By Lawrence Mead, Ph.D.
Between 1987, when Tommy Thompson took office as governor, and 1994, Wisconsin cut its welfare caseload (Aid to Families with Dependent Children, or AFDC) by 23 percent, by far the largest fall of any state. It avoided the abrupt growth in dependency that hit most other states between 1989 and 1993. Several causes might be imagined, including Wisconsin’s good economy, the fall in welfare benefits due to a Thompson cut and inflation, effective child support enforcement, and the welfare employment programs the state has implemented.
The work programs include the national Job Opportunities and Basic Skills Training Program (JOBS) and several experimental projects launched by Thompson. Changes in JOBS as well as the experiments have shifted state work policy away from placing clients in education or training and towards enforcing work in available jobs. However, fewer clients assigned to JOBS now enroll than formerly, and the program serves fewer of the more disadvantaged recipients than it used to.
Studies of national trends suggest that the rise in unwed parenthood and the last recession were mainly responsible for the recent welfare boom. However, if one compares states, those that enforced work and child support well suffered less welfare growth than those that did not, even allowing for social and economic differences. Wisconsin escaped the boom largely because it was good at work and child support enforcement, as well as due to low unemployment.
Many believe that Wisconsin’s welfare decline is due mainly to the benefit cut or low unemployment. It is difficult to test these claims by examining statewide trends, but a benefit effect appears unlikely. Comparisons across the Wisconsin counties suggest that a tight labor market and effective work programs were the principal causes of decline. Low unemployment drove the caseload down in the late 1980s, and in the early 1990s, JOBS helped sustain the fall. Recently, the experimental programs appear to be diverting many applicants for aid away from AFDC.
Several questions remain about the Wisconsin achievement:
- Are the poor better or worse off? There is no systematic information, but to date, anecdotes do not suggest unusual hardship.
- Why has Milwaukee reduced its caseload less than the rest of the state? The main reason appears to be a poorly-run JOBS program. Recent reforms have sharply improved JOBS performance in Milwaukee, and this augurs well for greater caseload reductions in the future.
- Has the state gained or lost money on reform? It has spent markedly more on administration and support services than it did before reform. Yet, due to the caseload fall, it has saved an estimated $68 million overall.
- How far might Wisconsin’s methods drive the caseload down? Perhaps two-thirds of cases might leave cash welfare, but in-kind benefits would still be necessary. And as the more employable cases leave the rolls, non-work strategies will be needed to help the remaining caseload.
One implication of the Wisconsin achievement is to question the opposition usually seen in Washington between government aiding the poor and trusting the private sector to do so. In Wisconsin’s best-run counties, government gives aid and enforces values on behalf of society. Another implication is that the days when welfare politics focused chiefly on employment may be numbered. If most of the employable leave the rolls and the remaining cases do more to help themselves, concern to improve benefit levels and ameliorate “working poverty” may grow. Conservatives may have reformed welfare, but the political beneficiaries may be liberals.
