Six—
Aid to Families with Dependent Children

AFDC is a public assistance program designed to mitigate some consequences of destitution for a category of the poor. While AFDC is managed pursuant to national guidelines, states have considerable leeway with respect to specifics. This case study emphasizes the common features of program operation.

Historical Background

In the Anglo-American tradition, children in households that cannot support them have long been considered among the "deserving poor" who are thought to merit public support.^[1] In the United States the institutions for such support have changed over time. In the nineteenth century widows unable to support their children frequently had to give them up. In the twentieth century, at the prodding of reform groups, several states enacted guidelines for "widows' pensions." Local options were allowed, and the discretion of local administering officials was generally broad. This precedent of state and local control exerted a fateful influence on the organization of the public assistance and unemployment insurance programs established by the Social Security Act of 1935. Both the officials (many of whom were from Wisconsin) who dominated the executive initiatives and numerous state congressional delegations were anxious to shield peculiarities of existing state programs from federal intervention.^[2] So, unlike social security, both public assis-

tance and unemployment insurance were constituted as state programs under loose federal guidelines.^[3]

From 1935 through 1962 Aid to Dependent Children (ADC), as the program was then known, was managed by the Bureau of Public Assistance under the direction of SSB/SSA. The national government set standards—generally procedural rules—and provided a portion of program funds. In essence ADC made transfer payments, with the titular beneficiaries being children in households whose adults were unable to support them. By and large these households were headed by unmarried, divorced, or widowed women who had few, if any, vocational skills and little experience in the labor market.

SSB officials prefered social insurance to public assistance. They saw the latter as an exceptional response to the Great Depression, and they thought that the need for ADC would gradually wither away. But to officials' consternation, the use of ADC increased in the late 1940s and accelerated in the 1950s. Between 1950 and 1960 the number of children in the program increased from slightly less than 1 million to over 2.5 million; during the 1960s repeated efforts to slow program expansion were met by a nearly identical increase in the number of families served. Although the relative importance of various factors contributing to this growth was disputed, much of the growth during the sixties is attributable to an increase in the proportion of eligible families making use of the program.^[4]

SSA officials were severely pressed to account for these trends.^[5] The Depression was long over and yet use of ADC was higher than ever. Based on the experience of ADC's predecessors, particularly state-initiated widows' pensions, officials had at first assumed that ADC would serve primarily a population of children whose fathers had died. When survivors' benefits were added to social security in 1939, it seemed reasonable to project that ADC would wither away, given the economy's long-term capacity to provide new jobs and the continuation of public employment efforts. The withering thesis reflects as well the limited scope of earlier local and state-level relief efforts that the federal government was now beginning to coordinate and help fund. These local programs had made relatively little effort to plumb the depths of social disadvantage. Widows' pensions, for example, went almost exclusively to white wid-

ows, and even among this group a variety of explicit and tacit restrictions limited claims. SSA's view also reflected naivete with respect to social disadvantage. SSA executives understood episodic social hazards such as aging, disability, illness, and even unemployment, but they were far less aware of the size and problems of the nation's socially disadvantaged underclass. They did not contrue "the poor" as a focus for public policy; their primary concern was keeping the elderly and others with records of regular self-support from joining the poor.

But by the mid-1950s it was clear that divorce and desertion, rather than widowhood, were accounting for the growing numbers of women that ADC served. Some observers argued that ADC in effect encouraged desertion by restricting eligibility to households with no able-bodied adult male—even as the national economy hindered males with relatively modest job skills (thus a high proportion of minority males) from finding steady employment and wages sufficient to support a family. While most ADC recipients were (and still are today) white, the proportion of minority recipients was increasing, and in the large cities they were becoming a highly visible and concentrated group. Through the early 1960s ADC appears to have served to a considerable degree as a substitute for unemployment insurance for these families: as nonwhite male unemployment increased or decreased, so did ADC cases.^[6]

The problems of family instability among households on the economic fringes of society were far more complex and intractable than those the program's initiators had foreseen. In 1962 the program was renamed and transferred to a new bureau, roughly the coequal of SSA, within the Department of Health, Education, and Welfare. The new AFDC included a variety of social services—family planning, basic adult education, child-care, vocational rehabilitation, and employment assistance—designed to increase the likelihood of employment among adults in recipient households.^[7] After 1962 a series of new programs—AFDC-UP for unemployed fathers, Community Work and Training (CWT), Work Experience Training (WET), and Work Incentive (WIN)—combined AFDC benefits and job training with the ultimate objective of enabling families to become self-supporting. As we will see later in this chapter, these new efforts all foundered on a combination of inadequate labor market opportunities, design features that created weak work incentives, and problems particular to program recipi-

ents. Despite these failures, reformers clung to an implicit version of the withering thesis. They persevered in the objective of reducing the AFDC recipient population.

