Welfare Spending's Up, But Not for the Poorest

New research finds that federal spending on safety net programs has gone up since the 1970s, but it's not reaching the nation's poorest people and families.
by | May 7, 2014 AT 5:00 PM

A team of academic researchers has found that federal spending on the nation’s 15 largest safety net programs went up by almost three-quarters in the three decades leading up to the Great Recession. But for extremely poor Americans, policies meant to encourage work have also resulted in a decline in financial support.

Robert Moffitt, an economist at Johns Hopkins University, presented the findings May 2 at an annual meeting of the Population Association of America. The research is also slated to appear in the peer-reviewed journal, Demography, in the February 2015 issue. In his talk, Moffitt showed that government spending on safety net programs went up 74 percent between 1975 and 2007. The proportion of government spending on the poorest families -- with private incomes equal to or below 200 percent of the federal poverty line -- has dropped from 56 percent in 1983 to 32 percent in 2004, according to an analysis of the U.S. Census Bureau's Survey of Income and Program Participation (SIPP).

The paper not only found that safety net spending has become skewed toward the slightly-less poor -- especially those with jobs -- but also to other specialized populations, such as the elderly, the disabled, native-born residents, citizens, and families with married couples. That's led the researchers to conclude that overall safety net spending has shifted to the "deserving poor."

For example, Moffitt and his co-authors found that single-parent families with private incomes below 50 percent of the federal poverty line experienced a 35 percent decline in government support between 1983 and 2004. At the same time, single-parent families with private income above 50 percent of the poverty line saw an increase of 73 percent. That change in the distribution of funds means that in 2014 a family of four earning $11,925 a year probably receives less in government financial support than a family of four earning $47,700.

To better understand the research, Governing spoke with Moffitt May 7. The following transcript has been edited for clarity and length.

What motivated you and your co-authors to assess the trends with overall safety net spending?

One of my co-authors, Karl Scholz, who is an economist at the University of Wisconsin-Madison, had done a paper earlier in which he was tracking the total amount spent on the welfare programs by the U.S. government and by state and local governments. He saw that there was an increase in spending, which was a little surprising.

I talked to professor Scholz, who is an old friend of mine, and I said if you look at the programs that are generating that spending, that most of them are going to the elderly or the disabled and a lot of them are going to working families with quite a bit of earnings. I proposed that we join forces and do a new paper with new research that would not only confirm whether or not the total amount of spending had gone up, but also who was getting it. That led to a series of three or four papers, starting in 2009.

Is the Temporary Assistance for Needy Families (TANF) program emblematic of the trend you’re discussing in the paper, where a program targeting the very poor has shifted to people who are slightly better off?

Yes. It is the primary culprit, if you want to call it that, for the declining support for very low-income families. Prior to 1996, one could receive benefits, even if you could not find a job, even if your earnings were very low. When that program was reformed, the result was a two-thirds decline in the number of families receiving TANF benefits. That really removed the main program we have for the lowest income families.

There are two other programs that could potentially go to those families -- one is Unemployment Insurance, so if you’re unemployed you’ll get about six months of benefits during normal times. But the problem there is that most of these very low-income single-parent or married-couple families often don’t qualify for Unemployment Insurance. You have to have worked for several quarters in the previous year and you have to have earned at least a certain amount of money. If you don’t work very much then you don’t qualify for Unemployment Insurance, so most of them don’t get that.

The only thing they really have now is food stamps. It’s vital that they’re getting they’re getting their food expenditures supported, but it only covers food and not anything else. So they’re really receiving a total much less than they used to.

I noticed that the findings do not extend beyond 2004. What’s the reason for that?

This SIPP data set is a survey of about 30,000 families in the United States conducted by the U.S. Census Bureau. They don’t conduct the survey every year. They only conduct it in select years. So, 2004 was the earliest year before the Great Recession. The Great Recession is a different event and government increased the amount it was giving to all kinds of families -- unemployed families and families who saw reductions in earnings. Congress passed several bills, so-called stimulus packages, that extended or increased benefits during the recession.

So I stopped for data reasons, but I also felt as though I was trying to look at a long-term trend. What’s happening with the Great Recession is that a lot of the additional support provided by the government is going away or has already gone away. It was only temporary. When we lose all that additional support, then we may return to where we were in 2004 -- but I can’t confirm that until we have more data.

Toward the end of your speech, you have a section that begins with the question, “What is to be done?” What kind of actions do you recommend that government officials take to reform our safety net programs?

One thing we should not do is return to the programs of the 1970s and 1980s, particularly the Aid Families with Dependent Children program [the predecessor of TANF], which gave money to single parents and married couples, very poor ones, if they weren't working. Back then, there were no strings attached. If you weren’t working and had no earnings, you just automatically were categorically eligible for benefits.

I think the voters have just resoundingly made clear they don’t want to give that kind of open-ended cash to low-income parents. The parents have to show that they’re making an effort, whether it’s looking for jobs or trying to go to school or trying to get more training. But I’m afraid that the situation now is that the rules of these programs are set up, so even if you’re trying, even if you’re looking for a job or going to school or getting training, and you don’t succeed, you’re not getting any support today. There’s no effort to identify those families that are trying. I think that’s going a little too far and I think if the general public understood, they would be quite sympathetic to individuals who are trying.

I can’t help but wonder how your findings will be received and interpreted by would-be reformers of today’s safety net programs. I’m thinking of Sen. Paul Ryan and Sen. Marco Rubio, who’ve both proposed changes to the nation’s anti-poverty programs. Do you have a sense of how members of Congress might use your research?

I would hope that there might be some common ground between the different perspectives on government programs and I would hope that some of the things that I’m talking about would appeal to members of the House. I don’t believe that it makes sense to simply cut the amount of money that government is spending. But I would hope that all sides agree that what we should do is look at how we are spending that money. We want to spend it on those people who are really trying.