How successful was US welfare reform?
Jared Bernstein has marked the 15th anniversary of America’s welfare reform legislation with a couple of really interesting posts on his blog. Calls for workfare or time-limited benefit entitlement are often justified by reference to the success of the US reforms, so this is more than an academic exercise for British progressives. In his first post, he points out that the key point about welfare reform is that it performed best when the economy was doing best – under Bill Clinton, when the jobs were being created that justified the focus on welfare-to-work. In the early years, the introduction of welfare-to-work obligations went hand-in-hand with investment in activation programmes and increases in the minimum wage –
if you’re expecting to increase supply in the low-wage labor market, you need to have a decent wage floor in place
More importantly, as the jobs market got worse and unemployment rose, the new system has not picked up the slack. The number of poor children has been rising for years – and so has the number in ‘deep poverty’, but without any response from Temporary Assistance for Needy Families, the new system created by the 1996 legislation.
By the way, it’s worth following Bernstein’s links to posts by LaDonna Pavetti – reading the third of these, it’s clear that British discussions about US welfare reform are often based on an out-of-date set of reviews:
Over the years, TANF has become less effective both in assisting working families affected by economic downturns and in helping very-low-income families in crisis. The result is a weakening safety net that is falling short of its promise to help families become self-sufficient and to protect families with children who are unable to work, often because of health problems.
In his second post, Bernstein points out that this experience is showing the weakness of relying entirely on ‘supply side’ programmes to deal with unemployment and poverty:
if there are not enough jobs for people, they won’t be able to support themselves or their families through work.
This is certainly a point that needs repeating in the British context. Every month we have new employment figures showing more than five unemployed people chasing every job vacancy and every month these figures are accompanied by statements from Ministers suggesting that the main problem is the motivation of unemployed people: if we only deal with our supply side problem we’ll just get a better motivated dole queue.
And we’ll also be stuck with the American problem of a system that does not respond to poverty.