This has raised the profile of economic insecurity caused by the recession. Public Policy Toward Low-Income Families with Children: Rewarding and Requiring Work

Current public policy toward low-income families with able-bodied adults emphasizes work. This work-based approach toward economic disadvantage and poverty among children evolved over several decades, culminating in several legislative initiatives in the mid-1990s. The 1996 welfare reform law ( P.L. In December 2008, the cash welfare caseload had fallen to 65% below the December 1994 caseload figure. In 2008, the welfare recipiency rate among poor children stood at 22%—down from about 60% before welfare reform. The Recession, Unemployment, and the Economically Disadvantaged

The current recession is the second one to test the work-based policies put into place in the mid-1990s and directed toward poor families with children. Since the beginning of the recession in December 2007, unemployment rates for all groups have increased as the economy slumped. There is cause for concern about the state of the "safety net" for workers and families who were economically disadvantaged before the recession. Unemployment insurance (UI) is the primary government program to help the involuntarily unemployed replace a portion of their lost earnings. Less than 25% of unemployed leavers applied for UI. cannot receive UI. The American Recovery and Reinvestment Act of 2009 and Disadvantaged Families with Children

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) provides states with incentives and funds to rethink the safety net for disadvantaged families with children. In particular, disadvantaged families with children could be affected by ARRA's provisions to enhance UI for low income families, provide additional TANF funding to allow the expansion of need-based assistance, or both. The ARRA includes several provisions that can enhance UI for low-wage workers. The TANF block grant provides states with fixed funding but broad authority to use federal TANF funds (and associated state funds) on a wide range of benefits and services to aid needy families and to reduce out-of-wedlock pregnancies and promote two-parent families. Absent additional funding, states bear the risk of an increase in recession-related costs, including increases in the cash welfare caseload. It appropriated $5 billion to the fund for these two years. The emergency contingency fund will reimburse states for 80% of increased expenditures for basic assistance, non-recurrent short-term benefits, and subsidized employment expenditures up to a cap. Reimbursement for basic assistance under the temporary emergency fund is contingent upon increases in basic assistance caseloads. Through that date, 15 states had claimed emergency contingency funds totaling $563 million. Of these funds, $180 million had gone to the states as outlays. Expanding TANF's Role to Respond to a Recession? Critics of the ARRA provision establishing the temporary emergency contingency fund argue that the extra funding will provide states with the incentive to increase their welfare rolls. Cash Welfare for Needy Families With Children

Though the emergency TANF fund can be used for a wide range of economic supports for families during the recession, its first use is likely to be paying for increased cash welfare caseloads. Table 4 provides TANF cash welfare benefits by state for 2008. Still, concerns about increased welfare dependency might lead to a debate at the state level about how to use the new ARRA funds. There could also be concerns that the rules of cash welfare—that limit countable job search and require quick returns to employment—might not meet the needs of families thrown into poverty by the recession. In FY2006, states expended only $289 million on non-recurrent short-term benefits and $103 million in wage subsidies to employers.
The recession that began in December 2007 has raised issues about policies to address the threats to the economic security of people and families from an economic downturn. Families that were economically disadvantaged before the recession are highly likely to face risks to their well-being—unemployment rates for women maintaining families, minorities, and those with less than a high school education are above the average for all workers.
The emphasis of public policy for low-income families with children with able-bodied parents is supporting and requiring work. The system of needs-based cash benefits underwent major changes over several decades, culminating in policy changes in the mid-1990s that included the major welfare reform law of 1996. The current recession is the first real test of how policies put in place in the mid-1990s affect the well-being of families with children during a steep economic downturn and high unemployment. Unemployment insurance (UI) is the major program to replace lost wages for unemployed workers. However, low-wage workers and those with intermittent employment are less likely to receive UI than higher-wage workers with stronger labor force attachment. In the past, the "safety net" for families with children included cash welfare. The 1996 welfare reform law created the Temporary Assistance for Needy Families (TANF) block grant with fixed funding and altered rules that apply to the cash welfare caseload and gave states enhanced flexibility in designing benefits and services for needy families with children. The cash welfare caseload declined by two-thirds from 1994 to 2008 and stood at 1.8 million families in December 2008, just above the post-welfare reform low of 1.7 million families in July 2008. The share of poor children receiving TANF plummeted from over 60% before welfare reform to 22% by 2008.
The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) provides states with incentives and funds to rethink the safety net for disadvantaged families with children. First, it provides states with funding incentives to expand UI for low-income workers. This permits states to expand social insurance to respond to the recession. ARRA also provides additional funding to the states through TANF to finance recession-related expenditures. It establishes a temporary, $5 billion "emergency" contingency fund that will reimburse states for 80% of increased expenditures for basic assistance, non-recurrent short-term benefits, and subsidized employment expenditures for fiscal years 2009 and 2010. Emergency funds for basic assistance are contingent on increases in the basic assistance caseload. Through September 11, 2009, 15 states have been granted emergency funds totaling $563 million with $180 million in outlays.
ARRA's new funds to pay for increased basic assistance (i.e. cash welfare) have raised the question of whether the newly available funds will serve to promote welfare dependency. Historically, cash welfare caseloads often increase when unemployment increases, so it could be argued that the additional funds will pay for caseload rises caused by systemic economic forces (e.g. a world-wide recession). However, concerns about increasing welfare dependency, as well as concerns that traditional cash welfare might not meet the needs of those thrown into poverty by the recession, could lead to debates at the state level about how best to use these new TANF funds. Since TANF provides states with broad flexibility, ARRA's additional TANF funding could be used for new programs, such as short-term benefits, subsidized employment programs, and community service programs, in addition to or instead of increased traditional cash welfare. This report will be updated.