Both the population designated as impoverished by federal guidelines and the population that uses AFDC have fairly high rates of turnover.^[8] Thus while poverty and AFDC usage are transitory conditions for many, the pools of persons experiencing poverty and AFDC usage over the span of a decade are quite large, about a quarter of the American population in each case.^[9] Furthermore, AFDC serves recipients with two distinctive patterns of use. Most recipient households use the program episodically to cope with a given social hazard—the loss of a job or separation of parents—whose resolution generally leads to leaving the program.^[10] For the most part these households have modest resources in the best of times, and their need for public assistance can be prompted by relatively modest hazards. In addition, parents in these households are frequently among the nearly one-third of the American work force to whom unemployment benefits are not extended.

Although public perceptions of widespread persistent use plague AFDC, less than 3 percent of the U.S. population, disproportionately urban and black, persistently use AFDC, and persistent dependence (relying on AFDC for over half of family income) is less than one-half of this level.^[11] Over the course of a decade persistent users constitute about one-sixth of AFDC recipients; but at any given point in time persistent users typically constitute a bit over half of the program's beneficiaries, and some of these households depend on public support for lengthy periods of time.

Implicitly recognizing the inadequacy of the withering thesis, the Nixon administration sent a version of a guaranteed-income plan to Congress in 1969.^[12] This proposal, known as the Family Assistance Plan (FAP), would have reduced the national government's payments to AFDC recipients in high-benefit states (California, Massachusetts, and New York, for instance) and would have provided help to the working poor who did not qualify for cash-transfer programs.^[13] Revisions of this plan were eventually defeated in Congress.

President Carter came into office on a campaign pledge of welfare reform, but his administration proved similarly unable to elicit congressional enthusiasm and support. Carter's proposal, Program for Better Jobs and Income (PBJI), resembled FAP in

many respects, although it was more ambitious with regard to employment and coverage (childless couples and single adults were included).^[14]

The Reagan administration has been concerned largely with reducing the national government's financial support for AFDC.^[15] It has also encouraged states to experiment with various workfare options. From the recipients' perspective, the single most important change has probably been the four-month limitation on allowing beneficiaries to keep the first $30 of earnings and one-third of the remainder. After four months—once limited work-related (including child-care) expenses are deducted—most earnings are offset by reductions in benefits.

In sum, little improvement has been made in the policy or design of public assistance in the last two decades. By and large recipients, program personnel, political leaders, organized interests, and the general public have little good to say about AFDC, but as yet there has been no consensus about how to reform the program. The 1988 legislation that emerged from conflicting ideas in Congress unfortunately deviates only slightly and unimportantly from the practices of the recent past.

Distributive Justice

AFDC has continually run afoul of American conceptions of distributive justice, in part because benefits are based on need and not explicitly linked to responsible, constructive behavior by recipient households and in part because benefits to the target group—needy children—are supplemented by "caretaker" grants to their parents. While the public generally supports the policy of providing for needy children,^[16] public attitudes are skeptical at best toward the parents of these children. Most of these parents are not employed full time, and the attention they devote to childrearing no longer elicits the public approval it did a half century ago when predecessor widows' pension programs served predominantly white women. Today, adults who use AFDC are often censured for their inability to provide for their families; frequently they are the subject of racial slurs and accusations of sexual promiscuity as well.

As a public assistance program, AFDC involves the vertical redistribution of resources from better to less well off. At current funding levels (approximately $15 billion a year), the program is a

modest attack on taxpayers' property that regularly serves roughly 11 million persons (nearly 5 percent of the population). But while AFDC benefits are not linked to prior effort or current results, neither does the program systematically apply the criterion of need to all Americans. Rather, AFDC responds to the needs of one category of people—poor children primarily in single-parent households—and ignores other equally needy people. The remediation of this horizontal inequity was one aspect of both the Nixon and Carter proposals for guaranteed annual income plans.

