Public Programs to Fight Poverty
Public Programs to Fight Poverty
There are many methods which the federal government and the states use to combat poverty. There are a variety of programs that provide assistance to those in or at risk of poverty. These are often referred to as welfare. Some of these programs, like Temporary Aid for Needy Families (TANF), are designed to help people improve their situation so they will no longer be poor. The Supplemental Security Income (SSI) program provides assistance to people who have conditions that make it difficult to earn a living. A number of programs, including Food Stamps and Medicaid, are intended to help those in poverty meet their basic needs for food, shelter, and medical care (these programs are discussed in Chapter 7). Besides welfare programs, the government has established programs and policies like the minimum wage and unemployment compensation that are intended to help people avoid poverty in the first place.
The most far-reaching welfare law is the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). First enacted in 1996 and renewed since, PRWORA replaced a welfare system based primarily on the Aid to Families with Dependent Children (AFDC) program with one centered on TANF. Critics of AFDC felt that the system produced welfare dependency rather than temporary assistance to help recipients move into a job and off welfare. TANF was specifically designed to limit the amount of time individuals could receive benefits, and to require that they work. The intention of the law was to reduce the number of people receiving welfare by bringing them into the workforce and out of poverty. PRWORA also changed some other welfare programs to place greater emphasis on these priorities.
According to the U.S. Department of Health and Human Services (HHS), in Temporary Assistance for Needy Families Program (TANF): Sixth Annual Report to Congress (November 2004, http://www.acf.hhs.gov//programs/ofa/annualreport6/chapter10/chap10.pdf), the welfare caseload fell from a monthly average of 4.5 million families during fiscal year (FY) 1996 to an average of 2.1 million families per month during FY 2002, a drop of 53%. This represented the largest welfare caseload decline in history. Observers agreed that some of the decline was the result of a strong economy in which unemployment was around 4%, an unprecedented low, rather than welfare reform. For example, a study conducted by the City University of New York and cited by the HHS in Temporary Assistance for Needy Families Program (TANF): Fourth Annual Report to Congress (April 2002, http://www.acf.hhs.gov/programs/ofa/opreweb/ar2001/indexar.htm) attributes 60% of the reductions in caseloads to welfare reform and 20% to the effects of a robust economy.
Critics of PRWORA question if the reduction in welfare caseloads are really a good thing. They are concerned that the system's time limits and its focus on moving people off of welfare and into work forces some individuals off of benefits even if they have a genuine need for them. For instance in states that are unable to provide jobs with a living wage the PRWORA system may merely move the poor population from welfare into low-wage work and deeper into poverty. In the fact sheet "TANF at 10" (August 17, 2006, http://www.cbpp.org/8-17-06tanf.htm), Sharon Parrott and Arloc Sherman note that the share of poor children who received TANF benefits dropped by half from 1995 to 2003, from 62% in 1995 to 31% in 2003. Parrott and Sherman state, "More than half—57%—of the caseload decline during the first decade of welfare reform reflects a decline in the extent to which TANF programs serve families that are poor enough to qualify, rather than to a reduction in the number of families who are poor enough to qualify for aid." As a result of these concerns, modifications to welfare legislation continue to be proposed.
PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT
Title I: Block Grants
Under the PRWORA each state receives a single block grant (a lump sum of money) for TANF programs. The amount of money available under TANF has remained steady at about $16 billion per year. However, Gene Falk points out in Temporary Assistance for Needy Families (TANF) Block Grant: FY2007 Budget Proposals (March 3, 2006, http://www.nationalaglawcenter.org/assets/crs/RS22385.pdf) that in constant dollars federal welfare spending has steadily decreased since 2001.
States have considerable control over how they implement the programs covered by the block grant, but the act requires that:
- Families on welfare for five cumulative years no longer receive further cash assistance. States can set shorter time limits and can exempt up to 20% of their caseload from the time limits.
- To count toward meeting the work requirement, a state must require individuals to participate in employment (public or private), on-the-job training, community service, work experience, vocational training (up to twelve months), or child care for other workers for at least twenty hours per week. State and local communities are responsible for the development of work, whether by creating community service jobs or by providing income subsidies or hiring incentives for potential employers.
- Unmarried parents under the age of eighteen must live with an adult or with adult supervision and must participate in educational or job training to receive benefits. In addition, the law encourages second-chance homes (discussed later in this chapter) to provide teen parents with the skills and support they need. The law also provides $50 million per year in new funding for state abstinence education activities, geared toward discouraging teen pregnancy through abstinence rather than through birth control.
None of the block grant funds can be used for adults who have been on welfare for over five years or who do not work after receiving benefits for two years. However, states are offered some flexibility in how to spend their TANF funds.
Title II: Supplemental Security Income
The PRWORA redefined the term disability for children who receive Supplemental Security Income (SSI). A child is considered disabled if he or she has a medically determinable physical or mental impairment that results in marked and severe functional limitations that can be expected to cause death or has lasted or can be expected to last at least twelve months. The PRWORA removed "maladaptive behavior" as a medical criterion from the listing of impairments used for evaluating mental disabilities in children.
Title III: Child Support
To be eligible for federal funds, each state must operate a Child Support Enforcement program that meets federal guidelines. The state must establish centralized registries of child support orders and centers for collection and disbursement of child support payments, and parents must sign their child support rights over to the state to be eligible for TANF benefits. The state must also establish enforcement methods, such as revoking the driver's and professional licenses of delinquent parents. The HHS's Administration for Children and Families notes in the fact sheet "Office of Child Support Enforcement" (October 2006, http://www.acf.hhs.gov/opa/fact_sheets/cse_factsheet.html) that in FY 2005 the program collected $23 billion at a cost of $5.4 billion. Federal funding for this program continues to increase; in FY 2005, $3.5 billion in federal funding was provided to states to help fund their programs; in FY 2006, $3.9 billion was provided.
To receive full benefits, a mother must cooperate with state efforts to establish paternity. She may be denied assistance if she refuses to disclose the father.
Title IV: Restricting Welfare and Public Benefits for Noncitizens
The PRWORA originally severely limited or banned benefits to most legal immigrants who entered the country on or after the date on which the bill became law. Ineligibility continued for a five-year period or until they attained citizenship. In addition, states had the option of withholding eligibility for Medicaid, TANF, and other social services from legal immigrants already residing in the United States. Refugees, including those who had come for political asylum or other sanctuary, veterans, and Cuban/Haitian immigrants were exempted from the five-year ban.
Illegal immigrants no longer had any entitlement to benefit programs, such as TANF or Medicaid. They could receive emergency medical care, short-term disaster relief, immunizations, and treatment for communicable diseases (in the interest of public health). They could also use community services such as soup kitchens and shelters, some housing programs, and school lunches/breakfasts if their children were eligible for free public education. States established programs to verify the legal residence of immigrants before paying benefits and may elect to deny Women, Infants, and Children (WIC) benefits and other child nutrition programs to illegal aliens.
The Balanced Budget Act of 1997 and the Noncitizen Technical Amendment Act of 1998 invested $11.5 billion to restore disability and health benefits to 380,000 legal immigrants who were in the United States before welfare reform became law on August 22, 1996. The Balanced Budget Act also extended the SSI and Medicaid eligibility period for refugees and people seeking asylum from five years after entry to seven years to give these residents more time to naturalize.
Title V: Child Protection
The PRWORA gave states the authority to use current federal funds to pay for foster care for children in child care institutions. It extended the enhanced federal match for statewide automated child welfare information systems through 1997 and appropriated $6 million per year (FY 1996 to FY 2002) for a national random sample study of abused and neglected children.
Title VI: Child Care
The law required that states maintain spending for child care for low-income families at the level of FY 1994 or FY 1995, whichever was greater, to be eligible for federally matched funds. Mandatory funding was set at $13.9 billion through June 30, 2004, with states receiving an estimated $1.2 billion per year before matching began. The remainder of the funds was available for state matching at the Medicaid rate. Total federal and state expenditures on child care totaled $3.2 billion in 2000, an increase of 60% over 1999 ($2 billion). The Congressional Budget Office (CBO), in Cost Estimate (January 27, 2006, http://www.cbo.gov/ftpdocs/70xx/doc7028/s1932conf.pdf), states that the Deficit Reduction Act of 2005, which reauthorized the PRWORA, provides for increased annual federal funding for child care by $11.7 billion by 2010.
As under prior law, states must establish standards for prevention and control of infectious diseases, such as immunization programs, and for building codes and physical safety in child care institutions. Child care workers must also receive minimal training in health and safety. However, many low-income people rely on informal sources of child care, including relatives and friends.
Pamela Holcomb et al. indicate in Child Care Subsidies and TANF: A Synthesis of Three Studies on Systems, Policies, and Parents (2006, http://www.urban.org/UploadedPDF/311302_synthesis.pdf) that despite increased federal funding for child care, the need outweighs the resources available under the law. As a result of more parents working while still on welfare or leaving welfare to work, the critical need for child care has become more pronounced. In The Changing Role of Welfare in the Lives of Low-Income Families with Children (August 2006, http://www.urban.org/UploadedPDF/311357_occa73.pdf), Pamela Loprest and Sheila Zedlewski report that only 21.4% of families who received TANF monies in 2002 received help paying for child care in that year. Even though the child care support system gives priority to families leaving welfare for work over other low-income families, only four out of ten families (40.8%) that had recently stopped receiving TANF monies received help paying for child care.
