Skip Navigation

The Leaflet: Moving from Welfare to Work

July 19, 2018

This week's Leaflet examines existing welfare work requirement laws and their effects thus far.

In the 1990s, a bipartisan effort to reform the Temporary Assistance for Needy Families (TANF) cash-assistance program led to meaningful and lasting changes. But despite the success of TANF reform, similar efforts have not yet been taken in the nation’s myriad non-cash welfare programs. Many claim that such reforms are unnecessary because “welfare recipients who can work are working.” However, this myth was recently debunked in a Council of Economic Advisors (CEA) report.

According to CEA, 54 percent of the 18.6 million non-disabled, non-elderly adults enrolled in the Supplemental Nutrition Assistance Program (SNAP), commonly called “food stamps,” do not work. Furthermore, 60 percent of the 18.6 total work fewer than 20 hours per week. Surprisingly, adults with dependent children had a higher working rate than those with no children. For example, 60 percent of childless adults did not work at all during the month in which they received food stamps versus 46 percent of adults with children ages one to five. Similarly, 53 percent of Medicaid recipients did not work any hours in the month in which they received benefits. These numbers indicate the majority of people (excluding the disabled, children, and elderly) enrolled in these welfare programs would not satisfy a typical 20-hours-per-week work requirement.

The CEA report recommends expanding work requirements to all non-cash welfare programs for non-disabled, working-age adults to promote self-reliance and reduce welfare rolls. “States can design their own community engagement requirement definitions, which can include activities such as paid employment, job training, community service, education, and drug treatment,” the report notes.

The thriving economy provides a strong foundation for welfare work requirements. The national unemployment rate is lower than it has been in two decades, hovering at 4 percent. Thirty-five states experienced growth in their nonfarm payrolls over the past year. In fact, there are 6.6 million unfilled jobs, according to the Bureau of Labor Statistics. In other words, if one wants to get a job, there are plenty of openings!

There is evidence work requirements foster self-reliance and increase economic output. For instance, employment, wages, and self-sufficiency all increased for Maine’s food stamp population after it reinstated part-time work requirements for able-bodied adults without dependents (ABAWD). Six months after the work requirements were implemented, the Pine Tree State’s SNAP enrollment dropped from more than 16,000 to less than 3,000. Thousands of former enrollees entered the workforce, where they experienced a 114 percent rise in income. On the other hand, qualified enrollees’ average benefits dropped 13 percent.

Similar improvements in Kansas’ SNAP population occurred after the Sunflower State reinstated work requirements and time limits for ABAWDs in 2013. Within three months of implementation, nearly half the state’s enrollees exited the program, gained employment, and experienced an average increase in their incomes of 127 percent. Both the Maine and Kansas reforms have saved taxpayers a combined $90 million annually.

In January 2013, the Centers for Medicare and Medicaid Services (CMS) allowed states to apply for a demonstration waiver to establish work requirements for Medicaid recipients. To date, Arkansas, Indiana, Kentucky, and New Hampshire have sought and gained approval from CMS to enact Medicaid reform. In 2017, the American Economic Journal found a statistically meaningful employment reduction of 5.3 percentage points attributed to Medicaid coverage of childless, working-age adults. This finding is consistent with a previous study that found there was a 4.6 percentage point increase in employment after ABAWDs stopped receiving Medicaid coverage in Tennessee.

The disincentive to work and the reduction in the number of eligible workers are consequences of welfare programs that have unfettered taxpayer-provided cash and in-kind welfare programs, an argument backed by economic theory and empirical research. Legislators should reform welfare programs so they provide popular, commonsense solutions that promote self-reliance, reinforce the dignity of work, and strengthen the American dream.

 

What We're Working On

Education
Investigation of Sexual Abuse in Chicago Public Schools Proves the Need for Child Safety Accounts
In this Research & Commentary, Policy Analyst Tim Benson writes about a Chicago Tribune investigation that found rampant student abuse in Chicago Public Schools from 2008 to 2017. Benson argues that this inexcusable behavior makes the case for Heartland’s Child Safety Account (CSA) proposal, a type of education savings account that would allow students to easily transfer to safe schools if they are being bullied, harassed, or otherwise placed in unsafe circumstances.

Energy & Environment
Gov. Hickenlooper’s Low-Emission Vehicle Executive Order Is Costly, Dangerous, and Unnecessary
In this Research & Commentary, Benson analyzes Gov. John Hickenlooper’s executive order forcing Colorado to adopt California’s low-emission vehicles standards, which mandates 15 percent of vehicles sold in the state by 2025 must produce zero greenhouse gas emissions. Benson argues broad-based adoption of zero-emission vehicles (ZEVs) in Colorado will likely increase pollution and environmental costs. Furthermore, he states there is effectively no economic value to the potential carbon dioxide emission reductions of ZEVs and claims Hickenlooper is essentially asking non-wealthy Coloradans to subsidize the purchase of high-end vehicles by their upper-class neighbors, who are the overwhelming purchasers of ZEVs.

Budget & Tax
Arkansas Task Force Should Embrace Lower Income Taxes
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines several tax reform proposals from the Arkansas Tax Reform and Relief Task Force. “Maintaining a complex income tax code imposes high administrative costs on the government and high compliance costs on businesses and individuals. Cutting the income tax would improve Arkansas’ economic competitiveness by leaving more money in the pockets of the state’s citizens and businesses to spend, save, and invest,” Glans wrote.

Health Care
The Battle for Medicaid Work Requirements (Guest: Charlie Katebi)
In this episode of the Heartland Daily Podcast, Sarah Lee, managing editor of Health Care News, speaks with State Government Relations Manager Charlie Katebi about Kentucky Gov. Matt Bevin’s efforts to enact Medicaid work requirements. In June, a federal District Court judge blocked the popular work requirements. Bevin is expected to appeal the decision.

From Our Free-Market Friends
Family Matters: The Role of Family Structure in Opioid Use and Foster Care in Wisconsin
In this paper, the Wisconsin Institute for Law & Liberty’s Natalie Goodnow and Dr. Will Flanders write about the relationship between family structure and opioid hospitalizations. Goodnow and Flanders reveal that “a primary indicator of opioid abuse in Wisconsin is family structure,” citing that “counties with low income but traditional family structures, such as Rusk County and Grant County, tend to see lower rates of opioid abuse.” In addition to examining opioid abuse, the authors consider the relationship between family structure and other elements, such as poverty rates and the number of children in foster care. Goodnow and Flanders conclude “the poverty rate is highly predictive of the number of foster kids,” and “single-parent households are related to higher poverty rates.”

 

Click here to subscribe to The Leaflet, the weekly government relations e-newsletter.