Mark Twain once famously observed that reports of his death were "greatly exaggerated." Those reports were at least highly likely to come true at some time in the future. Recent reports concerning the success of Minnesota's welfare reform are not only greatly exaggerated, they are unlikely ever to come true.
Under the historic welfare reform enacted in 1996, Congress abolished the Aid to Families with Dependent Children (AFDC) welfare program and directed each of the 50 states to design its own program to replace it. Congress afforded the states wide latitude in designing their own programs, subject only to a uniform five-year lifetime limit (with limited hardship exceptions) on any given family's welfare participation, effective July 1, 1997. No longer would the federal government underwrite intergenerational welfare dependence that allowed families to treat life on welfare like the family business.
Minnesota's version of welfare reform is the Minnesota Family Investment Program (MFIP). "Investment" — the liberal Clinton-era euphemism for government spending and income redistribution — is the key to MFIP. In crafting MFIP, Minnesota's then-Democratic legislature and Republican former Governor Arne Carlson deemed the simple goal of moving recipients from welfare to work and self-sufficiency to be too modest. Rather, they set themselves the more high-minded goal of fighting poverty by increasing the incomes of welfare-dependent families.
Field trials of MFIP began in three urban and four rural counties in April 1994. The program provided increased financial incentives to work by allowing all recipients who found or kept jobs to retain substantially more of their benefits than was otherwise permitted by AFDC rules. (Essentially by definition, this results in higher incomes for recipients of MFIP rather than AFDC.) The program also encouraged work by subjecting long-term welfare recipients to a potential 10 percent cut in benefits if they failed to undertake work-related activities. With minor modifications, MFIP was ultimately extended statewide in early 1998.
The Minnesota Department of Human Services commissioned an evaluation of the results of the MFIP pilot program by the Manpower Demonstration Research Corporation. Among other things, the corporation's final evaluation of the MFIP pilot program found that MFIP succeeded in increasing the incomes of welfare recipients and decreasing reported incidents of domestic abuse. The press release accompanying the corporation's summary of the final evaluation issued on May 31 touted these results as a great success. Related news accounts, editorials and opinion columns have trumpeted the success of the MFIP pilot program based on the press release.
The positive results emphasized in the press release are generally marginal at best. Even so, looking beyond the press release to the results of the report itself reveals a significantly different picture. One must keep in mind that the report's conclusions are based on comparisons of welfare recipients on the MFIP pilot program with recipients operating under the old AFDC rules. It does not compare Minnesota welfare recipients to welfare recipients in other states. It is difficult to imagine a welfare program that would produce more negative, if unintended, consequences than AFDC, and many state welfare programs crafted in the wake of welfare reform have tried to avoid them by imposing serious work requirements that end the entitlement status of welfare benefits. MFIP is unfortunately not one of these programs. Indeed, in critical respects the results reveal that MFIP is worse than AFDC.
According to the report, for example, MFIP increased the number of those receiving welfare over the AFDC control group and therefore "modestly increased dependence." Among two-parent families receiving MFIP, the report found that "MFIP's primary effect was to cause one parent in some of the families to cut back on work, either by reducing his or her hours worked or leaving work entirely."
Moreover, when all of those who participated in the pilot program are taken into account, MFIP did not have the effect of encouraging recipients to get off welfare. As expressly observed in the MFIP interim evaluation released by the corporation in late 1997, MFIP participants stayed on welfare longer than their AFDC counterparts because they were able to combine welfare and work. The fact that MFIP keeps recipients on welfare even longer than did AFDC should be sobering in view of the five-year lifetime time limit on welfare receipt contained in federal law and the underlying desire to prevent recipients' lifetime subsistence on the taxpayers.
Since MFIP was extended statewide in early 1998, it is fair to say that MFIP has failed to produce an outpouring of work effort among participants in the program. During May 1999, for example, only 28 percent of families with eligible adults had 20 or more work hours per week; 56 percent of such families had no working recipients at all.
The magnitude of the failure represented by these statistics can only be seen in the context of Minnesota's record low unemployment rate. Jobs at every level of skill and experience have gone begging throughout the state since the implementation of MFIP on January 1, 1998, and nowhere has this been truer than in the Minneapolis-St. Paul metropolitan area. Yet the employment rates of welfare recipients in Minneapolis and St. Paul have been the lowest of any region in the state. In May 1999, there was no working adult in 64 percent of the Minneapolis and St. Paul welfare families.
In Minnesota, welfare has enabled participants to choose either to forgo work entirely or to adjust their lives to achieve the optimum balance of income and leisure. According to the study released earlier this year by Minnesota's Office of the Legislative Auditor, if those MFIP participants who are now working part-time instead worked full-time, the vast majority would be off welfare.
Unlike Congress, and unlike political leaders in many other states, Minnesota's politicians seem to have learned nothing from the experience of the past 30 years. Lost in a time warp, Minnesota has recreated the very features that made the AFDC program so devastating to the families that became dependent on it. In January, Minnesota's welfare commissioner projected no decline in Minnesota's welfare caseload over the next three years and estimated that 7,500 families would exhaust their five-year limit of MFIP eligibility by 2003. Tracing MFIP's path to its logical conclusion, he recommended that the state continue welfare payments to families that exhaust the five-year limit set by federal law. Despite the issuance of press releases to the contrary, is this not a confession of failure?