Title VII: Child Nutrition Programs
The PRWORA continued existing child nutrition programs, such as the school lunch and breakfast programs. Maximum reimbursement was reduced, however, for the Summer Food Service Program and for some institutional food programs. States were allowed to decide whether to include or exclude legal immigrants from these programs. According to the U.S. Department of Agriculture (USDA), in FY 2007 Budget Summary and Annual Performance Plan (2007, http://www.obpa.usda.gov/budsum/2007/fy07budsum.pdf), the budget for FY 2007 child nutrition programs was $13.8 billion, an increase of $439 million over the previous year.
Title VIII: Food Stamps and Commodities
The law reduced maximum benefits to the level of the Thrifty Food Plan, the index set by the USDA that reflects the amount of money needed to purchase food to meet minimal nutrition requirements. Benefits were indexed to the rate of inflation so that they increase as inflation rises.
The law also restructured the way certain expenses and earnings were counted in establishing eligibility for food stamps. Under the PRWORA, when recipients' benefits are calculated, their countable monthly income is reduced by several deductions, including a standard deduction, a deduction for excessively high shelter expenses, a dependent care deduction, and medical expenses for the elderly and disabled. These deductions raised food stamp allotments. In the fact sheet "Food Stamp Program" (January 4, 2007, http://www.fns.usda.gov/fsp/applicant_recipients/fs_Res_Ben_Elig.htm), the USDA reports that through September 30, 2007, the maximum monthly allotment for a household of one was $155, for a household of two was $284, for a household of three was $408, and for a household of four was $518.
By law, all food stamp recipients who are eighteen to fifty years old and without children (known as able-bodied adults without dependents [ABAWD]) must work at least part time or be limited to three months of assistance in a thirty-six-month period. Recipients who were in a workfare program (a welfare program that usually requires recipients to perform public-service duties) for thirty days but lost their placement may qualify for an additional three months of food stamps. (This provision was revised to allow states to exempt 15% of ABAWD recipients from this restriction.)
Since 1996 many changes have been made to the PRWORA. The PRWORA was reauthorized through 2010 when President George W. Bush signed the Deficit Reduction Act of 2005 in February 2006. This bill did not increase funding for TANF programs and further restricted eligibility requirements. The Communications Workers of America noted critically in "TANF Reauthorization" (March 2, 2006, http://www.cwa-legislative.org/fact-sheets/page.jsp?itemID=27482970) that the basic TANF block grant did not increase with inflation but remained capped at $16 billion. Funding for child care was set at $2 billion for each year between 2006 and 2010. Child support enforcement funding was reduced. Drug testing became required for every TANF applicant and recipient. Finally, the bill allowed TANF funds to be used to promote the value of marriage through public advertising and high school and adult classes and mentoring programs.
ELIGIBILITY FOR TANF AND BENEFIT PAYMENTS
Under TANF, states decide how much to aid a needy family. No federal guidelines exist for determining eligibility, and no requirement mandates that states aid all needy families. Though TANF does not require states to have a need standard or a gross income limit, as the AFDC did, many states have based their TANF programs in part on their earlier practices.
The maximum benefit is the amount paid to a family with no countable income. (Federal law specifies what income counts toward figuring benefits and what income, such as child support, is to be disregarded by the state.) The maximum benefit is to be paid only to those families that comply with TANF's work requirements or other program requirements established by the state, such as parental and personal responsibility rules.
Although most states vary benefits according to family size, some eliminate or restrict benefit increases because of the birth of a new child to a recipient already receiving benefits, in effect penalizing poor families for having children. Instead, benefits depend on family size at the time of enrollment in sixteen states. Idaho pays a flat monthly grant that is the same regardless of family size. Wisconsin pays benefits based on work activity of the recipient and not on family size. Five states provide an increase in benefits to TANF families following the birth of an additional child.
Most states did not change their maximum benefits between July 1994 and January 2003, despite the major changes brought about by the PRWORA. When taking inflation into account, the value of benefits in most states has actually declined. (See Table 3.1.)
Most families receiving TANF benefits are also eligible for food stamps. A single benefit determination is made for both cash and food assistance. Though the eligibility and benefit amounts for TANF are determined by the states, food stamp eligibility and benefit amounts are determined by federal law and are consistent in all states.
Food stamp benefits, which are administered by the USDA, are not counted in determining the TANF cash benefit. However, TANF benefits are considered part of a family's countable income in determining food stamp benefits, which are reduced $0.30 for each dollar of countable income. Therefore, food stamp benefits are higher in states with lower TANF benefits and vice versa. As of January 1, 2003, combined monthly benefits for a family of three were lowest in Mississippi ($525), Puerto Rico ($532), Tennessee ($535), Texas ($546), and Arkansas ($549). (See Table 3.2.) Alaska ($1,157) and Hawaii ($1,012) had the highest combined benefit for a family of three. (Poverty guidelines are higher in these two states because of higher costs of living.) Other states that paid the most in benefits included Vermont ($902), California ($881 in region 1), and New York ($898 in Suffolk County).
Who Gets TANF Benefits?
In 2003 an average of 3.7 million people, or 1.3% of the population, received TANF benefits each month. (See Table 3.3.) Some groups in the population were more likely to receive these benefits than others. Children under eighteen years old were more likely than adults to receive TANF benefits—3.4%—compared with only 0.7% of adults aged eighteen to sixty-four years and 0.1% of adults aged sixty-five and older. Women were more likely than men to receive TANF benefits (1.5% and 1.1%, respectively), reflecting their role as the primary caretakers of children.
A higher proportion of African-Americans (3.7%) received TANF benefits each month in 2003 than any other racial or ethnic group. (See Table 3.3.) Among other groups, 2.7% of Hispanics, 1.5% of Asians and Pacific Islanders, and 0.5% of non-Hispanic whites received benefits, on average, each month.
Single female-headed families were by far the most likely family group to receive TANF benefits each month in 2003. More than one out of twenty of these families (5.6%) received TANF benefits each month, compared with 1.3% of single male-headed families and 0.5% of married-couple families. (See Table 3.3.)
Adults who had a high school education or less were much more likely than their better-educated peers to receive TANF in 2003, reflecting the difficulty of earning a living wage without some higher education. In that year 1.4% of adults who had not received a high school diploma received TANF assistance each month, compared with 0.5% of high school graduates and 0.2% of adults who had attended college. (See Table 3.3.)
|Maximum AFDC/TANF benefita for a family of three (parent with two children), by state, selected years 1994–2003|
|State||July 1994||July 1996||July 1998||January 2000||January 2002||January 2003||Percent real change from July 1994 to January 2003b|
|aThis table presents maximum benefits generally available to families without income. Some states pay larger benefits to certain categories of recipients. For example, Hawaii and Massachusetts have a separate benefit schedule for persons whom they exempt from work. Also, some states supplement benefits for families with special needs.|
|bThe inflation factor used to convert July 1994 dollars to January 2003 dollars was 1.2244 (representing the change in the Consumer Price Index for all urban consumers).|
|Notes: AFDC is Aid to Families with Dependent Children. TANF is Temporary Assistance for Needy Families.|
|Source: "Table 7.10. Maximum AFDC/TANF Benefit for a Family of Three (Parent with Two Children), July 1994–January 2003," in The Green Book, U.S. House of Representatives, Committee on Ways and Means, 2004, http://waysandmeans.house.gov/media/pdf/greenbook2003/Section7.pdf (accessed January 11, 2007)|
|District of Columbia||420||415||379||379||379||379||−26.3|
|New York-New York City||577||577||577||577||577||577||−18.3|
|New York-Suffolk County||703||703||703||703||703||703||−18.3|
Because TANF is designed to help those most in need, it is not surprising that most people who received TANF in 2003 were poor. In that year 6.1% of people below the poverty line received TANF assistance each month, compared with 0.5% of people who lived in families with incomes above the poverty line. (See Table 3.3.)
|Maximum combined TANF and food benefits for single-parent family from one to six persons, January 1, 2003|
|District of Columbia||346||504||671||829||970||1,152|
|New York-Suffolk County||491||699||898||1,082||1,261||1,440|
Most states have imposed a lifetime limit of five years for the receipt of TANF benefits for adults, although states are allowed to extend benefits for hardship cases or victims of domestic violence. Some states have set limits less than five years. Families in which there is no adult head of household are exempt from time limits. The actual median amount of time recipients receive TANF benefits is much lower than the lifetime limit. Between 2001 and 2003 TANF recipients received benefits for a median of 4.9 months. (See Table 2.17 in Chapter 2.) Children under eighteen years old tended to received TANF for a longer period; they received benefits for a median of 6.3 months, compared with a median of four months for adults aged eighteen to sixty-four.
