Gaining Ground, Moving Up: The Change in the Economic Status of Single Mothers Under Welfare Reform

• Between the passage of welfare reform (1996) and 2001a recession year the poverty rate of single-mother families declined by about 20%, from 41.9% in 1996 to 33.6%, slightly above the record low for single mothers attained in 2000. The poverty decline is in large part a by-product of the transition from welfare to work induced by welfare reform.
• The reduction in poverty was particularly large among those groups of single mothers who have always had the the highest levels of poverty and welfare participationblack and Hispanic women, never-married mothers, and high school dropouts.

• The proportion of single mothers who worked at all during the year increased rapidly, from 76% in 1996 to 82% in 2001. The proportion who worked half of a full year or more increased from 60% to 70%, and the proportion working a full year increased from 44% to 52%.
• Welfare reform was the largest single factor responsible for the rise in single mothers work participation, accounting for more than 40% of the increase between mid-1996 and the end of 2001. Only about 9% of the employment gain is attributable to the expansion of the economy during that period.

• Single mothers own cash incomes rose 21% between 1995 and 2000, even after averaging in those reporting zero cash income. Similar gains were experienced by single mothers of all demographic groups, including high school dropouts. These income gains occurred because the rise in the employment of single mothers resulted in earnings gains that far outweighed their loss in welfare benefits.
• Total household income (including non-cash benefits) increased significantly among those mothers who left welfare since 1996. Before leaving welfare, the average incomes of these women ranged from about 10% to 40% above the poverty level. By the end of the second year after leaving welfare their incomes were 50% to 70% above poverty.
• Single mothers, on average, earned $11.60 per hour in 2001, considerably more than the minimum wage. Only 4% of working single mothers earned the minimum wage or less. Even among those who are high school dropouts, only 8% earned the minimum or less.

• Poverty drops steadily for women who leave welfare and the poverty decline grows with years since leaving. The poverty rate among women who left welfare in 1996, for example, fell by about 50% in four years.
• In addition, among single mothers who left welfare after 1994, each additional year worked between 1994 and 1998 was associated with an increase in hourly pay of about 2% and each additional year with the same employer increased pay by another 1%.