Welfare Reform in the U.S.: A Policy Overview Analysis

Several previous papers have marked the United States as an outlier: high poverty rates, low public social spending but high private social expenditures; a rather strong belief that people are poor because of laziness or lack of will; and remarkable differences across the States due to state discretion. With that established context in mind, this paper analyzes U.S. welfare in more detail, focusing on the impact of TANF—part of the major welfare reform that took place in the United States in 1996. U.S. welfare reform emphasized an American preference for work, and it was a move further away from the strategies other “wealthy” nations use to address poverty. Initially U.S. welfare reform did serve to increase work participation rates, although the earnings of most individuals who left welfare were still below the poverty line, even many years after their exit. We found huge variation of welfare eligibility rights across states, depending on the state's ability to pay and preferences to meet a certain level of social standard or other (social) objectives such as child care, work support and employment programs.