The public's response, at both elite and mass levels, to AFDC stresses two distinct themes.^[17] Americans believe that legitimate needs should be met by public social provision, but there is a widespread feeling that some proportion of the adults who draw on AFDC do not really need to do so, but lazily choose to do so. Thus AFDC benefits are perceived as inconsistent with human dignity, as indicative of dependence, and as destructive of work incentives and other aspects of economic efficiency.

Questions of distributive justice became particularly vexing in the late 1960s and early 1970s. Prior to 1967, AFDC benefits were, with only occasional erroneous or fraudulent exceptions, so low as to extend to only food, shelter, and clothing. But a series of changes in 1967 allowed recipients to keep (in addition to allowances for work expenses) the first $30 of monthly earnings and one-third of the remainder. In conjunction with relaxed eligibility for Medicaid and food stamps, these changes enabled a small proportion of AFDC recipients, generally residents of urban areas in industrial states, to combine earnings and public program benefits into household incomes bordering on the national median income.^[18] Such income levels threatened the otherwise close association between program benefits and basic resources. And as recipients in the higher-income brackets stayed on AFDC, the proportion of program resources going to the neediest families declined.^[19] The changes that permitted these aberrations have largely been rescinded by the Reagan administration.

Negative Liberty

From the libertarian perspective, participation in AFDC as a beneficiary is voluntary. Public assistance, in contrast to social insurance, characteristically involves no compulsion in the form of

government pressure. The destitute are free to ignore public aid, although the drive to survive may compel many disadvantaged and vulnerable citizens to make use of the program. But this is, from the libertarian perspective, a choice freely made.

Taxpayers involuntarily participate in the program by funding it. Federal tax revenues cover over half of the national cost, with states covering the rest. The amount of taxpayers' discretionary income redirected to AFDC is far less than that allocated to social security, but AFDC transfers involve a higher degree of vertical redistribution.

Historically, AFDC has been associated with a number of constraints on recipient liberty. The legal basis for some of the more notorious of these practices was withdrawn in the late 1960s when the federal courts invalidated residency and "man-in-the-house" rules. Considerable infringement is still possible, although its actual imposition varies widely with region, time, and caseworker.^[20] Most states have also dropped the elaborate intrusive investigations of recipient need, and some use a self-report system similar to that used by the Internal Revenue Service for taxes.

At the level of the field office the extraordinary complexity of AFDC holds conflicting implications for the freedom of program providers. On one hand, case workers are free to exercise individual discretion within a set of complex rules that cover a variety of matters, such as the determination of work-related expenses. In practice, heavy caseloads and high turnover lead caseworkers to substitute intuition and discretion for laborious bureaucratic procedures.^[21] On the other hand, the diversity of complicated social services provided by AFDC requires service providers, such as the Department of Labor, to conform to overall program guidelines and desiderâtâ.^[22]

Economic Efficiency

AFDC executives and welfare reformers have continually struggled over the issue of work incentives for recipients. One overriding work incentive, stronger among some groups than others, is the stigma associated with AFDC status. The complexities of the application process and subsequent eligibility testing also provide some deterrent to program use and thus may serve as a work in-

centive. As a group, however, AFDC mothers tend to have low levels of education, job skills, and work experience. So even those who are eager to work, as most initially are,^[23] have difficulty finding jobs that provide either much job security or income sufficient to support their families. For many, earnings from even full-time employment fall below official poverty levels or, in some cases, below the value of AFDC grants in conjunction with the benefits of other programs—food stamps, Medicaid, and housing—for which AFDC recipients are generally eligible.

