A good time for welfare reform.

• Author: Tweedie, Jack

An improved economy and lighter welfare caseloads give states a little welcome leeway in their efforts to change "welfare as we know it."

States could hardly have picked a better time to take on the difficult challenges of welfare reform. A strong economy and rapidly declining caseloads give states a running start on moving people from welfare into jobs. Don't misunderstand: States still must move many more recipients into jobs than have left welfare so far. An economic downturn would undermine even their current achievements. But current conditions give them a good job environment and more resources to concentrate on fewer cases. States are learning which approaches work. And the early progress can contribute to the momentum necessary to transform the welfare system from one that writes checks to one that prepares recipients for work and provides them with needed support services such as child care and transportation

SHRINKING CASELOADS

Across the country, caseloads declined by 20 percent from January 1993 to January 1997. This is the largest decline in over 50 years. In 17 states, caseloads declined by more than 30 percent. In 17 others, they declined between 21 percent and 30 percent, so that two-thirds of all the states have had declines of more than 20 percent. In only four states have caseloads increased during this time.

The drop has occurred for a number of reasons, but it is difficult to say exactly why there has been such a large decline now. In the past, welfare caseloads have been strongly affected by the economy and the number of jobs, especially low-wage jobs, available. The strong economy across the country is probably the primary reason that caseloads have dropped. The critical question is how much difference state and federal welfare reforms have made. A recent report by the White House Council of Economic Advisers credits 44 percent of the drop to the falling unemployment rate and 31 percent to welfare reform. While no one method of calculating these effects is necessarily accurate, this estimate does highlight the critical role of the economy and the potential effect of welfare reforms.

Linking caseload drops and welfare changes is tricky. Some of the largest caseload drops are in states that are aggressively pursuing reforms, such as Indiana, Oregon and Wisconsin. However, large drops have also occurred in states that have not yet implemented major charges, such as Alabama and West Virginia. And even in the aggressive...