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Evaluating Welfare Reform in an Era of Transition (2001)

Chapter: 1. Introduction

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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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1
Introduction

With the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, the United States embarked on a major policy change to its social welfare and safety net programs for the poor. The most fundamental and far-reaching reform of the traditional cash welfare system for single mothers since 1935, PRWORA replaced the federal entitlement program for low-income families and children (Aid to Families with Dependent Children, AFDC) with a program financed by state-administered block grants, the Temporary Assistance for Needy Families (TANF) program.

PRWORA furthered a trend started earlier in the decade under so-called “waiver” programs—state experiments with different program rules—toward devolution of the design and control of social welfare programs from the federal government to state governments. The legislation imposed several new major requirements on state programs—lifetime time limits on receipt of benefits paid out of federal funds, minimum work requirements, and minimum sanction requirements, for example—but otherwise allowed states to reconfigure their programs as they wish. Taking advantage of this new flexibility, states have made and continue to make major changes in the nature of their welfare programs. Changes made by some states emphasized immediate work and job placement, strengthening sanctions (i.e., benefit penalties) for failure to comply with regulations, and limiting or eliminating extra benefits for additional children. Some states have broadened the scope of services they provide to low-income families by implementing programs that provide noncash assistance, such as child care assistance, job search assistance, or transportation assistance. The aim of the

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

reforms was to “end welfare as we know it,” and most observers have agreed that the former AFDC system has been fundamentally transformed.

Determining the consequences of this experiment is of great importance to the public as well as legislators and federal and state officials. Has welfare reform “worked?” Has it been a success or a failure, however those terms are defined? If the effects have varied across families, for which types of families has it been beneficial and for which types harmful? In addition to these questions about the past, there are questions about the future. Should the welfare system be pushed further in the same direction or pulled back? Which elements of the new welfare system need to be changed and which left as is? What works and what doesn’t in aiding former welfare recipients to leave the rolls and become self-sufficient?

For these fundamental questions to be answered adequately, two issues need to be addressed. The first concerns how these questions can be answered: What methods can and should be used to determine the effects of welfare reform? Simply tracking families from before the reforms to after the reforms is not sufficient because other things have happened simultaneously, most notably the improvement in the economy. In the four years since PRWORA was passed, a large number of evaluation efforts have been initiated: Have those studies used the appropriate evaluation methods? If not, what evaluation methods should be used, and what steps should be taken to promote their use?

A second key issue concerns what types of data are needed to measure and evaluate the effects of welfare reform. Are the data sources currently available to evaluators at the federal and state levels adequate for assessing the effects of reform? In the many welfare reform studies that have been initiated since 1996, have the best data been used? Have the studies been handicapped by inadequate or unavailable data? If so, what steps should be taken to improve the quantity and quality of data needed to evaluate welfare reform?

These two issues are the subject of this report.

THE PANEL

To answer questions about the methods and data needed to assess the consequences of welfare reform, the Committee on National Statistics of the National Research Council formed the Panel on Data and Methods for Measuring the Effects of Changes in Social Welfare Programs. This panel is sponsored by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) of the U.S. Department of Health and Human Services through a congressional appropriation. The same congressional appropriation provided funding to ASPE for data collection and evaluation of the effects of welfare reform on families who have left welfare, commonly called “welfare leavers.” Language accompanying the appropriation requested that the panel provide guidance on the ASPE research

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

plan for tracking former welfare recipients and suggest directions for future welfare-related research.

The charge to the panel is to review methods and data needed to evaluate the outcomes of changes in social welfare programs on families and individuals. The panel is specifically charged with assisting the department in (1) identifying how best to measure and track program eligibility, participation, child well-being, and other outcomes; (2) evaluating data, research designs, and methods for the study of welfare reform outcomes; and (3) identifying needed areas and topics of research. In doing so, the panel was asked to consider alternative federal and state data sources, the limitations of currently available data, appropriate evaluation design and methods for analysis and inference, and, finally, findings from previous research and evaluation. The panel is also specifically charged with reviewing data needs and methods for tracking and assessing the effects of program changes on families who stop receiving cash assistance.

