NCPA - National Center for Policy Analysis

State Welfare Caseloads Decline Due to Sanctions

May 11, 1999

Is the large decline in welfare caseloads over the past three years principally due to state welfare reform policies or strong employment growth? "We find that differences in state welfare policies -- specifically stringent sanctions and immediate work requirements -- are highly associated with rapid rates of caseload decline," says a new report from the Heritage Foundation.

  • During the past three years, national caseloads in the Temporary Assistance to Needy Families (TANF) program (formerly called Aid to Families with Dependent Children, or AFDC) have fallen by 37 percent.
  • Welfare rolls dropped from 4.73 million families in June 1995 to 2.98 million in June 1998.
  • However, the reductions varied enormously among the states, ranging from an 84 percent drop in Wisconsin to a 7.4 percent increase in Hawaii.
  • State economic vigor, as measured by unemployment rates, had no statistically significant effect on caseload decline, and states with higher caseload reductions, on average, had slightly higher unemployment rates.

But variations in caseload declines were highly associated with differences in the sanctions states applied to recipients. Over the 18-month period between January 1997 and June 1998:

  • States with immediate work requirements that allowed withholding the entire check at the first instance of noncompliance had an average caseload decline of 41.8 percent
  • By contrast, states with escalating penalties for repeated noncompliance -- thus delaying full-check sanctions for several months -- had an average caseload decline of 28.3 percent.
  • And in states with weak sanctions -- such as partial withdrawal of support -- caseloads declined only 17.3 percent.

Analysts speculate the new welfare policies reduced caseloads by eliminating fraud, uncovering unreported income and reducing the incentives for idleness.

Source: Robert E. Rector and Sarah E. Youssef, "The Determinants of Welfare Caseload Decline," Report No. 99-04, May 11, 1999, Center for Data Analysis, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.


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