Update: Welfare Rolls Still Plunging After All These Years, and Still Underreported

OVERVIEW: An underappreciated accomplishment of the past six years has been the continued reduction in the number of people on welfare.

The welfare caseload, after declining dramatically in the first four years after Welfare Reform was enacted, might have been expected to level off, or even rise slightly with overall population growth, after the initial impact of the 1996 law wore off.

After all, the reduction in the number of welfare recipients during the 1990s was stunning. From a peak of over 14 million in 1994, and over 12.5 million at the end of 1996 (over 4.5 million families) when the new took effect, the number of those receiving welfare came tumbling down to about 5.5 million by the end of 2000 — a decline of nearly 2 million per year.

I’m not sure that anyone expected the numbers to steadily fall after the first four years of reform, but that is exactly what has happened. Here are the details for families and recipients on welfare as of the end of each calendar year beginning with the turn of the century (000s omitted):

Dec. 31, 2000: 2,155; 5,527 (from year-end 2001 reports)
Dec. 31, 2001: 2,101; 5,276 (from year-end 2002 reports)
Dec. 31, 2002: 2,045; 5,014 (from year-end 2003 reports)
Dec. 31, 2003: 2,003; 4,844 (from year-end 2004 reports)
Dec. 31, 2004: 1,970; 4,695 (from year-end 2005 reports)
Dec. 31, 2005: 1,863; 4,386 (from year-end 2006 reports)
Mar. 31, 2006: 1,808; 4,223 (from year-end 2006 reports)
Dec. 31, 2006: 1,740; 4,093 (from interim 2007 reports)
Mar. 31, 2007: 1,696; 3,971 (from interim 2007 reports)

The reductions in families and recipients on welfare over the last 6-plus years are over 21% and over 29%, respectively, which the country’s overall population has increased by about 6-7%. The percentage of the population receiving welfare benefits has dropped from 1.95% at the end of 2000 to 1.32% in March 2007 — a per-capita drop of almost one-third.

It’s also worth noting that since reform took effect, the ratio of recipients to families has gone down from 2.56 to 2.34 — perhaps indicating a significant slowdown in the “babies making babies” phenomenon.

It seems to me that The Administration for Children and Families (ACF) deserves kudos, and at least some media attention, for the continued, mostly unknown, and I believe mostly unexpected, progress.

To get the numbers down further and thereby move more individuals and families into the economic mainstream, ACF would do well to focus on two persistent problem spots, both of which have also generally escaped media mention.

First, there's California — The Golden State apparently abandoned governor Ronald Reagan’s landmark welfare reforms of the 1970s. Paul Weyrich noted in a 2006 Townhall column that “Reagan managed significantly to cut welfare rolls while increasing support for those who really needed help.” But by the time nationwide welfare reform kicked in, a mind-boggling 8% of the state was on the dole — over 2.6 million people. The state's welfare reform progress has consistently trailed the rest of the country, but the past year has been especially weak.

While almost every other state in the union continued to see welfare rolls decrease, California had 1.16 million people on welfare in March 2007, about 100,000 MORE than in March 2006, primarily because of a 140,000-case spike in October 2006 (if anyone knows what happened to cause this, e-mail me or throw in a comment). California today has just over 12% of the nation’s population, but a ridiculous over-29% share of total welfare recipients -- up from about a 25% share a year ago. The state would have at least 700,000 fewer welfare recipients if it reflected the rest of the country, and I can think of no good reason why it shouldn't.

The state’s outsized welfare problem probably cannot be traced to immigration, as Florida, Arizona, and Texas do not have disproportionately large welfare populations. In fact, the percentages of the nationwide caseload in each of those three states is lower than their percentages of the US population -- In the cases of Florida (6% of the population, 1.9% of the caseload) and Texas (7.8% and 3.4%), quite a bit lower.

Then there's Tennessee — The Volunteer State’s welfare situation, while improved from last year, is still seriously out of whack; it has 2% of the nation’s population but 4% of all welfare recipients. The state’s nearby neighbors do not have anything resembling this severe of an imbalance.

Other candidates for closer scrutiny would include Michigan (3.4% of population, 4.9% of caseload), Indiana (2.1% and 3%), Missouri (1.9% and 2.6%), and Washington State (2.1% and 3.1%).

The most-improved area by far is the District of Columbia — Its caseload dropped by over 70% from March 2006 to March 2007, almost entirely due to a 25,000-case reduction in October 2006 (as before, if anyone knows why, e-mail me or comment below).

I would hope that the record of improvement continues. Every former welfare recipient who enters the workforce transforms himself or herself into a societal contributor, and from a tax-taker to a taxpayer.

Finally, here’s a related thought that I wish I had time to follow up on: How much of the prosperity of the late 1990s, and how much of the budget-deficit turnaround that occurred, can be traced to over 2 million adults coming off the dole and entering the workforce during that time? I suspect that the answer is "much more than a little." And we should never forget that Bill Clinton only signed on to Welfare Reform to preserve his reelection viability:

For all that Clinton got wrong, welfare reform was one thing he ended up getting very right. He had vetoed two previous reform bills passed by the Republican-controlled Congress, and when the House and Senate came back with a third bill, liberal pressure for another veto was intense. But political strategist Dick Morris warned Clinton that a third veto could cost him the 1996 election, and so, pronouncing it a "historic opportunity to do what is right," he signed the bill.

If he had to be dragged kicking and screaming into agreeing to Welfare Reform, exactly why does Mr. Clinton deserve credit for the economic and job growth that resulted from it?

This post updates a related one from September 2006.

Cross-posted at BizzyBlog.com and Wide Open.