Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services. Alan Weil is the project director. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute's Web site. This paper is one in a series of discussion papers analyzing information from these and other sources.
The project has received funding from the Annie E. Casey Foundation, the W.K. Kellogg Foundation, the Robert Wood Johnson Foundation, the Henry J. Kaiser Family Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, the David and Lucile Packard Foundation, the McKnight Foundation, the Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, the Fund for New Jersey, the Lynde and Harry Bradley Foundation, the Joyce Foundation, and the Rockerfeller Foundation.
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Contents
Introduction
Creating a Leaver Sample
Who Are Welfare Leavers?
Employment among Leavers
Type and Quality of Jobs
Characteristics of Nonworkers
Government Support in Transitioning off Welfare
Economic Struggles
Discussion and Conclusions
References
About the Author
Introduction
One of the stated purposes of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, popularly known as welfare reform, was to "end the dependence of needy parents on government benefits by promoting job preparedness, work, and marriage." To this end, this federal legislation, along with many other changes in state policies before and after passage, has increased incentives and requirements for families receiving benefits to move into work and eventually off welfare.
How do we know if the goal of ending dependence is being met? How do we evaluate if families have made a successful transition off welfare? Some would argue that the act of leaving cash assistance provides evidence that dependence has ended. Many point to the dramatic decline in cash assistance caseloads since 1996 as an indication of the success of welfare reform policy in this respect. But while the declining caseload means fewer persons are receiving cash assistance, it tells us nothing about the circumstances of the families that leave and whether they are making a successful transition off welfare.
In order to get a national picture of how families who left welfare at the early stages of welfare reform are faring, this paper takes a close look at the economic situation of families who have left cash assistance. Given the emphasis on work as the road to a successful transition off welfare, I focus largely on work among these families. But I also examine other sources of support, particularly government benefits that have potential for facilitating the transition off welfare. I include indicators of the economic struggles former recipients are encountering and a discussion of the situation of those who are not working.
Why study leavers? There has always been turnover in the cash assistance programs, but little study of how families fared after leaving welfare. Recent interest in leavers comes for several reasons. Changes in welfare policies have done more to explicitly "encourage" leavers. Many more recipients have left or will be leaving the roles than previously because they do not meet (or do not want to meet) program requirements or because they hit a time limit on benefits. Also, as caseloads rapidly decline, there is concern that some individuals will "fall through the cracks" of policies that encourage or require work.
In response to these concerns, a large number of studies have been conducted examining recipients leaving the Temporary Assistance for Needy Families (TANF) program.1 Most of these studies focus on specific state or substate areas. This study differs from other leaver studies in two ways. First, it gives a national picture of how former recipients are faring. Geographic area-specific studies are important, as they have the ability to connect state policies with outcomes. However, it is difficult to get an overall picture from these studies since they are from such a variety of places and do not exist for all areas. This national study is a way to put information together and provide context for the subnational studies.
Second, this study begins to address a question that few of the other leaver studies have examined. How do we interpret the current economic status of leaver families? Having a good description of the economic status of former recipient families is not enough to fully understand how they are doing or whether transitions are "successful." Of course, these conditions are subjective and any measure is open to debate. However, we do need a context for interpreting the economic situation of leavers, a marker to which we can compare former recipients' experiences.
In addition, it is important for policymakers to understand the degree to which welfare leavers differ from other low-income families. Connecting eligibility for program benefits such as Medicaid and childcare subsidies to former welfare status may be a questionable strategy if other low-income families are in similar situations. As welfare programs begin to consider postplacement and job retention supports for former recipients, it may be helpful to frame the question more broadly of how best to target funds to support low-wage workers with children.
In this paper, I focus on how former welfare recipients' situations compare with other low-income families' economic experiences. The formation of an appropriate comparison group depends, at least in part, on one's expectations of how former welfare recipients "should be" doing. If ending welfare dependence means recipients are integrated into the labor market, one measure of this is how similar former recipients' economic situations are to a broader group of families. Since I do not expect leavers to immediately look like the median worker, I choose to compare them with other low-income or "working poor" families. Also, since all former recipients have children and this inevitably impacts the employment and general economic situation of the family, I also limit my comparison to families with children. The main comparison group used in this paper is women with children under 18 who have low family incomes and have not received welfare in the past two years. I use two definitions of "low-income" to indicate how a specific income cutoff changes results: family income less than 150 percent of poverty in 1996 and family. income less than 200 percent of poverty in 1996. These definitions describe fairly large comparison groups. Twenty-eight percent of all women with children under 18 had family income below 150 percent of poverty in 1996. Thirty-eight percent of all women with children under 18 had income below 200 percent of poverty.
The paper uses data from the National Survey of America's Families (NSAF) conducted at the Urban Institute. I focus on the group of recipients who stopped receiving benefits at some point between 1995 and 1997, sometimes referred to as "welfare leavers." This group does not represent purely a pre or postwelfare reform group, both because the period spans the passage of federal legislation and because some states were already implementing reforms on their own during the period before federal legislation. It does represent an early picture of who welfare leavers are and how they fared in 1997 when federal welfare reform was beginning to be implemented. Future cohorts of leavers will likely differ from this initial group. For example, if recipients who can most easily find work leave welfare more quickly, future cohorts could possibly have higher numbers of recipients with obstacles to work, such as low job skills and experience. The findings from this study can be used for comparison with future cohorts, including the 1999 second wave of the NSAF data, to understand how leavers differ over time and how future groups of families fare after leaving welfare.
The paper is organized into the following sections. In the first section, I describe the characteristics of leavers and how they differ from other low-income families. I then turn to examination of the main questions in the paper. To what extent do leaver families rely on work and how "good" are the jobs they hold? Why are some families not working and how are they surviving? What is the role of nonwelfare government benefits in facilitating the transition off welfare? What are some of the continuing economic struggles of families who leave welfare? Finally, I provide a discussion of these findings and some implications.
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Notes
1. For reviews of some of these studies, see Brauner and Loprest (1999), Tweedie (1999), or Parrot (1998).
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