TANF Talking Points from CPA

Summary

• As the nation struggles with recession, TANF becomes increasingly important.
• Poverty is on the rise, and the poor are becoming poorer.
• In 2001, the number of children living in poverty increased.
• Just as the economic downturn has caused former TANF recipients to lose their jobs, lifetime limits on cash assistance are going into effect.
• Americans support TANF expansion.
• States have a number of options to improve TANF and strengthen the social safety net.

As the nation struggles with recession, TANF becomes increasingly important.

The Temporary Assistance to Needy Families (TANF) block grant program was enacted by Congress in 1996 as a replacement for the previous welfare system.  It was designed to move Americans from welfare to work, finding jobs for poor parents and reducing the number of families receiving cash assistance.  TANF caseloads fell throughout the 1990s, largely because a robust economy generated millions of new jobs.  But as the national economy fell into recession in 2001, state TANF programs were expected to hold up the social safety net.

Poverty is on the rise, and the poor are becoming poorer.

In 2001, for the first time in 10 years, the nation’s poverty rate increased.  According to the Census Bureau, 32.9 million Americans lived in poverty in 2001, and the median household income declined by 2.2 percent from 2000-01. Over the past few years, income disparities have widened, and the poorest families experienced the largest losses in income.  By 2001, the average poor person had fallen further below the poverty line than at any time since 1979. Poverty levels for families of color were disproportionately higher. In 2001, 22.1 percent of African-American families, and 21.4 percent of Hispanic families lived below the poverty line, compared to 7.8 percent of non-Hispanic white families. 1

In 2001, the number of children living in poverty increased.

The number of children living in poverty and the number living in extreme poverty have increased from 2000-01.  In 2001, 11.7 million children were in households below the poverty line, and 5.1 million of them were in extreme poverty.  Almost 75 percent of children in poverty have parents who work, and these are the very families that TANF was intended to support.2  One likely cause is the extreme low wages and insufficient benefits earned by these parents.  The median wage for former TANF recipients was $6.61 per hour in 1997, and they were not likely to receive any health insurance coverage, sick leave, or vacation days.3

Just as the economic downturn has caused former TANF recipients to lose their jobs, lifetime limits on cash assistance are going into effect.

Former TANF recipients, even the “success” stories, are the first to lose their jobs in an economic downturn. They have the least job seniority and hold the most expendable positions. Just when poor families need support the most, the five-year lifetime limit on cash assistance is taking effect. Eight states had TANF lifetime limits that went into effect before 2001, 14 state limits became effective in 2001, 15 state limits took effect in 2002, and eight other state limits will begin in 2003. Six states have no lifetime limits on cash assistance.

Americans support TANF expansion.

According to an August 2001 survey by the Feldman Group, 67 percent of American voters support adjusting TANF to help people improve their education and learn new skills, in order to

earn enough money to move out of poverty, a policy also favored by a majority of Republicans (56 percent). Ninety-five percent favor allowing TANF recipients to fulfill their work requirements through education and training. Respondents also saw the value in suspending work requirements for TANF recipients who are primary caretakers. Seventy-one percent want to allow a parent with a child under three to receive cash assistance in order to stay home with the child, and 64 percent support a proposal to give cash assistance to a parent with children younger than six.

States have a number of options to improve TANF and strengthen the social safety net.  States can:

• Delay time limits for assistance under TANF and/or use state maintenance of effort funds to provide cash benefits to families who are cut off from federal funding.
• Invest in low-wage workers and laid-off workers by allowing them to obtain additional education and training and count the education programs as a work activity under TANF. Education will help workers find new, better jobs so they can become economically self-sufficient.
• Address shortfalls in state unemployment insurance programs that deny eligibility to many of the newly unemployed.
• Adopt or expand state Earned Income Tax Credit (EITC) programs that target the working poor.
• Take advantage of various new state options under the food stamp program, which is primarily paid for by federal funds.

Endnotes

1 U.S.Census Bureau, Poverty in the United States, September 2002.

2 Children’s Defense Fund, “The State of Children in America’s Union,” 2002.

3 Urban Institute’s Assessing the New Federalism, “1999 National Survey of America’s Families,” 1999.

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