The topic of welfare—particularly welfare reform—has been driving a recent string of headlines. The Trump administration recently announced an executive order directing federal welfare agencies to recommit to making economic mobility and employment a cornerstone of their antipoverty efforts. Last week, the House of Representatives considered, though failed to pass, a Farm Bill that would strengthen the eligibility requirements for food stamps.
What do these reform efforts have in common? Emphasizing work.
This push is supported by findings in a joint report released by the American Enterprise Institute and the Brookings Institution. The report found that striking a “balance between promoting or requiring work in public programs and ensuring economic security for all families” is a core tenet of reforming welfare programs for the better. Encouraging greater individual autonomy in welfare is key to helping individuals support themselves, and it is uplifting to see federal policy begin to make moves in this direction.
In a recent executive order, President Trump stated that for “policies or programs that are not succeeding [in championing work, free enterprise, and safeguarding human and economic resources], it is our duty to either improve or eliminate them.” He also made reference to the 1996 welfare reform effort, praising the bipartisan affair and suggesting that there is still more work to be done. Regarding the 1996 welfare reform, the successes of that endeavor can offer a roadmap for a new age of bipartisan cooperation looking to make government spending more efficient and effective while recapturing the intended purpose of these programs.
There is also the paradox of the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, where despite a drop in the unemployment rate to a post-Great Recession low of 3.9 percent in 2018, enrollment in SNAP has nearly doubled from roughly 26,000 to just over 42,000 since a decade ago. The House Farm Bill, which packages together SNAP with farm subsidies, includes new work requirements to be eligible for SNAP while eliminating some broad exclusions from current work requirements. Specifically, the bill would require adults between age 18 and 59 to spend 20 hours at work or in job training to qualify for benefits unless they are caring for a child under the age of 6 (currently, the ages are 18 to 49). It would also limit a state’s’ ability to waive these work requirements. Currently about 30 percent of the population lives in a waived area. The House bill would reduce it to 12 percent. The bill also provides funding and require states to offer job training programs so that more people can meet the requirements to be in a job or job training program.
In an analysis conducted by the Pew Research Center, human services—the study’s overall classification for programs like Social Security, health programs, education services, and veterans benefits—constituted less than 1% of spending as a share of GDP during the Second World War. Today that number has risen to a staggering 15.5%, with Medicaid, Medicare, and Social Security serving as the primary drivers of this growth in spending. According to the Congressional Research Service, the federal government spent $877.5 billion on programs for people with low income in 2016 (about half of that is Medicaid), a $300 billion increase from 2008.
Despite the tremendous rise in government spending on programs founded to combat poverty, the UC Davis Center for Poverty Research has found a consistent trend in the poverty rate. Between 1964 and 2015, the official poverty rate has remained between 11% and 15%. These outcomes can hardly be judged as a success when considering the growth in spending over the same period of time, and it does no service to the noble goal of trying to help those who have fallen on hard times in finding a way out of poverty.
While making work a key component of eligibility for different federal support programs, Congress must also examine how the structure of these programs prevent people from rising out of government support once they find work. A report by the Congressional Budget Office found that the average marginal tax rate—defined as the “percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs”—for low and moderate income taxpayers is 34%, the highest of any income level. The report explains that low and moderate-income taxpayers actually suffer from wage increases because of greater tax liability coupled with reductions in benefits and refundable tax credits they may depend on. This makes people who depend on the combination of income and welfare less interested in working and increasing their earnings if the end result of that increase negatively impacts their after-tax income.
By championing an individual-based evaluation of these programs, promoting the dignity of work, and finding innovative solutions to make poverty more escapable that also curb spending, lawmakers from both sides of the aisle have a chance to come together as they did in 1996 to debate, develop solutions, and enact innovative approaches to the human and fiscal issues of welfare for the modern day.
