Unemployment substitutes welfare: will the "American Jobs Act" change this?

By Melanie Tom, Field Organizer

From the Urban Institute

About a month ago, the 15th anniversary of President Clinton's welfare-to-work program quietly passed. Built on the backdrop on the dot-com boom and predicated on the false belief that hard work was all one needed to succeed, the welfare-to-work program effectively cut a hole into the social safety net and drastically changed how we care for others in need.

In came Temporary Assistance for Needy Families (TANF), whose requirements vary tremendously by state with the exception of one: the 50% Work Participation Rate, which means that for half the caseload, one or more adults are required to participate in a narrowly defined set of work activities for 30 hours a week.

What does this mean for a country, whose unemployment rate has risen 88% from 2007-2010? Some say the effectiveness of a government aid program can be best evaluated during times of need. Countries like Columbia, Georgia, Ethiopia and Mexico built their safety net systems during stable times to account for unanticipated events like droughts or food insecurity. The U.S., however, did the exact opposite, pulling back resources during an economic boom. And the absence of a social safety shows.

The Urban Institute's analysis of welfare during this period of high unemployment is striking. Here are their latest analysis from August 2011:

1. TANF has not played a counter cyclical role during the current recession;
2. Unemployment benefits substitute for welfare: In three of ten low-income (below 200 percent of the federal poverty level) single parents received unemployment benefits in 2009, double the share receiving in 2005;
3. TANF benefits have remained flat over the past 15 years, diminishing the value to low-income families; 
4. Attitudes are changing about participation: The share of eligible families for welfare assistance that enroll in the program has dropped from over 80% before TANF in 2006 to 40% in 2005.

What the Urban Institute's research shows is that people in need are discouraged from using TANF, and that the program's responsiveness to unemployment varies greatly by state: Arizona's unemployment rate rose by 146% yet they had the largest decline in TANF enrollment in the nation. California had 80% of poor families enrolled in TANF in 2009 while Texas only had 8% enrolled. State discretion over defining eligibility (i.e. defining ‘family’) has led to huge variability in which families can benefit from TANF.

This finding was also echoed in research conducted for Strong Families. Sara Taylor of Law Students for Reproductive Justice examined how ‘family’ is defined the social safety net programs and found that out of all of the programs (food stamps, Section 8, etc) TANF has the most restrictive definition of family and that when states have a hand in defining eligibility, the impact of the program drastically varies from state to state.

She also discovered that when Congress remodeled the program in 1996, the purpose of the program was redefined to benefit married, heterosexual couples with biological children. And just four years later, the 2000 Census found that only 22.4% of families meet the definition of a married, heterosexual couple with biological children--so it's no wonder why so many families are losing out.

President Obama is attempting to counter this dismal situation with his “American Jobs Act” that he rolled out last Thursday, hoping to capture the families that have fallen through the cracks with a modest mix of tax breaks, unemployment insurance benefits, and infrastructure spending. It is a bipartisan plan that has mixed reviews during a time when some say the economy might droop into a double dip recession.

Given what we know about social safety net programs like TANF, what is recognized as work, and who is recognized as family, we can see that by updating our understanding of work (or family), to greater reflect lived realities in this decade we would go a long way toward ensuring that visions like Obama’s actually have the impact we need—rights, recognition and resources so all of our families can thrive.