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Welfare reform in 1996 was accompanied by an increased focus on policies that help low-income parents find and keep employment and support their families as many moved into low-wage jobs with few benefits. The core supports that assist families while they are working include the Earned Income Tax Credit (EITC), health insurance, food assistance, and child care subsidies. Unemployment Insurance (UI) provides the core support for unemployed families, paying a cash benefit that partially substitutes for lost earnings.
The core supports for working families (those with some paid work during the year) underwent many changes in the period leading up to welfare reform and subsequently. The EITC was expanded substantially in 1993; the 1996 reforms increased federal money for child care and gave states more flexibility to enhance working families' access to benefits through administrative changes; and Congress enacted the State Children's Health Insurance Program (SCHIP), a broad expansion of health insurance coverage for children, in 1997. In contrast, UI has remained relatively unchanged during this period.
Despite the substantial expansion of work support programs, they fall far short of fulfilling the needs of low-income working families (income below twice the federal poverty level or about $39,600 for a family of four in 2005). The complexity of program rules, lack of information, asset tests, and stigma, however, inhibit many families' participation in these support programs. In addition, child care funds fall short of demand in most states, and the expanded subsidy program has challenged states' administrative capacity and families' ability to understand the program. Relatively few unemployed families qualify for UI benefits.
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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
