Economy Fuels Decline In Welfare But White House Report Says Reforms Have Helped, Too

The dramatic decline in the nation’s welfare rolls over the past four years has been due largely to a healthy economy, but welfare reform experiments in many states have helped significantly, according to a White House study released Friday.

Since President Clinton took office in 1993, the number of Americans receiving welfare has fallen 20 percent, or nearly 2.8 million, the largest decline in five decades.

The report by the White House Council of Economic Advisers said low employment and a growing economy accounted for 40 percent of the decline in caseloads. Welfare reform experiments explained 31 percent of the decline and the remainder was due to other policies, including the Earned Income Tax Credit for low-income workers, increased child support collections and more spending on child care for welfare mothers, the report said.

“It is not the strength of the economy alone that has been responsible for that decline, but also state experiments designed to move recipients off welfare and into work,” council chair Janet L. Yellen said.

This suggests that if the economy turns down, caseloads could start rising again.

Health and Human Services Secretary Donna E. Shalala said the administration recognizes that and will need to ask for additional money from Congress to help states handle rising caseloads. At the same time, some states have been setting aside extra funds to help if the economy declines, she said.

Over the past year, political leaders and researchers have debated whether the shrinking welfare caseload was explained simply by the availability of jobs or, as many governors have claimed, their welfare reform programs. Even before the federal welfare law was approved by Congress last August, the Clinton administration had given 43 states permission to try new programs to encourage recipients to work.

Many states have told recipients their benefits would be cut unless they joined job-training programs or found employment. Other rule changes have encouraged recipients to work by promising health coverage and child care for a year or two.

But Clinton administration officials also said the report, which examined state economic and welfare data, does not indicate what has happened to those who left the rolls.