Positive effects of welfare reform in U.S.A.

October 16, 2001

Free Market Foundation

A new analysis by the Urban Institute confirms that the dire predictions of welfare-reform opponents failed to materialise in the wake of American reforms.

Economist Robert I. Lerman reports that between early 1994 and the first quarter of this year the employment ratio of all working-age Americans rose by less than three percentage points.

But the share of single mothers with jobs catapulted from 59 percent to 74 percent reducing joblessness among this group from 13 percent to less than 8 percent.

Over the seven-year period, the inflation-adjusted median wage of single working mothers rose by nearly 14 percent to $10 an hour.

So although 15 percent of employed single mothers in 2001 were earning nothing five years ago, the average working single mother took home 78 percent as much as the average worker by early this year.

Meanwhile, other low-wage workers saw similar percentage increases.

Source: Gene Koretz, Economic Trends: How Welfare to Work Worked, September 24, 2001; based on Robert Lerman, Jobs and Wages Up Sharply for Single Moms, Gains Especially High After Welfare Reform, Single Parents’ Earnings Monitor, July 25, 2001, Urban Institute.

For Urban Institute text http://www.urban.org/pdfs/SPEM_1.pdf
For more on Welfare Reform http://www.ncpa.org/pi/congress/pd020601e.html

FMF\9 October 2001