Nandita Verma and Richard Hendra
Manpower Demonstration Research Corporation
January 2003
Welfare caseloads have always been dynamic, with families entering and leaving assistance programs each month. However, the unprecedented declines in welfare caseloads since the passage of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) have led many to raise questions about what the rapid drop in caseloads means for states and families. National and local interest in this phenomenon has resulted in a number of studies of welfare leavers.
The study of Los Angeles County welfare leavers was undertaken by the Los Angeles County Department of Public Social Services as part of a grant from the Office of the Assistant Secretary for Planning and Evaluation of the U.S. Department of Health and Human Services (HHS). The Manpower Demonstration Research Corporation conducted the research and analysis and prepared this final report. The Los Angeles study was designed to inform local administrators and policy analysts about the circumstances of families leaving welfare before and after the onset of CalWORKs, Californias welfare reform program. Specifically, the study was designed to address the following key questions:
- Who are the welfare leavers, and what are their background characteristics? How do pre-CalWORKs leavers compare with post-CalWORKs leavers?
- What are the earnings and employment experiences of pre- and post- CalWORKs welfare leavers?
- To what extent do pre- and post-CalWORKs leavers return to welfare? What public and other supports do leavers rely on after they stop receiving cash assistance?
- What is the post-exit material well-being of the CalWORKs leavers? What are their income sources, and what types of hardship do they experience?
To address these questions, the research focused on the post-welfare experiences of two groups of welfare leavers: a group of leavers who exited welfare in quarter 3 of 1996 (or pre-CalWORKs leavers) and a group of leavers who exited welfare in quarter 3 of 1998 (or post-CalWORKs leavers). All AFDC/CalWORKs single-parent cases that closed in quarter 3 of 1996 and 1998 and did not reopen within two consecutive months of closing were included in this study.
Outcomes were examined for approximately 27,146 adult welfare leavers. Administrative data were used to track welfare leavers for a total of nine quarters, including four quarters pre- exit, the quarter of exit, and four quarters post-exit. Welfare records were used to obtain a small number of background characteristics and monthly AFDC/CalWORKs, Food Stamp, and Medi-Cal receipt.Wage files were obtained to examine pre- and post-exit employment rates and earnings.
To supplement the administrative records analysis, a random sample of 340 quarter 3 1998 CalWORKs leavers were selected for in-depth interviews. Sixty-two percent of the sample completed the survey. A mixed-mode survey, relying on telephone and in-person interviews, was conducted approximately 12 to 22 months after sample members exited welfare in 1998. The survey was used to gather data on topics that cannot be examined from administrative records alone.
Findings in Brief
A number of important findings emerge from the study of Los Angeles Countys welfare leavers. This section highlights the major findings as they relate to the key questions addressed in this study.
- Individuals who left welfare in 1998 were somewhat more advantaged with respect to pre-exit employment and earnings.
Few demographic differences were observed across the pre- and post-CalWORKs leavers. Employment history data, however, suggest that the post-CalWORKs leavers were better prepared to leave welfare for work in that they had more employment experience while on welfare: the share of welfare leavers with no reported employment in the year prior to leaving welfare fell by 10 percentage points between 1996 and 1998. Also, the percent with steady employment for all four quarters prior to leaving cash assistance went up by approximately 7 percentage points in this time period. It is possible that the change in the pre-exit employment rates could be a result of the greater emphasis on work as part of Jobs-First GAIN and also of the increased work opportunities produced by the recovering economic growth during the same time period. Further the earned income disregard, which was also more generous for the later cohort of leavers, could have encouraged welfare recipients to combine work with welfare.
- Women leaving welfare in 1998 were somewhat more successful in finding and keeping work.
The employment findings offer reasons for optimism and concern. Although 52 percent of the pre-CalWORKs leavers and 59 percent of the post-CalWORKs leavers worked at least one follow-up quarter in a UI-reported job, quarterly employment rates remained under 50 percent for both groups. Further, little employment growth was observed in the four quarters of follow-up for both groups of leavers. Forty percent of the pre-CalWORKs leavers and 48 percent of the post-CalWORKs leavers were employed in the first quarter after exit. Four quarters later, 41 percent of the pre-CalWORKs leavers and 47 percent of the post-CalWORKs leavers were employed. While post-exit employment rates remained more or less stable for both groups, the overall quarterly employment rates were higher by 6 to 7 percentage points for the 1998 leavers.
