Issue: The Personal Responsibility and Work

Opportunity Reconciliation Act (PRWORA) of 1996

dramatically altered the social safety net for poor

Americans. Major goals of the 1996 welfare reform legislation include the reduction of long-term welfare dependency and the increased self-sufficiency of former welfare

recipients through employment. But there is reason to

believe that welfare reform outcomes may be different for

many of the 7 million people living in poverty in rural

areas. In rural areas, employment is more concentrated in

low-wage industries; unemployment and underemployment are greater; and work support services, such as

formal paid child care and public transportation, are less

available. These potential barriers suggest that welfare

reform could be less successful in moving rural lowincome adults into the workforce and out of poverty. 

This issue brief addresses two broad questions. What is

the evidence from recent research about rural-urban

differences in the effects of welfare reform on program

participation, employment, earnings, and poverty? And

how can welfare policy better address the different needs

of rural and urban low-income families? 

Background: PRWORA is the most significant social

welfare legislation enacted since the New Deal legislation

more than 60 years ago. The 1996 Act replaced the entitlement program Aid to Families with Dependent

Children (AFDC) with the Temporary Assistance for

Needy Families (TANF) program, which is funded

through block grants to States. TANF seeks to move

people from welfare to work by imposing a 5-year lifetime limit on receiving Federal welfare benefits and

requiring recipients to participate in work activities

within 2 years of receiving benefits. States have more

flexibility in designing and implementing programs that

meet their needs, and individuals have greater responsibility to provide for themselves through job earnings and

for their children through tougher enforcement of childsupport payments from absentee parents. 

In addition, PRWORA has important implications for the

Food Stamp Program, the largest Federal food assistance

program and a mainstay of the Federal safety net.

Although the legislation decentralized the welfare system

with block grants to States, the Food Stamp Program

remained a federally administered entitlement program.

PRWORA instituted a small, across-the-board reduction

in food stamp benefits and limited some deductions from

income when calculating benefits. Able-bodied adults

without dependents face a 3-month limit on receiving

food stamps, unless they are working or in a job-training

program, and most noncitizens cannot receive food

stamps until they become citizens or work for at least 10

years. 

Since welfare reform was enacted in 1996, welfare and

food stamp caseloads have declined substantially.

Concomitantly, the employment of poor single mothers, a

group that has often been the least likely to work and the

most likely to be on welfare, has increased. While considerable research has focused on welfare reform’s effect on

the lives of low-income families, current policy debates

tend to center on the urban poor. Yet, rural areas have

demographic, economic, and geographic characteristics

that pose unique challenges for welfare reform.

In May 2000, USDA’s Economic Research Service, the

Joint Center for Poverty Research, and the Rural Policy

Research Institute, with funding from USDA’s Food

United States

Department of

Agriculture

Economic 

Research

Service

Reforming Welfare

What Does It Mean for Rural Areas?

Leslie A. Whitener, Greg J. Duncan, and Bruce A. Weber

Food Assistance and Nutrition Research Report Number 26-4 June 2002

IN FOOD ASSISTANCE
Reforming Welfare: What Does It Mean for Rural America? / FANRR-26-4

2

Assistance and Nutrition Research Program, co-sponsored a research conference exploring the rural dimensions of welfare reform and food assistance policy. The

conference brought together some of the Nation’s leading

academic researchers, welfare policy experts, and rural

scholars. Conference findings were published by W.E.

Upjohn Institute for Employment Policy in June 2002

and represent the first comprehensive analysis of the

spatial dimensions of PRWORA, examining how welfare

reform is affecting caseloads, employment, earnings, and

family well-being in rural and urban areas. This issue

brief summarizes some of the major findings from the

conference and concludes with suggestions for future

policy options to better address the differing needs of

rural and urban low-income families. 

Findings: Welfare reform seeks to reduce long-term

welfare dependence in favor of greater self-sufficiency

through employment. But reductions in caseloads do not

mean that all rural and urban families that leave the

welfare rolls are making ends meet. The tight labor

markets and low unemployment rates nationwide during

the late 1990s provided the best possible environment for

new entrants into the labor market. Many rural areas,

however, did not benefit from the Nation’s booming

economy. Over 500 nonmetro U.S. counties are classified

as persistent-poverty counties, having poverty rates of 20

percent or higher consistently over the last four decades

(fig. 1). These counties have a disproportionate number

of economically at-risk residents, and, at the same time,

often have weaker local economies that do not generate

 Note: Persistent-poverty counties are defined as nonmetro counties with 20 percent or more of their population in poverty in each of the years 1960, 

1970, 1980, and 1990.

