Welfare reform has negative impact for the extremely poor

Dec 5, 2012

New research shows that the 1996 federal welfare reform, while bringing some improvements to the nation’s poor, has made extremely poor people in America worse off, according to an article on phys.org.

Marci Ybarra

NASW member Marci Ybarra, assistant professor at the School of Social Service Administration at the University of Chicago, analyzed these changes and their potential outcomes in a study called “The Welfare Reforms of the 1990s and the Stratification of Material Well-being among Low-income Households with Children,” published in September in “Children and Youth Services Review.”

The article says the reforms greatly changed welfare (cash assistance) by requiring recipients to work and placing a cap on the aid that one can receive. In addition, social policies set in place in the 1990s raised the benefits of work for low-income families. As a result of these changes, millions of people — mainly single mothers — who previously received welfare joined the workforce.

At the same time, welfare has become more difficult to obtain for families at the very bottom who have more difficulty entering the workforce. “The Welfare Reforms of the 1990s” paper, written by Ybarra and a team of scholars, compares the material well-being trends of very poor families with incomes of $11,500 for a family of four in 2012 — or below 50 percent of the poverty level — with those of near-poor families with incomes between $23,051 and $34,500.

“This is the first study to use nationally representative survey data to compare the material hardships of deeply poor households with children to other low-income groups of lower-income households with children, before and after the 1990s welfare reforms,” Ybarra wrote.

Some of the findings include:

  • Among deeply poor households with children, 48 percent reported in 2005 they did not have enough money to cover most of their essential household expenses, compared with 45 percent in 1992 and 37 percent in 1995.
  • Among near-poor households with children, 30 percent reported in 2005 that they had difficulty meeting their household expenses, down from 37.9 percent in 1992.
  • While the amount of public aid received by deeply poor households fell dramatically, it increased substantially for near-poor families, particularly through expansions of the Earned Income Tax Credit, a benefit that reduces income taxes for certain people with low or moderate wages
  • Even among deeply poor households, 41 percent of household heads were working in 2005. But this is well below the proportion for near-poor households, in which 88 percent of household heads work. This may be because household heads among the deeply poor were more likely to report a work-limiting disability.

This should  “prompt policymakers to be more aware of the income diversity among the poor and the ways in which policy may increase stratification among the poor,” Ybarra said. “Social workers as well need to be aware of the variety of forms poverty takes so that supports they offer can be consistent with the needs of the clients they serve.”

From the November 2012 NASW News’ “Social Work in the Public Eye.”

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