Understanding Poverty 2: Cash Benefits (Welfare/TANF)

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The Basics

Contrary to popular belief, cash benefits (called Temporary Assistance to Needy Families or TANF) from the welfare office are not a common entitlement for poor families. In fact, in contrast to food stamps where one can earn up to 200% of the federal poverty threshold and qualify, the eligibility criteria for cash benefits is around 50% of the federal poverty threshold in most states. This is calculated monthly and all forms of income count against eligibility including unemployment compensation, disability income, court-mandated child support (regardless of whether or not it is received), wages, and even one-time payments like a tax return or life insurance payment. Only families with children are eligible for this benefit.

There are also asset limits that vary by state. The typical asset limit is $2,000. Usually (but not always), the family’s primary vehicle doesn’t count as an asset and their primary home doesn’t count as an asset. Any kind of savings account owned by any member of the household counts against eligibility, even if the savings is specially designated (such as a college savings fund).

Finally, the amount of time that a family can receive cash benefits is limited, usually to two years, and can only be received if non-disabled, adult heads of household are actively seeking employment or are working through a state-sponsored program.

The maximum monthly amount of money a single parent with two dependents receives on welfare is $170-770 depending on the state in which the family lives.

Curious and want to an even deeper look into this program? Congressional report here.

The Problem with the TANF Approach

There are many problems with the TANF approach to poverty, but I’ll focus on the big 3. First, a TANF check is never enough to pay for all the basic needs of a family, even when combined with food stamps, but the asset limits and monthly earning limits mean that a family literally cannot get enough money for those needs in any other way except through other social service programs that are excluded from the calculations. The system creates more dependence on the system rather than working toward helping families out of poverty.

Second, while it is acceptable under eligibility guidelines to work for a state-sponsored program while receiving cash benefits, families receive ONLY cash benefits as their “wage.” These programs require roughly 20 hours per week of work. Remember that in the lowest-paying state, the maximum monthly benefit for a single parent with two children is $170 per month. That equates to approximately $2.13 per hour. While these programs are supposed to be helping families develop long-term job skills for productive employment, the program jobs are typically menial labor, retail sales, or low-skill secretarial jobs that continue to keep people in poverty.

If an able-bodied adult member of the household wanted to go to college to improve their long-term employment options, they would be disqualified from the program unless they also worked those 20 hours. 20 hours of work study count as financial aid, not employment.

Perhaps the biggest problem with the TANF approach is that families cannot save for college, trade school, or other training that would help their children break the poverty cycle. A college savings account for their child—something that would have a long-term impact and equalizing effect on their future—counts against the family’s ability to meet that child’s right now needs.

This doesn’t even take into consideration the way the inability to save for emergencies puts some families into a cycle of employment followed by reliance on the system.

Few TANF programs come anywhere close to being equalizing, deliberate, or to show an expectation for future success. In fact, they don’t consider the future at all.

What Can We Do?

Our current welfare system is based on Elizabethan-era assumptions and policies. It is also designed in such a way that it assumes all poverty looks, feels, and behaves the same. Because of these foundational assumptions, some efforts to “fix” the welfare system—such as Clinton’s welfare reform of the 90s—have actually increased the risk of long-term impoverishment and made it more difficult for social mobility to occur.

The first thing we need to do as citizens is educate ourselves about what poverty is really like. I can’t count the number of times I have heard people say things like, “They don’t work because they can just rely on welfare.” The truth is that no family can successfully and healthily rely on cash benefits or any other form of welfare. Imagine trying to live as a single parent with two children on $170 per month in Alabama or even the $770 per month they could receive in New York. Yes, they probably also have food stamps, but food stamps will not pay the rent or the electricity or medical bills or anything else (and as mentioned in Part 1, they don’t even cover all of the food a family needs).

Then we need to dedicate time and energy to working with others and developing innovative solutions that meet both the right-now need and the long-term future needs of a family. In simple mathematical terms, if we invest in getting families out of poverty, the amount of money needed to help people in poverty will decrease over time. If TANF programs don’t work to improve a family’s long-term socioeconomic status, we need to revamp them.

One of the most important things we as individuals can do is demand from our political representatives that people in poverty are included in conversations about how to fix poverty. Offer to drive a group of people to a public hearing or run a free class that shows people how to provide written input. There are significant barriers for people in poverty to participate in the political establishment that sets requirements for their needs, but we can help them.

A lot of the reason our welfare programs don’t work is because they are all designed to do for families instead of with them. Behavioral sciences tell us that this is a poor way to lead and an ineffective way to create change. So why are we still doing it?