HALF FIXED OR HALF BROKEN? | Chicago Tribune

The arguments seem distant now, but they were charged and bitter at the time. As Congress set about overhauling the welfare system in 1996, proponents talked about the moral and economic imperative of cutting welfare rolls and increasing employment, setting former recipients on a path to financial stability. Critics warned that single mothers would be consigned to lives of deprivation without a safety net.

With the 10-year anniversary of the legislation approaching, it is time to assess what welfare reform has wrought.

A key goal of the legislation was to reduce dependency and to promote work. Welfare was no longer an entitlement but rather temporary aid for the neediest--with strings attached, such as a work requirement. Welfare support was limited to no more than five years' worth of aid.

By the standards of reducing dependency and moving people into jobs, welfare reform worked. Caseloads have plummeted, from about 5 million families in 1994 to fewer than 2 million today, according to the Department of Health and Human Services.

The employment rate of single mothers, the primary recipients of welfare, has risen sharply. Contrary to the most pessimistic predictions, large numbers of children are not sleeping on grates as a result.

Yet it would be wrong to credit welfare reform alone for this. Research has shown that the drop in welfare numbers can be traced to a combination of factors, from the law's work requirements and time limits to the economic boom of the late 1990s and expansion of the Earned Income Tax Credit.

It also is clear that not all has gone according to plan. Welfare reformers envisioned a world where work today would lead to higher wages in the future. "A job, a better job, a career" was the slogan of many welfare offices during the late 1990s.

But despite gains in employment, wage growth has been modest. The reason? Many former recipients lack high school diplomas. And with little education, good jobs are hard to come by. The welfare poor simply have become the working poor.

So what should we do? Can we keep the rolls down and still put needy families on the path toward the financial stability reformers envisioned? The answer is yes, if we think outside the welfare system.

First, we should invest in young women before they go on the dole. A high school diploma is no welfare vaccine, but it does help reduce the reliance on welfare. It cuts into that pathology of dropping out and becoming a teenage mother.

It raises wages too.

We should do everything we can to promote education among at-risk girls. One approach that looks promising is to provide incentives for disadvantaged kids to finish high school or go to college.

This was the idea behind the "I Have a Dream" programs, in which a family "adopts" a class of low-income students in the hope of getting them to college. More recently, Israel's Achievement Awards experiment, in which disadvantaged students were offered financial incentives to pass their high school exit exams, boosted the success rate by about one-fourth.

Critics object to these programs on the grounds that they pay people to do things they ought to do anyway. Even so, if we think of them as investments that help prevent young people from entering the welfare system, they make sense.

Second, we should expect more from fathers. The 1996 welfare law did address child support, but progress has been too slow. According to Census Bureau data from 2002 (the last year for which published figures are available), the fraction of single parents receiving child support was only 38 percent. In 1994, it was 37 percent.

One of the main virtues of raising child support is that it partly privatizes the welfare system by replacing support from taxpayers with support from fathers. More important, regular child support reduces the need for single mothers to apply for welfare in the first place.

Critics of increased child-support enforcement argue that fathers can't afford to pay more. This sounds a lot like the old argument that welfare mothers would not be able to find jobs, which proved spectacularly wrong. Maybe if we were as demanding of fathers as we are now of mothers, we would see real progress.

Critics also argue that the child-support system is unfair. Fortunately, we have two good examples that show how to devise a balanced system. Sweden, with a universal guaranteed minimum child-support benefit, holds out promise of success. Closer to home, Wisconsin has run a universal child-support system for years. Fathers generally pay a fixed share of their income that depends on the number of children they support. The uniform guidelines help make the system fair, and the routine withholding of wages leads to high collections.

During the first decade of welfare reform, the focus on moving welfare mothers into jobs succeeded in reducing caseloads and increasing employment. It did not move needy families toward financial independence, however. If we think outside the welfare system, expanding educational incentives and expecting more from fathers, we should be able to keep the welfare rolls down and give needy families a boost up the economic ladder.

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Jeffrey Grogger is the Irving Harris professor in urban policy at the Harris School of Public Policy Studies at the University of Chicago. He is co-author of "Welfare Reform: Effects of a Decade of Change."