For the past 15 years, Temporary Assistance for Needy Families (TANF) has been considered the premier lifeline for those who've needed some short-term help between jobs. But now comes a report out of the Urban Institute seriously questioning just how well TANF has functioned in that role, particularly during this recession and its tepid, even questionable, recovery.
"The TANF program is overdue for a serious review of its effectiveness during economic downturns," notes the report, What Role is Welfare Playing in this Period of High Unemployment? It's a topic of particular concern right now in light of the most recent employment numbers -- the worst in a year -- and the fact that 2011 marks 15 years of experimentation inspired by President Bill Clinton's vow "to end welfare as we know it."
The report, authored by Sheila Zedlewski and Pamela Loprest, takes a state-by-state look at TANF caseloads in comparison to unemployment rates from 2007 to 2010. At least one thing becomes abundantly clear: If 1996 welfare reform was about giving states more say and flexibility in how TANF money is spent -- and how much is spent -- then the law certainly has had the intended effect.
The numbers for states are all over the map, mostly on account of the vastly disparate economic, policy and political climates in each state. The report notes that TANF caseloads have actually declined in 13 states during the recession, with Arizona leading the way at a nearly 50 percent reduction in caseloads. In a handful of other states, caseloads spiked, as in a 70 percent increase in Oregon.
What's crazy about these numbers is that unemployment increased 146 percent in Arizona over that period, while it went up a relatively mild 41 percent in Oregon. In all, while unemployment rose nearly 90 percent nationally from 2007 to 2010, TANF caseloads only went up 14 percent.
The report pegs the counterintuitive numbers mainly to a few things: First, in many cases, unemployment benefits -- with its expanded eligibility and bigger benefits -- took the place of welfare. Second, attitudes about accepting welfare appear to be changing among families who need help. For example, the report notes that among eligible families enrollment in TANF dropped from 80 percent to 40 percent from 1996 to 2005. Third, state policies have also served to discourage signing up. TANF benefits, according to the report, have flatlined for the past 15 years in most states. In 30 states, the maximum allowed benefit doesn't even come close to 30 percent of the federal poverty threshold.
Just how frugal a state can be is currently on display in Michigan, where the Legislature passed a tough 48-month lifetime cap on TANF that is expected to whisk 11,000 families and nearly 30,000 kids off its rolls come Oct. 1. (The law also shortens the time period anyone can collect unemployment benefits, and it reduces the earned income tax credit from 20 percent to 6 percent.)
Lots of states, of course, have passed time limits shorter than the 60 months pegged by the federal statute, but in many cases they also included wiggle room for those who might need more help, like the disabled and elderly. Some states have even dug into their general funds to continue helping families that have exhausted federal assistance. Probably most important to point out, in many of those states, the shorter time limits were passed when economies were humming along just fine, and jobs were relatively abundant.
Michigan says it has a plan to help TANF cases transition, according to Gilda Z. Jacobs, president and CEO of the Michigan League of Human Services. But, she says, it's hard to see where they're going to transition to. "We're in a situation where there simply aren't any jobs."
The Michigan move seems to be part of a tenuous equation: Gov. Rick Snyder supported and got $1.5 billion in cuts to business taxes to be paid for, in part, through reductions in TANF expenses. In theory, the cuts to business taxes will stimulate the economy and create jobs -- jobs that will catch those coming off TANF.
But it's highly unlikely that Snyder's stimulus plan -- if it works at all -- is going to have such significant short-term impact that it will help those coming off TANF at the end of the month. As Jacobs, a former Michigan state senator, puts it, "I hope that business tax cuts will create jobs, but in the meantime these folks need food and shelter. Food banks, homeless shelters and community centers are going to be swamped."
Which brings us back to the question raised by the Urban Institute report: What role should TANF play in an era of high unemployment if it isn't to help support people as they wait for economic recovery?
When asked what a more thoughtful conversation about TANF and unemployment might involve, Loprest says, "We'd be having a bigger conversation about helping low-income folks during a recession, generally. Not just TANF, but food stamps, child welfare, unemployment compensation and how they all fit together, and what are the goals for our society when it comes to those who need assistance."