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Analysis
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Analysis
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from NewsLink, Vol. 6, No. 3, Spring 2002
In November 1995, Massachusetts enacted welfare reform as part of an effort to decrease long-term dependency. An analysis of monthly unemployment and welfare caseload data for the period of July 1983 to February 2002 in Massachusetts (see chart) illustrates the changes brought about by welfare reform. From July 1983 through mid-1988 the number of welfare recipients was virtually unchanged even as the state unemployment rate was dropping. A statistical analysis applied to that period of time shows that welfare caseloads were highly insensitive to changes in the unemployment rate and that there would have been 68,548 welfare cases even if the unemployment rate had gone to zero. This suggests that, before welfare reform, a sizeable number of what could be considered chronic recipients were unwilling to join the workforce.
Starting in late 1988, a statewide recession forced the unemployment rate to rise dramatically. This rise in unemployment added previously employed Massachusetts residents to the welfare rolls, culminating in a high of 114,671 welfare cases in May 1993. Soon thereafter, the state’s economy began to rebound and welfare cases started to drop back toward its pre-recession level.
In November 1995 the state passed welfare reform, mandating work requirements and time limits. Thereafter the story changed dramatically. Caseloads began to fall in line with the decreasing unemployment rate. A statistical analysis applied to data for the post-welfare reform period shows that welfare caseloads have become highly sensitive to the unemployment rate and that the core group has diminished. In other words, welfare reform has succeeded in removing the disincentive to work and, in the process, reduced dependancy on goverment. Our findings further suggest that a federal proposal to tighten work requirements would further reduce welfare caseloads.
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