- Both groups of leavers generally had low earnings and little earnings growth in their first year off cash assistance.
Consistent with the somewhat higher employment rates, median quarterly earnings were higher for the post-CalWORKs leavers and this trend remained consistent over the four quarters of follow-up. Median earnings for the 1998 leavers in the first full quarter of follow-up was $3,286, $271 higher than earnings for the 1996 leavers; by the fourth quarter of follow-up, the median quarterly earnings of the 1998 leavers was about $230 higher than the earnings for the 1996 leavers. Based on the data, the majority of those working four quarters after exit were not earning enough to move their families above the poverty threshold if they were relying exclusively on their own earnings either before or after welfare reform.
Former recipients who were working at the time of the follow-up survey interview were likely to be working full time (35 hours a week) and reported mean hourly wages of $8.4 an hour. Close to 18 percent of those who worked reported earning below the minimum wage. About 17 percent reported earning above $11 an hour. Fifty-four percent of those with a job reported that their employer offered health insurance benefits.
- Women with less than stable work history were more likely to report the presence of barriers to work.
Indicators of basic education or training, prior work experience, problems with child care, physical or mental health problems, or child health problems were examined to assess the types and levels of barriers limiting the post-CalWORKs leavers ability to work. Forty-two percent of the sample had less than a high school education and 39 percent reported that they had not worked in the year prior to leaving welfare. Seventeen percent of the sample reported having a physical or mental condition that prevented them from working or engaging in a work-related activity. Child care problems were reported by 24 percent of the sample.
Multiple barriers to work were common as well. Seventy-three percent of the leavers who responded to the survey reported the presence of at least one barrier to work. Former recipients who worked steadily for four quarters after exit were less likely to report multiple barriers compared to those who had worked less or had not worked during the follow-up period. Those with less stable or no employment were more likely to report the presence of multiple barriers. The prevalence of barriers among all groups, regardless of work status, suggests a need to enhance delivery of transitional benefits and other support services to help former recipients move from welfare to work. Los Angeles County is paying attention to these issues in several self-sufficiency projects and in post-employment services.
- Less than one-fifth of those with children under the ages of 13 years reported that they had received help from a government agency or other source for paying for child care costs since they left welfare.
Questions about child care were asked to respondents who had a child under age 13 living with them (191 of 240 respondents). Eighteen percent of this group indicated that they had received some form of assistance from a government agency or other source to pay for child care costs since they had left welfare. Fifteen percent of this sample was receiving this assistance at the time of the survey interview. Respondents who had worked steadily in the first four quarters after exit were more likely to have received some assistance with child care payments.
- Most recipients who left welfare did not return within one year of exit. Welfare recidivism rates were lower for the post-CalWORKs leavers.
Roughly 44 percent of the pre-CalWORKs leavers and 31 percent of the post-CalWORKs leavers returned on welfare at least once after being off cash assistance for two consecutive months in the quarter of exit. Most of those who returned to welfare did so within the first quarter after exit. It should be noted that no women in these cohorts had reached their welfare time limit during the follow-up period. However, it is possible that information about impending time limits could have affected the return rates for the post-CalWORKs leavers in particular.
- Those returning to welfare were less likely to have worked steadily post-exit and were more likely to have relied on other government supports.
This study shows a few important differences in the characteristics of those who returned to welfare during the follow-up period compared with those who did not. Among the pre- and post-CalWORKs leavers, steady employment (or working in all four quarters of follow-up) and higher median earnings were clearly associated with staying off welfare. Those who returned were less likely to have been steadily employed and had much lower earnings during the follow-up period.
- Overall, between 1996 and 1998 there was a marked increase in the rates of post-exit participation in Medi-Cal. Smaller increases were observed in Food Stamp participation.
