Poverty After Welfare Reform
Children—in particular, those in single-mother families—are significantly less likely to be poor today than they were before welfare reform: child poverty overall fell between 1996 and 2014. This is the case because of household earnings, lower taxes, several refundable tax credits, food stamps and other noncash benefits.
“Deep poverty”—defined as having a family income below half the official poverty line—was probably as low in 2014 as it had been since at least 1979.
Practically no children of single mothers were living on $2 a day in either 1996 or 2012 (the latest year for which we have reliable statistics), once the receipt of all government benefits are factored in. In 2012, fewer than one in 1,500 children of single mothers were living in what is called “extreme poverty.” This finding is consistent with other research.
Official poverty statistics can create a misleading impression that hardship has increased, and that this increase has been due to welfare reform. Government statistics underestimate the income of poorer families, exclude entirely the receipt of valuable benefits, and overstate inflation. The most reliable indicators showing some increase in hardship after 1996 reflect the rise and fall of the business cycle but do not rise steadily—and generally grew worse among groups of Americans who never received cash welfare. The idea that rolling back the 1996 welfare reform would help the poor is wholly unjustified by the evidence.