Despite these obstacles to household support, adult AFDC recipients generally do work, frequently part-time, using the program episodically when work runs out. Recipients thus do not constitute a perverted culture whose members are unwilling to contribute to the support of their households. Instead they generally do contribute, but their economic position is fragile and highly contingent on periodic changes in family composition and employment status.^[24]

This fragile situation is complicated by AFDC's design features. Since 1962 AFDC has experimented with different approaches intended to encourage recipient self-help. But in practice these measures have penalized recipients who are too diligent. For example, until 1967 recipients' earnings, less work-related expenses, were deducted from their program benefits, a practice that "taxed" earnings at about 70 percent. In 1967, in connection with the WIN program, Congress effectively reduced this rate to about 50 percent.^[25] Then in 1981 the Reagan administration limited the more generous treatment of earned income to the first four months of a claim. Thus recipients eventually encountered a "notch," a point at which additional earnings cause a drop in total household income because they render the household ineligible for AFDC benefits and programs such as Medicaid and food stamps.^[26]

Although the term work incentives arises repeatedly in discussions about AFDC, it is fair to say that there is no agreement as to what work incentives or disincentives are associated with the program. Some critics of the program argue that the very distribution of resources to working-aged adults reduces their incentive to work. Other critics cite the high rate of benefit reductions against earnings and the aforementioned notches as the major disincentives.^[27] Proponents and detractors of AFDC also disagree on the inter-

pretation of the program's results. For instance, attrition rates in job training programs are high, but some people do achieve independence from AFDC through WIN training and job placement.^[28] Yet the attrition rate is commonly interpreted as an index of the failure of work incentives, rather than as a measure of the difficulty of the circumstances faced by recipients.

The various social services introduced in 1962—child-care, basic adult education, family planning, work training—are frequently viewed as work incentives. The delivery of these services, however, has been spotty, largely because funding has been much more limited than the initial program announcements suggested. Additionally, the objectives of services such as basic adult education have never been clearly defined and are sometimes delivered in ways that serve the needs of providers more than those of program recipients. For instance, since the federal government picks up a higher portion of costs associated with social services, state welfare agencies have renamed offices that scrutinize recipients' budgets as budget-counseling services.^[29]

Regarding incentives for household savings, AFDC's means test is clearly counterproductive. State regulations vary, but in general means tests restrict program eligibility to households that have virtually no income or saleable assets.^[30] Means tests thus mesh poorly with the episodic character of most AFDC usage: families are not eligible for assistance until they have depleted their resources—a small savings account, marketable possessions—a practice that only reinforces a sense of hopelessness with respect to savings. Means tests also make leaving AFDC protection risky, since the recipient will have to fall back into destitution in order to reenter the program.

Guaranteed-income experiments conducted in Seattle and Denver suggest that means tests which ignore assets in determining eligibility may be a more constructive approach to aiding the working poor and encouraging savings.^[31] The abolition of means testing would reduce target efficiency but would bring AFDC in line with social security and unemployment insurance, both of which use current earnings as a measure of eligibility. (No one would ever suggest that laid-off workers covered by unemployment insurance sell their homes, cars, and other possessions before applying for benefits.) Since AFDC serves as a substitute for unemployment insurance for

a high proportion of workers on the fringes of the economy, parity in the type of eligibility rules does not seem unreasonable.

For businesses and corporations AFDC's consequences for risk-taking are mixed. Because the program is financed from general revenues, rather than payroll taxes, the association between levels of program support and the costs of doing business are small and indirect. The program's deleterious effects on work incentives may hurt recipients but should have little influence on business. The argument that AFDC curtails participation in the labor force by offering a limited and unrepresentative segment of the labor market roughly comparable levels of financial support for rearing children may have considerable face validity for businessmen, but this contention is of dubious empirical accuracy. Nor can AFDC be implicated in debates about the competitiveness of American goods and services in global markets. The taxes that sustain AFDC are paid largely by individuals, not by business enterprises, and they represent less than 0.5 percent of GNP (compared to 5 percent for social security), or about 1.5 percent of the federal budget (compared to 20 percent for social security).

The total costs of AFDC are modest: less than $15 billion to serve about 11 million persons in 1986. Herein lies one of the program's virtues from the standpoint of economic efficiency. It is inexpensive—far less expensive than any program attempting to achieve self-support among AFDC's adult recipients would be.

Slightly more than half of AFDC's costs are covered by the federal government from general revenues. The redistribution of resources is thus strongly vertical: since the incomes of AFDC recipients are low, few of them pay federal income tax, and higher-earning citizens shoulder the bulk of AFDC's costs.

States fund the balance of AFDC expenditures through a variety of taxes that are usually more regressive than the federal income tax. The tax burden that AFDC poses for residents of different states varies sharply. Nearly one-half of the benefits are disbursed in three states (California, New York, and Massachusetts) that provide high benefits, based on high costs of living, to large numbers of recipients.^[32] But other states do not share these exceptional fiscal problems.

