Mothers’ Income and Economic Well-Being

Critics charged that the Aid to Families with Dependent Children (AFDC) program trapped people in a cycle of dependency. Some emphasized that the generosity of welfare payments (relative to available employment) made long-term welfare receipt an attractive alternative to work. Others argued that even when employment increased gross income, the total economic package offered by the welfare system dominated, because low-wage work generally did not provide benefits and required some jobrelated expenditures (child care and transportation, for example). Recent reforms have aimed to “make work pay.” The Earned Income Tax Credit (EITC) has been dramatically expanded in the last decade. The AFDC program, which included an entitlement to cash assistance, has been replaced by TANF, which provides time-limited payments and which generally requires work. Wisconsin’s TANF program, W-2, has been associated with declines in the receipt of public assistance (see Chapter 3) and increases in mother’s earnings (see Chapter 4). In this chapter we consider whether the program has led to improvements in overall economic well-being for its participants.