Research Report Why Does Cash Welfare Depend on Where You Live?
How and Why State TANF Programs Vary
Heather Hahn, Laudan Y. Aron, Cary Lou, Eleanor Pratt, Adaeze Okoli
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Main take-aways

  • Only a small share of families living in poverty receive cash assistance, and that share has fallen dramatically in the last 20 years.
  • The cash support available to families and the conditions under which they can receive it largely depend on where they live.
  • State TANF policy decisions are significantly related to race. States with larger African American populations, all else equal, have less generous and more restrictive TANF policies.

When people think about welfare, they often imagine government assistance—often cash—for people living in poverty.

The main government program associated with cash welfare is Temporary Assistance for Needy Families (TANF), which provides cash assistance to low-income families with children (childless adults are not eligible). But most low-income families do not receive cash assistance. In 2014, only 23 families in poverty received assistance for every 100 such families nationwide. And in an average month in 2016, about 1 percent of the total population received TANF cash assistance.

The cash support available to families and the conditions under which they can receive it largely depend on where they live. TANF gives states the flexibility to determine the mission, design, and benefits of their programs, and states are under no legal obligation to provide cash assistance to families living in poverty. Consequently, state TANF policies vary widely in their generosity (e.g., the maximum monthly benefits families can receive and the assets they can keep), restrictiveness (e.g., work requirements families must meet to receive benefits and sanctions for not meeting them), and how long a family can receive assistance.

Looking at what drives variation in state TANF programs, we considered the following questions: Do states with more generous TANF benefits have less restrictive requirements and benefit duration? Or do states with more generous benefits counterbalance that generosity by having more restrictive requirements and benefit duration? We also observed the effects of state differences on selected racial groups.

We conclude with our overarching observations and suggestions for further research, which are based on the following findings:

  • State decisionmaking is not the result of trade-offs between different dimensions of TANF policymaking: generosity, restrictiveness, and duration. States that are more generous are less restrictive and allow families to receive benefits longer.
  • State TANF policy decisions are significantly related to race. A state with a relatively large African American population is more likely to have less generous, more restrictive TANF policies (except for asset limit policies). States with larger African American populations also tend to have less generous maximum benefits and income eligibility limits and harsher initial sanctions, all else equal. Further research should explore the relationships between TANF policy decisions and other racial and ethnic groups.
  • Although state TANF policies are race neutral in that everyone is subject to the same policies, the policies’ effects are not. Most Americans live in states with less generous maximum benefits, more restrictive behavioral requirements, and shorter time limits. But African American people are disproportionately concentrated in these low-ranking states. Additional analyses of the implications of state policy choices for other racial and ethnic groups are warranted.
  • Aside from race, the patterns in state TANF policy decisionmaking are less clear. States with similar demographic, economic, and political contexts make different TANF policy decisions. State median income, the share of the adult population with at least a bachelor’s degree, and the share of Democrats in the state legislature are associated with stricter TANF policies on some dimensions but not others.

Race and ethnicity shape our modern social welfare system. Other studies have shown that local policymaking and caseworkers are subject to racial biases that affect welfare recipients’ experiences. Furthermore, racial differences have been observed in several aspects of TANF, including sanctions, receipt of work support services such as child care, and access to education and training.

As Congress and state legislatures consider refining TANF and other supports for low-income families, they should understand the effects of the previous welfare reform. States gained autonomy and flexibility in how to structure and deliver TANF benefits, but many families in need are worse off as a result. Any public policy or change in policy will involve trade-offs, but Americans and their elected leaders must fully understand the consequences of the choices and trade-offs.
Research Areas Wealth and financial well-being Families Social safety net
Tags Families with low incomes Wealth inequality