|Maximum combined TANF and food benefits for single-parent family from one to six persons, January 1, 2003 [continued]|
|Food stamp calculations assume that the family does not receive an excess shelter deduction. In many states with low TANF (Temporary Assistance for Needy Families) benefits, combined benefits shown reflect the maximum food stamp allotment for the family size, but in some states the excess shelter deduction would increase food stamps (by up to $110 monthly-more in Alaska and Hawaii). Calculations assume a singleparent family with no earned income.|
|*Wisconsin has no one-person families in its regular W-2 (TANF) program. Pregnant women without children are ineligible and "child-only" recipients have been moved into special programs of kinship care and SSI (Supplemental Security Income) caretaker supplements. The kinship care payment is $215 monthly per child; the SSI caretaker supplement program provides $250 monthly for the first eligible child and $150 for each additional child.|
|Source: "Table 7-12. Maximum Combined TANF and Food Benefits for Single-Parent Family from One to Six Persons, January 1, 2003," in The Green Book, U.S. House of Representatives, Committee on Ways and Means, 2004, http://waysandmeans.house.gov/media/pdf/greenbook2003/Section7.pdf (accessed January 11, 2007)|
Asians and Pacific Islanders had a much higher median duration of participation in TANF than did other racial and ethnic groups. Between 2001 and 2003 Asians and Pacific Islanders had a median duration of 11.4 months, compared with 6.5 months for African-Americans and four months for Hispanics and non-Hispanic whites. (See Table 2.17 in Chapter 2.)
People in families headed by a single female had a higher median duration of participation in TANF than did other family types. Between 2001 and 2003 these families had a median duration of 5.8 months, compared with 3.9 months for married-couple families and 3.8 months in families headed by a single male. (See Table 2.17 in Chapter 2.)
TANF contains provisions to encourage two-parent families and reduce out-of-wedlock births. Several provisions deal specifically with the reduction of births among teen mothers. According to Rebecca A. Maynard, in Kids Having Kids: A Robin Hood Foundation Special Report on the Costs of Adolescent Childbearing (1996, http://www.robinhood.org/approach/KHK.pdf), teen mothers tend to have less education and fewer job skills than older mothers.
|Average monthly program participation rates for TANF or general assistance, by selected characteristics, 2001–03|
|Characteristic||Temporary Assistance for Needy Families(TANF)/General Assistance Participation rates (in percent)|
|Total number of recipientsa||3,935||3,584||3,667|
|As percent of the population||1.4||1.3||1.3|
|Race and Hispanic originb|
|Asian or Pacific Islander||2.0||1.8||1.5|
|Under 18 years||3.7||3.3||3.4|
|18 to 64 years||0.7||0.7||0.7|
|65 years and older||0.1||0.1||0.1|
|Educational attainment (people 18 and older)|
|Less than high school graduate||1.7||1.6||1.4|
|High school graduate, no college||0.6||0.5||0.5|
|Disability status (people 15 to 64 years old)|
|With a work disability||2.1||1.6||1.5|
|With no work disability||0.6||0.6||0.7|
|In married-couple families||0.5||0.5||0.5|
|In families with a female householder, no husband present||6.5||5.8||5.6|
|In families with a male householder, no wife present||1.4||1.1||1.3|
|Employment and labor force status (people 18 and older)|
|Not in labor force||1.2||1.2||1.1|
Teen mothers have a much higher participation rate in major means-tested government programs than do mothers in other age groups. The U.S. Bureau of the Census finds that in 2001 half (50%) of unmarried mothers aged fifteen to nineteen who had had a child in the last year received some form of government assistance, compared with 16% of all unmarried mothers who had had a child in the last year. (See Figure 3.1.) However, older unmarried mothers were more likely than younger unmarried mothers to receive TANF in particular. In 2001, 68,000 of 670,000 unmarried mothers aged fifteen to twenty-four years who had had a child in the last year, or 10.1%, received TANF, but 54,000 of 365,000 unmarried mothers aged twenty-five to thirty-four years, or 14.8%, received TANF in that year. (See Table 3.4.)
|Average monthly program participation rates for TANF or general assistance, by selected characteristics, 2001–03 [continued]|
|Characteristic||Temporary Assistance for Needy Families(TANF)/General Assistance Participation rates (in percent)|
|bHispanics may be any race.|
|cFull-time and part-time employment reflect the monthly employment status.|
|dFamily income-to-poverty threshold ratio reflects the monthly poverty status. A ratio of under 1.00 indicates that a person is in poverty, whereas a ratio of higher than or equal to 1.00 indicates that a person is not in poverty.|
|Source: Tracy A. Loveless and Jan Tin, Table A-2. Average Monthly Program Participation Rates for Temporary Assistance for Needy Families or General Assistance by Selected Characteristics: 2001–03, in Dynamics of Economic Well-Being: Participation in Government Programs, 2001 Through 2003: Who Gets Assistance? Current Population Reports, U.S. Census Bureau, P70-108, October 2006, http://www.census.gov/prod/2006pubs/p70-108.pdf (accessed January 2, 2007)|
|Marital status (people 18 and older)|
|Separated, divorced, or widowed||0.9||0.7||0.7|
|Family income-to-poverty ratiod|
|1.00 and over||0.4||0.4||0.5|
The birth rate for unmarried teens is high, although it declined in the 1990s. (See Figure 3.2.) Between 1991 and 2003 the birth rate for fifteen- to seventeen-year-olds fell significantly, from a birth rate of 30.8 per one thousand unmarried girls in that age group to 20.3 per one thousand. Births to teenagers represent a concern to society because teen mothers tend to have less education and less ability to support and care for their children. In addition, Maynard indicates that babies born to teen mothers are:
- More likely to be born prematurely and to be of low birth weight
- At risk for health problems, lower cognitive skills, and behavioral problems
- Less likely to grow up in homes with their fathers, possibly causing emotional as well as financial problems
- At greater risk to be abused
To receive TANF benefits, states are required to submit plans detailing their efforts to reduce out-of-wedlock births, especially among teenagers. To be eligible for TANF benefits, unmarried minor parents are required to remain in high school or its equivalent as well as to live in an adult-supervised setting. One provision in the law allows for the creation of second-chance homes for teen parents and their children, a type of home that already existed in some states. These homes require that all residents either enroll in school or participate in a job-training program. They also provide parenting and life skills classes as well as counseling and support services.
A performance bonus that is separate from the TANF block grant rewards states for reductions in out-of-wedlock births combined with a decline in the abortion rate. Grant money is also available for states to implement abstinence-only education programs. In addition, the welfare-reform law directs the HHS to provide a strategy to prevent unmarried teen pregnancies and to ensure that 25% of the communities in the United States implement a teen pregnancy prevention program. The CBO reports in the Cost Estimate that the 2006 reauthorization of the PRWORA provided an additional $73 million per year for FY 2006 through FY 2015 to fund healthy marriage initiatives—a variety of activities designed to promote the value of marriage to the general population and teach interpersonal skills to help ensure the stability of marital relationships.
THE WELFARE-TO-WORK CONCEPT
TANF recipients are expected to participate in work activities while receiving benefits. After twenty-four months of assistance, states must require recipients to work at least part time to continue to receive cash benefits. States are permitted to exempt certain groups from the work-activity requirements, including parents of young children (up to one year) and disabled adults. The TANF law defines the work activities that count when determining a state's work participation rate.
