Few conservative domestic policy achievements over the past 40 years have been as important as the welfare reforms of the 1990s. These reforms initially comprised innovative state experiments authorized by policy waivers during the George H. W. Bush and Clinton administrations. They culminated in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, which replaced the former cash welfare program Aid to Families with Dependent Children (AFDC) with a work-focused block grant combining state flexibility with federal accountability—the Temporary Assistance for Needy Families (TANF) program.

Key Points:

• The 1996 welfare reform reduced poverty dramatically by putting millions of poor Americans on a path to self-sufficiency, but policymakers have since increased the number of Americans receiving unconditional transfers.
• Policymakers should recast safety-net programs to better encourage work and marriage, thereby addressing the key underlying causes of long-term poverty.
• Policy should also encourage state governments to promote upward mobility by allowing them to innovate with program design and holding states financially accountable to achieve the aims of antipoverty programs.

Along with welfare reform, numerous policy changes during the 1990s provided more generous benefits to low-income workers. These reforms included expanding the earned income tax credit (EITC), creating the child tax credit (CTC), and providing additional childcare subsidies. Efforts to enforce child support payments from noncustodial parents were also strengthened.

Together, these reforms dramatically reduced the number of families receiving cash welfare. In 1992, 14 percent of children were in AFDC-receiving families in a given month. By 2000, just 6 percent were in families enrolled in TANF, and by 2019, 3 percent were.¹ Meanwhile, child poverty declined by over half, and possibly by much more, in the decades following PRWORA’s enactment.² Employment among single mothers increased from 59 percent in 1992 to 73 percent in 2019.³ The five-decade increase in nonmarital birth rates preceding welfare reform moderated before declining to rates not seen since the late 1980s.⁴

Yet this policy victory was narrow and incomplete. TANF now comprises a small portion—about 5 percent—of federal safety-net dollars (excluding health care programs). Many safety-net programs retain the work and marriage disincentives that bedeviled AFDC, and when TANF receded, several of those programs expanded. The resulting safety net undermines the very choices that lead families to upward mobility and long-term prosperity.

As the 1996 reforms retreat from memory, many activists, advocates, and policymakers have propounded a revisionist history, denying welfare reform’s success and concluding that it actually increased deep poverty.⁵ While these claims contradict the facts, progressives have used them to justify calls for creating a child allowance, which would reverse some of welfare reform’s successes. Meanwhile, the rate of single parenthood remains historically elevated, the safety net remains an expensive thicket of programs administered via poorly coordinated bureaucracies, and upward mobility remains disappointing. States have limited means—and few financial incentives—to innovate in order to help families achieve better outcomes.