The persistence of poverty was a central question surrounding the August 1996 enactment of the Personal Responsibility and Work Reconciliation Act (PRWORA). This legislation dramatically changed both the nature and provision of public assistance/welfare in the United States. Block grants from the federal government called Temporary Assistance for Needy Families (TANF) replaced the Aid to Families with Dependent Children (AFDC) program. Under TANF, recipients are subject to new rules such as time limits, work requirement, and personal responsibility measures.
The AFDC program, created in 1935 as part of the Social Security Act, was enacted to allow single mothers, usually widows at that time, to stay at home and take care of their young children rather than being forced to leave home and enter the labor force. Since then fundamental changes have occurred in our society. The number of divorced, separated, and never-married mothers has increased, and the labor force participation of women, in general, and mothers, in particular, has increased such that it has become an accepted and even expected situation. Similarly, during this period the composition of the welfare caseload changed, with the majority of recipients not being widows but rather being divorced, separated, or never-married mothers (Wallace and Blank 1999). Moreover, perceptions changed about the AFDC program as the caseload mix changed and the labor force participation of women increased (Haskins 2001).
Prior to the 1996 legislation many viewed the AFDC program as a work disincentive program (Keane 1995), and still others argued that the program was an incentive for women to have children out of wedlock in order to become eligible for welfare, that is, gaming the system for increased benefits (Moffit 1992).
The underlying premise of PRWORA was that economic self-sufficiency is the solution to poverty. PRWORA initiated reforms to the U.S. welfare system not seen since its inception, and it also directed the U.S. Census Bureau to collect data to evaluate the effectiveness of the legislation, The Survey of Program Dynamics (SPD). (1)
The following discussion differs from prior studies looking at issues related to welfare reform. (2) Rather than trying to determine the social, economic, and demographic factors that differentiate those who left the welfare roils from those who stayed on the rolls, the discussion uses data from a nationally representative survey to answer a set of fundamental questions regarding the 1996 reform legislation: (1) What did welfare leavers earn after leaving the welfare rolls? (2) Did leavers and their families escape being poor after leaving the welfare rolls? and (3) How many leavers returned to welfare after leaving the rolls in 1996?
The goals for the SPD are threefold: first, to provide information on spells of program participation in the ten-year period of data collection; second, to provide data on the causes of program participation and the long-term consequences on the well-being of recipients, their families and their children; and, last, to provide researchers and policy analysts with data to monitor the possible long-term changes for individuals due to implementing protocols under PRWORA. To meet these objectives, data were collected for seven years on the demographic, social, and economic characteristics of a nationally represented sample of the U.S. population. These data supplement three years of longitudinal data available from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). When all data are released, the SPD will provide ten years of data which are fully edited, consistently formatted, and longitudinally processed on program eligibility, access, and participation; transfer income and in-kind benefits; employment transitions; income sources and values; and family composition. For this note the SPD second longitudinal file (SLF) was the most recent release available for use. It provides longitudinal data on more than 29,000 people, spanning the years 1993-1994 and...