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The administrators of all the welfare-to-work programs studied in NEWWS hoped that their programs' preemployment services, mandates, and messages would enable welfare recipients eventually to increase their income and move out of poverty, but their relative emphasis on and methods of achieving this goal differed. The education-focused programs emphasized this goal most explicitly -- by providing education and training activities, which were seen as a gateway to high-paying, stable employment. The Portland program emphasized this goal in another way -- by encouraging welfare recipients participating in job search to accept only jobs that paid above the minimum wage and offered opportunity for advancement. Notably, however, none of the NEWWS programs provided earnings supplements to low-wage workers, as many states now do, in the form of substantial earned income disregards or work incentive payments provided outside the welfare system. (All the program and control groups in NEWWS were eligible for the federal EIC.) As a result, the NEWWS results can draw attention to gaps that the new policies might fill.
First, although almost all the programs studied in NEWWS increased earnings, their impacts were relatively modest in size owing to the only modest increases in five-year job finding, the small improvement in employment stability, and the small increases in wages (Box 2). Second, there was little increase in the extent to which people worked while on welfare. Third, some program group members did not return to welfare even after they lost their jobs. Finally, some program group members failed to maintain their eligibility for food stamps after they left welfare, the reasons for which are unclear.
During the 1990s, especially after passage of federal welfare reform in 1996, welfare administrators adopted a variety of services and financial incentives that were specifically intended to boost welfare recipients' incomes. These included raising the level of earned income disregards, extending child care benefits and medical coverage for welfare recipients who find employment, providing financial incentives to welfare recipients who work, and offering job search assistance to people who leave welfare for employment but then lose their jobs. During this period, the federal government joined in this effort by substantially increasing the value of the EIC. Although policy researchers have only begun to investigate the effects of recent policy changes such as these, the NEWWS findings underscore the need for such innovations.
As mentioned in the description of the NEWWS programs operated in Columbus, there are two general approaches to welfare case management: traditional and integrated. Although each can be argued to have advantages and disadvantages, some policymakers and program operators have speculated that integrating the roles of income maintenance and employment and training might be advantageous under TANF, most importantly for its potential to change the "welfare culture" from one that emphasizes sending out checks to one that stresses employment and job preparation. In addition, some have argued that integrated case management leads welfare recipients to seek jobs or get into job preparation activities more quickly.
NEWWS provides a unique opportunity to capture the relative advantages and disadvantages of the two case management approaches in one site. Apart from the fact that one used traditional and the other integrated case management, the two welfare-to-work programs operated in Columbus were the same, and their enrollees were subject to the same public assistance eligibility and payment system. The results suggest the following lessons.
Integrated case management can engage more people in program activities. As shown in Table 4, which presents many of the results discussed in this subsection, welfare-to-work activity participation rates were higher in the Columbus integrated program than in the traditional one. This result seems to be attributable to the fact that the integrated staff monitored participation more closely and followed up with participants who had attendance problems more quickly than did the traditional staff. It is also possible that people with integrated case managers took the threat of sanctions for noncompliance more seriously than did people working with traditional staff because the integrated staff could enforce the sanction themselves by reducing the grant. Interestingly, the integrated approach engaged more people in the program without actually imposing more sanctions.
Engaging more people in welfare-to-work program activities is valuable for a few reasons. Most obviously, it exposes more people to the program's services and messages. It also enforces the idea that people receiving welfare should, in return, take part in employment-focused services. Finally, under PRWORA, states must meet relatively high work participation requirements or face reductions in their TANF block grant; integrated case management may help them do so.
In Columbus, integrated staff closed cases more quickly than traditional staff and, through closer and more frequent contact with recipients, were better able to discover people who should not have been receiving welfare. Both programs reduced the number of months that recipients spent on welfare (relative to the control group level), but the impact of the integrated program was 1.4 months larger than that of the traditional one; similarly, whereas the five-year welfare savings generated by the integrated program were $1,523, those generated by the traditional program were $1,105.
In the current environment of time-limited welfare benefits, programs that reduce the time spent on welfare -- thus allowing people to "bank" more months of welfare eligi-bility for future use -- are particularly valuable. Moreover, decreasing welfare payments saves the government money.
