Reforms to the Safety Net for Families Who Can Work

The 1990’s brought a number of changes to the social safety net for poor families in America. Perhaps the most significant was transforming a system primarily created to provide aid to parents who were not expected to work, to one in which employment was the primary goal. Even so, our safety net should provide economic security to the most vulnerable while still promoting self-empowerment. This raises questions about how well the current safety net is performing when it comes to supporting work.

Three of the five safety net programs that receive the most federal spending – Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and the earned income tax credit (EITC) – focus mostly on families with children who have at least one parent who can work—“the work-able.” In a new monograph for the American Enterprise Institute, I argue that we should work to reform these programs to more effectively promote employment while also recognizing the crucial role they play in protecting our most vulnerable families.

TANF has perhaps the most controversial history. Intended as a way to reduce welfare dependence and increase employment, some are disappointed that TANF has not done more and may have let some extremely poor families fall through the cracks. At the same time, research shows that many families were made better off, mainly because it raised employment levels and, when combined with the EITC, increased income. This suggests that reforms are needed, but whatever changes are made should not reverse the core principles of TANF—that a paycheck is better than a government check.

As structured, TANF gives states flexibility to design work programs to help participants find employment. But certain provisions in the law may be too restrictive (for example, how to count a work activity), while others provide too much flexibility (for example, leniency in the work participation rate makes it difficult to measure how effective states are in transitioning recipients into the workforce).

States should be held accountable for meeting TANF’s goals, including an assurance that funding is spent on poor families and that work programs are increasing employment. This means moving away from process measures to outcome measures, making the work participation rate more meaningful (including giving states credit for engaging hard-to-serve families), and maintaining a strong work-first focus while allowing states to experiment with various program activities, such as education and training.

SNAP is often considered one of the more effective and efficient safety net programs. A large body of research shows that SNAP reduces poverty, improves food security among low-income households, and has positive effects on infant health and long-term benefits for children who received it. Nevertheless, despite this strong track record, the program still faces challenges.

A dramatic increase in recipients and costs in recent years has raised questions about whether the program is sustainable, leading to calls for block granting the program to the states. Further, it currently places little emphasis on work, except for able-bodied adults without dependent children. Finally, questions remain about how aggressively to push for improved nutrition among recipient households. As a program designed to “improve the nutrition of low-income households,” allowing expenditures on sweetened beverages, for example, seems inconsistent with program goals.

The main challenge for SNAP is how to engage participants in work. Work requirements for able-bodied adults without dependents (ABAWDs) were largely reinstated across the country by 2016. But it is unclear the extent to which work requirements and work programs can help other populations engage in work.

SNAP Employment and Training (E & T) pilot programs are currently being tested across the country, but none are testing mandatory requirements outside of those involving ABAWDs. Additional pilots in a few states could be implemented and rigorously studied to determine whether mandatory work requirements for able-bodied adults with children could be effective and whether they increase employment among SNAP recipients. If successful, efforts to expand work requirements more broadly could be explored.

Another major reform is to test what is allowed to be purchased with SNAP. Given the clear link between sweetened beverages and obesity, we should experiment with prohibitions on these purchases to see if they have a meaningful impact on the health of program recipients.

Finally, the EITC has become the primary source of cash assistance for work-able families, far surpassing what is provided through TANF. In tax year 2013, $68.1 billion was distributed to more than 28 million tax filers. Although it effectively encourages work and reduces poverty for millions of families, clear problems persist. Most notably, Government Accountability Office research indicates that approximately one-quarter of EITC payments are made in error.

The EITC also imposes an unintentional marriage penalty. Many low-income families with children are financially better off remaining unmarried given that they face a reduction of $1500-$2000 in the EITC if they choose to marry. And the payment schedule for the EITC is problematic considering that it is intended to cover gaps between income and expenditures throughout the year, yet comes in one lump sum payment.

Some potential reforms include simplifying the rules around the EITC to reduce improper payments, increasing the benefit for married families, and testing ways to offer periodic payments throughout the year instead of once during tax time.

These three programs provide approximately $160 billion to poor, largely work-able families each year. For the most part, these programs effectively reduce poverty and decrease material hardship among our nation’s poor. But more could be done. The reforms outlined here would be a good start.

Angela Rachidi is a research fellow in poverty studies at the American Enterprise Institute.

The views expressed in this commentary are those of the author or authors alone, and not those of Spotlight. Spotlight is a non-partisan initiative, and Spotlight’s commentary section includes diverse perspectives on poverty. If you have a question about a commentary, please don’t hesitate to contact us at commentary@spotlightonpoverty.org.

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