Welfare reform in 1996 ended the traditional cash welfare program called Aid To Families With Dependent Children (AFDC). In place of AFDC came a new program titled Temporary Assistance to Needy Families or TANF, which made assistance payments contingent on job search or participation in job training activities. Welfare reform placed a renewed focus on encouraging and rewarding work, a focus also shared by the Earned Income Tax Credit program (EITC). A large line of research on the EITC shows that the program encourages labor force participation, particularly for single mothers, and offers long-term benefits for children in EITC-receiving households. As these studies show, the system has worked well for those low-wage workers who are able to find work by boosting their incomes and encouraging sustained long-term employment. But what of the non-working poor?

Is TANF Helping The Poor?

The effects of programs that aim to help the non-working poor, such as TANF, are less well-understood. From the stories profiled in $2.00 a Day, we get a disappointing picture of the role of cash assistance in helping families in extreme poverty. Many poor families are unaware that they are eligible for assistance from the TANF program. Other families know about TANF, but choose not to apply for benefits because they see the process as too complicated or believe they will likely be rejected despite having hardly any cash income. In addition, the average benefit amounts are paltry, ranging from $300 to $400 for a family of three.

Read the article “Is TANF Actually Helping the Poor?” on aei.org.