Wisconsin's Welfare Miracle

Ever since the new federal welfare reform law was passed last summer, the liberal welfare establishment and its allies in the media have incessantly warned how difficult, if not impossible, reform will be. What they don't know, or refuse to admit, is that one state has already proven them wrong.

Wisconsin has already won half the battle against welfare dependence, and it is winning the other half with breathtaking speed. In the last 10 years, while national caseloads in the Aid to Families with Dependent Children (AFDC) program were rising steeply, the caseload in Wisconsin dropped by more than half. In inner-city Milwaukee, the AFDC caseload has fallen by 32 percent; in the rest of the state, caseloads have fallen by more than 70 percent. In 28 of Wisconsin's 77 counties, the welfare rolls have already dropped by 80 percent or more. In Milwaukee, the AFDC caseload is now shrinking by 2 percent per month; in the rest of the state, it's shrinking by 4 percent per month.

Liberal welfare experts have consistently claimed that a successful work program might reduce welfare caseloads at most by 5 percent over three years. But in some parts of Wisconsin the number of people on welfare is steadily falling by that amount every 30 days. Wisconsin's decline in dependence is the most significant change in the 60-year history of AFDC.

Other states have begun to reduce their AFDC caseloads, too: Over the past 12 months, Maryland has cut its AFDC caseload by 28 percent, Oregon by 23 percent, and Oklahoma by 17 percent. But in most instances these declines were caused merely by reductions in the large numbers of welfare recipients who were added in the early 1990s. In reality, most states lag a half-decade behind Wisconsin; they are only now engaging in the kinds of efforts to reduce dependence that began in Wisconsin in the late 1980s.

Defenders of the welfare status quo have tried to attribute Wisconsin's plummeting dependence to a "good economy." But many states have had good job growth and lower unemployment than Wisconsin without experiencing any decline in AFDC. Skeptics also claim that Wisconsin's reforms have increased welfare costs. This is untrue. Aggregate AFDC, daycare, and training costs have declined in the ten years since Governor Tommy Thompson took office, while nearly doubling nationwide over the same period.

So what did Governor Thompson do to generate such success? His reforms reflect three themes. First, Wisconsin recognized that one of the keys to reform is to separate those individuals who truly need aid from those who do not, but who are willing to take a free handout if offered. The state created "Self-Sufficiency First," a program aimed at cutting the number of new AFDC entrants. The program provides new AFDC applicants with counseling on the negative effects of dependence, offers short-term aid (such as car repairs) to help people avoid the need to enroll in AFDC, and requires most new applicants to begin working almost immediately after enrolling. As a result, new AFDC enrollments have been cut almost in half.

Second, Governor Thompson instituted real work requirements for welfare recipients--something most politicians have only talked about. Most Wisconsin recipients who fail to find a private-sector job within a few weeks of entering AFDC are required to perform community service as a condition of continuing welfare. Wisconsin's welfare recipients receive benefits only after work has been satisfactorily completed. Recipients who are delinquent in performing community service work see their welfare checks slashed in direct proportion to the number of hours of work they fail to perform. Through the rigorous enforcement of this "pay after performance" rule, the option of receiving free income from welfare has been effectively eliminated.

Third, Governor Thompson created powerful incentives to guide and motivate an often-rigid welfare bureaucracy. County welfare offices have been required to earn daycare and training funds by increasing the number of recipients placed in jobs or community service work. Welfare offices that fail to reduce caseloads dramatically face an unprecedented penalty: They can be replaced by outside contractors. As a result, Wisconsin's bureaucracy has implemented reform with unusual zeal and efficiency.

The collapse of AFDC dependence in Wisconsin has been extraordinary, but even more fascinating is the fact that this welfare implosion has been the result of quite straightforward, common-sense policies. Any state could implement similar policies tomorrow. The only question that remains from the Wisconsin miracle is, How long will it take for the rest of the nation to follow?

Robert Rector is a welfare expert at The Heritage Foundation.

For more information ...

W2: Wisconsin Works. Outlines the philosophy, goals, and key features of the State of Wisconsin's workfare program, adopted in 1993. (State of Wisconsin, 1995, 16 pp.)

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