 Source: USDA, Economic Research Service, based on information from the decennial censuses of population.

Figure 1

Nonmetro persistent-poverty counties

Persistent-poverty counties contain 32 percent of the nonmetro poor.

 Nonmetro persistent-poverty

 Other nonmetro

 Metro
Reforming Welfare: What Does It Mean for Rural America? / FANRR-26-4

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jobs as well as other nonmetro counties. Successful

welfare reform may be more difficult to achieve in these

areas because of inherent structural and human capital

disadvantages. 

Has welfare dependency declined as a result of

welfare reform? Nationwide, only half as many families received cash assistance from the TANF program in

1999 as under the AFDC program in 1994. Caseloads

declined by 47 percent between 1994 and 1999. Workoriented welfare reforms, a strong economy, and expansions of the Earned Income Tax Credit (EITC) and other

work support benefits, all contributed to the caseload

decline, with most former welfare recipients finding at

least temporary employment. On average, caseload drops

were about as large in rural areas as in urban areas, but

some States exhibit very different patterns of change in

their rural and urban TANF caseloads. Caseload declines

in Kentucky, Mississippi, and South Carolina were typically smaller in rural areas than in urban areas. These

interstate differences in welfare outcomes are likely due

to variations in State welfare program implementation,

structure of job opportunities, and work support services. 

At the same time, participation in the Food Stamp

Program dropped by 33 percent, declining from 25.5

million participants per month in 1996 to 17.2 million in

2000. As unemployment and poverty rates fell, so did the

number of people eligible to participate in food assistance

programs, and PRWORA restructured the cash welfare

system in ways that also may have reduced participation

in food assistance programs. Although the Food Stamp

Program serves a predominantly urban population, nearly

one-fourth of food stamp participants live in rural areas.

A Mathematica Policy Research, Inc., study shows that

food stamp participation rates are higher in rural areas

and that the recent declines in participation have occurred

primarily in metro areas, as both the size of the eligible

population and the participation rates in metro areas

declined. In nonmetro areas, only the size of the eligible

population decreased. 

Can rural welfare recipients find work? National

studies suggest that a strong economy, welfare reform,

and expansion of EITC have helped raise the employment

rates of single mothers, with one-half to two-thirds of

single mothers finding employment at some time after

leaving the welfare rolls. In nonmetro areas, the percentage of poor female heads of households with earnings rose sharply after PRWORA, increasing from 59

percent in 1996 to 70 percent by 1999, based on Current

Population Survey (CPS) data. A study by the Urban

Institute shows similar increases in employment for

single mothers in both metro and nonmetro areas, with

little difference in the effect of welfare reform in these

areas. Study findings suggest that single mothers with

little education in rural areas have not shared in the employment gains of urban mothers with these same characteristics. In general, however, national data do not support

the early predictions that rural mothers and their children

would be left behind under the new welfare policy.

Some State-level analyses suggest more variable effects.

The Minnesota Family Investment Program (MFIP), an

experimental welfare waiver program, used both financial

incentives to encourage work and mandatory participation in employment-focused services for long-term

welfare recipients. Manpower Demonstration Research

Corporation (MDRC) assessed the program’s effects on

employment and earnings of long-term welfare recipients

in Minnesota. During the 2 years after selection for study

in 1994-96, employment for single-parent recipients

increased in both urban and rural counties (fig. 2).

However, in contrast to the large and lasting employment

increases in urban counties, average employment

increases in rural counties were much smaller, and MFIP

effects on employment faded considerably by the second

Source: Gennetian, Redcross, and Miller, 2002. year of followup. 

Difference in average quarterly employment

Figure 2

Impact of MFIP on employment of long-term 

welfare recipients

The effect on rural employment was smaller 2 years after 

entering the MFIP.

