NCPA - National Center for Policy Analysis

Work Lifts Welfare Families From Poverty

October 3, 2002

Congress on Monday extended the 1996 welfare reform law for three months. In effect, it delayed debate on reauthorization of the landmark legislation that ended the federal entitlement to a welfare check and required states to move recipients into jobs.

Although the poverty rate for low income families rose by 1.3 percent in 2001, that up tick came after a record decline that has reduced the poverty rate for low income families and children to historic lows. Meanwhile, the employment of single mothers was rising to record highs.

That these trends were occurring simultaneously under welfare reform is no coincidence, say experts. That is because even a minimum wage job lifts families out of poverty.

For example, in 2000 the poverty threshold for a single mother with two children was $13,874.

  • Welfare benefits of $421 a month ($5,052 a year), plus near-cash food stamp benefit benefits of $4,920 yielded an effective income of $9,072 -- leaving the typical welfare family in poverty.
  • But with a full-time minimum wage job paying $5.15 an hour, that same family would have wage income of $9,512, and would qualify for food stamp benefits of $1,934 and a refundable Earned Income Tax Credit of $3,888 -- giving them total income of $15,334, which is $1,460 above the poverty line (111 percent of the poverty level).
  • And with a full-time job paying only $7.50 an hour, the family would have $13,852 in wages, $806 in food stamps and an EITC of $3,402 -- for a total family income of $18,060, or 130 percent of the poverty level.

Thus, editorializes USA Today, "the evidence is clear that a combination of tough work requirements and targeted government programs provide an effective safety net for children."

Source: Editorial, "Tough Economy Reveals Welfare Reform's Successes," USA Today, October 3, 2002; Maude Hurd, "Where Is Child Safety Net?" Opposing View, USA Today, October 3, 2002.

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