6 ideas
The 1996 replacement of AFDC with TANF converted cash aid into a capped block grant that states could divert to other uses, so the share of poor families actually receiving cash fell sharply over time. Aid shifted toward the working poor via the EITC and toward in-kind benefits like SNAP, leaving families with no earnings and no cash income largely unprotected.
Adapting the World Bank's global threshold, the authors measure households whose cash income is at or below $2 per person per day in a given month. Using SIPP survey data, they estimate that about 1.5 million U.S. households with children fell below this line in 2011, roughly double the 1996 number. SNAP and other in-kind benefits are excluded because they cannot pay rent, utilities, or transportation.
Food stamps, housing assistance, and Medicaid do not substitute for cash, because many essentials of participation in modern life, such as rent, a phone, bus fare, school supplies, and a security deposit, require money. Viewing poverty through cash liquidity rather than total resource value shows why in-kind-rich families still experience destitution and instability.
Families at $2 a day earn cash by repeatedly selling blood plasma, sometimes to the point of physical depletion. They also sell their SNAP benefits at a discount, scrap metal, and collect cans. These strategies turn bodies and in-kind aid into scarce cash at a steep loss, which shows a survival economy that emerges when cash assistance disappears.
Families fall to $2 a day not because they reject work but because low-wage jobs have unpredictable hours, arbitrary firings, and no benefits, so income spells end abruptly. Without a cash floor between jobs, one lost shift or job can push a household into a month with essentially no cash.
The authors propose rebuilding the safety net around three pillars: guaranteeing work opportunity through subsidized or public jobs, providing stable and affordable housing, and supplying a cash floor for families who cannot work. The design keeps the pro-work values that drove welfare reform while closing the gap that leaves jobless families with no cash at all.