Enough time has passed to allow objective assessment of the American efforts to reform welfare programs. The mounting evidence indicates enormous success.
About a year and a half ago, Congress repealed the Aid to Families with Dependent Children program and replaced it with a system of block grants to the states. The new law also set a time limit for new recipients, who are now required to find work within two years of applying for welfare.
Vigorous economic growth was already collapsing caseloads when the law passed, but the new rules have accelerated the trend. From March 1994 until September 1997, the number of people on welfare fell more than 30%. Over half the decline took place after the new federal rules took effect.
The national law followed experiments in several states that had earlier enacted tough work requirements. As reported in Investor’s Business Digest, the statistics in some of them are spectacular:
- In Maryland, one-third of former recipients found work or outside income.
- Of Kentucky recipients who moved off the dole in 1997, 49% found jobs and 29% left for other reasons, such as a spouse’s finding work.
- In New Mexico, 54% who had left the rolls from July 1996 to June 1997 were working, with only 12% forced off for non-compliance.
- Welfare caseloads in Oregon fell more than 55%, and job placements rose from a rate of 500 a month in early 1995 to between 1,000 to 2,500 a month.
- Virginia’s welfare caseload dropped by about 17,000 in less than two years.
About 93% of the new jobs were created in the private sector.
Inspiration for much of this came from the state of Wisconsin, a bastion of liberalism where welfare reform nonetheless had first taken hold. Welfare rolls in Wisconsin shrank 85% in ten years, from nearly 100,000 families to fewer than 15,000. Of the state’s 72 counties, 33 have no one left on welfare that isn’t working for his or her cheque. Spending actually increased 43% from 1996 to 1997, as the state boosted auxiliary pay for child care, job training, transportation and other services needed to equip people for work.
On April 1, the final stage of the program kicked in when every adult judged capable of work was cut off welfare. Those who aren’t ready must do something to earn their cheque–either work, look for work or prepare for work. Only families with children under 12 weeks old are exempt. Job recruiting centres have replaced welfare offices. To ensure that even the last holdouts were notified, the state spent $140,000 on advertisements warning that the old system had ended.
Even more impressive was the state’s effort to reduce the cost of delivering welfare services. The Wisconsin Works program, which started two years ago, radically changed the way public aid was distributed by introducing performance measures and by partially privatizing its administration. Under the new federal rules, states are now allowed to contract the task out to "charitable, religious, or private organizations". County employees in Wisconsin have to meet targets for caseload reduction, job placement and spending — or face competition from contractors.
More than 70% of Wisconsin’s welfare caseload is now handled by private agencies. Over two years the state paid out $10.25 million less than it would have had to shell out if counties still administered the program.
All of this will be regarded in some circles as heartless. But the cycle of dependency created by a half century of expanding welfare programs does the poor no favours.
In Wisconsin, attaching the handouts to a work requirement has benefitted everyone.