Child Care Subsidies and Leaving Welfare

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Executive Summary

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 and the welfare-to-work program established by it—Temporary Assistance for Needy Families (TANF)—moved many individuals from the welfare rolls into jobs. While many factors contribute to individuals' success in the labor market, child care can be a particularly critical component of a worker's move from welfare to sustained employment. All adult welfare recipients have children—and many have young children—and unless child care is available it is impossible for most to keep their jobs. However, the nature of employment among low-wage workers can make it difficult to obtain appropriate child care arrangements—low wages often limit the amount parents can pay for child care; job loss and turnover are frequent, making stability difficult; and work hours are often during nonstandard times when child care options are limited.

Federal and state programs have played an important role in making child care more affordable during the transition from welfare to work by providing subsidies—usually in the form of vouchers—to help low-income families pay for all or most of the cost of child care. Prior to 1996, families receiving cash assistance who were enrolled in work or training programs, and families leaving welfare for work, were entitled to child care assistance. PRWORA eliminated the entitlement to subsidies for these families, established a single program (known as the Child Care and Development Fund, or CCDF), and gave states the flexibility to determine their own priorities for child care subsidies, including for those families leaving welfare. However, most states continue to see families leaving welfare as a priority group to receive child care assistance.

Despite the priority given to welfare leavers, research has shown that child care subsidies are used at lower levels than might be expected by those leaving welfare for work. While strategies to increase the use of other federal work supports—such as food stamps and Medicaid—have received increasing attention from policymakers and program administrators, boosting the use of child care subsidies has received significantly less attention. Given the importance of child care assistance in supporting employment, this paper explores why welfare leavers are not using subsidies and identifies potential strategies to ensure that those who need subsidies are able to access them. To address this issue, it examines what is known about child care needs and subsidy use among those leaving welfare for work, as well as state and local policies that shape subsidy use among this population.

Our study reviews state policies regarding child care subsidies for welfare leavers based on telephone discussions with policymakers, experts, and policy researchers at the national level. We also examined how child care subsidies were implemented in selected localities by conducting telephone discussions with administrators and line staff from welfare and child care agencies in 11 local sites. Finally, we conducted focus groups with parents in four of these sites to learn about their experiences with the welfare and child care systems. (This paper is part of a larger three-part study of interconnections between the child care subsidy and TANF welfare-to-work systems.)

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