The Columbus program with integrated case management increased five-year earnings (relative to the control group level) more than that with traditional case management, by $2,055 compared with $1,410. The difference between the earnings outcomes for the two approaches was not, however, statistically significant. Integrated case management worked especially well for nongraduates (and the difference in earnings outcomes for the two approaches was statistically significant for this subgroup). This result suggests that integrated management especially benefits more disadvantaged groups of people, perhaps because of the closer attention and monitoring it affords.
Both case management models in Columbus were operated as part of well-funded, well-run welfare-to-work programs. Staff had extensive administrative support, including a sophisticated case records information system, a child care referral unit, and a clerical unit that tracked recipients' attendance in program activities. In addition, program administrators placed a high priority on the employment services aspect of the programs; services were plentiful; and staff training was adequate. Even with these resources and supports, integrated case managers in Columbus found the job demanding (and caseloads were high, as shown in Table 4); without them, they might have found the work overwhelming, which in turn might have diminished the positive effects of the integrated approach.
Underscoring this point are findings from another NEWWS site -- Oklahoma City -- that used integrated case management but did not have the same funding, administrative, and management advantages as Columbus. (The two-year net cost per person of the Oklahoma City program was about $1,000, much lower than that of the two Columbus programs. In addition, its caseload was higher than that in Columbus's integrated program.) Oklahoma City's program did not increase five-year earnings. Considering these sites' results together, it is clear that integrated case management alone is not sufficient to produce the added benefits found in Columbus.
| Columbus | ||
|---|---|---|
| Integrated | Traditional | |
Average caseload size |
140 | 265(income maintenance) |
| 258(employment and training) | ||
Participation rate (%) |
53 | 34 |
Sanctioning rate (%) |
36 | 35 |
Earnings impact ($) |
2,055*** | 1,410* |
Welfare payment impact ($) |
-1,523*** | -1,105*** |
Welfare receipt impact (months) |
-3.9*** | -2.5*** |
Net cost per person ($) |
2,149 | 1,720 |
| Return to government budget per dollar invested ($) | 1.06 | 0.83 |
| SOURCES: Hamilton et al., 2001; Scrivener and Walter,
2001. NOTE: Except for the participation and sanctioning rates and the net cost per person, which cover two years, all the results shown cover five years. |
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Despite the fact that participation in welfare-to-work activities is generally required in exchange for welfare receipt, welfare agencies often have a difficult time engaging a large share of their caseloads in program activities. Reacting in part to low participation rates in welfare-to-work programs, FSA broke new ground in requiring states to engage a specified -- and gradually increasing -- proportion of welfare recipients in work-related activities each month or to face possible reductions in federal funding.
The 1996 welfare law continued down this path but went still further, raising the percentage of welfare recipients who had to engage in work or work activities, narrowing the set of activities that could count in participation rates, and increasing the required number of hours of participation per week. States could lower their required participation rate by reducing their TANF caseload (relative to their 1995 caseload) and, owing to the welfare reform message's taking hold and unprecedented economic expansion, targets have been relatively easy to meet. But the recent economic downturn, which is likely to increase TANF caseloads, may make meeting participation standards more difficult. Furthermore, welfare time limits have increased the pressure on welfare-to-work programs to help all welfare recipients become self-sufficient before exhausting their welfare eligibility, thus magnifying the importance and urgency of increasing program participation.
The NEWWS programs, which began operating under FSA, did not put time limits on welfare receipt, generally exempted more people from participation than is now the case, imposed less severe financial penalties for nonparticipation than are now enforced in many states, and did not have enhanced earned income disregards -- which allow more people to fulfill their participation requirement by working while on welfare -- as many states now do. Nonetheless, the programs all shared PRWORA's goals of requiring welfare recipients to do something in exchange for their welfare benefits, and the NEWWS findings provide lessons and guidance concerning participation.
