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Unemployment Insurance Does Not Explain Why TANF Caseloads Are Falling As Poverty and Need Are Rising

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Between 2000 and 2003, the number and percentage of single mothers living in poverty increased while the percentage of single mothers with jobs fell. At the same time, poverty among children rose, and the number of children living below half of the poverty line increased by nearly one million. In response to this increase in poverty and need, the number of families receiving food stamps and Medicaid rose. The number of poor families receiving TANF cash assistance, however, continued to fall. TANF provided assistance to 845,000 fewer people in 2003 than it did in 2000.

Administration officials have attempted to portray TANF’s lack of responsiveness to increased need as a positive development and have suggested that unemployment insurance is filling that need rather than TANF. Wade Horn, the Assistant Secretary for Children and Families at HHS, has said that welfare reform moved poor single parents into the “economic mainstream.” According to Horn, the safety net for people who are part of the economic mainstream is unemployment insurance, not TANF.

Unfortunately and contrary to Administration claims, for most poor families, unemployment insurance has not proved to be an effective substitute for the TANF safety net during this period of labor market weakness.