The membership of the panel was constituted in the summer of 1998 and the panel issued an interim report in the summer of 1999 (National Research Council, 1999). The interim report summarized the general principles of good evaluation, gave an initial assessment of the data infrastructure for welfare reform evaluation, specifically discussed studies of welfare leavers, and gave the panel’s short-run recommendations for improving the data infrastructure needed to measure the effects of changes in the cash assistance program. In this final report, the panel considers broader and more long-run data and methodological needs for evaluating welfare reform.

In carrying out its work, the panel quickly realized that assessing which methods and data are most appropriate for evaluating welfare reform requires that the key evaluation questions and outcomes of most interest have to be specified first because the methods and data needed must be oriented around specific questions and outcomes. The panel therefore focused its attention on determining the research questions and outcomes of most interest for measuring the effects of welfare reform, as well as the appropriate methods for answering these questions and the data needed to carry out these evaluations. These three topics defined the structure of the panel’s work.

In addition to the discussions and detailed investigations carried out by the panel members and staff, the panel also sponsored many other activities and enlisted the advice of numerous other experts. The panel commissioned several papers on issues concerning data collection, most of which were presented at the Workshop on Data Collection for Low Income and Welfare populations held in December 1999. These papers were revised and will be published as a companion volume to this report (National Research Council, 2001a). The panel also held a seminar on evaluation methods for measuring the effects of welfare reform. This seminar brought together experts in social program evaluation to discuss the appropriateness of different evaluation methods for measuring the

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

effects of changes in welfare policies. The panel also invited representatives of the U.S. Census Bureau to a meeting to discuss four major surveys relevant to evaluations of welfare reform: the Current Population Survey, the Survey of Income and Program Participation, the Survey of Program Dynamics, and the American Community Survey. In addition, the panel consulted a wide variety of private researchers and government officials involved in welfare reform research and commissioned a number of expert studies on welfare reform methods and data, which are included in the panel’s companion volume (National Research Council, 2001 a). The panel also had continued discussions with ASPE officials on the agency’s research agenda on welfare reform.

POLICY BACKGROUND

The modern constellation of means-tested transfer programs in the United States originated in 1935 with the creation of the Aid to Families with Dependent Children (AFDC) Program. Intended to provide cash support to low-income widows with children, the program grew slowly through the 1940s and 1950s and then began growing rapidly in the 1960s. At the same time, the nature of the caseload changed, as more recipient families were divorced women with children rather than widows. The “welfare explosion” of the late 1960s and early 1970s was a defining moment in the history of the program. While there had been controversies prior to that time, the big growth in the number of recipients generated widespread public discussion of the program. Legislative interest also grew during this time, and reforms of the program became a high priority on the government’s agenda.

As shown in Figure 1–1 the growth in the late 1960s and early 1970s was followed by very little growth in the late 1970s and early 1980s. However, growth again accelerated in the late 1980s, leading to concern by state governments about the cost of welfare. In addition, the nature of the caseload changed as the fraction of recipients who were unmarried single mothers grew relative to the number who were divorced or separated; see Figure 1–2. Over time, the early concentration of widows in the program in the 1940s was followed by a dominance of divorced and separated women in the 1960s and 1970s, and finally the growth and predominance of never-married women in the 1980s and 1990s. This development changed public attitudes toward the program and led to concerns over the implicit support of nonmarital childbearing that the program seemed to provide.

Table 1–1 lists the major pieces of legislation in the history of the program. After its creation in 1935, the program remained essentially unchanged until 1961, when eligibility was extended to two-parent families in which the primary earner is unemployed (AFDC-UP). The 1967 Social Security Amendments were the first to directly address the issue of work by AFDC recipients, creating financial incentives by lowering the benefit reduction rate and by creating a work

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

FIGURE 1–1 Total Number of Cash Assistance (AFDC) Recipients, 1936–1992.

FIGURE 1–2 Basis of AFDC Eligibility, 1942–1992.