Overall AFDC is a highly focused program that concentrates on a particular swath of urgent need. Consequently, AFDC has a

reputation for target efficiency; that is, AFDC benefits—in contrast to those of social security—go to extremely needy households. Prior to the late 1960s varying interpretations of what constituted a "suitable home" and other restrictions combined to deny aid to many needy families within the ostensible target population.^[33] Between 1967 and 1981 target efficiency was diluted somewhat by more lenient rules covering earnings retention, but only a small proportion of AFDC households were able to take advantage of these rules.^[34]

Specific aspects of AFDC's highly focused design, critics claim, exacerbate the plight of destitute households and undermine economic efficiency. One argument of this sort is that by supporting only single-mother households, AFDC encourages family dissolution.^[35] Fathers who cannot or who are reluctant to take responsibility for the support of their dependents either leave the household or never become a formal part of it. Empirical evidence for this argument is sparse: one analysis shows that the variation in the level of AFDC benefits across states has no effect on family structure and living arrangements, but other data suggest that the incentive structure to which this feature of AFDC contributes is not overlooked by some of the males associated with AFDC families.^[36] Nonetheless, experiments with the negative income tax, particularly the Seattle/Denver work, suggest that programs that aid households regardless of composition may facilitate family dissolution as well, through an independence effect—that is, women who have independent resources are apt to leave a bad marriage.^[37]

A second troublesome feature is the wide variation of benefits among states and their subdivisions. Economic efficiency is not well served if poor households migrate from the rural south, where benefits are lowest, to northern and western cities. Any concentration of AFDC-dependent households in cities already facing impressive structural unemployment problems produces a permanent urban underclass. A program of standardized national benefits, in contrast, might encourage poor households to move to areas in which the cost of living is lower and job opportunities are more plentiful. Social security, for instance, has probably facilitated a migration of elderly citizens from the frost to the sunbelt, and the Denver guaranteed-income experiment suggests a similar migration pattern.^[38]

In summary, little about AFDC contributes to economic efficiency, but programs that target narrow, highly vulnerable segments of the population are, by nature, not intended to realize economic efficiency. Nevertheless, extending help to the impoverished and economic efficiency may not be as incompatible as is generally thought. As we will see, the economic efficiency of a program aimed at helping the poor can be enhanced, but such improvements exact a price in terms of program budget.

Administrative Complexity

For a national program, AFDC allows an astonishing degree of regional variation,^[39] with each state having its own rules for eligibility, subsequent household budgets, and a variety of other matters. Typically, these rules are extraordinarily complex, and their application requires continual interpretive decisions by state-level and field-office personnel. The density of substantive field-office decision making, fostered through decentralization, is further complicated by high turnover among recipients and their concurrent use of other public assistance programs.

AFDC's original objective was to supervise transfer payments, but the addition of social services components in 1962 presented more demanding and less well-defined program objectives. So-called hard services, those clearly related to employment such as job training and placement, have had relatively modest success, and providers in other government agencies have complained about the constraints that serving AFDC recipients places on them. The so-called softer services—basic adult education—have less clear-cut objectives and have sometimes become twisted to serve the needs of state financing rather than those of recipient merging.^[40]

Compounding the difficulties posed by complex procedures and ambitious objectives, AFDC operates in a highly decentralized fashion. Decentralization opens the door to differences in objectives among the national, state, and local levels as well as among the various agencies involved at any given level. Additionally, decentralization places a great deal of decision-making responsibility at the bottom of the organizational pyramid, where a variety of personnel problems and high rates of employee turnover hamper administrative efficiency. To reduce some of these complexities, the guaranteed-income proposals of the 1970s sought to standardize

many rules on a national basis and to return the program's focus from social services to income transfers.

AFDC's most prominent limits issues involve the types and degrees of need covered by the program. To take but one prominent example, fewer than half of the states chose to expand eligibility to households with an unemployed male by instituting AFDC-UP.^[41] State-by-state guidelines about what constitutes need reinforce the notion that AFDC is, despite its formal legal standing, a type of gratuity rather than a socioeconomic right.^[42] The English poor laws linger on in contemporary AFDC practice.

