Families on TANF in Illinois: Employment Assets and Liabilities. Employment and Earnings


Since the enactment of PRWORA, large numbers of TANF recipients nationwide have entered employment. While some recipients who find work leave TANF, others remain, despite relatively substantial earnings, because of the generous earned-income disregards in some states. In this section, we examine the extent to which current TANF recipients in Illinois are employed. To assess whether those jobs could be springboards toward greater self-sufficiency, we also examine the characteristics of these jobs and recipients' earnings.


  • Two in every five TANF recipients are employed, and most of these recipients work 30 or more hours per week.

Thirty-nine percent of TANF recipients in Illinois are employed, more than three-quarters of whom work at least 30 hours per week (Figure II.5). The state's generous 67 percent earned-income disregard enables recipients to combine work and welfare up to an earnings level of about $1,100 per month for a family of three.(4) And as noted, the state turns off the 60-month benefits clock for recipients who work 30 or more hours per week. Given these two strong incentives, it is not surprising that Illinois TANF recipients combine work and welfare at a higher rate than is reported nationally. Results from the 1999 National Survey of American Families indicate that 32 percent of TANF recipients nationwide were working at the time of the survey (Zedlewski and Alderson 2001).

Figure II.5. Current Employment Status.

The 61 percent of TANF recipients who are not currently employed have a broad range of reasons for not working.(5) The principal reason is being pregnant or caring for a newborn (Table II.1). Other reasons for not working include physical or mental health problems, child care problems, and lack of education or work experience. Thirteen percent of unemployed recipients cited a poor local labor market--one that provides either no jobs or only low-wage jobs--as their principal reason for not working. Another 10 percent of recipients are not working because they are in education or training programs.

Table II.1
Principal Reason for Not Working by Case Heads Who Are Not Currently Working
Pregnant or Caring for a Newborn 17
Physical, Mental Health, or Substance Abuse Problem 14
No Jobs Available or Low Wages 13
Child Care Problem 11
Lack Education or Work Experience 11
In School or Training 10
Other Reasons 24
Source: 2001-02 survey of Illinois TANF cases.

Job Characteristics

The characteristics of the jobs held by recipients can influence job duration and advancement. Several studies have found that starting out in jobs in certain occupations that offer higher wages or fringe benefits are more likely to lead to sustained employment and job advancement (Strawn and Martinson 2000). In this section, we describe the characteristics of the primary current or most recent job held by TANF recipients who have ever worked for pay. We refer to these jobs interchangeably as the "most recent job" or "the current or most recent job" and consider whether their characteristics are such that they are conducive to progressing toward self-sufficiency. (6)

  • Illinois TANF recipients tend to hold jobs in the same occupations and industries as recent TANF recipients in other states.

The jobs most recently held by TANF recipients in Illinois are concentrated in the same industries and occupations as those held by individuals who have recently left welfare in selected states, as documented by studies of TANF "leavers" (Richer, Savner, and Greenberg 2001). Nearly one in every three (29 percent) TANF recipients in Illinois works in the retail industry (Table II.2). In addition, just over half (53 percent) work in service industries. Among TANF recipients, the initial occupation (not just the industry) is an important determinant of long-term success in the labor market. Strawn and Martinson (2000) report that individuals who make the transition from welfare to work by starting out in sales positions tend to have shorter periods of employment and lower earnings growth. In Illinois, 17 percent of TANF recipients hold sales positions. Most recipients (54 percent) work in service occupations.

Table II.2
Industry and Occupation of Most Recent Job
Industry % Occupation %
Sales 29 Retail 17
Health Services 14 Administrative Support and Clerical 16
Social, Educational, and Other Nonprofit or Public Services 14 Food Services 14
Business Services and Utilities 13 Health Services 12
Personal Services 9 Grounds Maint. and Cleaning Services 10
Manufacturing 7 Personal Services 10
Hotels and Other Lodging Services 3 Other Services 8
Transit and Transportation 2 Production and Manufacturing 4
Recreation and Amusement 2 Technical 2
Other 7 Other 8
Source: 2001-02 survey of Illinois TANF case
  • Most recipients have a day job. The typical job is full time and lasts approximately five months.

More than half of recipients (56 percent) work a day shift in their most recent job (Figure II.6). A day shift is typically the most desirable and sustainable shift for single parents because it dovetails with more child care options and greater child care availability (Ross and Paulsell 1998). In addition, public transportation tends to be more widely available during daytime hours. Notwithstanding the advantages of a day shift, a substantial share of TANF recipients--about one-third--works either a night shift or an irregular shift, which can present challenges for arranging child care and transportation.

The current or most recent job for 59 percent of TANF recipients in Illinois is a full-time job, that is, at least 35 hours per week (Table II.3). Although this is a substantial portion of full-time workers on TANF, it is lower than the percentage of full-time workers among those who have left the welfare rolls. Loprest (2001) reports that, nationally, 68 percent of employed former recipients worked 35 hours or more per week at the time of the 1999 National Survey of American Families.

