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July 2004, Volume 10, Number 3

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Census, Welfare

California adult recipients of cash assistance under CalWORKS (the name for TANF in California) began reaching their five-year time limit for payments in January 2004. Under CalWORKS, cash assistance continues for children in poor families even after it ends for adults, and poor families continue to receive child care and Food Stamp benefits. There are numerous exemptions and extensions from the five-year time limit, so that adults who try but are unable to maintain stable employment can continue to receive cash assistance in California. However, in one survey, the counties that administer CalWORKS have been reluctant to extend cash assistance beyond 60 months http://www.wprp.ucop.edu).

Many provisions of the federal Temporary Assistance for Needy Families program expired in September 2002, but TANF has been extended as Congress struggles with whether to toughen work requirements for adult recipients. A main goal of welfare reform was to give more control to state and local officials; states receive $16.5 billion a year to assist poor residents. Most versions of the five-year extensions pending in Congress would require 70 percent of adult recipients of cash aid to be engaged in work activities by 2008.

A CGE model of the "welfare-to-work" provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) concluded that welfare reform added 2.4 million workers to the US labor force, 18 percent of labor force growth over the period studied, and resulted in four percent growth in wages rather than the seven percent that would have occurred without welfare reform.

The Earned Income Tax Credit provides up to $4,000 to families with children whose incomes are less than 200 percent of the poverty line. Enacted in 1975 to cushion the impacts of rising payroll taxes on poor families, the EITC has become the nation's largest anti-poverty program. In 2001, some 16 million families, over 80 percent of those eligible, received $30 billion in EITC payments, twice the payments under cash welfare assistance.

Hanson, Kenneth and Karen S. Hamrick. 2004. Moving Public Assistance Recipients Into the Labor Force, 1996-2000. Food Assistance and Nutrition Research Report No. (FANRR40). May. http://www.ers.usda.gov/publications/fanrr40/