As part of their plans, states must require parents to work after two years of receiving benefits. In 2000 states were required to have 40% of all parents, and at least one adult in 90% of all two-parent families, engaged in a work activity for a minimum of twenty hours per week for single parents and thirty-five hours per week for at least one adult in two-parent families. This work require-
|Program participation status of mothers 15 to 44 years with a birth in the last year, by marital status and age, 1996 and 2001|
|[Numbers in thousands]|
|Marital status and age of mother||Total||Participantsb||Nonparticipantsd||1996e|
|Number||Participation ratea||Total||TANF||Food stamps||WIC||Medicaid||Housing assistance||Otherc||Number||Participation ratea|
|—Represents or rounds to zero.|
|(B) Derived measure not shown when base is less than 200,000.|
|aPercent of mothers currently participating or covered by one or more programs.|
|bCurrently participating in or covered by one or more programs.|
|cIncludes general assistance and other welfare.|
|dNot currently participating in any program.|
|eData for 1996 may vary due to analysis of additional assistance programs.|
|fIncludes married spouse present, married spouse absent (excluding separated).|
|gIncludes separated, divorced, widowed, and never married.|
|Notes: TANF is Temporary Assistance for Needy Families. WIC is Women, Infants and Children (public health program).|
|Source: Terry A. Lugaila, "Table 2. Program Participation Status of Mothers 15 to 44 Years with a Birth in the Last Year by Marital Status and Age: 1996 and 2001," in Participation of Mothers in Government Assistance Programs: 2001, U.S. Census Bureau, Current Population Reports, P70-102, September 2005, http://www.census.gov/prod/2005pubs/p70-102.pdf (accessed January 11, 2007)|
|Mothers who had a child in the last year||4,066||29.4||1,194||100.0||171||559||449||767||239||44||2,872||100.0||3,859||41.5|
|15 to 24 years||493||41.7||206||17.2||24||56||100||110||19||12||287||10.0||586||55.4|
|25 to 34 years||1,840||12.9||237||19.9||21||83||111||102||52||3||1,603||55.8||1,634||21.7|
|35 to 44 years||567||14.8||84||7.0||5||27||37||39||9||6||483||16.8||510||15.2|
|15 to 24 years||670||59.8||400||33.5||68||225||112||310||103||13||269||9.4||672||80.9|
|25 to 34 years||365||56.0||205||17.1||54||134||73||165||42||5||161||5.6||356||68.0|
|35 to 44 years||132||(B)||62||5.2||—||35||17||41||14||5||69||2.4||101||(B)|
|Mothers who did not have a child in the last year||31,174||17.1||5,334||100.0||577||2,941||449||3,484||1,834||154||25,841||00.0||31,633||21.7|
|15 to 24 years||1,049||24.3||255||4.8||14||119||46||144||61||3||794||3.1||1,119||34.4|
|25 to 34 years||6,833||10.7||729||13.7||42||332||101||416||191||7||6,105||23.6||8,061||14.7|
|35 to 44 years||12,793||6.0||763||14.3||54||357||54||451||162||32||12,030||46.6||12,581||7.5|
|15 to 24 years||1,758||48.6||854||16.0||134||422||131||626||324||25||904||3.5||1,592||63.5|
|25 to 34 years||3,724||37.9||1,411||26.4||212||919||92||982||551||33||2,314||9.0||3,609||50.1|
|35 to 44 years||5,017||26.4||1,322||24.8||121||792||25||865||546||55||3,695||14.3||4,672||33.1|
ment is becoming stricter. The 2006 reauthorization of PRWORA required 50% of all TANF recipients to work in 2006, increasing by 5% each year to 70% in 2010.
TANF recipients required to work must spend a minimum number of hours per week engaged in one of the following activities:
- An unsubsidized job (no government help)
- A subsidized private job
- A subsidized public job
- Work experience
- On-the-job training
- Job search and job readiness (a usual maximum of six weeks, total)
- Community service
- Vocational educational training (a twelve-month maximum)
- Job skills training
- Education related to employment
- High school or a general equivalency diploma completion
- Providing child care for a community service participant.
Additional provisions apply to young parents who are under the age of twenty and are either household heads or married and who lack a high school diploma. They will be considered "engaged in work" if they either maintain satisfactory attendance in high school (no hours specified) or participate in education directly related to work (twenty hours per week).
Education and Training
Reflecting a work-first philosophy, the 1996 welfare law limits the number of TANF recipients who may get work credit through participation in education and training. No more than 30% of TANF families who are counted as engaged in work may consist of people who are participating in vocational educational training. Vocational educational training is the only creditable work activity not explicitly confined to high school dropouts.
Finding and Creating Jobs for TANF Recipients
Job availability is one of the most difficult challenges facing states in moving recipients to work from welfare. While the national unemployment rate fell from a high of 7.5% in 1992 to 4% in 2000, it then began to rise again, hitting 6% in 2003. In 2006 it had fallen again to 4.6% ("Annual Average Unemployment Rate, Civilian Labor Force 16 Years and Over," U.S. Department of Labor, Bureau of Labor Statistics, February 6, 2007, http://www.bls.gov/cps/prev_yrs.htm). However, even in times of low national unemployment, unemployment in some areas of the country might be much higher, and the skill level of unemployed people may not match the skills required for available jobs. Welfare recipients often lack job skills and work experience. If suitable jobs cannot be found, states must create work-activity placements and may use TANF block grant funds to do so.
Welfare agencies have had to change their focus and train staff to function more as job developers and counselors than as caseworkers. They make an initial assessment of recipients' skills as required by TANF. They may then develop personal responsibility plans for recipients, identifying what is needed (for example, training, job-placement services, and support services) to move them into the workforce.
States have developed a variety of approaches to finding and creating job opportunities. Although most rely on existing unemployment offices, many states have tried other options to help recipients find work:
- Collaboration with the business community to develop strategies that provide recipients with the skills and training employers want
- Use of several types of subsidies for employers who hire welfare recipients directly (subsidizing wages, providing tax credits to employers, and subsidizing workers' compensation and unemployment compensation taxes)
- Targeting state jobs for welfare recipients
- Financial encouragement for entrepreneurship and self-employment
- Creation of community service positions, often within city departments, such as parks and libraries (recipients usually participate in this workfare as a condition of continuing to receive benefits rather than wages)
The results of these efforts to find welfare recipients work have been mixed. The Urban Institute reports that in fact, TANF agencies have built relationships with outside agencies in order to fulfill work program requirements, especially with nonprofit agencies; however, building partnerships with the for-profit business community occurred much less often. In addition, local TANF agencies rarely built partnerships with state agencies, but they did involve community-based nonprofit agencies, workforce development agencies, and occasionally other public agencies, like the public school system, in order to find jobs for welfare recipients. However, not all local TANF agencies made even these connections (Karin Martinson and Pamela A. Holcomb, "Reforming Welfare: Institutional Change and Challenges," The Urban Institute, July 2002, http://www.urban.org/url.cfm?ID=310535). In addition, at times of a slower economy, like in the early 2000s, fewer jobs existed for former welfare recipients (Pamela J. Loprest, "Fewer Welfare Leavers Employed in Weak Economy," The Urban Institute, August 2003, http://www.urban.org/url.cfm?ID=310837).
In Building an Employment Focused Welfare System: Work First and Other Work-Oriented Strategies in Five States (June 1998, http://www.urban.org/UploadedPDF/WORKFST.PDF), Pamela A. Holcomb et al. offer in-depth comparative analyses of how well states are adapting to work-oriented welfare systems. This study of five selected states shows that strategies to promote employment, supported by a strong economy, were effective in moving significant numbers of welfare recipients into jobs. Holcomb et al.'s report is based on site visits in early 1997 to Indiana, Massachusetts, Oregon, Virginia, and Wisconsin, states that have experienced large caseload declines. These five states had begun reorganizing their welfare systems to emphasize a work-first approach before Congress passed the 1996 welfare reform law.
According to Holcomb et al., typical practices in all five states included:
- Making the job search the first and major activity
- Restricting participation in education and training
- Imposing stricter participation and work requirements
- Enforcing heavy penalties for noncompliance
- Setting time limits on assistance
Nonetheless, despite the similarities, each state had its own unique plan for welfare reform. For instance, Virginia gave recipients the greatest opportunity to combine assistance with employment but also imposed harsh penalties for noncompliance. Both Virginia and Massachusetts required work sooner than the other states and depended heavily on community-service programs to engage recipients in some form of work. Of the states studied, Oregon had developed the most successful program for creating subsidized job opportunities for welfare recipients.
However, Holcomb et al. warn that a work-first approach alone cannot help all welfare recipients. It works best for individuals who are already fairly employable. It is less effective in helping those with significant barriers to employment or in helping recipients stay employed. After tracking a sample of recipients over a one-year period, Holcomb et al. find that, by the end of that year, 31% to 44% of the participants were still receiving cash assistance or were back on welfare, whether they had a job or not.
Norma B. Coe et al., in Does Work Pay? A Summary of the Work Incentives under TANF (December 1998, http://www.urban.org/UploadedPDF/anf28.pdf), look at the welfare-to-work program from the point of view of a benefit recipient. They find that the nation's social service system provides incentive for a single mother with two children to work, even at minimum wage. By supplementing her wage with tax credits, food stamps, and other available public assistance, a single mother can raise her family's income to 120% of the poverty level. However, because of decreasing public programs available to her if she earned more, that same mother would have little incentive to try to increase her earnings to $9 per hour.
States are now turning their attention to the needs of those with barriers to employment, including health problems, low educational and skill levels, difficulties speaking English, substance abuse, mental health problems, and victimization by domestic violence. These are people who require intensive supportive services to obtain employment and for whom a work-first approach is not appropriate.
In "Welfare Reform Mostly Worked" (July 24, 2005, http://www.urban.org/publications/900824.html), Olivia A. Golden, the assistant secretary for children and families in the HHS under President Bill Clinton, presents her thoughts concerning welfare reform. She believes the welfare-to-work model "mostly worked" in the sense that welfare caseloads have dropped and that most low-income parents are now working to support their families. However, even though welfare-to-work was successful, its success brought about additional problems. She states that "in less than a decade, welfare has faded as a means of support for impoverished families. Many of these families are working long hours despite low wages, shrinking health-insurance coverage and serious trade-offs between work and decent care for their children. Yet, neither our politics nor our policies have adjusted to our success at bringing more of these parents into the labor force."