AFDC's harmonization with other relevant public policy objectives is sharply uneven. Public revenues allocated to AFDC are usually spent quickly, so the program minimally helps to maintain consumer demand and therefore employment. But since most AFDC recipients are not full-time members of the labor force, one could argue that the program removes potential workers from labor-market participation. Unlike social security, AFDC is not considered as an important contributor to inflation.

AFDC's central harmonization problem lies in the insulation of the program from the labor market—an inherent aspect of program design that is highly artificial in a society that places great emphasis on work. Efforts by the Nixon and Carter administrations to reform public assistance by replacing AFDC, rather than by tinkering with the specifics of the existing program, were well intended, but their guaranteed-income proposals were also seriously at odds with American political values about work.

With respect to the values of limited and local government, AFDC offers a mixed but not generally encouraging fit. The program is relatively small, but it looms large in the public's perception. Regional and, less legitimately, case discretion provide some measure of local governance, and there have been several interesting state-level experiments in recent years. But local discretion can just as easily become a tool for institutionalized racism and other disturbing practices.^[43]

Conflicts of Interest and Compliance

A program such as AFDC is, by nature, a locus for conflicting interests, the most central of which is that between public officials'

desires to restrict spending for "the poor" and the needs of the program's clientele. Throughout AFDC's history, this conflict has taken different forms. At the program's inception the administrative officials at SSB sought to limit public assistance relative to social insurance, and this preference persisted for a number of years. Up through the early 1960s program executives viewed AFDC as a transfer program concerned with maintaining a limited number of households beset by highly exceptional circumstances. This view was gradually superseded by the alternative conception of AFDC as serving a more progressive task. In 1962 increasing costs prompted the Kennedy administration, on the advice of social work professionals in HEW, to add a social services emphasis to AFDC. Representing the social work view about the path to self-reliance, these services were intended to reform recipients in ways consistent with increased self-sufficiency, but they also enhanced the role of social workers, offering them more interesting tasks than handling caseload paperwork.^[44]

Successive initiatives by political leaders through WIN in 1967 were driven most immediately, though not exclusively, by a concern with controlling costs. Since the early 1970s a concern with limiting program costs has been joined, and occasionally even eclipsed, by concerns relating to vertical or work equity and permissiveness. Overall, however, interest among political elites in AFDC has been extremely uneven. The relatively small federal expenditures for AFDC and the concentration of costs in a handful of states means that most members of Congress need not pay much attention to the program. Representatives from affected states have often viewed fiscal relief for state government as more of an issue than program reform, and few House members have significant AFDC constituency interests.^[45] Nor have AFDC program executives typically exhibited the devotion and adroitness of their social security counterparts.

At the state level, conflicts of interest between public officials and program clientele vary over time. Some states have been relatively generous in extending eligibility and higher benefits; others have adopted practices designed to deter or discriminate against applicants and restrict benefit levels. The primary federal sanction for achieving state-level adherence to those aspects of the program covered by federal guidelines—the withdrawing of federal funds—

has not proved effective. A few states have been so bold as to call the federal government's bluff in such matters.

The incentives for compliance and cooperation among beneficiaries, federal officials, and third-party providers are no less problematic. With respect to the majority of episodic users, AFDC does provide invaluable assistance for bridging social hazards, but the means test, which generally requires program applicants to be indigent before qualifying for services, is clearly counterproductive. Rather than stimulating self-help efforts, the means test creates strong cross-pressures between self-sufficiency and dependence among persons whose views about their economic futures are understandably uncertain. Once a household qualifies for the program, these conflicting pressures continue, as increased earnings are penalized by reduced benefits. Episodic users work their way toward renewed self-sufficiency in spite of, rather than because of, the program.

For the less numerous persistent users of AFDC, the bonds of habit and dependency have thus far proved intractable. Whether such bonds can be broken humanely—without disruption, suffering, and controversy—is a troubling question.

Three factors mitigate against persistent users' achieving independence from AFDC. First, these are people who have limited or undeveloped capacities with respect to the existing labor market; they are caring for young children and have little in the way of job skills and experience. Second, in addition to information and transportation problems that complicate the matching of recipients and jobs, the existing labor market does not offer enough paid positions capable of sustaining the families that require support. Third, against this structural inadequacy, AFDC offers an enticing form of economic security, one that in extreme cases invites recipient abuse. But while New York City, for example, has been troubled by systematic patterns of abuse, the vast majority of these abuses concern extremely small sums of money. (The popular myth of AFDC recipients driving Cadillacs is precisely a myth.) Nonetheless, cases of abuse do illustrate how the program's design features encourage certain kinds of counterproductive behavior from recipients.

