeed, the likelihood that a girl who grew up on welfare would receive public assistance in some form as an adult continued to increase after the end of the old system.

For example, in 1996, a woman who had grown up with welfare was 38 percentage points more likely to use public assistance than a woman whose mother had not received welfare. The most recent data, from 2012, show that figure has increased to 44 percentage points.

Whether welfare reform exacerbated this trend or helped to mitigate it is unclear. James Ziliak, who wrote the paper with Robert Paul Hartley and Carlos Lamarche, thinks that welfare reform might have helped a small number of families escape poverty, but that a broader decline in opportunity across the economy has been far more consequential.

"Economic mobility from mother to daughter has not improved," he said.

Thinking twice

The economists' data adds to an expanding body of research that has brought many poverty experts to reconsider the wisdom of the reform Clinton signed 20 years ago — including some who initially supported it.

"I have had second thoughts," said Ron Haskins, the former Republican congressional staff director who supervised the drafting of the bill that Clinton eventually signed.

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Haskins said the reform has had important successes — improving day-care programs, helping local authorities collect child-support payments from absent fathers, establishing the value of work in American culture with an unequivocal statement by Congress and the president.

At the same time, Haskins said, the reform has done too little to help the worst off. Clinton's reform gave states authority to use federal money to help parents train and find work, but many states used the money for other purposes, he said.

"This group of moms at the bottom needs help," he said. "It's disappointing to me that the states have not tried harder."

Other conservative experts say the reform did not go far enough. Although the number of Americans receiving welfare was halved, more Americans are receiving other kinds of public assistance such as disability payments and food stamps.

"You have a whole lot of people who will not take advantage of the opportunities that are out there," said Charles Murray, a social scientist at the conservative American Enterprise Institute. "Employers are ecstatic to get employees that they can rely on to show up every day on time and do a hard day’s work."

Many advocates for the poor argue that it is not culture that prevents parents from improving their circumstances, but punitive and unnecessary rules imposed on beneficiaries in the new system.

For example, general-education classes typically don't satisfy the law's mandate that recipients work, volunteer or enroll in vocational training. Critics say that restriction discourage parents who lack a high school diploma from acquiring the skills needed to provide for their families, since they have to spend much of their time working or volunteering to continue receiving benefits.

"It's structured in a way that stymies opportunity," said Robyn Merrill, the executive director of Maine Equal Justice Partners, an advocacy group. "Education can be a path out of poverty."

Rentie, the mother from Tulsa, says her grandmother impressed the importance of education on her when she was growing up. She holds two associate's degrees. She plans to a pursue a bachelor's degree in nursing, with the goal of someday earning enough to live without public assistance.

She recalled the shame of buying groceries with food stamps as a child. The stamps were much more conspicuous when recipients paid with paper stamps rather than an electronic card. "People were cruel: 'Oh, y'all got food stamps,' " Rentie said. "At the time, it didn't feel good."

At the moment, though, she has no choice but to rely on food stamps. "I have to feed my family right now," she said. "When I'm on my feet, we won't need it anymore."

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