Consistent with findings from a number of welfare leavers studies, the proportion of Los Angeles countys leavers retaining Food Stamp and Medi-Cal (Californias Medicaid program) benefits increased between 1996 and 1998, with a far more dramatic increase in Medi-Cal participation. Sixty-five percent of the pre-CalWORKs leavers received Medi-Cal coverage in the follow-up period, compared to 92 percent of the post-CalWorks leavers. An additional important finding is that the proportion of women who stayed off welfare but received Medi-Cal rose by approximately 51 percentage points between 1996 and 1998. Food Stamp participation increased slightly during this period.
- Fifty-four percent of the families leaving cash assistance live in households with incomes below the poverty threshold.
Transitioning off welfare is not the same as leaving poverty. The survey data show that the average monthly household income for the 1998 welfare leavers was $1,466, or about $17,592 annually. Other household members earnings appear to be critical to the income support for leaver households. Fifty-four percent of the 1998 leavers were living in households with income below the poverty threshold. The poverty threshold for a family of three in 1999 was $13,880. Families living below the poverty threshold were more likely to have returned to welfare in the follow-up period and were more likely to be relying on public assistance than on work.
- Reports of post-exit material hardship varied by respondents work status. Those with the least steady post-exit employment experience were likely to report higher levels of hardship and were more likely to report receiving assistance from government or other agencies.
Overall, 45 percent of the sample reported that they had experienced food insecurity after leaving welfare. The food insecurity level for the national population is about 10 percent. Those who did not work or had stayed off welfare during the follow-up period reported higher food insecurity. Leavers also reported housing-related hardship: nearly 36 percent of the sample paid over 50 percent of their income for housing expense. Approximately 16 percent of the respondents indicated that their utilities had been shut off because they were unable to pay bills, and close to a third of the sample indicated hardship accessing either medical or dental care. The level of hardship documented among the post-CalWORKs leavers, even among those with steady employment, suggests that leaving welfare does not necessarily translate into improved economic and material well-being.
Reflections
This report presents an initial look at the characteristics and the experiences of people leaving the welfare rolls before the onset of time limits. Overall, based on the outcomes examined in this study, the welfare leavers in Los Angeles County share some similarities and differences in their post-exit experiences with leavers in other parts of the nation. The Los Angeles study finds that a significant proportion of families leaving welfare are making the transition from welfare to work, as reflected by the high levels of post-exit employment. However, the fact that over one-third of the leavers return to welfare within 12 months of leaving and that between 28 and 34 percent of those employed are able to maintain stable employment suggests that labor market transitions are tenuous for a segment of this population. Further, reports of relatively low earnings, high levels of material hardship, and lower than expected take-up rates for Food Stamps suggest that the circumstances of welfare leavers warrants attention. Reports of the implementation of CalWORKs appear to suggest that the county has begun to put into place programs to ease former recipients transition to work.
The findings presented in this report are subject to a few caveats:
- The Los Angeles leavers study, by design, focuses on single-parent, cash assistance cases that stopped receiving cash assistance for at least two months after exiting welfare. The use of a two months off welfare definition provides a conservative estimate of welfare exits. Findings from this study are not directly comparable with studies that include cases that close for shorter periods.
- As a monitoring study of welfare leavers, the findings presented in this report are best suited to provide program managers and policy administrators with a description of how former recipients are faring after going off welfare. The findings are useful to monitor the degree to which former recipients are employed, whether they are progressing toward economic self-sufficiency, and whether they rely on government assistance to support their transition from welfare to work. The design of the study does not permit causal inferences about the effects of welfare reform on the observed outcomes.
- It is also important to keep in mind that the findings do not necessarily reflect the consequences of reaching the time limit. The study sample is largely made up of people going off welfare because of higher earnings, noncompliance, or not wanting to receive welfare any longer, and no sample members reached a time limits during the tracking period for this study. However, it is possible that knowledge of the impending deadline influenced women in ways that affected their employment and other behavior.
- Finally, it should be noted that the second cohort of leavers included in this study went off welfare in the third quarter of 1998, when the CalWORKs programs was in a very early phase of implementation. Many services were not available or were only partially available; therefore, the experiences of the post-CalWORKs leavers might not be the same as for the more recent leavers.