Following Through on Welfare Reform
Tuesday, April 1, 2008

New report looks at Massachusetts' commitment to lower-income working families

BOSTON — New research suggests that, in the decade since the welfare reforms of the mid-1990s, Massachusetts has substantially reduced funding for supports for lower-income families. While at the time of welfare reform many spoke of shifting resources from cash assistance into child care, worker training, and other supports for working families, the evidence shows that most of the savings from welfare reform were not reinvested in those ways.

Following Through on Welfare Reform: How Savings Could Support Lower-Income Working Families, released today by the Massachusetts Budget and Policy Center and The Home for Little Wanderers, examines spending on lower-income families and finds that, after adjusting for economic growth, Massachusetts is spending $1.3 billion a year less now on core supports for these families than a decade ago.

Because most of the savings from the reforms were not reinvested in efforts to help lower-income working people succeed, it is not surprising that there has been no significant decrease in Massachusetts’ poverty rate since the enactment of welfare reform.

Key findings of Following Through on Welfare Reform include:

• From 1995 to 2007, the number of families with dependent children receiving cash grants fell 57 percent, and spending for cash grants fell by $680 million.

• Massachusetts appropriated $1.314 billion less in 2007 than in 1995, as a share of personal income, for programs helping lower-income families. In 1995, Massachusetts spent 0.87 percent of state personal income on programs supporting lower-income families. By 2007, after a decade of growth in the economy and declines in spending to help lower-income families, the share fell by almost half to 0.44 percent.

• While poverty rates in the U.S. have fallen since 1995, the poverty rate in Massachusetts has remained at about 10 percent of all people living in the state. Additionally, the number of individuals living at or below 200 percent of poverty hovered around 25 percent between 1995 and 2007.

"Giving lower-income people the support they would need to work and provide for their families was an articulated purpose of the welfare reforms of the 1990’s. To escape poverty, education and training for one’s future are essential," said Joan Wallace-Benjamin, Ph.D., President and CEO of The Home for Little Wanderers. "But we are not meeting that goal because we are not reinvesting enough of the savings achieved into work supports for lower-income families. The Commonwealth is obligated to create and maintain the supports that families need to escape poverty.

"The unfinished task of welfare reform is to provide low income parents with the supports they need to succeed in the workplace, such as education and training to build their skills and quality child care for their children," commented Noah Berger, Executive Director of the Massachusetts Budget and Policy Center. "By reinvesting more of the savings from welfare reform in these effective supports, our Commonwealth could give lower-income working parents the help they need to provide for their families."

Senator Karen Spilka (D-Ashland) recognizes the broad-based benefits of following through on reinvestment in work supports. "Job training, child care, and community supports are tools that can help working families turn their potential into productivity," said Spilka, Senate Chair of the Committee on Children, Families and Persons with Disabilities. "While there is certainly a moral imperative for the Commonwealth to follow through on enhancing work supports for lower-income families to get them on the path to self-sufficiency, it is also good for the overall economy. Better supports will increase the earning potential of Massachusetts employees while expanding the skill-base of the workforce."

Margaret Miley, Coordinator for MIDAS, a statewide collaborative of community-based, non-profit organizations that help working low-income residents in Massachusetts build assets and achieve greater economic stability, noted the immediate need for reinvestment in work supports so that families have the opportunity to make a living and provide for their families. "This report confirms what we have seen in our communities," said Miley. "These people follow the rules and work hard. Can we really expect families to pay for childcare while earning below-living-wages? Increasing work supports and tax credits are good investments in families and in our local economy."

The full report, Following Through on Welfare Reform: How Savings Could Support Lower-Income Working Families, offers suggestions to policymakers including: increasing childcare supports and expanding access to early education, improving employment and training, including additional supports for higher education, expanding the earned income tax credit (EITC) program, and building community supports to help low-income children succeed in school. The report, with executive summary, is available here.

The Massachusetts Budget and Policy Center provides independent research and analysis of state budget and tax policies, as well as economic issues, that affect low- and moderate-income people in Massachusetts.