In Assessing the New Federalism, Eight Years Later (2005, http://www.urban.org/UploadedPDF/311198_ANF_EightYearsLater.pdf), Golden identifies many successes of the welfare-to-work policies, including the increase in the percentage of welfare recipients who worked rising from 22% in 1997 to 33% in 1999, while declining as a result of a weaker economy in the early twenty-first century; the rise in work activity among those most likely to use welfare, namely single mothers with a high school education or less; the finding that employers were willing to hire welfare recipients; the fact that most families that left welfare had at least one working adult; and that about one-third of former welfare recipients who worked had health insurance benefits. However, there were also some problems, including that roughly 25% of those who left welfare were back on assistance two years later. In addition, many welfare recipients face multiple barriers to working that need to be addressed.
Support Services Necessary for Moving Recipients to Work
The offer of affordable child care is one critical element in encouraging low-income mothers to seek and keep jobs. In Child Care Subsidies and TANF, Holcomb et al. note that "child care is a key work support that can help those leaving cash assistance for work keep their jobs and avoid returning to welfare." According to Karen Schulman and Helen Blank, in Child Care Assistance Policies 2005: States Fail to Make Up Lost Ground, Families Continue to Lack Critical Supports (September 2005, http://www.nwlc.org/pdf/ChildCareSubsidyReport_September2005.pdf), child care for one child costs from $4,000 to $10,000 per year. In other words, child care for one child, at a minimum, would consume more than a third of the income of a family with one adult working full time and earning the minimum wage. As such, subsidies are essential.
The 1996 welfare reform law created a block grant to states for child care. The amount of the block grant was equivalent to what states received under the AFDC. However, states that maintain the amount that they spent for child care under the AFDC are eligible for additional matching funds. The block grant and the supplemental matching funds are referred to as the Child Care Development Fund (CCDF). In addition, states were given the option of transferring some of their TANF funds to the CCDF or spending them directly on child care services. The Urban Institute reports in the fact sheet "Government Work Supports and Low-Income Families: Facts and Figures" (July 2006, http://www.urban.org/UploadedPDF/900981_worksupports.pdf) that the amount allocated for child care through the CCDF and TANF tripled between 1996 and 2002, from $4 billion to $12 billion.
Because states may use TANF funds for child care, they have more flexibility than before to design child care programs, not only for welfare recipients but also for working-poor families who may need child care support to continue working and stay off welfare. States determine who is eligible for child care support, how much those parents will pay (often using a sliding fee scale), and the amount a state will reimburse providers of subsidized care. Children under the age of thirteen are eligible for child care subsidies; depending on the state, families with incomes from 111% to 287% of the federal poverty level in 2005 were eligible, although few states guaranteed payments to all eligible families. For example, the Urban Institute notes in "Government Work Supports and Low-Income Families" that in 2005 twenty states either had waiting lists or had stopped taking applications for child care subsidies.
The Administration for Children and Families reports in the "FFY 2005 CCDF Data Tables" (November 29, 2006, http://www.acf.hhs.gov/programs/ccb/data/ccdf_data/05acf800/list.htm) that in FY 2005 states provided child care subsidies to approximately 1.8 million low-income children in one million families. Approximately 73% of the children were cared for in child care centers or licensed family child care homes. The remaining 27% of children were cared for in more informal settings, including arrangements with friends and relatives. Despite the dramatic increase in the provision of child care to low-income families, many eligible families were still not receiving assistance. About one in five (19%) families served nationally were receiving TANF assistance.
TRANSPORTATION AND ACCESS TO JOBS
According to the U.S. Department of Transportation (DOT), in "Use of TANF, WtW, and Job Access Funds for Transportation" (1998, http://www.fta.dot.gov/printer_friendly/grants_financing_3715.html), transportation is another critical factor facing welfare recipients moving into a job. Recipients without a car must depend on public transportation. Yet two out of three new jobs are in suburban areas, often outside the range of public transportation, whereas three out of four welfare recipients live in rural areas or central cities. Even when jobs are accessible to public transportation, many day care centers and schools are not. Some jobs require weekend or night shift work, when public transportation schedules are limited. Even for those recipients with cars, the expense of gas and repairs can deplete earnings.
To promote employment, the vehicle asset limits under TANF are broader than under the AFDC. Even though each state has the flexibility to determine its own vehicle asset level, all states have chosen to increase the limit for the value of the primary automobile in the family beyond that set under the AFDC. Over half the states now have no limits on the value of one vehicle, while many other states have raised the vehicle asset limit.
The DOT notes that states use a variety of approaches to provide transportation for TANF recipients moving into the workforce, such as:
- Reimbursing work-related transportation expenses (automobile expenses or public transportation)
- Providing financial assistance in the form of loans or grants to purchase or lease an automobile
- Filling transit service gaps, such as new routes or extended hours
- Providing transit alternatives, such as vanpools or shuttle services
- Offering entrepreneurial opportunities for recipients to become transportation providers
- Transferring TANF funds to the Social Services Block Grant to develop the transportation infrastructure for the working poor in rural areas and inner cities
To qualify for unemployment compensation benefits, an unemployed person usually must have worked recently for a particular employer for some period and for a certain amount of pay. Almost all wage and salary workers and most of the civilian labor force are covered by unemployment insurance. Most of those not covered were people who were self-employed, agricultural or domestic workers, certain alien farm workers, and railroad workers (who have their own unemployment program).
According to the Unemployment Insurance Chart-book (March 5, 2007, http://www.doleta.gov/unemploy/chartbook.cfm), the U.S. Department of Labor's Employment and Training Administration indicates that even though most wage and salary workers were covered in 2006 by the unemployment compensation insurance system, only 35% of unemployed workers received unemployment benefits.
Unemployment compensation varies widely by state. Figure 3.3 shows the percentages of unemployed receiving benefits in each state in 2003. The states with the highest rates of those receiving unemployment compensation were Pennsylvania and Massachusetts; South Dakota and New Mexico had the lowest rates.
Even though the maximum a state may offer is thirty-nine weeks of coverage (except for special programs), all states provide up to twenty-six weeks of benefits, except Massachusetts and Washington, which offer thirty weeks. Benefits vary dramatically from state to state. In 2002 the average weekly benefits in Massachusetts ($357), New Jersey ($336), Rhode Island ($336), Minnesota ($321), and Colorado ($302) were significantly higher than those offered by Puerto Rico ($108), Alabama ($182), Mississippi ($186), Louisiana ($192), Alaska ($194), and Arizona ($195). (See Table 3.5.)
Unemployment insurance helps workers avoid poverty. In Is the Unemployment Insurance System a Safety Net for Welfare Recipients Who Exit Welfare for Work? (June 2001, http://wdr.doleta.gov/conference/pdf/rangarajan.pdf), Anu Rangarajan, Walter Corson, and Robert G. Wood find evidence that the unemployment insurance system was protecting low-wage workers following the enactment of welfare reform in 1996. After examining a group of former welfare recipients who exited welfare between July 1997 and June 1998, Rangarajan, Corson, and Wood find that between 50% and 60% of people leaving welfare for work were eligible for unemployment insurance, compared with 20% to 35% found in earlier studies. Nonetheless, almost 40% of those who left welfare for work were ineligible for benefits. Some of those who left the welfare rolls were ineligible for benefits because they quit their jobs. This study was conducted during a strong economic period, and more research is needed to determine whether unemployment insurance provides a safety net to low-wage workers and those leaving welfare during periods of slower economic growth and recessions.
The unemployment rate of African-American and Hispanic workers is higher than that of white and Asian workers. In 2005 the unemployment rate for white male workers aged sixteen years and over was 4.4% and for Asian male workers of the same age was 4%, compared with 10.5% for African-Americans and 5.4% for Hispanics. (See Table 3.6.) Single men and women have a higher unemployment rate than others. The unemployment rate for single women in 2005 was 8.3%, compared with 5.4% for widowed, divorced, or separated women and 3.3% for married women; the unemployment rate for single men in 2005 was 9.5%, compared with 5.6% of widowed, divorced, or separated men and 2.8% for married men.
