One of the big successes of the Giuliani years in New York City was welfare reform. When Rudy Giuliani took office as mayor in 1994, more than 1.1 million New Yorkers burdened the welfare rolls. Even before the federal Welfare Reform Act took effect in late 1996, the mayor began to transform New York’s welfare program, putting in place a strong new emphasis on work and personal responsibility. The combined results of federal and city efforts were spectacular. From 1994 through 2001, New York’s welfare caseload fell roughly 60 percent, an achievement that closely paralleled the city’s rollback in crime during the same period. In both cases, Gotham sprinted ahead of national trends.

Unfortunately, the city’s welfare rolls have stopped falling. What’s more, other forms of public assistance have been steadily rising.

Welfare Stops Declining

The trouble began once the five-year limit on welfare benefits kicked in at the end of 2001—a year that also marked Giuliani’s exit from the mayor’s office. As Chart 1 shows, tens of thousands of New York welfare recipients shifted virtually overnight from the federal Temporary Assistance to Needy Families (TANF) program to Safety Net Assistance (SNA), a program with no time limit, financed solely by state and city taxpayers. The city’s SNA caseload is now larger than its number of TANF recipients. By the fall of 2003, the total number of welfare recipients in the city—the combined TANF and SNA caseloads—had begun rising (albeit slightly) on a yearly basis for the first time since the early 1990s.

Gotham's Growing Medicare Burden

While it’s still too early to call the increase in the general welfare rolls a definite trend, other forms of public assistance clearly are on the rise. The Medicaid caseload, for example, has ballooned 48 percent in the last three years, so that, by late 2003, nearly 2.4 million New Yorkers (more than one out of every four city residents) were Medicaid recipients (see Chart 2). The number of federal food-stamp recipients in the city has also grown by 120,000 people over the last two years, reaching its highest level since the end of 1999 (see Chart 3). Finally, the city’s average homeless-shelter population surged to a record level of more than 38,000 people in 2003—an incredible 81 percent jump from where it stood in the late 1990s (see Chart 4).

What’s to blame for these disturbing numbers? The 2001 recession and the World Trade Center attack obviously were factors. But the trends also have a lot to do with deliberate policy choices in city hall and Albany.

Consider welfare reform. Efforts to get more people off public assistance have received zero help lately from Albany, where the State Assembly has rejected Governor Pataki’s eminently reasonable proposal to enact tougher sanctions on welfare mothers who refuse to seek work or cooperate with child-support requirements. Nor has the city under Mayor Bloomberg been any tougher. As Heather Mac Donald reported in the Autumn 2003 issue (“Wimping Out on Welfare”), the Bloomberg administration has allowed the work-exemption rate for welfare recipients to rise steadily, and it is fighting federal proposals to toughen work-participation requirements.

Food-Stamp Comeback

Medicaid’s growth is largely the outcome of three policy decisions: Giuliani’s HealthStat initiative, specifically designed to enroll the uninsured into Medicaid and other government programs; Governor Pataki’s Family Health Plus program, which extended a form of Medicaid to families with incomes up to 150 percent of the poverty level; and the post–September 11 “disaster relief Medicaid” outreach effort, which amounted to an express lane for new enrollees.

The upsurge in food-stamp recipients also results from a broader policy shift. Mayor Giuliani treated food stamps as a dependency snare to be discouraged, even though, as a federal program, it didn’t directly have an impact on the city budget. The Bloomberg administration, though, supported by both the Pataki and Bush administrations, views food stamps as a necessary and appropriate subsidy for low-wage workers and the non-working disabled. However, Bloomberg has defied the poverty advocates by refusing to seek a waiver of the modest federal work requirement for food stamps.

Homeless-Shelter Population

Then there’s the burgeoning homeless-shelter population. The ranks of the homeless swelled only slightly during the last recession and had remained stable for ten years before 2001—a tribute in part to the success of the Giuliani administration’s tough-love approach to homelessness, which kept the homeless off the streets but also got them into treatment. To its credit, the Bloomberg administration has sought to continue the Giuliani approach. The city fought and won an important lawsuit giving it the right to hold single homeless-shelter residents to behavioral standards, on pain of eviction. And it has also reached a consent decree with homeless advocates that places some limits on a homeless family’s right to turn down apartments indefinitely.

The big bump up in homelessness over the last couple of years is due primarily to an increase in the number of families seeking temporary shelter, at an average cost to taxpayers of $2,900 per family per month. Many of the shelter-seekers, it turns out, are new arrivals in the city, taking advantage of its overly generous temporary-shelter provisions. Over the first ten months of 2002 alone, at least one in six of the new homeless families arriving in emergency shelters had been living outside the city—even outside the country—the month before. New York is thus becoming an apartment-rental agent for immigrants and other newcomers to the city.

Workers vs. Adult Welfare Recipients

Despite these troubling developments, it’s crucial to emphasize that the overall problem of dependency in New York remains dramatically better than it was a decade ago, or even five years ago. For example, as shown in Chart 5, the net drop of nearly 138,000 adult welfare recipients since late 1998 has coincided with a net rise of nearly 300,000 people in the city’s labor force (those either employed or seeking a job) during the same period, according to preliminary U.S. Department of Labor data. With the national economy beginning to sizzle, the second half of Mayor Bloomberg’s current term will be a critical time for reversing New York’s troubling new public-assistance trends.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next