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Do work requirements for federal assistance help people escape poverty? No. Here’s what really happens.

- August 13, 2018

Last month, the Trump administration reopened its effort to allow Kentucky to require low-income citizens to work in exchange for health-care coverage — part of its larger goal of imposing work requirements nationwide for all kinds of benefits, including assistance buying food. The Kentucky effort has run afoul of at least one federal judge, who wrote that the administration “never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

Nonetheless, supporters argue that work requirements improve the beneficiaries’ lives. Our research on the already established work requirements for welfare suggests otherwise. Here are six things to know about requiring aid recipients to work:

1. Reducing caseloads isn’t the right way to measure success for work requirements

Supporters of the Trump campaign to impose work requirements point to the 1996 welfare reforms, which imposed such requirements for the Temporary Assistance for Needy Families (TANF) program. One defender claims TANF work requirements raised single mothers’ employment levels and lowered child poverty rates. Based on that, advocates argue for extending work requirements from TANF to programs like food stamps and Medicaid.

Our research suggests that such claims exaggerate the evidence. To be sure, welfare reform led to massive caseload reductions. The number of families receiving aid dropped from roughly 5 million in the mid-1990s to 1.3 million in 2015. Studies reveal a variety of causes, including stronger efforts by states to deter and divert potential claimants. There is, however, little doubt that strict work requirements helped to drive TANF caseloads to historic lows.

But caseload reductions are a poor measure of welfare policy success. Reformers in the 1990s, from Democrat Bill Clinton to Republican Newt Gingrich, sought to reduce poverty among single-parent families by helping them replace welfare with increased earnings from employment. A better indicator of success would, therefore, show whether work requirements led to increased earnings from employment.

2. Single mothers were increasingly entering the workforce before Congress required them to work

In the mid-1990s, single mothers entered the workforce at higher rates than did other women. Conservative groups point to this as evidence that welfare reform worked as intended. The full body of evidence makes this not so clear.

That increase started before Congress and the president enacted TANF. And as shown in the figure below, the upward trend leveled off soon after the new work requirements kicked in in 1997. In fact, according to the Bureau of Labor Statistics, the rate at which single mothers age 25 and up with less than a high school diploma — prime TANF candidates — held jobs actually fell after 2000, dropping from 53.8 percent to 48.9 percent by 2015. In the figure below, the rate of all single mothers with young children taking jobs first went up but then leveled off at a lower level.

Labor force participation rate for single mothers with children under 18, 1975-2015

3. Changes to the earned income tax credit enticed more single mothers into getting jobs

So why did more single mothers take jobs in the mid-1990s? The short-lived economic expansion of that decade helped. But so did policy change — not of TANF, but of the earned income tax credit.

In the 1990s, federal officials revised the EITC program, which subsidizes low-income families, to offer more incentives for people to take low-paying jobs. Larger tax credits for low-income workers meant that even minimum-wage jobs would effectively pay more. The largest EITC increase passed in 1993, and it especially boosted the incomes for families with children, including single mothers. Research suggests that EITC incentives — carrots, rather than sticks — were a significant factor in both reducing welfare caseloads and increasing the rate of single mothers taking jobs.

4. TANF rules may have pushed more families into extreme poverty

Research by Luke Shaefer and Kathryn Edin finds that the number of families in “extreme” poverty (living on less than $2 per person per day) rose after welfare reform. With tough TANF rules in place, about 20 percent to 25 percent of low-income single mothers are “disconnected” from both work and welfare; more than 80 percent of them live in poverty.

In other words, TANF’s restrictions deny aid to families in need. According to Child Trends, 62 percent of poor children were supported by cash aid in 1995; by 2015, this number had fallen to just 18 percent.

5. TANF work rules led to racial biases across the states

Our research found that giving states leeway to design and implement TANF work rules result in racial disparities. States with higher percentages of black welfare recipients were significantly more likely to adopt tougher rules. As a result, a national pattern emerged in which black TANF recipients, on average, faced tougher work requirements and penalties for noncompliance than their white counterparts.

Racial biases were then amplified when front-line workers put the rules into effect, stripping benefits from recipients who failed to meet the work rules. In Florida, our research found clear racial biases in who got sanctioned — with clients of color more likely to lose benefits than white clients for the same infractions. We corroborated our findings by examining administrative data, where we found consistent evidence that TANF case managers treated similar cases differently depending on a client’s race. Expanding work requirements to other federal programs could result in similar racial disparities.

6. Two-thirds of adult Medicaid recipients already work

Undeterred by research indicating the negative effects, the Trump administration persists in trying to extend work requirements to other benefit programs. In January 2018, the federal Centers for Medicare and Medicaid Services (CMS) invited states to submit proposals for what would require Medicaid recipients to work. As of June, CMS has approved four states, including Kentucky, for such requirements; seven more states have proposals pending with CMS, and others are considering or developing such programs.

But approximately two-thirds of all adults receiving Medicaid already work. Almost everyone else in the program is ill, disabled, in school, taking care of family or retired. In fact, Medicaid covers costs for a remarkable 62 percent of all nursing home residents; nursing home care accounts for 35 percent of all Medicaid spending nationwide. Most adults receiving food assistance are also already working.

In the end, imposing work requirements on these populations is likely to reproduce the negative effects we found for welfare: People who cannot work will lose benefits.

Sanford F. Schram is professor of political science at Hunter College, CUNY.

Richard C. Fording is Marilyn Williams Elmore and John Durr Elmore Endowed Professor of Political Science at the University of Alabama.

Joe Soss is Cowles Chair for the Study of Public Service at the University of Minnesota.