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The myth of the modern welfare queen

Nicole Oman works in the property management office of the YWCA Family Village in Issaquah, Wash., where she also lives.
Peter DiCampo | NBC News
Nicole Oman works in the property management office of the YWCA Family Village in Issaquah, Wash., where she also lives.

Here's one thing both critics and supporters of the modern welfare system agree on: The direct assistance program as we knew it in the 1980s and 1990s is dead and gone.

"It's a very different program than it was in the past. The comment about welfare queens is much less justified now," said Ron Haskins, a key advisor of the Republicans' welfare reform effort who now works at the Brookings Institution.

Two decades after President Bill Clinton promised to "end welfare as we know it"—and nearly four decades since President Ronald Reagan repeatedly derided the "welfare queen" while on the 1976 presidential campaign trail—far fewer families are receiving cash and voucher assistance, and a larger share of less-educated single moms are working.

"People think everyone who is poor gets welfare, and it's just not true," said Heather Hahn, a senior research associate at the Urban Institute.

Still, experts are deeply divided on how successful the tax and welfare reform efforts of the 1990s have been in improving the lives of less educated single mothers, especially after the Great Recession and weak recovery.

An average of about 1.72 million families a month received direct assistance through Temporary Assistance for Needy Families last year, according to the latest data from the federal government's Office of Family Assistance. That's about half the 3.94 million families who received TANF in 1997, according to an Urban Institute report funded by the Department of Health and Human Services

In addition, about 62 percent of never-married moms ages 20 to 49 with a high school degree or less were working in 2011, according to an analysis of Current Population Survey data prepared by the Center on Budget and Policy Priorities, a liberal-leaning think tank. That's up from about 51 percent in 1992 but down from 76 percent in 2000, before two recessions hit low-skill workers hard.

Welfare-to-work

Welfare has not been the same since the mid-1990s, when the old program, called Aid to Families with Dependent Children, was replaced by TANF. The new program's requirements include that recipients do 20 to 30 hours a week of work-related activities, such as job hunting or community service.

Most states allow adults to collect TANF for a maximum of five years over the course of their lifetime.

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"The expectation is that you need to be looking for work," said LaDonna Pavetti, vice president for family income support policy at the Center on Budget and Policy Priorities. "And if you don't, you will either have your benefits reduced or lose them entirely."

Many more low-educated single mothers did start working soon after the program was introduced, but experts say welfare-to-work cannot take all the credit for that. The late-1990s welfare reform effort also coincided with the expansion of the earned income tax credit—which provides financial assistance to low-wage workers—and a strong labor market.

"There really were three factors: One was welfare reform, one was expansion of the EITC, and one was (the) economy," Pavetti said. "Welfare reform was not the biggest role in that."'

Working, but struggling

These days, Kathryn Edin, a professor of public policy at Harvard University, said the good news is that many single mothers who used to be longer-term welfare recipients are now workers who need assistance only once in a while.

But the bad news for those with little education and low skills is that, in the past decade or so, it has become increasingly difficult to find a stable, full-time job that pays well. That means some moms may now be working very hard and still find that their families are at or near poverty.

A person working a full-time, minimum wage job would take home $15,080 a year. That's below than the Census Bureau's 2012 poverty threshold for a family of one adult and two children under 18.

About 41 percent of female-headed households with children under age 18 were living in poverty in 2011, according to the bureau. That's up from 33 percent in 2000.

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Many also fret about a group of women who weren't able to make it into employment and may now be in deep poverty.

"What ended up happening … is a lot of families fell through the cracks," Edin said. Her recent research has documented a sharp increase in extreme poverty among the families with children that have been most affected by welfare reform.

Most experts say that even in a low-wage job, a single mother is better off financially than on welfare because welfare payments are so low. In July 2011, the maximum monthly TANF payment for a family of three ranged from $170 to $923 a month, depending on the state, according to HHS.

But many concede that one hope for welfare reform—that women who entered low-wage work would gradually get better-paying jobs—has not materialized.

"The idea that these moms are going to go into the labor force, they're going to get skills, they're going to move up, they're going to make more money … that did not happen very much," said Haskins, who also advised President George W. Bush on welfare in 2002.

From homeless to employed

These days, the small group of adults who do receive TANF are often at rock bottom.

Nicole Oman is an example. The mother of three children received $454 a month from TANF after she divorced her husband of 14 years and got into another relationship she described as unhealthy.

That was in 2011, and Oman and her children were staying in a homeless shelter where she was required to do about 30 hours of chores, training and therapy for victims of abuse.

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After completing the shelter's program, Oman used a community job search program offered through TANF to land a position with a residential YWCA facility in Issaquah, Wash., outside Seattle.

She now typically earns about $1,150 a month handling some of the tax compliance requirements at the YWCA Family Village at Issaquah. She also receives several hundred dollars a month in food stamp benefits, now known as SNAP.

Oman, 38, also was able to move into a subsidized two-bedroom apartment in the YWCA community, saving her a long bus ride from another temporary housing facility.

After spending years in homeless shelters, Oman revels in having a job and her own apartment.

"The thing that this process makes you is grateful for the craziest little things," she said.

For Oman, it's having her own kitchen, which means she can cook meals for her family for the first time in years.

For her 10-year-old daughter, it was learning that the bus route near their new apartment would drop them right in front of a major grocery store, instead of having to walk a long way to a less desirable store.

The family's grocery trips recently got even easier. A few weeks ago, Oman bought a 2001 Ford Taurus. It's the first time she has been able to afford a car in nearly three years.

She said the job has helped her get back on her feet by giving her more than just a paycheck.

"The gals that I work with, they've helped me so much … in rebuilding myself," she said.

—By CNBC's Allison Linn. Follow her on Twitter @allisondlinn and Google or send her an email.

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