Welfare Reform under PRWORA: Aid to Children with Working Families?

We assess some of the major themes and impacts of welfare reform that have emerged for states and families during the three years since the passage of the 1996 welfare reform bill, PRWORA. The major themes for states include: (1) a work-first approach to cash assistance, (2) large increases in federal funding for child care, (3) increasing diversity in state and local cash assistance and child-care programs, (4) the beginning stages of the integration of diverse child-care programs, and (5) the severing of the link between child-care assistance and cash assistance in some states. Changes for families include (1) increases in financial incentives to work; (2) mandatory work-related activity requirements, sanctions if requirements are not met, and time limits on cash-assistance receipt; (3) increased availability of child-care subsidies; and (4) a different environment and culture at welfare offices—stressing work and personal responsibility. Assessment of impacts on state and localgovernment and low-income families with children are at an early stage. The clearest impact is the marked decline in the number of individuals receiving cash assistance and the equally marked increase in the number of children being cared for in nonfamilial settings. A markedly increased proportion of cash-assistance recipients are working or in other approved activities. Increased child-care subsidies appear to have increased the earnings of both current and former welfare recipients and other low-income families. Preliminary results suggest that work requirements and time limits have succeeded in moving low-income women with children into jobs, but have decreased the wages they are able to obtain compared to women who are not subject to time limits.