Better Off Welfare

Studies | Welfare

No. 255
Monday, October 07, 2002
by Joe Barnett

Potential for Additional Caseload Decline

Table II - Change in Welfare Caseloads

"Less than half of welfare recipients have been subject to enforceable work requirements."

As previously noted, although national welfare rolls have fallen by more than 50 percent under the federal reforms and some states have reduced their rolls substantially, other states have reduced their caseloads by less than 25 percent. [See Table IIA.] [See Table IIB.]

How Much Do Sanctions Matter? The most significant factor in caseload reduction is the policies established by the states - specifically, whether or not the state has an effective sanctions policy. Effective sanctions terminate benefits for noncompliance. Sanctions may be imposed when recipients refuse work, fail to keep appointments or refuse to document illnesses they claim resulted in unexcused work absences. Some states sanction recalcitrants but reduce benefits by only a token amount. Some states have such an extensive appeals process (during which welfare payments continue) that their sanctions are ineffective.44

Yet effective sanctions rather than state unemployment rates, demographics or the proportions of disadvantaged women on welfare best correlate with caseload reductions.45 Only effective sanctions compel welfare recipients to comply with program requirements. More than half of welfare recipients have not been subject to enforceable work requirements. The less successful states have had ineffective sanctions, high benefit levels and other counterproductive policies. For instance, through prolonged appeals processes, very modest benefit reductions or transferring cash benefits to the children of sanctioned parents, 17 states still allow recipients to receive welfare even if they refuse to participate in required activities.

Two of these states, New York and California, account for nearly a third of the remaining welfare caseload.

New York. In New York state, if welfare recipients refuse to comply with work requirements, their benefits are reduced by a small amount (from $588 per month to $475 for a family of three), but they continue to receive food stamps, public housing and other benefits. As a result, "recent figures show that, of those adults who are assigned to an activity, only 54 percent participate as their assignment requires."46

"New York and California have ineffective sanctions and account for nearly a third of the remaining caseload."

California. California offers high benefits and ineffective sanctions. Much of the fall in federal welfare rolls (TANF) in California was due to the state transferring all two-parent families to a program that uses discretionary state funds, does not have to meet federal requirements and does not count in the TANF caseload. If the state had adopted the welfare policies of an average state, 200,000 fewer Californians would be receiving welfare.47

California and some other states also allow recipients to combine benefits with a high level of wage income. This has created incentives to remain on welfare. The Urban Institute found that 20 percent of welfare recipients combined welfare and work in 1999, compared to 5 percent in 1997.48

Without any changes in federal law, the states that have failed to reduce their welfare rolls by as much as the average could adopt more effective policies. The impact would be significant:

  • The average (and median) state caseload decline from 1993 to 2000 was about 59 percent.
  • If the 23 less-than-average states had done as well as the average state, more than 800,000 additional people would have left welfare.
  • Instead of a 59 percent reduction in welfare rolls, the United States would have 66 percent fewer welfare recipients.49

This would amount to a reduction of about 15 percent in the more than five million Americans who now collect welfare.

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