Percentage points 

Year 1 Year 2

Urban

Rural

0

2

4

6

8

10

12

14

16
Reforming Welfare: What Does It Mean for Rural America? / FANRR-26-4

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Is the welfare-to-work transition more difficult in

rural areas? Although rural areas are becoming more

culturally, politically, and economically integrated with

urban areas, some State-level analyses suggest that rural

areas lag behind urban areas in ease of welfare-to-work

transition. A recent study of welfare families and community residents in seven Iowa communities ranked along a

rural-urban continuum of population density found that

welfare reform effects hinge on differences in the proximity of jobs and access to support services. Urban

centers offer more job opportunities and support a scale

of auxiliary social services that cannot be matched in

rural communities. Welfare recipients who live in or adjacent to urban areas have access to more and higher

paying jobs than recipients who live in remote rural

communities. Capitalizing on local job opportunities

requires access to reliable, affordable transportation, and

cost-effective mass transit systems are less likely to exist

in more sparsely settled rural areas. Support services,

including job training or health care, are less likely to

exist in smaller, more rural areas. Also, rural families

often have less access to affordable, flexible, and formal

child care than urban families; however, rural areas may

offer more extensive and stronger informal support

networks to help single mothers make the transition to

paid employment. 

Have welfare-to-work transitions improved the

economic well-being of rural recipients? National

analyses show that welfare reform has clearly moved

many poor rural and urban single mothers into the labor

force and that welfare-to-work transitions have increased

earnings for these female-headed families. Real annual

earnings for poor rural mothers increased from $3,835 in

1989 to $6,131 in 1999, based on CPS data. Income rose

even higher when adjusted for the EITC, which provides

a refundable tax credit to low-income workers. 

In some States, however, the effects of welfare reform on

earnings are smaller for rural areas than for urban areas.

The MDRC study found that Minnesota’s welfare waiver

program had no effect on the average earnings of rural

welfare recipients, although it increased the average earnings of urban recipients (fig. 3). Differences in recipients’

prior marital history and changes in family structure help

explain the program’s different effects on rural and urban

welfare recipients.

Can former welfare recipients escape poverty

through work? Although most former recipients can

find work, many cannot get or keep full-time, year-round

work. From 1996 to 1999, rural poverty rates declined

among female-headed families, rates of welfare receipt

dropped, and labor force participation increased along

with average earnings. Despite these positive outcomes,

over one-third of working rural single mothers were in

poverty in 1999, the highest rate since the late 1980s.

Between 1989 and 1999, the proportion of rural single

mothers with earnings from work increased dramatically

but has not kept pace with the large decrease in the

proportion of single mothers with welfare income since

enactment of PRWORA. A higher proportion of rural

single mothers are working but are still poor, despite

increases in the minimum wage and expansions to the

EITC. 

In summary, the overall effects of welfare reform on

caseloads, employment, and poverty have been positive in

both rural and urban areas. TANF caseloads have declined substantially and employment by single mothers in

the short run has increased in both rural and urban areas.

Although still higher than comparable metro rates, nonmetro rates of child poverty have declined substantially

since 1993, and nonmetro rates of child poverty among

Blacks have reached their lowest levels in 10 years. 

 Note: The impact on earnings in rural counties was not statistically different

from zero.

 Source: Gennetian, Redcross, and Miller, 2002.

Difference in average quarterly earnings

Figure 3

Impact of MFIP on earnings of long-term 

welfare recipients

The effect on rural recipients' earnings faded 2 years after 

entering the MFIP.

Dollars 

Urban

Rural

Year 1 Year 2

-50

0

50

100

150

200

250
Reforming Welfare: What Does It Mean for Rural America? / FANRR-26-4

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Yet, several studies of individual State welfare programs

and specific policy provisions have found smaller welfare

reform effects on caseloads, employment, earnings, and

poverty in rural areas than in urban areas. These differences in outcomes are due in part to variation in State

welfare programs. State programs differ, for example, on

the amounts and types of assets used to determine eligibility and benefits, the time period for work requirements, and the design of child care and transportation

assistance programs. At the same time, rural areas are

diverse and welfare recipients in some areas are harder to

serve than in others. National-level analyses using a

simple metro-nonmetro dichotomy can mask rural variation in welfare program operation, structure of opportunities at the local level, and program outcomes. 

Addressing Future Policy Needs: The 2002 reauthorization of PRWORA will enable adjustments in the

Federal welfare regulations and in State programs. Rural

Dimensions of Welfare Reform Conference attendees

identified a number of policy options to improve the 

self-sufficiency and economic well-being of rural and

urban families. 

As TANF caseloads have fallen sharply, most, but not all,

families that leave welfare are gaining at least a temporary foothold in the labor market. However, many families leaving welfare remain poor, and not all receive the

work-based supports they need to gain permanent

economic independence. Some policy options could

assist low-income working families, regardless of residence. State and Federal policy options that could make

work pay for both rural and urban low-wage workers

include:

• Expand coverage and encourage participation in

health insurance and child care assistance programs

for low-wage families.

