PRWORA instituted Temporary Assistance for Needy Families (TANF) which became effective July 1, 1997. TANF replaced Aid to Families with Dependent Children (AFDC) program which had been in effect since 1935 and also supplanted the Job Opportunities and Basic Skills Training (JOBS) program of 1988. The law was heralded as a "reassertion of America's work ethic" by the US Chamber of Commerce, largely in response to the bill's workfare component. Some criticized the bill as a reinstitution of workhouses and believe the new system has been ineffective in getting people out of poverty. Although PRWORA has expired, Congress has continued to fund the program until a new bill is enacted.
AFDC caseloads increased dramatically from the 1930s to the 1960s as restrictions on the availability of cash support to poor families (especially single-parent, female-headed households) was reduced. Under the Social Security Act of 1935, federal funds only covered part of relief costs, providing an incentive for localities to make welfare difficult to obtain. More permissible Northern laws were put to the test during the Great Migration between 1940 and 1970 in which millions of people migrated from the agricultural South to the more industrial North. Additionally, all able-bodied adults without children as well as two-parent families were originally disqualified from obtanining AFDC funds. Court rulings during the Civil Rights Movement struck down many of these regulations, creating new categories of people eligible for relief. Community organizations, such as the National Welfare Rights Organization, also distributed informational packets informing citizens of their ability to receive government assistance. Between 1936 and 1969, the number of families receiving support increased from 162,000 to 1,875,000. After 1970, however, federal funding for the program lagged behind inflation. Between 1970 and 1994, typical benefits for a family of three fell 47% after adjusting for inflation.
Beginning in the 1980s, AFDC came under bipartisan criticism for the program's alleged ineffectiveness. While acknowledging the need for a social safety net, Democrats often invoked the culture of poverty argument. Stereotypes explaining welfare recipients as "trapped in a cycle of dependency" developed into an American folklore, even becoming internalized by those receiving welfare. Highlighting instances of welfare fraud, conservatives often referred to the system as a "welfare trap" and pledged to "dismantle the welfare state". Ronald Reagan's oft-repeated story of a welfare queen from Chicago's South Side became part of a larger discourse on welfare reform.
Republican governor Tommy Thompson began instituting welfare reform in Wisconsin during his governorship in the late-1980s and early-1990s. In lobbying the federal government to grant states wider latitude for implementing welfare, Thompson wanted a system where "pregnant teen-aged girls from Milwaukee, no matter what their background is or where they live, can pursue careers and chase their dreams." His solution was workfare, whereby poor individuals, typically single-mothers with children, had to work to receive assistance. Thompson was later awarded a position as Health and Human Services Secretary under President George W. Bush.
Passage of PRWORA was the culmination of many years of debate in which the merits and flaws of AFDC were argued. Research was used by both sides to make their points, with each side often using the same piece of research to support the opposite view. The political atmosphere at the time of PRWORA's passage included a Republican-controlled House of Representatives and Senate (defined by their Contract with America) and a Democratic president (defined by Bill Clinton's promise to "end welfare as we know it.")
PRWORA proposed TANF as AFDC’s replacement. The Congressional findings in PRWORA highlighted dependency, out-of-wedlock birth, and intergenerational poverty as the main contributors to a faulty system. In instituting a block grant program, PRWORA granted states the ability to design their own systems, as long as states met a set of basic federal requirements. The bill's primary requirements and effects included:
In granting states wider latitude for designing their own programs, some states have decided to place additional requirements on recipients. Although the law placed a time limit for benefits supported by federal funds of no more than 2 consecutive years and no more than 5 years over a lifetime, some states have enacted briefer limits. All states, however, have allowed exceptions with the intent of not punishing children because their parents have gone over the time limit. Federal requirements have ensured some measure of uniformity across states, but the block grant approach has led individual states to distribute federal money in different ways. Certain states more actively encourage education, others use the money to help fund private enterprises helping job seekers.
The legislation also greatly limited funds available for unmarried parents under 18, and restricted any funding to immigrants (legal or illegal). Some state programs emphasized a shift towards work with names such as "Wisconsin Works" and "WorkFirst". Between 1997 and 2000, enormous numbers of the poor have left or been terminated from the program, with a national drop of 53% in total recipients. Since there is less training and education available than with the earlier JOBS program, these "last hired, first fired" recipients have been returning to welfare and the caseloads have been increasing.
Welfare and poverty rates both declined during the late-1990s, leading many commentators to declare that the legislation was a success. An editorial in The New Republic opined, "A broad consensus now holds that welfare reform was certainly not a disaster--and that it may, in fact, have worked much as its designers had hoped.
Critics of the law argue that a large reduction in the number of people collecting welfare was largely a result of steady and strong economic growth in the years following enactment of the law. Others question the definition of success, asking whether "success", as measured by caseload reduction, was merely a political construction for policy makers to easily claim credit in front of their constituencies. In analyzing the effects of welfare reform, political scientist Joe Soss notes that caseload reduction is not very demanding, especially compared to improving material conditions in poor communities:
"The TANF program does not offer benefits sufficient to lift recipients out of poverty, and despite a strong economy, the majority of families who have moved off the TANF rolls have remained in poverty. Considerations of another traditional economic goal, reduction of inequality, only makes matters worse. Welfare reform has coincided with massive growth in income and wealth disparities; it has done little to slow the expansion of inequality and may have actually accelerated the trend. Has welfare reform created job opportunities for the poor? Has it promoted wages that allow low-wage workers to escape poverty? In both of these areas, the economic story remains the same: we have little evidence that reform has produced achievements that warrant the label of success."
Frances Fox Piven questioned whether the problem with AFDC was not so much a problem with the welfare system, but with the structuring of low-wage work in general:
"Logically, but not in the heated and vitriolic politics created by the attack on welfare, a concern with the relationship of welfare to dependency should have directed attention to the deteriorating conditions of the low-wage labor market. After all, if there were jobs that paid living wages, and if health care and child care were available, a great many women on AFDC would leap at the chance of a better income and a little social respect."
Feminist critics, such as Barbara Ehrenreich, point to a degree of misogyny and racism in the lead up to PRWORA, claiming that advocates for workfare rehashed stereotypes that had been around for centuries. Through the perceived demonization of single mothers, Ehrenreich sees welfare reform as stigmatizing "unpaid, family-directed labor" and believes that the reform put many women into exploitative situations:
"Stigmatizing unemployment obviously works to promote the kind of docility businesses crave in their employees. TANF requires recipients to take whatever jobs are available, and usually the first job that comes along. Lose the job – for example, because you have to stay at home with a sick child or because you tell the boss to stop propositioning you – and you may lose whatever supplementary benefits you were receiving. The message is clear: Do not complain or make trouble; accept employment on the bosses’ terms or risk homelessness and hunger."".