If decades of research on poverty have shown anything, it’s the importance of work in helping people to avoid or escape poverty. Indeed, it is difficult to conceive of a pathway out of poverty that does not involve work. While it may need to be subsidized, at least initially, paid employment is the best and primary route to self-sufficiency. The benefits of work go beyond the paycheck. Work helps people gain the hard and soft skills necessary to move up the ladder and can provide a sense of dignity and control over one’s life.
That’s why it is so concerning that the real rate of work participation under the Temporary Assistance for Needy Families (TANF) program was as low as eight percent in FY2024, far lower than the 50 percent required by statute. According to a new report from the Department of Health and Human Services’s Office of Family Assistance, half of TANF families with a work-eligible individual in FY2024 reported zero hours of participation in work-related activities.
Moreover, these calculations include only those families with a work-eligible individual, meaning they exclude single adults caring for children, individuals previously sanctioned for not-working within the past year, and participants in tribal work programs. This means the actual rate of work participation is even lower than the paltry figures show.
If all of that wasn’t bad enough, many states appear to be deliberately manipulating the rules in order to further evade the program’s work requirements.
In theory, states are supposed to ensure that at least 50 percent of TANF recipients and 90 percent of two-parent families are participating in work activities, such as work, job training, job search, or educational programs. States that fail to meet this requirement risk having their federal block grant reduced. In practice, however, states can reduce that requirement through a “caseload reduction credit,” that reduces the 50 and 90 percent requirements by one percentage point for every one percent reduction in the total number of families receiving benefits in that state. In addition, states can further reduce work requirements by increasing their spending on “maintenance of effort” programs. States are generally required to continue spending roughly 75 percent of what they had been spending prior to the passage of welfare reform in 1996. As a result of these two factors, 39 states effectively reduced their work targets to zero.
Policymakers should want states to reduce their caseloads and exercise care in how they reduce their welfare spending. Still, that means a lot of states have minimal incentive to prioritize moving recipients from welfare to work.
More troubling, a number of states appear to be deliberately subverting the rules in order to artificially inflate the number of working recipients. These states provide token payments to families—often less than $35 per month—in which an adult is already working, allowing the state to count those families toward its work participation rate even though they otherwise would have had no connection to the TANF program. Among the biggest offenders were California, Indiana, Massachusetts, New Hampshire, Oregon, Vermont, and Washington.
The Fiscal Responsibility Act of 2023 contained provisions designed to limit the use of token payments starting in October of last year, but it is too soon to judge their effectiveness. But if a state is seriously determined to evade work requirements, it seems likely that they could find a way to do so.
Taking a longer view of all of this, it increasingly looks as though welfare reform’s commitment to work is slipping away. If so, that would leave more and more poor families trapped in poverty and dependency.