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

TABLE 1–1 Major Legislation in the AFDC and TANF Programs

Date

Title

Main Provisions

1935

Social Security Act

Created the AFDC program for low-income children without a parent present in household

1961

Amendments to the Social Security Act

Created the AFDC-UP program for children in two-parent families whose primary earner is unemployed

1967

Amendments to the Social Security Act

Lowered the benefit reduction rate to two-thirds; created the Work Incentive (WIN) Program

1981

Omnibus Budget Reconciliation Act of 1981

Increased the benefit reduction rate to one; imposed a gross income limit; counted income of stepparents; allowed waiver authority

1988

Family Support Act of 1988

Created the JOBS program for education, skills training, job search assistance, and other work activities; created transitional child care and Medicaid programs; mandated AFDC-UP in all states

1996

Personal Responsibility and Work Reconciliation Act

Abolished the AFDC program and created the TANF program

program called WIN, the Work Incentive Program. Raising the financial incentive for working was not successful in increasing employment to any significant degree and was eliminated in the 1981 Omnibus Budget Reconciliation Act, which effectively increased the benefit reduction rate back to 100 percent of net earnings. The WIN program remained small and provided little training to the majority of AFDC recipients. However, an emphasis on work continued to grow during the 1970s and 1980s, with most initiatives proposing work programs with a strong focus on education and training. This trend culminated in the 1988 Family Support Act, which created the Job Opportunities and Basic Skills Training (JOBS) program to encourage skills training. This trend was reversed in the welfare reform movement of the 1990s, which eschewed expensive and arguably low-return education and training programs in favor of more immediate job placement and employment programs. The PRWORA legislation reflected this change in philosophy toward employment by backing up a “work first” approach with strong sanctions for noncompliance with work requirements.

Another significant trend in reform has been an increasing focus on child support enforcement. Strengthening child support enforcement has been a part of every welfare reform law since 1974, when the federal-state child support enforcement system was established. The Family Support Act of 1988, as well as PRWORA, followed in this tradition by increasing efforts to obtain payments from noncustodial parents, usually fathers. The most recent laws have established routine withholding of child support obligations, statewide registries of obligations, reporting of new hires, seizure of assets and forfeiture of driver’s

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

licenses and professional licenses, mandatory blood and genetic testing, and in-hospital voluntary paternity establishment programs. These laws have made it more difficult and costly for fathers of children receiving welfare to avoid paying child support.

The current era of welfare reform has been characterized by major structural changes in the system and by drastically falling caseloads. Beginning in the late 1980s and early 1990s, states began to request waivers from federal law in order to experiment with different rules in their AFDC programs. The variations ranged from the imposition of time limits on welfare receipt to new and strengthened work requirements for recipients, stricter financial sanctions for violations of rules and noncompliance with work requirements, family caps that limit benefit increases for women who had additional children while on the welfare rolls, and other provisions. These waiver programs initially tested the new provisions on small numbers of recipients but became more comprehensive over time as they were increasingly applied to all recipients in the state.1 Another important change during this period was an increasing tendency of states to test multiple sets of new rules simultaneously, comprising a “package” or “bundle” of reforms, rather than introducing each separate reform component sequentially. Both of these trends reflected a growing desire on the part of states to change their AFDC systems in a fundamental way and to enact a basic restructuring of the entire state’s caseload, often with the goal of changing the “culture” of welfare. By the summer of 1996, more than 40 states had requested and been granted statewide waivers.

The passage of the Personal Responsibility and Work Opportunity Reconciliation Act in August 1996 incorporated the spirit of these waivers in federal law. States are required to impose a 5-year lifetime limit on benefit receipt by adults (at least those paid for out of federal funds). States are also required to impose work requirements for a large portion of their caseloads, and a narrower range of activities satisfy these work requirements than was the case under prior law. Equally if not more important, states were freed from other federal regulatory authority, and funding was switched from matching grants to block grants, thereby freeing states to set benefit levels, eligibility requirements, and financial incentives, and to enact sanction, diversion, and other types of rules and programs as they wished. The program was also renamed and is now called Temporary Assistance for Needy Families.

