The American income maintenance system is in reality a patchwork of programs aimed at different populations and financed and administered by federal, state and local governments. Further, it is divided into “insurance-like” programs, for which eligibility is based on a history of wage earning, and “welfare” programs, for which eligibility is based on “means-testing,” the determination of need according to levels of income and wealth.

“Welfare reform” denotes sweeping policy changes in the means-tested programs, mainly in terms of initial eligibility and continuing assistance.

Until passage of the Social Security Act in 1935, welfare was a state and local matter.

The Social Security Act, and many subsequent amendments, made federal and state governments partners in the administration and financing of welfare benefits for families and the elderly blind and disabled. Federal rule-making, buttressed by US Supreme Court decisions, attempted to ensure a rough equity on a national basis. In 1974 benefits for the elderly blind and disabled were consolidated in one federally administered and financed program. The states continued to share administration and financing of the program for families. After 1988, and gaining momentum with the Republican ascendancy in Congress after 1994, administrative control of the family aid program began to shift towards the states, but remained tethered to overarching federal rules. The most dramatic change of this sort was accomplished by the Personal Responsibility and Work Opportunity Reconciliation Act of 1997 (PRWO).

The PRWO eliminated the entitlement to benefits in the family program. Previously any eligible family had a legal right to benefits, regardless of budgetary considerations.

Now, states receive “block grants,” fixed sums of federal dollars calculated by formula.

When these funds are exhausted, aid may be denied to eligible families by states unwilling to spend their own funds. The PRWO also limits federal benefits to five years in a lifetime for most family aid recipients and allows states to adopt shorter terms.

Further, it mandates the states to enroll increasingly large proportions of adult family aid recipients in work or training programs. Failure to meet scheduled goals results in the loss of a percentage of block grant funds.

Historically welfare programs incorporated a suspicion of poverty and welfare programs were overlaid with “morals testing.” Until the 1970s, putatively dissipated or licentious poor folk frequently were denied aid, restricted to institutional care, or had their benefits carefully supervised. The PRWO reinvigorated this tradition by imposing on recipients of family aid “behavioral requirements” for initial eligibility and continuing assistance. (The PRWO also allows the states to impose others.) The most significant of these make ineligible or impose penalties on those who commit drug felonies or use illicit drugs, fail to have their children immunized or attend school regularly or refuse work or training opportunities. In a similar spirit, though by different legislation, substance abuse was eliminated as an eligible impairment in both the insurance-like and welfare versions of the federal disability program.

In sum, in its present cast, welfare reform is intended to limit federal financial liability force welfare parents into the labor market and discipline the behavior of poor people. Its results remain to be seen.