FEDERAL MINIMUM WAGE
The federal minimum wage dates back to the passage of the Fair Labor Standards Act of 1938, which established basic national standards for minimum wages, overtime pay, and the employment of child workers. The provisions of the act have been extended to cover many other areas of employment since 1938.
|Amount and duration of weekly benefits for total unemployment under regular state programs, by state, 2005|
|State or area||Average weekly benefit for total unemployment||Average weekly insured unemployment||Average actual duration (weeks)|
|Amount (dollars)a||Percent of average weekly wagesb|
|District of Columbia||266.67||22.7||4,529||19.5|
The first minimum wage instituted in 1938 was $0.25 an hour. Over the years it gradually increased, reaching $4.25 in 1991. In July 1996 Congress passed legislation that raised the minimum wage to $5.15 in 1997 by means of two $0.45 increases. (See Table 3.7.) In 2007 the mini-mum wage was still $5.15, although twenty-nine states had minimum wage rates higher than the federal rate. Kansas had a minimum wage rate lower than the federal rate for the few jobs not covered by the federal minimum wage. It is worth noting that the minimum wage is a cash wage only and includes no health care or other fringe benefits that higher paid workers typically enjoy.
|Amount and duration of weekly benefits for total unemployment under regular state programs, by state, 2005 [continued]|
|State or area||Average weekly benefit for total unemployment||Average weekly insured unemployment||Average actual duration (weeks)|
|Amount (dollars)a||Percent of average weekly wagesb|
|aIncludes dependents' allowances for states that provide such benefits.|
|bBased on average total weekly wage in current year.|
|Source: Adapted from "Table 9.A2. Summary Data on State Programs, by State or Other Area, 2005," in Annual Statistical Supplement, 2006, Social Security Administration, 2007, http://www.ssa.gov/policy/docs/statcomps/supplement/2006/9a.html#table9.a2 (accessed January 11, 2007)|
|Wyoming Outlying areas||241.52||38.6||2,791||11.8|
The minimum wage remained unchanged from 1981 to 1990. When inflation is taken into account, the minimum wage actually decreased in value by about $2. The increases in 1996 and 1997 still left the real value of the minimum wage well below the 1978 value. (See Figure 3.4.) A person working forty hours per week for fifty weeks per year at minimum wage ($5.15 per hour) would gross $206 per week, or $10,300 per year, well below the poverty level for a family of three ($16,600 in 2007). (See Table 1.1 in Chapter 1.) For adults, this means that day laborers (those without a permanent job who look for a job every day) and those employed in many service jobs for minimum wages will not be able to earn enough to escape from poverty.
In January 2007 the U.S. House of Representatives overwhelmingly passed a measure to increase the minimum wage from $5.15 per hour to $7.25 per hour, offering hope that the minimum wage would be increased for the first time in a decade. The Senate approved the measure in February but also called for tax breaks for small businesses. As of spring 2007, the measure still required reconciliation between the House and the Senate.
Who Works for Minimum Wage?
After the recession of 1990–91 and the slow recovery in 1992, 4.2 million workers in 1993 earned the minimum wage or less. In 1996 nearly ten million workers were directly affected by the minimum-wage increase. Often, employers use the minimum wage as a standard for low-paying jobs, perhaps paying $1 or $2 above minimum wage for a particular job.
|Unemployed persons by marital status, race, ethnicity, age, and sex, 2004–05|
|Marital status, race, Hispanic or Latino ethnicity, and age||Men||Women|
|Thousands of persons||Unemployment rates||Thousands of persons||Unemployment rates|
|Note: Estimates for the above race groups (white, black or African American, and Asian) do not sum to totals because data are not presented for all races. In addition, persons whose ethnicity is identified as Hispanic or Latino may be of any race and, therefore, are classified by ethnicity as well as by race. Beginning in January 2005, data reflect revised population controls used in the household survey.|
|Source: "24. Unemployed Persons by Marital Status, Race, Hispanic or Latino Ethnicity, Age, and Sex," in Household Data Annual Averages, Bureau of Labor Statistics, 2006, http://www.bls.gov/cps/cpsaat24.pdf (accessed January 11, 2007)|
|Total, 16 years and over||4,456||4,059||5.6||5.1||3,694||3,531||5.4||5.1|
|Married, spouse present||1,466||1,287||3.1||2.8||1,244||1,168||3.5||3.3|
|Widowed, divorced, or separated||608||563||6.3||5.6||828||768||5.9||5.4|
|Single (never married)||2,381||2,209||10.5||9.5||1,621||1,595||8.7||8.3|
|White, 16 years and over||3,282||2,931||5.0||4.4||2,565||2,419||4.7||4.4|
|Married, spouse present||1,161||1,011||2.9||2.5||996||922||3.3||3.0|
|Widowed, divorced, or separated||466||415||5.9||5.0||600||548||5.5||4.9|
|Single (never married)||1,655||1,505||9.1||8.2||969||949||7.1||6.8|
|Black or African American, 16 years and over||860||844||11.1||10.5||868||856||9.8||9.5|
|Married, spouse present||200||177||5.6||5.1||149||144||5.3||5.2|
|Widowed, divorced, or separated||104||119||8.9||9.5||179||166||7.8||7.3|
|Single (never married)||556||548||18.2||16.9||540||546||14.4||13.9|
|Asian, 16 years and over||153||141||4.5||4.0||124||118||4.3||3.9|
|Married, spouse present||64||61||2.9||2.7||62||62||3.4||3.3|
|Widowed, divorced, or separated||14||11||5.8||3.6||24||23||6.3||5.5|
|Single (never married)||75||68||7.8||7.2||39||32||5.6||4.5|
|Hispanic or Latino ethnicity, 16 years and over||755||647||6.5||5.4||587||544||7.6||6.9|
|Married, spouse present||275||231||4.4||3.6||228||202||6.2||5.4|
|Widowed, divorced, or separated||85||69||5.8||4.5||130||103||7.9||6.2|
|Single (never married)||394||347||10.3||8.7||229||239||9.6||9.8|
|Total, 25 years and over||2,980||2,617||4.4||3.8||2,531||2,453||4.4||4.2|
|Married, spouse present||1,399||1,232||3.1||2.7||1,139||1,071||3.3||3.1|
|Widowed, divorced, or separated||584||538||6.2||5.5||781||730||5.7||5.3|
|Single (never married)||997||848||8.0||6.6||611||651||6.3||6.4|
|White, 25 years and over||2,225||1,929||3.9||3.4||1,773||1,699||3.8||3.6|
|Married, spouse present||1,108||966||2.8||2.5||911||845||3.1||2.9|
|Widowed, divorced, or separated||447||395||5.7||4.9||563||519||5.3||4.8|
|Single (never married)||670||567||7.0||5.7||299||335||4.6||4.9|
|Black or African American, 25 years and over||545||507||8.4||7.6||589||568||7.9||7.5|
|Married, spouse present||191||170||5.5||5.0||141||133||5.2||4.9|
|Widowed, divorced, or separated||101||113||8.8||9.2||172||160||7.7||7.2|
|Single (never married)||253||223||13.5||11.1||276||275||11.1||10.4|
|Asian, 25 years and over||117||102||3.9||3.3||93||102||3.7||3.8|
|Married, spouse present||63||61||2.9||2.7||55||60||3.1||3.3|
|Widowed, divorced, or separated||13||11||5.7||3.6||21||23||5.9||5.5|
|Single (never married)||41||30||6.6||5.0||17||19||4.2||4.5|
|Hispanic or Latino ethnicity, 16 years and over||477||401||5.1||4.1||408||372||6.6||5.8|
|Married, spouse present||253||214||4.2||3.5||202||174||5.9||5.0|
|Widowed, divorced, or separated||75||63||5.5||4.4||121||98||7.8||6.1|
|Single (never married)||149||124||7.4||5.7||84||99||6.8||7.7|
Even though workers must receive at least the minimum wage for most jobs, there are some exceptions in which a person may be paid less than the minimum wage. Full-time students working on a part-time basis in the service and retail industries or at the student's academic institution, certain disabled people, and workers who are "customarily and regularly" tipped may receive less than the minimum wage.
According to the U. S. Department of Labor's Bureau of Labor Statistics, in Characteristics of Minimum Wage Workers: 2004 (April 2005, http://www.bls.gov/cps/minwage2004pdf.pdf), approximately 2 million American workers are paid at or below the minimum wage. Most of those who work for the minimum wage or below (74.6%) are employed in the service sector. About two-thirds (1.3 million out of two million, or 66.1%) of minimum-wage workers in 2004 were women, whereas 1.2 million of two million workers (61.9%) who earned minimum wage or less were part-time workers. (See Table 3.8.) White workers predominate among minimum-wage workers; 1.7 million of two million workers were white (83.9%), 250,000 were Hispanic (12.5%), 227,000 were African-American (11.3%), and 38,000 were Asian (1.9%).
