Deep Poverty Among Children Worsened in Welfare Reform’s First Decade

http://www.cbpp.org/cms/?fa=view&id=4173

By Arloc Sherman and Danilo Trisi
July 23, 2014

Since the mid-1990s, when policymakers made major changes in the public assistance system, the proportion of children living in poverty has declined, but the harshest extremes of child poverty have increased. After correcting for the well-known underreporting of safety net benefits in the Census data, we estimate that the share of children in deep poverty — with family income below half of the poverty line — rose from 2.1 percent to 3.0 percent between 1995 and 2005. The number of children in deep poverty climbed from 1.5 million to 2.2 million.

In the mid-1990s, policymakers dramatically shifted income assistance policies for low-income families with children toward helping workingfamilies. They replaced Aid to Families with Dependent Children (AFDC), which had chiefly served families with little or no earnings, with Temporary Assistance for Needy Families (TANF), which offers less assistance and includes stricter work requirements and time limits. At the same time, policymakers expanded assistance for moderate-income working families, such as by strengthening the Earned Income Tax Credit (EITC) and medical and child care programs and creating and later expanding the Child Tax Credit through a partially refundable component of the credit for lower-income families with earnings.
The results over the ensuing decade were mixed. The bulk of the evidence suggests that while many parents moved from welfare to work and child poverty declined overall, the number and percentage of children in deep or severe poverty, with family income below half the poverty line or even lower, increased.

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