TANF Has Been a Success—Let’s Make It Even Better

This commentary is part one of a two-part series about updating the Temporary Assistance for Needy Families (TANF) program. Next week, we will feature a perspective from LaDonna Pavetti of the Center on Budget and Policy Priorities.

President Bill Clinton and House Speaker Newt Gingrich’s 1996 partnership to transform our nation’s old cash welfare program remains a significant achievement. Temporary Assistance for Needy Families (TANF) replaced Aid to Families with Dependent Children (AFDC), moving away from an entitlement program that asked little of recipients and toward a block grant with work requirements that pushed states to help low-income Americans get a job.

As the twentieth anniversary of the program approaches and Congress pursues a serious reauthorization effort, it is critical to consider TANF’s accomplishments, as well as areas for improvement.

Based on 20 years of program performance, we can say that TANF has been a success. In the checkered history of US social policy, TANF is a bright spot: Few programs have generated such strong gains in poverty reduction and employment. The program’s robust work requirement, accountability of state performance, and expanded administrative flexibility all helped raise the labor force participation of never-married mothers from 59.5 percent in 1995 to 73.8 percent in 2001 and reduce their poverty rate from 51 percent to 38.5 percent over the same time period. While a strong economy and the expanded Earned Income Tax Credit certainly helped, studies that isolate the impact of welfare reform find that TANF itself also increased employment and earnings.

This record cautions against drastic changes to TANF, but smaller tweaks that help move more people into employment are warranted.

One area ripe for improvement is the work participation rate (WPR). Under TANF, states must engage 50 percent of their recipients in work activities to avoid losing funds. Many states game the system.

“Caseload reduction” credits let states lower their required work participation rate by reducing the number of people who receive benefits. “Excess Maintenance of Effort” exemptions allow states to engage a smaller share of recipients in work if the state spends more than is required. And some states provide very small benefits to workers in order to boost their work engagement numbers. These loopholes should be closed. Returning the WPR to a true 50 percent would re-establish it as a meaningful accountability measure.

Phasing in outcome-oriented metrics would also be a step in the right direction. These measures are untested, and should not replace existing requirements in the near term or undermine the proven work-first approach. But introducing supplementary assessments based on participant outcomes, such as job placement and job retention, could help states focus on what matters most.

And other changes proposed in the recent House Ways and Means Committee TANF reauthorization discussion draft make sense. Giving states partial credit toward their WPR for people who partially meet the work requirement but don’t reach the full thirty hours a week expectation would recognize that some work is better than no work. Eliminating the separate and higher work participation rate for married-parent families would end an implicit marriage penalty. And funding demonstration projects to evaluate programs with experimental techniques along with creating a What Works Clearinghouse – similar to the Department of Education’s – would help states pursue evidence-based policies.

But protecting what has made the program successful is just as important as addressing its weaknesses. There is compelling evidence that TANF’s work-first approach is more successful in increasing earnings than an education-based approach. The Ways and Means discussion draft goes astray in this regard.

Currently, TANF recipients must spend the majority of their required work engagement time in “core” activities (work or work-like activities), as opposed to activities that do not carry the structure or feel of work (such as education, job search, or job readiness training). Changes outlined in the discussion draft would eliminate this distinction and requirement. In doing so, it would weaken the program’s work-first focus and likely diminish TANF’s ability to help recipients gain full-time employment.

In the same vein, expanding allowable educational activities would likely make TANF less effective in getting recipients employed. Data show that rates of completion for GEDs or 2-year college certificates are low and that adult education programs fail to increase earnings over control groups. Allowing recipients up to the age of 26 to satisfy their requirements through secondary education or any recipient to pursue vocational education for 24 months (the current limit is 12 months), as the draft proposes, would not be effective at boosting employment.

And strong verification processes must remain in place. These requirements demand resources, and states do not like them. But the program’s past success and the public’s support rested on ensuring that recipients are engaged in productive activities on a daily basis.

TANF has been a rare bright spot in US anti-poverty policy. Policymakers should not forget that the primary reason the program has been successful is its work-first approach. Skepticism toward reforms that change course is warranted. However, the program also has room for improvement—be it by preventing states from playing numbers games or by incentivizing a sharper focus on employment and job retention. Reforms should help TANF build on its past success in reducing poverty, not fundamentally change it.

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Robert Doar is the Morgridge Fellow in Poverty Studies at the American Enterprise Institute. From 2007-2013, he was the commissioner of the New York City Human Resources Administration. Follow him on Twitter at @RobertDoar.

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