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Substance Abuse and Mental Health Services Administration
Does Work Pay? An Analysis of the Work Incentives under TANF
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For years, policymakers have struggled to find ways to make a paycheck more attractive than a welfare check while still ensuring that poor children do not suffer from serious material deprivation. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) represents the most recent attempt to encourage families to leave welfare and go to work. The legislation made several important modifications to existing laws to achieve this goal. First, it transformed cash assistance to the able-bodied poor from an entitlement to a block grant and imposed lifetime limits on the number of months a family could receive cash aid. Second, it gave states wide-ranging authority to require welfare recipients to participate in work-related activities and to impose sanctions for noncompliance, change benefit levels, and change the way benefits are reduced as families attempt to work themselves off welfare. This report examines how state policy choices and current federal laws affect the incentives a family of three faces as it attempts to move from welfare to work in 12 states. (Authors)
The Urban Institute
Washington, D.C.