States have used the TANF provisions to completely redesign their programs. Several states have imposed even more stringent time limits than required by TANF, and some states have imposed stricter sanction policies than required by federal law, with the result that sanctions have become a commonplace occurrence in the lives of welfare recipients. Other changes include Work First Pro-

1  

Usually, a small number of families in each state remained on the old AFDC program for comparison purposes. This approach is discussed further below.

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

grams, which attempt to move recipients into employment (rather than training or education) as quickly as possible and numerous diversion, family cap, and other provisions governing and limiting benefit receipt. The overall goal of most new state programs, at least in the initial period, has been to move recipients from welfare to employment. Some states have also attempted to move recipients to employment while still on welfare through more liberal earnings disregards, which encourage recipients to combine welfare and work. This goal has been reinforced by changes in the nature of local welfare offices, as they attempt to change from mere eligibility-determining and cash-dispensing agencies to agencies whose primary mission is to assist recipients in moving from welfare to employment. This kind of fundamental restructuring of the welfare system cannot happen quickly, and at this writing, 4 years after the passage of the law, states are still developing their welfare programs and experimenting, often by trial-and-error, with different strategies for achieving employment, caseload-reduction and other program goals.

This period of welfare reform has been accompanied by a drastic reduction in the caseload in the AFDC program, as illustrated in Figure 1–3. Over the 1993– 1999 period, the AFDC caseload has fallen by 49 percent, an historically unprecedented reduction that has decreased the program caseload to its level in 1970. Some states have experienced much more drastic declines: Wisconsin leads the nation with a 86 percent decline between its peak caseload in January 1992 and June 1998 (U.S. Department of Health and Human Services, 1998). Poverty rates have also declined, as shown in Figure 1–4.

FIGURE 1–3 Total Number of Cash Assistance (AFDC/TANF) Recipients, 1993–1999.

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

FIGURE 1–4 Poverty Rates in the United States, 1993–1999. NOTE: Poverty rate is defined as the percentage of families with children under age 18 and incomes below the federal poverty level for family size. Family is defined by the CPS as a group of two or more (one of whom is the head of household) people related by birth, marriage, or adoption and residing together; all such people are considered members of one family. SOURCE: Data from U.S. Census Bureau, Current Population Survey (CPS).

Although it is natural to associate the decline in the caseload with the nature of the welfare reforms, other forces have been at work and could have contributed to the decline in caseloads.2 An equally historic occurrence is the unprecedented period of economic growth and falling unemployment rates the nation has experienced in the 1990s, which has lifted employment rates to all-time highs and has reached deeply into the low-skill labor market. Major policy shifts have also occurred: the Earned Income Tax Credit (EITC) has been expanded, providing major new income support for families off welfare, and Medicaid has expanded its coverage for nonwelfare low-income families and children. A major research and evaluation issue has been how to parcel out the relative contributions of welfare reform, the economy, and the other policy developments to the decline in the caseload over this period. Most analysts attribute a sizable fraction of the decline in welfare recipients to welfare reforms, although methodological problems and data limitations create some uncertainty about this conclusion, an issue we discuss in Chapter 4.

Welfare reform is a moving target for evaluation because the strategies and policies practiced by states are still evolving. There is some evidence that states,

2  

A recent compilation of papers studied explanations for recent trends in welfare caseloads (W.E. Upjohn Institute for Employment Research, 1999). Previous studies have also discussed the increases in caseloads in the late 60s and early 70s (Michel, 1980; Moffitt, 1992).

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

having largely accomplished their caseload-reducing goals, are now turning their attention to the provision of services to poor families, in general, and to women and families who are not receiving welfare. Provision of work supports, such as child care, as well as services meant to address other problems and barriers women experience in attempting to reach self-sufficiency, are widely discussed. Welfare reform is a continuing, dynamic process as states gradually confront new problems and face new challenges. The energy in this evolution is an indication of a system that is constantly trying to improve itself, which is clearly desirable, but it makes the problem of evaluation quite difficult. Estimates of the effect of welfare reform to date are not necessarily applicable to the future, when the nature of the reform may have changed. Moreover, from an evaluation point of view, it can be argued that the highest priority now should be to set up data and evaluation mechanisms that are capable of monitoring relevant populations and evaluating the impact of the new and ongoing strategies constantly being adopted.