|Federal minimum wage rates under the Fair Labor Standards Act, selected years 1938–97|
|Effective date||1938 acta||1961 amendmentsb||1966 and subsequent amendmentsc|
|aThe 1938 act was applicable generally to employees engaged in interstate commerce or in the production of goods for interstate commerce.|
|bThe 1961 amendments extended coverage primarily to employees in large retail and service enterprises as well as to local transit, construction, and gasoline service station employees.|
|cThe 1966 amendments extended coverage to state and local government employees of hospitals, nursing homes, and schools, and to laundries, dry cleaners, and large hotels, motels, restaurants, and farms. Subsequent amendments extended coverage to the remaining federal, state and local government employees who were not protected in 1966, to certain workers in retail and service trades previously exempted, and to certain domestic workers in private household employment.|
|dGrandfather clause: employees who do not meet the tests for individual coverage, and whose employers were covered by the Fair Labor Standards Act (FLSA), on March 31, 1990, and fail to meet the increased annual dollar volume (ADV) test for enterprise coverage, must continue to receive at least $3.35 an hour.|
|eA subminimum wage—$4.25 an hour—is established for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer.|
|Source: "Federal Minimum Wage Rates under the Fair Labor Standards Act," U.S. Department for Labor, Employment Standards Administration, http://www.dol.gov/esa/minwage/chart.htm (accessed January 11, 2007)|
|Oct. 24, 1938||$0.25|
|Oct. 24, 1939||$0.30|
|Oct. 24, 1945||$0.40|
|Jan. 25, 1950||$0.75|
|Mar. 1, 1956||$1.00|
|Sept. 3, 1961||$1.15||$1.00|
|Sept. 3, 1963||$1.25|
|Sept. 3, 1964||$1.15|
|Sept. 3, 1965||$1.25|
|Feb. 1, 1967||$1.40||$1.40||$1.00||$1.00|
|Feb. 1, 1968||$1.60||$1.60||$1.15||$1.15|
|Feb. 1, 1969||$1.30||$1.30|
|Feb. 1, 1970||$1.45|
|Feb. 1, 1971||$1.60|
|May 1, 1974||$2.00||$2.00||$1.90||$1.60|
|Jan. 1, 1975||$2.10||$2.10||$2.00||$1.80|
|Jan. 1, 1976||$2.30||$2.30||$2.20||$2.00|
|Jan. 1, 1971||$2.30||$2.20|
|Jan. 1, 1978||$2.65 for all covered, nonexempt workers|
|Jan. 1, 1979||$2.90 for all covered, nonexempt workers|
|Jan. 1, 1980||$3.10 for all covered, nonexempt workers|
|Jan. 1, 1981||$3.35 for all covered, nonexempt workers|
|Apr. 1, 1990d||$3.80 for all covered, nonexempt workers|
|Apr. 1, 1991||$4.25 for all covered, nonexempt workers|
|Oct. 1, 1996e||$4.15 for all covered, nonexempt workers|
|Sept. 1, 1997||$5.15 for all covered, nonexempt workers|
SUPPLEMENTAL SECURITY INCOME
SSI is a means-tested income assistance program authorized by Title XVI of the Social Security Act. The SSI program replaced the combined federal-state programs of Old Age Assistance, Aid to the Blind, and Aid to the Permanently and Totally Disabled in fifty states and the District of Columbia. However, these programs still exist in the U.S. territories of Guam, Puerto Rico, and the Virgin Islands. Since the first payments in 1974, SSI has provided monthly cash payments to needy aged, blind, and disabled individuals who meet the eligibility requirements. States may supplement the basic federal SSI payment.
A number of requirements must be met to get financial benefits from SSI. First, a person must meet the program criteria for age, blindness, or disability. The aged, or elderly, are people sixty-five years old and older. To be considered legally blind, a person must have vision of 20/200 or less in the better eye with the use of corrective lenses, have tunnel vision of twenty degrees or less (can only see a small area straight ahead), or have met state qualifications for the earlier Aid to the Blind program.
A person is disabled if he or she cannot earn money at a job because of a physical or mental illness or injury that may cause his or her death, or if the condition lasts for twelve months or longer. Those who met earlier state Aid to the Permanently Disabled requirements may also qualify for assistance.
Children under the age of eighteen (or age twenty-two if a full-time student) and unmarried may qualify for SSI if they have a medically determinable physical or mental impairment that substantially reduces their ability to function independently as well as effectively engage in age-appropriate activities. This impairment must be expected to last for a continuous period of more than twelve months or to result in death.
Because SSI is a means-tested benefit, a person's income and property must be counted before he or she can receive benefits. In The Green Book (2003, http://waysandmeans.house.gov/media/pdf/greenbook2003/Section3.pdf), the Committee on Ways and Means of the U.S. House of Representatives indicates that in 2003 individuals and couples receiving Social Security benefits could not earn more than $572 and $849 per month, respectively. In addition, in 2003 a person could have no more than $2,000 worth of property, and a couple could have no more than $3,000 worth of property (mainly in savings accounts or stocks and bonds). Not included in countable resources are the person's home, as well as household goods and personal effects worth less than $2,000. The first $4,500 of the fair market value of a car is not counted. A car is not counted at all if a member of the household uses it to go to and from work or to medical treatments or if it has been adapted for a disabled person. Someone applying for SSI may have life insurance with a cash value of $1,500 or less and/or a burial policy up to the same value.
Recipients of SSI Benefits
The Social Security Administration's Office of Research, Evaluation, and Statistics reports in Fast Facts and Figures about Social Security (September 2006, http://www.ssa.gov/policy/docs/chartbooks/fast_facts/2006/fast_facts06.pdf) that 7.1 million people received SSI payments in December 2005. Of these, 82% were disabled, 17% were elderly, and 1% were blind. (See Figure 3.5.) Most of those receiving SSI were between the ages of eighteen and sixty-four (57%). Between 1974 and 2004 the number of elderly recipients declined, whereas the number of disabled recipients increased. Table 3.9 shows the annual amount of payments by source of payment and category from 1974 through 2004. About half—48.4%—of SSI recipients in 2004 were female; 51.6% were male. (See Table 3.10.)
TAX RELIEF FOR THE POOR
Both conservatives and liberals hailed the Tax Reform Act of 1986 as a major step toward relieving the tax burden of low-income families, one group of Americans whose wages and benefits have been eroding since 1979. The law enlarged and inflation-proofed the Earned Income Tax Credit (EITC), which provides a refundable tax credit that both offsets taxes and often operates as a wage supplement. Only those who work can qualify. The amount is determined, in part, by how much each qualified individual or family earned. It is also adjusted to the size of the family. To be eligible for the family EITC, workers must live with their children, who must be under nineteen years old or full-time students under twenty-four years old.
The maximum credit for 2005 was $2,662 for taxpayers with one child, $4,400 for taxpayers with more than one child, and $399 for people with no children. (See Figure 3.6.) Families received less if their income was low because they were also eligible for public assistance. A family of four received the maximum benefit if its earnings were slightly below the poverty line, but many families well above the poverty line received some credit. Single-parent families with one child were eligible for some credit up to an income of $31,030, whereas single-parent families with at least two children were eligible for some credit up to an income of $35,263. Benefits phased down gradually when income surpassed $15,000 and phased out entirely for single-parent families with two or more children that earned more than $35,000.
|Workers paid hourly rates at or below minimum wage, by selected characteristics, 2004|
|Characteristic||Number of workers (in thousands)||Percent distribution||Percent of workers paid hourly rates|
|Total paid hourly rates||At or below $5.15 per hour||Total paid hourly rates||At or below $5.15 per hour||At or below $5.15 per hour|
|Total||At $5.15||Below $5.15||Total||At $5.15||Below $5.15||Total||At $5.15||Below $5.15|
|Note: Data exclude all the self-employed, both unincorporated and incorporated.|
|aDetail for the race groups (white, black or African American, and Asian) will not sum to totals because data are not presented for all races. In addition, persons whose ethnicity is identified as Hispanic or Latino may be of any race and, therefore, are classified by ethnicity as well as race.|
|bThe distinction between full- and part-time workers is based on hours usually worked. These data will not sum to totals because full- or part-time status on the principal job is not identifiable for a small number of multiple jobholders.|
|Source: "Table 1. Employed Wage and Salary Workers Paid Hourly Rates with Earnings at or Below the Prevailing Federal Minimum Wage by Selected Characteristics, 2004 Annual Averages," in Characteristics of Minimum Wage Workers: 2004, U.S. Department of Labor, Bureau of Labor Statistics, April 2005, http://www.bls.gov/cps/minwage2004pdf.pdf (accessed January 11, 2007)|
|Age and sex|
|Total, 16 years and over||73,939||2,003||520||1,483||100.0||100.0||100.0||100.0||2.7||0.7||2.0|
|16 to 24 years||16,174||1,022||272||750||21.9||51.0||52.3||50.6||6.3||1.7||4.6|
|16 to 19 years||5,433||497||168||329||7.3||24.8||32.3||22.2||9.1||3.1||6.1|
|25 years and over||57,765||982||249||733||78.1||49.0||47.9||49.4||1.7||0.4||1.3|
|Men, 16 years and over||36,806||680||210||470||49.8||33.9||40.4||31.7||1.8||0.6||1.3|
|16 to 24 years||8,305||366||127||239||11.2||18.3||24.4||16.1||4.4||1.5||2.9|
|16 to 19 years||2,672||179||78||101||3.6||8.9||15.0||6.8||6.7||2.9||3.8|
|25 years and over||28,500||314||83||231||38.5||15.7||16.0||15.6||1.1||0.3||0.8|
|Women, 16 years and over||37,133||1,323||310||1,013||50.2||66.1||59.6||68.3||3.6||0.8||2.7|
|16 to 24 years||7,869||655||145||510||10.6||32.7||27.9||34.4||8.3||1.8||6.5|
|16 to 19 years||2,761||319||90||229||3.7||15.9||17.3||15.4||11.6||3.3||8.3|
|25 years and over||29,265||668||166||502||39.6||33.3||31.9||33.9||2.3||0.6||1.7|
|Race, sex and Hispanic or Latino ethnicity|
|Black or African Americana||9,417||227||99||128||12.77||11.3||19.0||8.6||2.4||1.1||1.4|
|Hispanic or Latinoa||12,073||250||82||168||16.3||12.5||15.8||11.3||2.1||0.7||1.4|
|Full-and part-time status and sex|
The largest EITC benefits go to families that no longer need welfare. The gradual phaseout and the availability of the EITC at above-poverty income levels help to stabilize a parent's employment by providing additional money to cover expenses associated with working, such as child care and transportation. Research finds that the EITC has been an effective work incentive and has significantly increased work participation among single mothers. The Urban Institute states in "Government Work Supports and Low-Income Families" that eight out of ten low-income working families are eligible to receive the tax credit and that the EITC is the support program with the highest participation rate.
