The Leaflet: Moving from Welfare to Work
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.
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