Although there is much concern about the effects of the landmark welfare reforms of the 1990s, especially the effects of the fundamental AFDC-TANF Program change, this program is only one of the nation’s set of means-tested transfer programs. Other programs have changed, too. The growth of Medicaid, food stamps, supplemental security income (SSI), and EITC spending over the past 30 years has been much more rapid than that for AFDC, and all four programs now have much greater expenditure levels than TANF—and all of them except EITC had greater expenditures even prior to PRWORA.3 Moreover, PRWORA had some provisions relating to programs other than TANF: immigrants were barred from Food Stamp receipt and strict time limits were imposed on some able-bodied program recipients without dependents; states were required to continue Medicaid eligibility for families that would have been eligible under the provisions of the pre-PRWORA AFDC program; and eligibility for SSI was restricted, with new income tests imposed and with certain types of child disabilities restricted. The result is that there is still major support for the low-income population even without considering TANF.4

However, many of the transfers in the other major programs go to more families than those headed by poor unmarried mothers. Despite the growth of noncash and non-AFDC programs, AFDC provided a major source of financial support to disadvantaged single mothers prior to 1996 and that level of that support has been greatly reduced. Moreover, the symbolic importance of PRWORA in signaling a new approach to welfare reform in general cannot be underestimated. The publicity and attention that this wave of welfare reform has

3  

In addition, new programs continue to be initiated, for example, the state Children’s Health Insurance Program (S-CHIP), was enacted in 1997 to fund states to expand health insurance coverage for poor children.

4  

PRWORA also significantly increased child support enforcement federal directives and assistance to the states.

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×

received has been extensive. It is fair to say that the U.S. welfare system is in an era of major transition to a new system that is considerably different from that which existed 10 years ago.

STRUCTURE OF THE REPORT

The attention that this transition has received is reflected in a major stream of research, evaluation, and monitoring activity among private researchers and in federal and state governmental agencies. Chapter 2 summarizes the major projects and provides a picture of the current landscape of welfare reform research. Before turning to a discussion of methods and data, Chapter 3 identifies the broad and specific populations of interest for measuring the effects of welfare reform and the specific research questions that need to be addressed to assess the impact of welfare reform and to inform future policy debates. It also assesses how well existing research has addressed the questions. Chapter 4 discusses alternative evaluation methods and considers which are best suited for the questions of interest identified in Chapter 3. Chapter 5 characterizes the data needed to address the questions of interest and presents the panel’s findings on the various national and state level data sources currently available. Chapter 6 presents and discusses the panel’s recommendation for a centralization and reorganization of administrative authority and responsibility for federal and state data collection on social welfare programs and populations.

Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×
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Suggested Citation:"1. Introduction." National Research Council. 2001. Evaluating Welfare Reform in an Era of Transition. Washington, DC: The National Academies Press. doi: 10.17226/10020.
×
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Next: 2. Welfare Reform Monitoring and Evaluation: The Current Landscape »
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Reform of welfare is one of the nation's most contentious issues, with debate often driven more by politics than by facts and careful analysis. Evaluating Welfare Reform in an Era of Transition identifies the key policy questions for measuring whether our changing social welfare programs are working, reviews the available studies and research, and recommends the most effective ways to answer those questions.

This book discusses the development of welfare policy, including the landmark 1996 federal law that devolved most of the responsibility for welfare policies and their implementation to the states. A thorough analysis of the available research leads to the identification of gaps in what is currently known about the effects of welfare reform.

Evaluating Welfare Reform in an Era of Transition specifies what-and why-we need to know about the response of individual states to the federal overhaul of welfare and the effects of the many changes in the nation's welfare laws, policies, and practices.

With a clear approach to a variety of issues, Evaluating Welfare Reform in an Era of Transition will be important to policy makers, welfare administrators, researchers, journalists, and advocates on all sides of the issue.

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