The low U.S. labor force participation rate has several causes, but a major one is the disincentive to work created by government programs. The Republican Party’s growth wing has spent years developing ideas for addressing these incentives not to work and rise up the economic ladder, and the results are starting to show.
Last month to almost no attention the House Ways and Means Committee moved a bill from Chairman Kevin Brady that would update the Temporary Assistance for Needy Families program, known as TANF. This program is the result of the Newt Gingrich-Bill Clinton 1996 welfare reform.
The American Enterprise Institute’s Robert Doar noted recently that TANF on the whole is a success. The program has declined as a share of 1996 spending while Medicaid and food stamps have exploded. One big reason is because TANF is a block grant to states, unlike the Medicaid racket that allows states to draw down more federal dollars for every new enrollee. The program even survived attempts at sabotage by the Obama Administration like expanding waivers for work requirements.
The current system requires states to engage 50% of families in work activities. But that means states can write off some of the tougher cases. And gimmicks like a “caseload reduction credit” allow states to buy down the 50% rate to a much lower benchmark or even 0% of families. Mr. Brady’s bill would require that 100% of recipients engage in work or training as a precondition of receiving benefits.