Welfare reform was one of the big successes of the Giuliani years. Unfortunately, the city’s welfare rolls are no longer steadily falling. What’s more, other forms of public assistance have been steadily rising.

From 1994 through 2001, New York’s welfare caseload fell roughly 60 percent. But as the chart shows, once the five-year limit on welfare benefits kicked in at the end of 2001, 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. And by last fall, the combined TANF and SNA caseloads had begun rising (albeit slightly) on a yearly basis for the first time since the early 1990s.

It’s still too early to call the increase in the general welfare rolls a definite trend, but other forms of public assistance clearly are on the rise.

The Medicaid caseload has ballooned 48 percent in the last three years. By late 2003, nearly 2.4 million New Yorkers (more than one in four city residents) were Medicaid recipients.

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.

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).

The 2001 recession and the World Trade Center attack obviously were factors here. 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 Assembly has rejected Gov. Pataki’s eminently reasonable proposal to enact tougher sanctions on welfare mothers who refuse to seek work or cooperate with child-support requirements. Meanwhile, 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.

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; 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-9/11 “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. 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.)

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.

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, 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.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Hochul Tells It Like It Is

Presenting her budget this week in Albany, Gov. Kathy Hochul delivered more than just a financial plan. She gave the state a refreshing dose of fiscal honesty. “The truth is,” Hochul said, “we can’t spend like there’s no tomorrow, because tom Read More

Putting Hochul to the test: Will the governor use her budget powers to protect New York’s fiscal future?

“We will not be raising income taxes this year,” Gov. Hochul declared in January at the opening of New York’s 2023 legislative session. Read More

What Gov. Hochul must do to prevent a coming fiscal crash

The pandemic and its fiscal aftermath have given rise — temporarily — to a state budget trend unique in New York’s history. Read More

NYC’s finances look flush — but Eric Adams’ budget carries many real risks

A few months into its third fiscal year since the pandemic’s start, New York City’s finances have never looked so flush — and so precarious. Read More

Bear market spells big trouble for NY state and city budgets

Wall Street generates an outsized share of New York’s tax revenue, so the recent drop in stock prices should worry both Gov. Kathy Hochul and Mayor Eric Adams. Read More

Kathy Hochul will have to prove she can hold the line on state spending

Hochul’s specific priorities were lowest-common-denominator stuff: “combating” the spread of COVID-19 linked to the Delta variant, pushing billions in stalled federal rent relief out the door to tenants (and ultimately their landlords) and “beginning to change the culture in Albany.” Read More

Calling Tax Cut “Theft,” Cuomo Continues to Push For Federal Bucks With Phony Math

The results of this week’s Georgia Senate runoffs, assuring Democrats will soon control both houses of Congress, as well as the White House, had to come as a huge relief to Gov. Andrew Cuomo. Read More

Students Need Reforms, Not HEROES

Families and businesses are watching their bottom lines and stretching each dollar. But House Democrats are pushing a plan to prevent America’s schools from doing the same thing. Read More