Those who do not owe income tax, or who owe an amount smaller than the credit, receive a check directly from the Internal Revenue Service for the credit due them. Most recipients claim the credit when they file an income tax form. Robert Greenstein concludes in "The Earned Income Tax Credit: Boosting Employment, Aiding the Working Poor" (August 17, 2005, http://www.cbpp.org/7-19-05eic.htm) that the EITC lifted 4.4 million people, including 2.4 million children, out of poverty in 2003. Without the credit, the poverty rate among children would have been almost 25% higher.
Although the Tax Reform Act of 1986 has helped ease the burden of federal taxes, most of the poor still pay a substantial share of their income in state and local taxes. To relieve this tax burden and increase the number of single parents working, eighteen states have enacted a state EITC to supplement the federal credit. These state programs boost the income of families that move from welfare to work and prevent states from taxing poor families deeper into poverty.
Not surprisingly, poor households that receive one form of social welfare assistance are likely to qualify for and receive others. For example, during 2002, 37.6% of households receiving TANF also received housing assistance, 62.3% received free or reduced-price school meals, 80.8% received food stamps, and almost all (99.6%) were on Medicaid. (See Table 3.11.) Similarly, among households receiving SSI, 40.2% received food stamps, 17.7% received free or reduced-price school meals, 22.9% lived in public or subsidized rental housing, and 96.4% were on Medicaid. About 18.2% of those receiving Social Security and 17.8% of people receiving Medicare were also on Medicaid.
Among households receiving food stamps, 16.2% received TANF, 30.2% received SSI, 30.5% received Social Security, and 26% were on Medicare. (See Table 3.12.) (The figures do not add up to 100% because some people received more than one benefit.) About 10.8% of those receiving WIC also received TANF benefits.
Between 1984 and 2002 the percentage of AFDC/TANF and SSI households who received other benefits fluctuated, but, generally, the coverage for most nonveteran benefit programs increased initially but then declined following the passage of the PRWORA in 1996. The percentage of households receiving both AFDC/TANF and food stamps declined, from 87.2% in 1995 to 80.8% in 2002. (See Table 3.13.) The percentage receiving both SSI and food stamps also declined over this period, from 50% to 40.2%.
In "Government Work Supports and Low-Income Families," the Urban Institute points out how important the "package of supports" could be to working, low-income families. The package could include Medicaid, food stamps, child care subsidies, and the EITC. According to the Urban Institute, in 2002 a single parent with two children working full time and earning $10,000 (the minimum wage) could receive about $23,600 in work supports. However, most working families did not receive all the supports they could have; in fact, only 7% of families with incomes below the federal poverty level received all four supports in 2002.
|Total annual amount of SSI payments, by source of payment and eligibility category, selected years 1974–2004|
|[In thousands of dollars]|
|Year||Total||Federally administered||Federal SSI||State supplementation|
|Total||Federally administered||State administereda|
|aIncludes data not distributed by category.|
|Note: SSI is Supplemental Security Income.|
|Source: "Table 7.A4. Total Payments, by Eligibility Category and Source of Payment, Selected Years 1974–2004," in Annual Statistical Supplement to the Social Security Bulletin, 2005, Social Security Administration, Office of Policy, Office of Research, Evaluation, and Statistics, February 2006, http://www.ssa.gov/policy/docs/statcomps/supplement/2005/supplement05.pdf (accessed January 11, 2007)|
|Number and percentage distribution of federally administered awards, by sex, age, and eligibility category, 2004|
|Sex and age||Total||Adults||Blind and disabled childrena|
|aIncludes students aged 18-21.|
|bLess than 0.05 percent.|
|Source: "Table 7.E2. Percentage Distribution of Federally Administered Awards, by Sex, Age, and Eligibility Category, 2004," in Annual Statistical Supplement to the Social Security Bulletin, 2005, Social Security Administration, Office of Policy, Office of Research, Evaluation, and Statistics, February 2006, http://www.ssa.gov/policy/docs/statcomps/supplement/2005/supplement05.pdf (accessed January 11, 2007)|
|Percentage distribution by sex|
|Percentage distribution by age|
|80 or older||1.6||12.9||1.0||b||—|
|80 or older||0.8||9.1||b||b||—|
|80 or older||2.4||15.1||2.2||b||—|
|Percent of recipients in multiple federal assistance programs, 2002|
|Other assistance programs||Ways and Means assistance programs|
|TANF||SSI||Social Security||Unemployment compensation||Medicare|
|Notes: Table shows number of recipient households for February-May 2002. Tables read that 80.8 percent of households with TANF (Temporary Assistance for Needy Families) recipients also received food stamp benefits. SSI is Supplemental Security Income. WIC is Women, Infants and Children. VA is Veteran Affairs.|
|Source: "Table 15. Overview 1. Percent of Recipients in Programs within the Jurisdiction of the Committee on Ways and Means Receiving Assistance from Other Major Federal Programs, 2002," in The Green Book, U.S. House of Representatives, Committee on Ways and Means, 2004, http://waysandmeans.house.gov/media/pdf/greenbook2003/15OVERVIEW.pdf (accessed January 11, 2007)|
|Free or reduced-price school meals||62.3||17.7||4.3||16.1||3.0|
|Public or subsidized rental housing||37.6||22.9||5.6||3.0||5.6|
|VA compensation or pensions||1.0||3.6||4.6||1.4||4.8|
|Number of recipients in households receiving benefits (in thousands)||1,393||5,207||31,358||3,209||28,452|
|Recipients of federal assistance programs receiving aid from multiple programs, by percent and number, 2002|
|Ways and Means assistance programs||Other assistance programs|
|Food stamps||WIC||Free or reduced-price school meals||Public or subsidized rental housing||Medicaid||VA compensation or pensions|
|Note: Table shows number of recipient households for February-May 2002. Tables read that 16.2 percent of households with food stamp recipients also received TANF (Temporary Assistance for Needy Families). WIC is Women, Infants and Children. VA is Veteran Affairs. SSI is Supplemental Security Income.|
|Source: "Table 15. Overview 2. Percent of Recipients in Other Major Federal Assistance Programs Receiving Assistance Under Programs within the Jurisdiction of the Committee on Ways and Means, 2002," in The Green Book, U.S. House of Representatives, Committee on Ways and Means, 2004, http://waysandmeans.house.gov/media/pdf/greenbook2003/15OVERVIEW.pdf (accessed January 11, 2007)|
|Number of recipients in households receiving benefits (in thousands)||6,924||4,517||9,620||4,795||17,322||2,639|
|Percent of households receiving TANF or SSI and also receiving assistance from other programs, selected years, 1984–2002|
|Note: Data on households interviewed between February and May 2002. AFDC/TANF is Aid to Families with Dependent Children/Temporary Assistance for Needy Families. WIC is Women, Infants and Children. VA is Veteran Affairs. SSI is Supplemental Security Income|
|Source: "Table 15. Overview 3. Percent of Households Receiving TANF or SSI and Also Receiving Assistance from Other Programs, Selected Years, 1984–2002," in The Green Book, U.S. House of Representatives, Committee on Ways and Means, 2004, http://waysandmeans.house.gov/media/pdf/greenbook2003/15OVERVIEW.pdf (accessed January 11, 2007)|
|Free or reduced-price school meals||49.2||55.6||52.7||55.5||56.9||57.5||63.1||60.3||62.3|
|Public or subsidized rental housing||23.0||19.4||34.7||29.5||33.1||30.3||31.1||21.2||37.6|
|VA compensation or pensions||2.8||1.9||1.3||1.9||1.1||1.1||0.8||1.1||1.0|
|Number of households receiving benefits (in thousands)||3,585||3,527||3,434||4,057||4,831||4,906||4,652||3,008||1,391|
|Free or reduced-price school meals||12.7||11.9||15.3||18.2||21.3||23.8||25.2||18.4||17.7|
|Public or subsidized rental housing||21.6||20.0||21.4||23.8||23.9||24.9||24.1||23.4||22.9|
|VA compensation or pensions||4.7||7.7||5.7||4.0||4.5||3.9||3.6||2.8||3.6|
|Number of households receiving benefits (in thousands)||3,008||3,341||3,037||3,957||3,861||4,223||4,580||4,772||5,207|
"Public Programs to Fight Poverty." Social Welfare: Fighting Poverty and Homelessness. 2008. Encyclopedia.com. (July 29, 2016). http://www.encyclopedia.com/doc/1G2-3049500009.html
"Public Programs to Fight Poverty." Social Welfare: Fighting Poverty and Homelessness. 2008. Retrieved July 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3049500009.html