This week marks the 20th anniversary of the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, or what is popularly known as welfare reform in the United States. The reform took the country’s primary social assistance program, Aid to Families with Dependent Children (AFDC), and transformed it into Temporary Assistance to Needy Families (TANF). It remains a lightning rod for controversy two decades later. Scott Winship argues it was a success. Jordan Weissman argues it was a failure. NPR finds mixed results.
The politics behind welfare reform has received endless attention from scholars of American political development. The literature is so large that a group of scholars used the anniversary as a chance to make a whole syllabus on the topic. It’s a good starting point for folks interested in learning more but it’s simply incomplete. Americans tend to be U.S.-centric when it come to explaining political trends and welfare reform is no different. It may comes as a surprise to many that countries from Canada and the United Kingdom to Australia and New Zealand undertook similar welfare reforms in the late 1990s. What, if anything, can the experiences of these countries teach us about the politics of welfare reform in the U.S.?
Because of its similarities, Canada offers the most illuminating comparison here. In both countries, social assistance grew out of state/provincial “Mothers’ pension” programs for destitute widows with children. These programs were eventually expanded to more categories of beneficiaries and given federal support. In the early 1990s, there was a consensus that welfare was broken and in need of reform. Even the rhetoric was similar. While President Clinton promised to “end welfare as we know it,” Ontario’s leftwing NDP government promised to “dismantle welfare as we know it.” Looking back, four major themes emerge:
Block Grants and Devolution
Much has been made of the fact that PRWORA transformed social assistance into a block grant. Prior to welfare reform, it was funded from an open-ended matching grant between each state and the federal government. If states decided to spend more then the federal government was obliged to kick in extra as well. As a block grant, each state receives a set amount of funding regardless of how much they spend themselves. Moreover, this block grant is not indexed to inflation so its value has eroded for the past two decades. The reform also devolved control over the program to the states, which were free to experiment with different eligibility requirements, benefits, etc.
We find the same exact set of reforms in Canada as well. Prior to 1996, provincial social assistance programs were funded with a matching grant from the federal government as part of the Canada Assistance Program (CAP). Facing unsustainable deficits, the Liberal government scrapped CAP and replaced it with a block grant called the Canada Health and Social Transfer (CHST). The initial value of the CHST was much lower than what CAP provided and remained below it until the early 2000s. Even as it rose though, spending on health – not social assistance – absorbed much of the increased budget. Like the U.S., the reform also devolved almost all control to the provinces by removing most federal stimulations on the funding. If anything, Canada’s system of provincial social assistance programs is more decentralized than the U.S.
One argument often heard is that devolution had a different impact in Canada because Canadians are just so gosh darn nice relative to hostile Republicans and punitive southern legislatures. Without doubting that Canadians are indeed nice folks, the evidence suggests that Canadian policymakers no nicer than Americans.
Ontario introduced similar work requirements and benefit reductions. The reform was the work of Premier Mike Harris. As early as 1994, Harris called for “removing from the rolls those who are ripping us off, those who are staying home and doing nothing because they want to do nothing.” As part of the 1995 election, Harris and the Progressive Conservative Party of Ontario released their Common Sense Revolution (CSR), which can only be described as the Canadian version of the GOP’s Contract with America. The CSR promised to slash provincial taxes by 30%, cut “Cadillac” welfare benefits by 20%, introduce new work requirements, and eliminate welfare fraud and abuse. Upon winning the election, the Harris government made good on all its election promises. The new “Ontario Works” program was explicitly modeled on Tommy Thompson’s “Wisconsin Works” program.
Stigmatizing Single Mothers
A large American literature focuses on the way that single mothers who receive social assistance are stigmatized by it. It is important to note that the U.S. is exceptional insofar as it is the only country that limits cash assistance to families with children (mostly women). In contrast, Canada also provides social assistance to the unemployed persons without children (mostly men). It turns out that American single mothers are disproportionately scapegoated for the problems of welfare simply because they are really the only group eligible for it. In countries like Canada, where childless persons are eligible for social assistance, single working age men without children are more likely to be targeted for punitive reforms. Put differently, Americans are no more likely to scapegoat single mothers than Canadians. It only looks this way because the group most likely to be subject to welfare stigma – single working age men without children –have never even been eligible for benefits in the first place.
The Dual-Clientele Trap
Welfare reform is subject to what R. Kent Weaver calls a “dual-clientele trap” in which policymakers wish to target adults for punitive reforms without harming innocent children. Much of the criticism of the U.S.’s welfare reform has been the adverse effects it has had on children but Ontario introduced the same welfare reforms including benefit cuts and work requirements that subsequently led to a rapid decline in caseloads. Despite these similar trajectories Canadian children have fared much better than American children. The child poverty rate for Canadian children is 50% lower than for American children.
The reason, as I discuss in a paper with Beth Popp Berman, is that Canadian policymakers could undertake punitive welfare reforms targeted at parents while continuing to funnel benefits to children through a separate program. The legacy of family allowances in Canada enabled policymakers there to redirect the child’s portion of social assistance into a refundable child tax credit (CTC). Conservative policymakers and pro-family groups otherwise hostile to welfare saw this as a legitimate way to “take children off welfare” once and for all. In contrast, the absence of family allowances in the U.S. left American policymakers without an alternative program. Without this legacy, similar efforts to shift children’s portion of social assistance into a refundable CTC were criticized by the same conservative policymakers and pro-family groups as an expansion of welfare. Differences in eligibility for child tax credits and their generosity – not welfare reform – better explains the child poverty gap.
As we reflect upon the successes and failure of welfare reform after twenty years, it is important to keep the experience of other countries in mind. Though too often forgotten, examining Canada is a great place to start the conversation.