Sanders: Welfare reform more than doubled 'extreme poverty'

One thing that sets Democratic presidential candidate Bernie Sanders apart from opponent Hillary Clinton is that he opposed a 1996 law known widely as welfare reform.

The Vermont senator said the Personal Responsibility and Work Opportunity Act, which both Democratic President Bill Clinton and a bipartisan Congress supported, contributed to poverty today.

"What welfare reform did, in my view, was go after some of the weakest and most vulnerable people in this country," Sanders said at a Feb. 24 press conference in South Carolina. "During that time, I spoke out against so-called welfare reform because I thought it was scapegoating people who were helpless, people who were very, very vulnerable. Secretary Clinton at that time had a very different position on welfare reform. ... Now what happened as a result of that so-called welfare reform bill? Since legislation was signed into law, the number of families living in extreme poverty has more than doubled from 636,000 to 1.6 million."

We wondered if the number of families living in extreme poverty — defined as households living on less than $2 in cash per person per day — has more than doubled, and we also wanted to know if the 1996 legislation caused that trend.

We found that the best estimates show Sanders’ numbers are right on, and there is some well-regarded research that ties welfare reform to the rise in extreme poverty.

The numbers

Sanders’ campaign pointed us to figures from the Census’ Survey of Income and Program Participation, which researchers Kathryn Edin and Luke Shaefer examined in their 2015 book, $2.00 a Day: Living on Almost Nothing in America.

When welfare reform passed in 1996, there were about 636,000 American households living on $2 per person per day or less. As of mid 2013, that figure has more than doubled, to about 1.5 million such households, with about 3 million children living in these circumstances.

That’s a 130 percent growth in families in extreme poverty, compared to just about 20 percent growth in the population as a whole.

This data has some shortcomings, acknowledged by Edin and Shaefer, professors at Johns Hopkins University and the University of Michigan, respectively. For example, there are concerns that survey respondents misreport how much cash assistance they receive from the government, which could mean that some of these households actually have cash income higher than $2 a day.

Additionally, SIPP only counts cash income, so it doesn’t capture whether these families receive in-kind government benefits like food stamps, Medicaid, child day care or subsidized housing.

Even if the SIPP data isn’t perfect, Edin and Shaefer found that the general trend was consistent with corresponding data, such as an increase in those reporting zero income among people receiving benefits from the Supplemental Nutrition Assistance Program, known colloquially as SNAP or food stamps.

In any case, by a reasonable measure, Sanders’ figures are correct.

The causes

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What was welfare reform? The bipartisan legislation sought to encourage the poor to join the workforce and stay there. It responded to a sense that welfare recipients were choosing government cash over getting a job.

The law put a five-year lifetime limit on receiving welfare cash, established as Temporary Assistance for Needy Families (TANF), and it established workforce participation requirements. The previous program had no such requirements. Welfare reform, combined with earned income tax credit expansions and a booming economy, benefited the working poor, experts told us.

But the instability of the low-wage market revealed the program to be an ineffective safety net for people who weren't able to find and keep work, Edin and Shaefer found. They aren’t able to maintain a stable earned income, and as a result they cannot reap the benefits of a work-based safety net and the earned income tax credit.

"We believe a lot of families are better off as a result of the package of changes made during the 1990s, in particular the EITC," Shaefer told PolitiFact. "Those who are able to maintain employment, buffer against the instability, receive more assistance than ever before. It’s those at the very bottom that we argue are doing worse."

Just 23 out of every 100 people living in poverty receive welfare cash, as of 2014, and that ratio has dropped nearly every year since 1996 when it was 68 out of 100, according to the left-leaning Center on Budget and Policy Priorities. People living in extreme poverty might not be taking advantage of welfare cash benefits because of the stigma, lack of confidence in the program, or the work requirements and time limits, contributing to some families’ extremely low cash income.

Welfare reform put TANF administration into the hands of the states in the form of block grants. This means that states can use the funding for cash benefits or for administering programs intended to increase employment, like childcare or job training. But there is wide variation between the states as a result. For example, in 2013, 78 out of 100 impoverished families in Vermont received cash benefits, but just 4 out of 100 did in Louisiana.

Shaefer said some states use these block grants to pay for programs they would have paid for absent the federal funds, leading to less cash in the hands of individuals.  

Certain states and the 1996 legislation for structuring welfare in such a way are both responsible for these state-level shortcomings, said Ron Haskins, who was involved in crafting welfare reform and is now codirector of the Brookings Center on Children and Families.

There are other factors affecting this upward trend in extreme poverty, including broader economic trends affecting low-wage employment and housing stability, Edin and Schaefer note. But there’s no doubt that welfare reform played a role.

"I think welfare reform was one major factor driving the increase in extreme poverty and probably the biggest single factor, although it’s harder to be sure about the second claim," said Christopher Jencks, professor of social policy at Harvard University.

Though acknowledging extremely poor people who are unable to maintain a job would have been better off under the pre-reform system, Haskins said Sanders is ignoring all the positive benefits of welfare reform. For example, poverty among single-mother households, which were most affected by by welfare reform, is lower than what it was prior to welfare reform, even during the Great Recession.

"Sanders is onto something, but he only told half the story," Haskins said.

Our ruling

Sanders said, "Since (welfare reform) was signed into law, the number of families living in extreme poverty has more than doubled."

Sanders is talking about a very specific and small percentage of American households living on less than $2 cash income per person per day. That figure has more than doubled from 636,000 to 1.5 million since 1996 when Bill Clinton signed welfare reform.

The data isn’t a perfect capture of how much these people receive in government benefits, and only so much blame can be placed on welfare reform legislation. But experts told us the law did play a significant role in this trend.

We rate Sanders’ claim Mostly True.