• Expand the Federal EITC or initiate and/or expand

State EITC supplements to further support the work

efforts of low-income families.

• Take greater advantage of resources in the

Workforce Investment Act of 1998 to help match

workers and jobs. This legislation gives State and

local officials new authority and flexibility for using

Federal job training aid to more closely reflect the

realities of changing job markets and simplifies programs under a single, comprehensive system. 

Several studies show that State welfare programs and

policy provisions have had less of an effect on employment and earnings in rural areas than in urban areas.

Residents of sparsely settled rural areas face unique challenges to working, including long distances to jobs and

limited options for services, such as health and child care.

State efforts to facilitate access to various modes of transportation and more creative ways to provide or subsidize

services can help rural low-income workers succeed in

transitioning from welfare to work. Of special importance

are State welfare reforms that address or recognize issues

specific to rural areas:

• The less favorable opportunities (low-wage jobs) and

high unemployment of many rural labor markets.

• The transportation needs of rural residents, such as

owning reliable cars while at the same time maintaining eligibility for assistance programs.

• Service delivery problems caused by the geographic

dispersion of people in need of program services. 

• Access to affordable, flexible, and quality child care.

Family-based financial incentives for child care are

not effective if lack of funding prevents development

of formal child care facilities in rural areas. 

Not all areas have benefited equally from the strong

economy and welfare reforms. Rural areas in Appalachia,

the Mississippi Delta, and the Rio Grande Valley have

experienced persistently high levels of poverty and unemployment. Welfare recipients in these areas may be more

likely to “hit the time limits” and be economically

dependent on informal work that is not recognized by

welfare reform mandates. Greater flexibility on time

limits and work requirements as well as increased efforts

to create additional job opportunities in persistently poor

rural areas could ease the welfare-to-work transition of

rural welfare recipients. 

As Congress considers reauthorization of PRWORA in

2002, the policy debate will focus on a variety of critical

issues, including funding levels, time limits and sanctions, child care, and the adequacy of provisions for

future economic downturns. The research findings

summarized here provide a strong empirical base to

better understand the effects of welfare reform and the

importance of recognizing rural and urban diversity in

welfare policy design.
Reforming Welfare: What Does It Mean for Rural America? / FANRR-26-4

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Information Sources:

Gennetian, Lisa, Cindy Redcross, and Cynthia Miller.

“Welfare Reform in Rural Minnesota: Experimental

Findings From the Minnesota Family Investment

Program,” in Weber, Bruce A., Greg J. Duncan, and

Leslie A. Whitener (eds.), Rural Dimensions of Welfare

Reform, Kalamazoo, MI: W.E. Upjohn Institute for

Employment Research, 2002, pp. 287-312.

Gibbs, Robert. “Nonmetro Labor Markets in the Era of

Welfare Reform,” Rural America—Special Issue on

Welfare Reform, Vol. 16, No. 3, Fall 2001, pp. 11-21.

McConnell, Sheena, and James Ohls. “Food Stamp

Participation Rate Down in Urban Areas But Not in

Rural,” FoodReview, Vol. 24, No. 1, January-April

2001, pp. 8-12.

McKernan, Signe-Mary, Robert Lerman, Nancy Pindus,

and Jesse Valente. “The Impact of Welfare Policy on

the Employment of Single Mothers Living in Rural

and Urban Areas,” in Weber, Bruce A., Greg J.

Duncan, and Leslie A. Whitener (eds.), Rural

Dimensions of Welfare Reform, Kalamazoo, MI: W.E.

Upjohn Institute for Employment Research, 2002,

pp. 257-286.

Weber, Bruce A., Greg J. Duncan, and Leslie A.

Whitener. “Welfare Reform in Rural America: What

Have We Learned,” American Journal of Agricultural

Economics, Vol. 83, No. 5, 2001, pp. 1282-1292.

Weber, Bruce A., Greg J. Duncan, and Leslie A. Whitener

(eds.). Rural Dimensions of Welfare Reform,

Kalamazoo, MI: W.E. Upjohn Institute for

Employment Research, 2002.

Whitener, Leslie A., Bruce A. Weber, and Greg J.

Duncan, “Reforming Welfare: Implications for Rural

America,” Rural America—Special Issue on Welfare

Reform, Vol. 16, No. 3, Fall 2001, pp. 2-10.

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