Financial sanctions have long been used to enforce work requirements in the welfare system, but more frequent and severe sanctions have been a central feature of the welfare reforms of the 1990s. Sanctions will be an important discussion topic in 2002 when Congress debates reauthorization of the 1996 welfare reform law. Some will argue that states should be required to use “full-family” sanctions that terminate the entire cash benefit, while others will push for restrictions on completely terminating cash benefits and new requirements for states to reach out to noncompliant families before imposing complete termination. There is little hard evidence to inform this debate. Studies have found that welfare recipients who are sanctioned are a diverse group but, on average, face more barriers to employment than other recipients; they are also less likely to work after leaving welfare. Studies have also found that enforcing work requirements is important, but it is not clear whether complete termination of benefits is more effective than partial termination. We believe states should continue to have flexibility in setting sanction policies. To reduce inappropriate sanctions, Congress could expand the types of work activities for disadvantaged recipients, and require states to describe both how they will inform recipients about exemptions from work requirements and what is required to remove a sanction.

Sanctions are financial penalties for failing to comply with work or other requirements of state welfare programs. They have been a central feature of the welfare reforms of the 1990s. Although time limits may receive more attention in the media, many more families have been directly affected by sanctions, and sanctions have arguably played a greater role in reshaping welfare recipients’ day-to-day experiences. This policy brief summarizes what is known about sanctions and their effects.