Rethinking Welfare in the Great Recession

Issues in the Reauthorization of Temporary Assistance for Needy Families

By Gordon Berlin

Testimony of Gordon L. Berlin, President, MDRC, Before the Senate Finance Committee, on September 21, 2010

Good morning. My name is Gordon Berlin, and I am President of MDRC, a nonprofit, nonpartisan education and social policy research organization that is dedicated to learning what works to improve policies and programs that affect the poor. Founded in 1974, MDRC evaluates existing programs and tries out new solutions to some of the nation’s most pressing social problems, using rigorous random assignment research designs or near equivalents to assess their impact.

I am pleased to be here today to discuss what research and experience have to tell us about moving forward with the reauthorization of the federal welfare program, Temporary Assistance for Needy Families (TANF). Let me start by summarizing my main points:

  • The historic reforms embodied in the TANF program transformed welfare: rewarding and supporting employment and maintaining an ethos of reciprocity and responsibility that is valued by American society. In the context of a booming economy and other supportive policies, the nation made substantial progress on a number of key indicators — for example, reducing the welfare caseload, increasing women’s employment rates, and reducing child poverty.

  • As last week’s new poverty numbers so starkly illustrated, the Great Recession has been an unprecedented test of antipoverty programs like TANF, demonstrating the limits of a social safety net built predominantly around work when unemployment is high. While the rolls of other safety net programs, like the Supplemental Nutrition Assistance Program (food stamps) and unemployment insurance, have risen to meet growing needs, the national TANF caseload has increased only modestly.

  • The current economic downturn has also highlighted some less successful aspects of the TANF block grant structure that have existed for some time, including its loss of value to inflation; its limited reporting and accountability requirements; its excessive flexibility in what counts as state maintenance of effort (MOE) match, which has essentially created a system of federal-state revenue-sharing; and its comparatively restrictive definitions of activities that meet work participation requirements. Together, these factors have worked in unintended ways to undermine the program’s effectiveness: the fraction of families living in severe poverty has remained stubbornly high; the number of former welfare families reporting neither work nor welfare income has been rising; and the program was slow to play an essential countercyclical role during periods of high unemployment.

  • In response to growing needs and a lackluster response from states, Congress moved decisively to address the economic downturn by creating the TANF Emergency Fund. The fund reignited state creativity, leading to the development of more than 250,000 subsidized jobs in the public, nonprofit, and private sectors and enabling the payment of additional assistance benefits. Emergency Fund authority expires in nine days, likely leaving employed individuals without work, employers without employees, and communities without the economic multiplier effects that spur broader economic activity.

  • The history of welfare policy is one of pendulum swings between various competing goals: reducing poverty vs. reducing dependency; being responsive to economic downturns vs. dealing with structural problems; privileging work-first vs. education-first; and promoting fatherhood programming vs. marriage programming. Yet these are not either/or choices. Indeed, the challenge is to use the opportunity of reauthorization to reduce the tendency to swing between philosophical extremes — while carefully developing evidence-based policies that anticipate changing economic contexts.

  • Research evidence from a variety of interventions, which I describe in detail below, offers guidance about moving forward — maintaining a strong work focus, while also encouraging advancement through education and training; reducing poverty without increasing dependency; providing services for those with persistent barriers to employment; taking the best from both fatherhood and relationship programs to make families stronger.

  • In the short run, it seems imperative to extend the current TANF law, as well as to extend and fund continuation of the Emergency Fund. The economic recovery has stalled, and the Emergency Fund appears to be providing vital bridge funding for clients, employers, communities, and states during this difficult period. However, an extension should be conditioned on improved state reporting about TANF spending, about participation in activities that states do not currently report, as well as about the nature of state maintenance of effort programming. We need better information in order to make good decisions about how to improve TANF.

  • In the long run (and perhaps with better data), we should step back and consider some more fundamental changes, including rethinking TANF’s goals and structure, so that the program promotes work and self-sufficiency in good times while expanding to provide support for the nation’s poorest citizens in difficult economic times; creating a permanent emergency fund triggered by poverty and unemployment indicators and designed to solve the shortcomings evident in the existing contingency fund; reexamining the block grant structure, so that states maintain sufficient flexibility to innovate while being transparent about how resources are being spent; expanding the role of education and training while creating standards that require participants to make adequate progress; revamping the participation requirements and combining them with a universal engagement measure; doing more to deal with participants with barriers to employment; and providing incentives to states to do more of what research says works.

To view the entire hearing and read the testimony of the other witnesses, visit the Senate Finance Committee’s Web site.

Document Details

Publication Type
September 2010
Berlin, Gordon. 2010. “Rethinking Welfare in the Great Recession.” New York: MDRC.