Timothy T. Taylor Home Page
Journal of Economic Perspectives
Articles and Writing
Economics Textbook
Classroom Teaching
The Teaching Company
High School Pedagogy

Articles and Writing

June 30, 1994
"... And Welfare Reform isn't Likely to Change That"
San Jose Mercury News
By Timothy Taylor
<< Back to 1994 menu

WELFARE REFORM is wildly popular. However, I suspect that the popularity is due to a combination of ignorance about the basic facts of the Aid to Families with Dependent Children (AFDC) program, and to frustration with single mothers, crime and the high cost of government social programs.

But welfare reform is almost surely incapable of addressing these problems.

For example, welfare reform isn't likely to save much money. AFDC now spends about $23 billion a year on benefits, including both federal and state money. Even after the recession-induced jump in AFDC spending in the early 1990s, AFDC spending actually grew more slowly than the economy as a whole from 1970 to 1992.

Compared with big-ticket items, like the $280 billion defense budget, $320 billion for Social Security, or $1 trillion that the U.S. spends on health care, AFDC just isn't a big lake to fish for cost savings.

There seems a widespread belief that welfare has contributed to many social pathologies, like crime, single teen-age motherhood, inner-city blight, and so on. There are anecdotes to back up these beliefs -- but there are anecdotes to back up the belief that Elvis is lunching at the Ritz with Princess Di and the Wolfman, too.

Setting juicy stories aside, social scientists have found little hard evidence to link welfare to social problems. The main analytical difficulty is that the average welfare check (adjusted for inflation) has fallen steadily: from $644 in 1970 to $458 in 1980 to $388 in 1992. If welfare is a major cause of certain social problems like non-marital births or crime, then it should logically follow that lower welfare payments would reduce those problems.

But if cutting the average welfare payment by about 40 percent -- which, in effect, is what has happened since 1970 -- hasn't ameliorated these problems, then why should anyone expect additional limits on welfare payments to suddenly have a beneficial effect?

It's surely true that the number of families receiving welfare has increased dramatically, from 1.9 million in 1970 to 4.7 million in the 1992 recession. But a growing number of families on welfare doesn't prove, in any logical sense, that welfare caused them to become dependent. After all, a growing number of people receiving Social Security doesn't prove that retirement benefits cause people to become old, either.

In the case of welfare, two main factors seem to be increasing the number of recipients.

For starters, the number of non-marital births has increased. Since the change has happened at all income levels, both for those who receive AFDC and for those who don't, it seems unlikely that AFDC is a main cause. In fact, the average welfare family has the same number of children (1.9) as does the average married couple with children. But a growing number of single mothers has also meant a growing number of welfare recipients.

A second force increasing the welfare population is that it's harder for a low-skilled worker to find a well-paid job than it used to be. As the U.S. economy has come to emphasize skills and technology, the economic reward for education and experience has increased -- and so has the economic penalty for the undereducated.

The latest wave of welfare reform largely ignores underlying causes for the rise in welfare recipients. Instead, President Clinton's proposal offers a tradeoff: for conservatives, a two-year limit on AFDC payments for some mothers; for liberals, $9.3 billion over five years to help those mothers find private-sector jobs, or to create public sector jobs where necessary.

This plan for time-limited welfare has a tidy, bipartisan sound. But no one really has any idea how it would turn out.

The "workfare" programs of the last few years offer some evidence that a program for moving welfare recipients who have school-age children into jobs can pay off, saving the government a modest amount and increasing the average income of the former welfare recipients.

But those programs prove nothing about Clinton's proposal for a two-year limit. Those who run into the two-year limit will be among the least educated and lowest motivated of all welfare recipients. They will often have toddlers, rather than school-age kids. Many have personal problems; researchers at Columbia University just reported that more than one-third of the mothers on AFDC have drug or alcohol problems.

There is no evidence that training hard-core welfare recipients is possible or cost-effective. Nor is there evidence that giving a welfare recipient a newly created public sector job prepares them for private sector employment in the future.

Even if such evidence did exist, Clinton has not proposed nearly enough money to put all welfare recipients into training, education, job search or public employment. His bill offers little child care support. At best, Clinton's version of welfare reform is a limited experiment, not a revolution.

When confronted with these facts, advocates of welfare reform usually fall back on saying that welfare is a disaster, and America has to try something different. That argument gives a reason to experiment with a Clinton-style welfare reform. But it doesn't offer any particular reason to be optimistic about the results.

Since 1970, average Aid to Families with Dependent Children benefit has declined, but the number of recipient families has increased. The figures in the first two categories are adjusted for inflation, calculated in 1992 dollars.

  1970 1980 1990 1992
Spending on benefits $14.8 bill. $19.6 bill. $19.9 bill. $22.2 bill.
Average monthly benefit per family $644 $458 $417 $388
Average size of recipient family 4.0 3.0 2.9 2.9
Average no. of recipient familes per month 1.9 mill. 3.6 mill. 4.0 mill. 4.7 mill.

Source: House Ways and Means Committee, 1993 Green Book

<< Back to 1994 menu