State TANF Policy Stringencies and an Individual's Long-Term Self-Sufficiency

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ended the longstanding unconditional cash assistance program and installed a new time limited and work-focused social assistance program –– Temporary Assistance for Needy Families (TANF). TANF has aimed to promote work and self-reliance, and it has established that individuals are subject to work requirements and a federal 60-month time limit on welfare. Under TANF, states are able to impose further restrictions beyond the federal requirements, and many have done so. While PRWORA showed positive effect in employment immediately after its implementation in 1996, little is known of the extent to which stringencies in various state TANF policies have affected individuals long-term. These policies affect millions of poor families, and stringencies add to levels of psychological stress and stigma that families experience. In this study, I intend to investigate how stringent and lenient welfare approaches differ in their impacts on an individual’s long-term self-sufficiency.

I use a nationally representative longitudinal dataset – Survey on Income and Program Participation 1996, 2001, 2004 Panels. I estimate the intent-to-treat effects of stringent versus lenient TANF policies on self-sufficiency, characterized by work participation, earnings, and dependency on welfare, as time exposed to TANF elapses among the potentially affected population. A state’s TANF regime is defined as stringent if its time limits are below 60 months and/or the initial sanction to noncompliance to work requirements is to remove the entire benefit. Since selection into TANF participation is not random, estimating intent-to-treat effects will more accurately capture policy effects, because nonparticipants’ behaviors may also be affected by the policy. I use single mothers with less than a bachelor degree as a proxy for the population most likely to be affected by TANF, and the individual self-sufficiency trajectory over time is tracked using years in single motherhood post-1996. I use multiple imputations to address the missing data problem and random effect models to estimate individuals’ long-term self-sufficiency progress. Models control for individual socio-demographic characteristics.

The results show that each additional year in single motherhood is associated with increases in earnings (4.2%), hourly wage (2.9%) and hours worked (1.6%), and a 1.9% decrease in TANF participation. These effects do not differ between single mothers living in stringent or lenient states. Although single mothers in stringent states have a 6.7% higher employment rates compared to those in lenient states, single mothers in the lenient states show a higher annual employment rate growth (1.1%) than those in stringent states (0.2%). With this pace, the average employment rate of single mothers in lenient states can catch up with those in stringent states within 7.5 years. In conclusion, stringent state TANF policies do not show superior effect on long-term self-sufficiency.

By examining whether stringent requirements encourage individuals to work more, earn more, and be less likely to receive welfare over the long term, this study may help states design more effective and humane policies. Findings may also help shed light on debates over the rationality and effectiveness of workfare policies.