Welfare Cases Drop 20% in U.S., Study Finds

WASHINGTON — Pioneering welfare reform programs implemented in many states even before a sweeping welfare reform bill took effect may account for the departure of nearly a million Americans from federal welfare rolls, a White House study released Friday concluded.

But a booming economy was an even bigger factor in the 20% decline--representing almost 2.8 million people--in the nation’s welfare caseloads in the last four years, according to President Clinton’s Council of Economic Advisers. The president’s chief economic analysts calculated that between January 1993 and January 1997, about 1.2 million people--roughly two-thirds of them children--left the welfare rolls because of the nation’s economic expansion.

Those findings demonstrate that organized programs to reform welfare are key to reducing welfare dependency, Clinton administration officials asserted in releasing the analysis. And they predicted that as a comprehensive welfare reform bill takes effect in all 50 states, welfare rolls will continue to decline across the nation.

“Now we know that what’s behind the record drops in welfare rolls isn’t just ‘the economy, stupid!’ ” said Bruce Reed, one of Clinton’s chief domestic policy advisors. “It’s government policy as well.”

At the same time, their findings underscore the fact that future progress in paring welfare rolls will depend heavily on continued economic prosperity. With economic expansion driving some 44% of the drop in welfare recipients since 1993, officials conceded that an economic downturn could slow or even reverse the decline.

“If the economy really turns, we may have to make some changes at the request of the states,” Health and Human Services Secretary Donna Shalala, said Friday. “No one ever thought we were going to get it right the first time. And in fact, we thought there were weaknesses in the bill itself.”

The White House analysis helps unravel one of the central mysteries of welfare reform: What factors drive welfare rolls down?

It is a question that has preoccupied government officials and academic analysts who have watched as the nation’s welfare caseloads reached a historic peak in 1993, when 14.1 million individuals received federal aid, then plummeted to 11.3 million in January 1997.

In California, however, welfare rolls peaked a bit later, reaching 2.69 million recipients in January 1995. While the state’s rolls had dropped to 2.47 million by January 1997, that level remains 2% higher than the state’s 1993 level, which the White House used as the starting point for its analysis.

As a result, California may appear to have bucked the nationwide trend and to defy the analysis released Friday. The state had, after all, the two factors that the White House analysis deemed critical to reductions in welfare recipients: It was implementing several experimental welfare reforms statewide and the drop in the state’s unemployment rate during the period studied was higher than the national average.

But Phillip B. Levine, a senior economist who helped prepare the White House analysis, suggested that the recent welfare roll reductions in California may simply be a delayed response to the state’s late economic recovery, as well as to Sacramento’s welfare reform experiments.

*

Officials acknowledged on Friday that their analysis leaves unanswered the question of what happens to individual welfare recipients when they leave the rolls. Do they get jobs and prosper? Do they leave the state in search of better opportunities or benefits elsewhere? Do they bounce in and out of the work force? Are they driven deeper into poverty?

“We don’t know what happened to individual women,” said Janet Yellen, who chairs the Council of Economic Advisers. But the analysis does indicate, she said, the relative weight of various factors that have driven millions of women off welfare.

Neither does the analysis end debate over who deserves credit for driving welfare dependency down in the years before Congress passed its comprehensive welfare reform bill.

The Bush administration was the first to make extensive use of waivers allowing states to depart from federal welfare guidelines and implement their own reforms. But after 1993, requests for waivers from states--many of them led by Republican governors--began pouring into Washington, and the Clinton administration approved most of them. President Clinton has granted waivers to 43 states and often has touted his actions as having driven down welfare dependency across the nation.

In addition to state-by-state welfare reform programs and a booming economy, the White House economists reckoned that factors as varied as reductions in births to teenage mothers, efforts to step up child-support collections and the expansion of the Earned Income Tax Credit, a tax break for the working poor, account for the departure of roughly 690,000 families from the nation’s welfare rolls.

“We know how most women get off of welfare,” Shalala said Friday. “They get a job, they get married or they get child support [payments].”

Shalala went on to note that an economic upturn may not always draw a female head of household into the job market and thus off welfare, but it could have subtle indirect effects. A thriving job market instead may draw fathers of welfare children into the work force. When economic expansion is thus paired with other policy changes, like more aggressive child-support collection efforts, a family can be lifted off public assistance, she said.

Administration officials used the release of Friday’s study to press for additional funds to help states implement welfare reform. Included is a $3 billion fund to expand job training and placement efforts by states and $600 million to provide employers a tax break if they hire welfare recipients. Clinton has asked Congress for an additional $300 million to continue Medicaid benefits for disabled children whose parents will be drawn into the work force under welfare reform.

Shalala said that such expanded efforts will be particularly important if the nation hopes to build on the gains it has made in reducing welfare dependency.

“With the welfare rolls dropping this far, the question is how much farther can they drop and what’s left in that population,” Shalala said. “Is it a hard-core population with very complex problems?”

Shalala said she believes that further reductions are possible but that, as states reach the point where their most employable aid recipients already have left the rolls, those that remain will require more intensive assistance to do the same.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Drop in Welfare Recipients

The number of welfare recipients nationwide fell by 20%--or 2.75 million recipients--between January 1993 and January 1997. Much of the credit is given to a better economy and innovative state programs.

Though higher since start of study, Calif. cases have dropped since 1995

The Decline

Share of total population receiving welfare

1989: 4.3%

1993: 5.4%

The Explanation

Reason cited for decline in welfare caseloads, 1993-1996:

Economic expansion: 44%

State initiatives on reducing welfare: 31%

Other factors: 25%

Source: White House Council of Economic Advisers.