Labor Gains

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 will have a major effect on America. But to understand just how big it is, you need some facts.

Welfare reform is not new. In fact, The Family Support Act, passed in 1988, required all states to implement the Jobs Opportunities and Basic Skills (JOBS) training program, mandating that at least 20 percent of a state's eligible welfare recipients be involved in work activities by 1995. These activities included getting a high school education, receiving job preparation or vocational training, working in community service, or finding subsidized or unsubsidized employment.

The new legislation supersedes this law. However, some states with federal government waivers may be able to keep operating their current programs with only minor revisions. Others may have to totally restructure.

Although it is not in the federal legislation, some state programs may offer employers limited subsidies for hiring welfare recipients.

Among the changes under the 1996 welfare reform legislation:

• The Aid to Families With Dependent Children program will now be called Temporary Assistance for Needy Families.

• People are no longer guaranteed assistance; states determine eligibility criteria and benefit limits.

• Recipients receive benefits for no more than two years without working.

• Adults are limited to five years of welfare in their lifetime; however, 20 percent of each state's recipients can be exempted from this limit.

• States must have 50 percent of their single-parent welfare recipients working by 2002.

• States may reduce or terminate the cash benefits of those who fail to fulfill the work requirement.

• Able-bodied food stamp recipients with no dependents must work at least 20 hours per week after receiving benefits for three months in any three-year period.

This article was originally published in the January 1997 print edition of Entrepreneur with the headline: Labor Gains.