As a program that deals with a narrow and unrepresentative group of vulnerable and generally disadvantaged citizens with

whom upper-middle-class bureaucrats do not readily empathize, AFDC is at a disadvantage compared to programs serving a broad cross-section of the population. Between 1935 and 1962, when AFDC was administered by SSB/SSA, the program executives who were so dedicated to social security exhibited far less enthusiasm for the public assistance program.^[46] Even after AFDC became an organizationally coequal division of HEW, program officials did not display the resourcefulness and commitment that characterized their counterparts at social security. The joint national-state character of the program surely impedes administrators' efforts, but the crusade to keep the elderly and the disabled from joining the poor has never been extended to those who are poor.

National elected officials have similarly evaded a strong commitment to AFDC and related public assistance issues. With the exception of Ford, every president since Roosevelt has taken some important initiative with respect to welfare reform, but only Johnson found these programs compelling enough to make persistent efforts on their behalf in the face of congressional opposition. In Congress, as noted earlier, interest in AFDC is sparse and more concerned with formulas for federal cost-sharing than program design or success.

From the perspective of the federal government, state and local officials are third-party providers of various sorts. Characteristically these providers have priorities that differ from those of AFDC's federal program executives. A few states offer aid that exceeds federal guidelines, but other states are reluctant to adhere to the spirit of the law, particularly in the implementation of the social service components. Two key problems have been the use of private contractors whose agendas do not match program objectives and the misappropriation of federal cost-sharing available for social services to finance routine administrative operations.

Summary and Implications

On the whole, AFDC fares much worse than social security on the criteria used in this case study. One must bear in mind, however, that AFDC, confronts tasks that are inherently tougher than the providing of pensions for the elderly, a particularly favored task among social insurance programs.

Despite a poor fit with American notions of distributive justice, AFDC distributes resources that are important, if not essential, to the survival of a shifting recipient population that currently numbers about 11 million people a year, most of them children. The program's effects in reducing starvation, homelessness, and other forms of human misery are laudable, especially given its low cost.

Additional strengths include the noncompulsory nature of participation, minimal effects on economic efficiency, relatively high target efficiency, and—for better or worse—a considerable degree of regional and local discretion.

The list of AFDC's weaknesses is far longer. Because the distribution of benefits is not systematically related to either need or effort and does not require effort-based certifying activities from beneficiaries, the consequent public skepticism about AFDC beneficiaries' true neediness undermines the program's goal of enhancing human dignity. The financing of AFDC poses relatively few constraints on citizens' discretionary income, but the income transfers are highly vertical, and additional constraints are posed on the liberty of recipients and providers. The program's consequences for work, savings, and risk-taking, while uncertain and probably modest, do not look promising.

AFDC also receives low ratings on administrative efficiency. Its artificial insulation of program recipients from the labor market creates notable limits and harmonization problems. The program has not appealed to traditions and symbols respected in American political culture and has not aroused the interest of political elites on matters other than containing costs.

Finally, the program does not well serve the needs of either episodic or persistent users. In particular, efforts to promote greater self-sufficiency among AFDC recipients have foundered on three central issues: program features that create only weak work incentives, inadequate labor market opportunities for recipients, and the personal disadvantages and limitations of recipients.

The reforms initiated in 1962 focused on improving beneficiaries' capacities for using the labor market through job training and placement, related social services, and simple coercion. It is possible that this approach failed because we simply did not try hard or long enough, but the difficulties experienced along this path suggest that we try other avenues.

Nonetheless, today one sees a resurgence of support for the failed approach of the 1962 reforms. In Beyond Entitlement , Lawrence Mead, for example, thoughtfully and provocatively argues that the fundamental fault with the American welfare system is not its size but its permissiveness. Programs of public social provision, according to Mead, should require more rigorous effort at self-development and help among beneficiaries than AFDC or public assistance in general currently do. While I agree with this premise, there are two serious flaws in Mead's proposal that we develop intraprogram policing capacities for assuring that beneficiaries are working, studying hard, treating fellow family members reasonably, and avoiding crime.

