A Cross-State Examination of Families Leaving Welfare: Findings from the ASPE-Funded Leavers Studies. Earnings

08/01/2000

Mean quarterly earnings in the quarter immediately following exit from TANF ranged from about $2,200 to over $3,400, according to administrative data from the Unemployment Insurance system for leavers in nine study areas (see Table 3A). Median quarterly earnings, that is the midpoint in the earnings distribution of employed leavers, were slightly lower, ranging from approximately $2,000 to about $3,250. In every location, earnings steadily rose over the course of the year following exit. Earnings were highest (over $3,000 per quarter) in New York and the two California counties of San Mateo and Los Angeles.

These averages were calculated over those leavers who found employment (i.e., leavers with positive earnings in a quarter). Grantees generally reported earnings in current or nominal dollars, except for San Mateo County, which presented earnings in November 1998 dollars.

The UI system collects data on aggregate quarterly earnings, without providing underlying information about actual wages, hours worked, or months worked in the quarter. Much of this additional detail was collected in surveys of former recipients, as shown in Table 3B. Hourly wages averaged about $7.50 to $7.70 in Arizona and Washington, with median hourly wages somewhat lower. Former recipients with jobs worked an average of 35 to 39 hours per week across the four studies, and a median of 40 hours per week.

Survey respondents who were employed reported monthly earnings that averaged about $1,000-$1,100, ranging from $958 in Washington to $1,101 in Missouri (see Table 3B). Illinois reported a slightly higher estimate of $281 per week. If leavers worked three months continuously, these earnings levels would translate into $3,000-$3,600 per quarter, somewhat higher than the $2,500-$3,000 quarterly earnings observed in administrative data in these four studies. Some of this difference is probably explained by job loss and turnover; one would expect quarterly earnings to be less than three times monthly earnings for individuals who do not work continuously over a three-month period. In addition, the self-reported monthly earnings estimates include earnings from jobs that are not covered by the UI system and so are not reported in the administrative data. Taxes are a third factor complicating the comparison of survey and administrative data on earnings. Whereas quarterly earnings from t he UI system represent gross earnings, only two of the surveys asked about gross earnings, before taxes; the other two surveys (in Arizona and Illinois) asked about take-home pay, net of taxes.

The mean monthly and quarterly earnings observed in these studies suggest that annual earnings of employed welfare leavers were quite low; averaging no more than $10,000-$13,000, despite the fact that many former recipients had jobs involving full-time work. With these levels of earnings, many former recipients are in need of continued supportive services, such as food stamps, Medicaid and child care. The extent to which families leaving welfare actually receive supportive services was one of the questions explored by all the ASPE-funded leavers studies. In addition, the studies examined the extent to which job loss and low wages caused families to return to cash assistance, as shown in the section below.

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