Table 5 shows the three main inputs to participation rate calculations and how much the participation rates of six of the NEWWS programs would have varied as a function of these components. Note that all six programs were successful in the sense that, over the five-year follow-up period, they vigorously enforced the participation mandate, increased employment, and reduced welfare. If participation is calculated using method 1, then the participation is low because only a small percentage of all welfare cases in a month included someone who participated at least 20 hours or was employed at least 15 hours every week. If, however as in method 2 recipients who are being sanctioned and recipients who participated at all during a month (that is, for any number of hours) are counted and people who qualify for exemptions are removed from the base, then the participation rate increases significantly. Methods 1 and 2 compute participation rates over a one-month period. Method 3, in contrast, lengthens the period of measurement to include everyone who participated at all over a two-year period. As the table shows, this calculation yields the highest participation rates. Method 3 is the one used most often in research (and was discussed in the previous section), but the monthly methods (particularly method 1) correspond more closely to that outlined in the 1996 federal welfare law.
| Method | Definition of a Participant | Population Base | Measurement Period | Participation Rate Range | |
|---|---|---|---|---|---|
| Statuses Counted | Level of Involvement Required | ||||
| 1 | Participated in JOBS activities or was employed while receiving AFDC | Participated at least 20 hours per week during every week or was employed at least 15 hours per week during every week | All AFDC cases in the month | Month | 5%-10% |
| 2 | Participated in JOBS activities or was employed while receiving AFDC or sanction was imposed or requested | Participated at all or was employed at all or sanction was imposed or requested at all | All JOBS-mandatory individuals in the month | Month | 35%-44% |
| 3 | Participated in JOBS activities | Participated at all | All JOBS-mandatory individuals entering program in a year | Two years after program entry | 44%-74% |
| SOURCE: Hamilton et al., 1995. NOTE: The participation rate ranges shown were calculated using data for the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside. |
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Greatly increasing program participation requires committing considerable staff time and resources. Effort must be made to reach out to potential participants, assign them quickly to program activities, monitor their participation and progress, and reengage those who drop out. In addition, penalties must be enforced in a timely manner for those who do not comply with the participation mandate. Finally, the more participants a program has, the more resources are needed to pay for program activities and support services such as child care, transportation, and other ancillary expenses. The NEWWS findings show that programs must work with almost all the welfare recipients targeted by a mandate in order to have a sufficiently large proportion of them count as participants in any given month. In fact, staff often spend almost as much time (in some cases, even more time) trying to engage nonparticipants as working with participants.
Figure 10 shows the participation statuses in a typical month of enrollees in the six NEWWS programs represented in Table 5. Averaged across the six programs, only a small proportion of recipients required to participate actually met FSA's definition of a participant in a typical month. What were the other recipients doing? As the figure indicates, somewhat more than one-third of them had not yet attended a program orientation; about one-fifth had attended an orientation but were not active in that particular month; and one-third participated in a program activity, but not for enough hours to meet the participation threshold. Some of these reasons for not meeting the definition of participation may be preventable, particularly through greater staffing: Tighter case monitoring and shorter gaps between activities can encourage people to enter activities more quickly and minimize the amount of time that people wait for new activities to begin. Yet other reasons, such as recipients' becoming ill or having to care for an ill child, lie outside the purview of welfare-to-work programs.
Several factors may be more important than participation rates in realizing the goals of welfare reform -- for instance, whether the types of activities in which people participate are the ones that can best help them to become self-sufficient, what people are doing while in those activities, and who is participating. In other words, there is little gain to having a lot of people participating in activities if the activities themselves are ineffective or inappropriate for those who participate in them.
Figure 10.
Reasons for Nonparticipation in a Typical Month:
Some Types of Nonparticipation Are Preventable, but others are Not
SOURCE: Hamilton, 1995.
NOTE: The percentage shown are averages for the LFA and HCD programs in Atlanta,
Grand Rapids, and Riverside.
Participation mandates in welfare-to-work programs are intended to change welfare recipients' perceptions and behavior in several ways. First, they send the message that receipt of welfare is not an unconditional entitlement. Second, owing to the time investment required by program activities, they reduce the perceived value of welfare grants relative to that of employment. Third, they compel some people who would otherwise not do so to participate in activities that program operators believe will enhance their employability.
As discussed earlier, FSA established participation mandates and means by which to enforce them. Most single parents had to participate in employment preparation activities for as long as they remained on welfare. Case managers could use a variety of informal and formal responses, including financial sanctions, when people did not cooperate. In the NEWWS programs, sanctions typically reduced the family's monthly welfare grant by approximately 20 percent until the sanctioned individual complied with the mandate; there was no minimum sanction length for the first "offense," a minimum of three months for the second, and a minimum of six months for the third. As a result, some sanctioned individuals experienced a penalty for a short time, while others were under sanction much longer. In Grand Rapids, for example, almost half of those sanctioned remained in this status for at least half of the first two years of the study period.