The first flaw is the impracticality of such a proposal. For one, programs with administrative teeth are hard to develop. Although California's new Greater Avenues for Independence (GAIN) and Massachusetts's Employment and Training Choices (ET) have reputations as more constructive than workfare generally, both programs ultimately rest on the individual recipient's willingness to cooperate.^[47] Furthermore, intraprogram policing takes us back along a route we have already traversed and decided, through a series of court decisions, we did not like. And American political values are not likely to be well served by a set of larger, seriously more intrusive state bureaucracies that monitor public assistance.

The second general flaw in Mead's approach is the particular character of its optimism, which seems in part a reincarnation of the withering thesis. Mead does not imagine that all poverty will wither away through coercively imposed work, but he is optimistic that a good deal of it will. Yet to suppose that a considerable measure of poverty rests on personal actions alone is to ignore characteristics of the labor market that limit its universal usefulness in providing a living wage for many workers. Low wages and modest skills combine to keep the working poor hovering barely above poverty, and the slightest misfortune is apt to plunge them into destitution. Many households recover through their own efforts, but the pool of households likely to experience episodic poverty is so large and the persistence of their collective problems so great that eliminating or even dramatically reducing such poverty through work alone seems unlikely. The overall problem is less one of changing the attitudes of a small subculture, although this may be

a factor among persistent AFDC users, than of overcoming a variety of structural problems in the labor market that preclude adults from being able to support their families.

Moreover, Mead's optimism seems to ignore the effects of certain demographic trends, including the birth rates for single mothers and the divorce and desertion rates among couples with young children. To take but one example, for poor women the single most frequent escape route from poverty is marriage or remarriage.^[48] But marriage and remarriage rates are notably low among single urban black women who have children. One explanation of this trend holds that the limited economic opportunities of urban black men contribute to their reluctance to take on the obligations of a wife and children or stepchildren; black women, seeing little economic relief in such marriages, might be equally reluctant.^[49] Another explanation looks to sex ratios. In those urban areas where women greatly outnumber men, men—and not just American black males—tend to be less responsible toward women and children; in areas where sex ratios are more balanced, stable two-parent families predominate.^[50]

In contrast to Mead's vision, the AFDC reforms initiated in 1967 (and dismantled in 1981) represent a nascent example of an approach that incorporates a more adequate recognition of the limitations of the existing labor market. These reforms extended to a category of the poor a minimal level of economic support (a guarantee) that could be enhanced by work. Expanding upon this approach, the FAP and PBJI proposals offered both advantages and drawbacks in comparison to AFDC. They covered more people, thus reducing horizontal or support inequities. But they also brought a much larger population into prospective programs that offered their recipients economic support insulated from requirements of working. And the language of guarantees, as developed from WIN through PBJI, contradicted the core American concerns of work and self-sacrifice as essential to human dignity.

During the last quarter-century, then, public assistance programs have tried either to alter the capacities of people ill suited for the existing labor market or to insulate these people from the rigors of that market. In the renewed debate over workfare conservatives have tended to argue that in order to reduce the public assistance rolls we need to put people to work, and liberals have

tended to argue that we therefore need to create jobs that will allow people to work. We can, I believe, carve out a position between these views. Most Americans would agree that able-bodied working-aged adults ought to participate in the paid labor force, rather than be insulated from it. For single adults and childless couples, self-support through the labor market is a reasonable expectation. But for households with children, particularly single-parent households, regular full-time work at or near the minimum wage will not cover basic needs or cushion a household from poverty. And in single-parent households regular full-time employment is extremely difficult in the absence of adequate and affordable child-care. For these households, then, it seems appropriate and socially productive to establish a program of public social provision that would both facilitate labor market participation and supplement wages inadequate to support a family.

In chapter 8 I will propose such a program, one that will create a structure of opportunities and incentives far stronger than any that has characterized AFDC to date. Rather than enlarge existing public assistance bureaucracies for the policing of recipients, my measures would facilitate the socially responsible activities we want to encourage and, as necessary, supplement low-income workers' constructive efforts at self-support. But before I lay out my proposal, we need to examine the special problems associated with the delivery of social services. For this purpose, let us turn to a case study of Medicare.