As Congress and the Trump administration begin to look at the possibility of increasing the use of waivers to encourage state experimentation for welfare reform, it is worth looking back at the last time the “laboratories of democracy” took the lead on improving the social safety net.
By the early 1990s, the failures of the welfare system had become painfully evident. The Clinton administration significantly expanded waivers allowing states to restructure and redesign their programs to address the recurring problems such as long-term dependence and low employment rates. Two of the leading states in this effort were Minnesota and Wisconsin. The two upper Midwestern states took slightly different approaches to reform that illustrate the importance of giving states the opportunity to try different approaches. As with so many other issues, one size does not necessarily fit all.
Minnesota
Minnesota used a series of federal waivers to dramatically revamp their welfare programs. These reforms, known as the Minnesota Family Investment Program (MFIP), were built around three key concepts: work, consolidation and simplification, and one-stop shopping.
Work
Recipients were required to work at least 30 hours per week or participate in job search, job training, or other educational programs. Those who failed to meet this requirement could be penalized 10 percent of their total benefits. There was an exemption for parents with children under the age of one and people with disabilities. The program also attempted to deal with “welfare cliffs” by allowing recipients to retain a larger portion of their benefits while their employment-based income grew.
Consolidation and simplification
Under MFIP, the state consolidated most major welfare programs—including cash benefits (AFDC at the time, what would be TANF today), food stamps (SNAP today), employment assistance and job training, and child care support—into a single benefit. Eligibility and other regulations were harmonized.
One-stop shopping
Minnesota’s program emphasized a “one-stop-shopping” approach to an integrated welfare and employment system that was similar to today’s OneDoor welfare programs. The welfare application process was designed so an applicant could a) apply for benefits; b) meet with employment councilors, c) be referred to training, education, or job search programs; and d) arrange child care in a single visit. Although different counties handled one-stop shopping in different ways, the system was generally designed so that an applicant was assigned to a single counselor and that all parts of the process took place in a single building if not a single office.
Outside evaluations of MFIP by the Manpower Demonstration Resource Demonstration Corporation and others found that it increased both employment and earnings compared to traditional AFDC.
Wisconsin
Wisconsin’s reform efforts, led by Governor Tommy Thompson, were more heavily weighted toward moving recipients quickly into work and reducing caseloads. If Minnesota’s program contained a lot of carrots, Wisconsin leaned more heavily into the stick.
Work was the primary focus of Wisconsin’s reform. Most able-bodied AFDC recipients were required to work or participate in job search and training programs. If a recipient was not able to find employment in the private sector, the state sometimes subsidized jobs. As a last resort, recipients could be required to participate in state-funded community service jobs. Failure to participate could result in partial or even full loss of benefits. Work participation was required almost immediately upon application and was directly tied to receipt of benefits. In addition, Wisconsin generally limited participation in AFDC to a maximum of 60 months.
After implementing these reforms, Wisconsin saw the largest reduction in caseloads of any state in the nation, though outside evaluators at the University of Wisconsin trace part of this success to the state’s extremely strong economy during this period.
Minnesota and Wisconsin are just two of the states that used federal waivers in the 1990s to reform their antiquated welfare systems. Waivers today could spur a similar burst of innovation. In addition, it is worth noting that many states today are pursuing “One Door” reforms as central to reforming welfare. One Door, as pioneered in Utah and since explored by several other states, integrates many of today’s fragmented welfare services, job training, and employment programs into a single coordinated system that makes it easier to help recipients transition from welfare to work. It may be instructive, therefore, to revisit how two “purple” upper Midwest states paved the way for today’s efforts.