Like FSA, PRWORA put in place mandates and enforcement mechanisms, but it also made the compliance requirements for welfare-to-work programs stricter and gave states the option to increase the severity of penalties for noncompliance. As a result, many states now impose full-family sanctions (revocation of the family's whole grant) as opposed to the partial-family sanctions (revocation of only the adult's portion of the grant) imposed under FSA.
Participation mandates and their enforcement could contribute to a program's impacts on earnings and welfare payments by, for example, getting more people to participate or getting nonparticipants to take a job to avoid participating in the program. It is very hard to determine the size of these contributions, however, because participation in program activities and the requirement to participate are usually bundled together. An innovative substudy was conducted as part of NEWWS in an effort to assess the effects of a mandate per se. Coupled with the extensive cross-program comparisons possible in the evaluation, this investigation points to several lessons and cautions.
The substudy, which was undertaken in Grand Rapids and Riverside, involved the random assignment of recipients to one of two groups before the random assignment process described in the first section of this document began. In the substudy, some welfare recipients were randomly assigned to a group that was informed that it was subject to a welfare-to-work program participation mandate; the others were assigned to a group that was not. By comparing the employment and welfare outcomes for the two groups, it is possible to isolate the effects of simply communicating to people that they are under a mandate to enter a welfare-to-work program before they learn how the program works or receive an activity assignment.
The findings from the substudy indicate that, in the site with the healthier labor market, the mandate had a large initial effect on average earnings but left rates of employment and welfare receipt unchanged. This suggests that some recipients reacted to the mandate by finding a job more quickly, finding a job with longer hours, or working more hours at a job they already had than they would have without a mandate. The earnings impact was concentrated among the more job-ready recipients, that is, among those who had been employed at some point during the year before study entry. In the site with the weaker labor market, the mandate had no effect on employment, earnings, or welfare receipt, even among the more job-ready. These results suggest that employment opportunities play a role in how welfare recipients react to a welfare-to-work mandate: The mandate alone can have its intended effects, but it is more likely to work in situations where jobs are available and people have the recent work experience needed to obtain a job.
As discussed in the first section, the nine high-enforcement NEWWS programs aimed to enroll most targeted people in the program, monitored participation in program activities moderately or very closely, and stressed the mandatory nature of the program through sanctions and means such as positive encouragement. About half of these programs had high rates of sanctioning; the other half had moderate sanctioning rates. The two low-enforcement NEWWS programs tended to give preference in enrollment to those who volunteered for the program (as opposed to vigorously trying to enroll all targeted individuals), did not closely monitor participation in program activities, and rarely imposed sanctions for nonparticipation. As shown in Table 6, the low-enforcement programs produced lower participation rates (calculated using method 3 in Table 5) and smaller impacts on participation than did the high-enforcement programs. The low-enforcement programs' particularly small participation impacts (of about 10 percentage points) are partly due to the fact that some control group members engaged in activities on their own. A program that lacks a significant "push" or "pull," like the low-enforcement programs in NEWWS, will not engage many more people than would participate in activities anyway.
Some of the high-enforcement programs in Table 6 sanctioned nonparticipants at very high rates, imposing partial-family sanctions on at least one-third of welfare recipients who enrolled in the programs. As shown in the table, however, these programs were no more successful in engaging people in activities than were programs in the high-enforcement category that had more moderate sanctioning rates. The programs with the highest sanctioning rates had neither the highest participation rates nor the largest participation impacts.
In the NEWWS programs, sanctions were more likely to be imposed on and lasted longer for the more disadvantaged welfare recipients than the less disadvantaged ones. One possible reason for this is that more disadvantaged people remain on welfare longer, lengthening the period of time during which they could fail to comply with the participation mandate and be sanctioned.
| Level of Enforcement | Sanctioning Rate (%) | Participation Rate(a) (%) | Participation Impact (%) |
|---|---|---|---|
| High enforcement (9 programs) | 28 | 57 | 26 |
| High sanctioning (5 programs) | 38 | 57 | 23 |
| Moderate sanctioning (4 programs) | 16 | 58 | 30 |
| Low enforcement (2 programs) | 3 | 45 | 10 |
| SOURCE: Hamilton and Scrivener, 1999. NOTE: (a) The participation rates shown are averages of individual program rates calculated using method 3 in Table 5. |
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