Work Requirements: The Temporary Assistance for Needy Families (TANF) Work Standard and How States Met It

Temporary Assistance for Needy Families (TANF) helps states fund cash assistance programs for needy families with children. It was created in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA, P.L. 104-193) during a period of experimentation with different forms of welfare-to-work programs. Engagement of nonemployed cash assistance recipients (mostly single mothers) in job preparation activities, such as job search or education and training was the focus of the pre-PRWORA programs and experiments. PRWORA changed that focus in creating TANF. The primary federal work requirement in TANF is a performance standard that state governments, not individual recipients, must meet. States that fail the performance standard are at risk of being penalized through a reduction in their block grant. Nominally, states are required to have 50% of all families and 90% of two-parent families engaged in work. However, the TANF work performance system allows states to meet TANF’s standards through additional means besides engaging nonemployed recipients in welfare-to-work activities. Most prominently, states may reduce these percentages through reducing the number of families receiving assistance, which earns states a caseload reduction credit. The caseload reduction credit provides states with the incentive to reduce the number of families receiving assistance, regardless of whether families not receiving assistance are working or not. States may also meet their standards through “work,” meaning TANF adult assistance recipients either (1) work in regular, unsubsidized jobs or (2) engage in job preparation activities (including subsidized employment). States may count engagement in job search and vocational educational training for a limited period. Work or participation has to be for a minimum number of hours for a family to count as being engaged in work, with those minimum hours varying by family composition. Decline in the Number of Cash Assistance Recipients Caseload Reduction Was the Primary Way Many States Met TANF Work Standards / Source: Congressional Research Service (CRS), based on data from the U.S. Department of Health and Human Service (HHS). Under TANF, states have generally met their work standards through reducing the number of families receiving assistance and assisting families with working members, not by engaging recipients without regular (unsubsidized) jobs in activities. The reduction in the number of families receiving assistance is a distinctive characteristic of the post-PRWORA period, declining from the historical peak of 5.1 million families in 1994 to 1 million in 2024. Further, one of the first policy changes states made after PRWORA was to enhance earnings disregards, incentivizing recipients to work but also effectively allowing those who got a job to stay on TANF at higher levels of earnings and/or for longer periods of time. In contrast, over the history of TANF, the share of adult recipients not employed in unsubsidized employment who participated in job preparation activities never exceeded 30%. States also engaged in other actions (e.g., accounting for two-parent families in separate programs not considered in the performance system) to help meet their standards. The Fiscal Responsibility Act of 2023 (P.L. 118-5) requires states to report employment outcome measures for former recipients, such as rates of job entries, measures of retaining jobs, and measure of wages. It also authorized a five-state pilot in which states would use such outcome measures as an alternative way to measure TANF performance. A TANF reauthorization bill (H.R. 3156/S. 1567) would, among other things, replace the current TANF work performance system with one based on employment outcomes and directly require participation in activities for most adult recipients. Such outcome measures are not necessarily immune from creating unintended behaviors to achieve performance goals. TANF would also continue to provide incentives outside of the work performance system (such as fixed funding) for further caseload reduction.