Did Welfare Reform Increase Extreme Poverty in the United States?
Two decades ago, on August 22, 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Act, popularly known as welfare reform, into law. At the time, liberals proclaimed that the bill would slash the incomes of one in five families with children and push 2.6 million people into poverty. Senator Daniel Patrick Moynihan famously predicted that the bill would leave children scavenging in the streets, “sleeping on grates, picked up in the morning frozen.”
In fact, reform cut welfare caseloads by over 50 percent, employment of the least-skilled single mothers surged, and the poverty rates of black children and single-parent families dropped rapidly to historic lows. Doomsday prophets were utterly discredited. Reform was very popular with the public.
Remarkably, 20 years later, Moynihan’s alarm about “children sleeping on grates” has been revived. The left now contends that welfare reform has thrown 3.5 million children into “extreme poverty” of the kind seen in the developing world, living in destitution on less than $2.00 per day. For example, Bloomberg News reports that millions of Americans now have incomes lower than the “disabled beggars of Addis Ababa in Ethiopia.”
These claims of extreme poverty in the U.S. are based on radically defective data. In reality, poverty among single parents, the main group affected by welfare reform, has fallen substantially over the past two decades while it remained constant or rose among groups unaffected by reform.