A stunning report released by the University of Michigan’s National Poverty Center reveals that the number of US households living on less than $2 per person per day—a standard used by the World Bank to measure poverty in developing nations—rose by 130 percent between 1996 and 2011, from 636,000 to 1.46 million. The number of children living in these extreme conditions also doubled, from 1.4 million to 2.8 million.
The reason? In short: welfare reform, 1996—still touted by both parties as a smashing success.
The report concludes that the growth in extreme poverty “has been concentrated among those groups that were most affected by the 1996 welfare reform.” The law created the Temporary Assistance for Needy Families (TANF) block grant, replacing Aid to Families with Dependent Children (AFDC), which had guaranteed cash assistance to eligible families since 1935. Prior to welfare reform, 68 of every 100 poor families with children received cash assistance through AFDC. By 2010, just 27 of every 100 poor families received TANF assistance.
States were given wide discretion to determine eligibility, benefit levels and time limits, and the TANF block grant was also frozen at the 1996 level without being indexed to inflation so those dollars don’t go as far now. A majority of states now provide benefits at less than 30 percent of the poverty line (about $5,200 annually for a family of three), and benefits are below half the poverty line in every state.
Arloc Sherman, senior researcher at the Center on Budget and Policy Priorities (CBPP), provides an excellent analysis of the National Poverty Center report here. He notes that while extreme poverty doubled, “it nearly tripled for female-headed households, which make up the bulk of the TANF caseload.”
There was an opportunity recently in Congress to address, or partially address—or at the very least debate—the TANF debacle of sub-poverty benefits and declining caseloads. It wasn’t widely reported, but along with the payroll tax cut and unemployment insurance extensions, TANF was also up for reauthorization.
Congress not only took a pass on any serious debate, it threw a little gasoline on the fire.
It extended the TANF block grant through September 2012 but denied funding for the Supplemental Grants which go to seventeen mostly poor states. Dr. LaDonna Pavetti, vice president for family income support division at CBPP, notes that these supplements were created in 1996 because welfare reform resulted in poor states receiving “less than half as much federal funding per poor child as other states.”