Figure II.6 Shift on Most Recent Job

Table II.3
Hours and Duration of Most Recent Job
Hours Worked Per Week
Less than 20 8%
20 to 34 33%
35 or more 59%
Average 34.2 hrs.
Median 35.0 hrs.
Months on Job
Average 11.9 mos.
Median 5.0 mos.
Temporary or Seasonal Job 28%
Source: 2001-02 survey of Illinois TANF cases.

The jobs most recently held by TANF recipients in Illinois tend not to last long; the median duration is just five months. One explanation for this short duration is that more than one in four of the most recent jobs is temporary or seasonal.

  • Recipients have jobs that pay low wages and offer limited benefits.

Despite some positive attributes, the quality of the most recent jobs held by TANF recipients is low in two important respects: the hourly rate of pay and fringe benefits. One in every five TANF recipients is paid less than the minimum wage of $5.15 per hour (Table II.4). A large proportion of these very low-wage workers provide child care or other personal services (e.g., housecleaning) in their own home or in the homes of their clients, and are often paid "under the table" on what appears to be a piecework basis. (7) These low wages may not lead to greater self-sufficiency and a movement off of welfare. For example, the median hourly rate of pay received by TANF recipients in Illinois on their most recent job is $6.50, which is about 10 percent lower than the median hourly wage among individuals who have left TANF across the nation, reported by Loprest (2001) at $7.15 based on the 1999 National Survey of American Families (or nearly 15 percent lower when Loprest's figure is adjusted to $7.60 per hour in 2001 dollars).

Table II.4
Compensation on Most Recent Job
Hourly Rate of Pay
Less than $5.15 20%
$5.15 to 6.00 25%
$6.01 to 8.00 34%
More than $8.00 22%
Average $7.12
Median $6.50
Fringe Benefits Available
Paid holidays 41%
Paid vacation 40%
Health insurance 34%
Paid sick leave 31%
Retirement plan 22%
Source: 2001-02 survey of Illinois TANF cases.

Extensive menus of fringe benefits are not available to most Illinois TANF recipients in their current or most recent job. Paid holidays and vacation time, the most common fringe benefits, are available to only two in every five TANF recipients at their most recent job (Table II.4). Health insurance and paid sick leave are available to only one-third of employed recipients, and a retirement plan is offered by less than one-quarter of the jobs most recently held by TANF recipients. Moreover, TANF recipients may not have participated in or received the fringe benefits, despite their availability, for such reasons as high co-payments or lack of longevity on the job to earn or qualify for them.

  • Only 6 percent of the jobs most recently held by TANF recipients have the characteristics most conducive to achieving greater self-sufficiency.

For TANF recipients to move from welfare to work, they must obtain jobs with characteristics that will facilitate their transition to self-sufficiency. We have selected the following four characteristics that define jobs with the potential to lead to greater self-sufficiency: a rate of pay higher than $8.00 per hour, a day shift, work that is not temporary or seasonal, and the availability of both paid leave (vacation and/or holidays) and health insurance. Only 6 percent of the jobs most recently held by TANF recipients in Illinois have all four of these desirable characteristics (results not shown). We emphasize that this estimate reflects the characteristics of the jobs held by individuals who were on TANF at a specific point in time--November 2001. It is probable that individuals who obtain jobs with these desirable characteristics move off the caseload fairly rapidly, so an analysis of the job characteristics of TANF recipients over time would likely yield a higher percentage of recipients who obtain such jobs.

Employment in jobs with the preceding desirable characteristics tends to be stable. Rangarajan, Schochet, and Chu (1998) report that TANF recipients with jobs that pay more than $8.00 per hour are employed for longer than are those with lower-paying jobs. Consistent with this earlier study, we found that TANF recipients in Illinois working in a job with the four desirable characteristics remain in that job for two months longer, on average, than recipients in other types of jobs. Given that the average duration of the most recent job is just under a year, the difference is relatively large (17 percent) in addition to being statistically significant.

  • TANF recipients perceive some opportunity to advance on their jobs.

About two-thirds (65 percent) of currently or previously employed TANF recipients believe that they have or had an opportunity, however small, for job promotion in their current or most recent job (Figure II.7). Almost all (92 percent) of the 6 percent of recipients whose most recent job has the characteristics conducive to greater self-sufficiency believe that they have the opportunity to advance.

Figure II.7 Opportunity for Advancement on Most Recent Job


  • While employment is an important feature of the lives of many TANF recipients, their earnings are not high enough to allow them to become self-sufficient.

Two out of every five TANF case heads were employed in the most recent month. However, 28 percent of those with earnings earned $400 or less in that month (Table II.5), which is far less than they are permitted to earn under Illinois' generous earned-income disregard while remaining eligible for TANF. The median monthly earnings of employed case heads is $600. This survey-based finding is broadly supported by quarterly data from the Illinois Unemployment Insurance (UI) system. For 2000 and 2001, these data indicate that the median earnings of employed TANF recipients ranged from $1,392 to $1,658 per quarter, or $464 to $553 per month (results not shown). These median values of monthly earnings, whether based on the survey data or the UI data, are substantially lower than would be predicted on the basis of the median amount of work (35 hours per week, Table II.3) and the median rate of pay ($6.50 per hour, Table II.4) in the current or most recent job held by TANF recipients. This gap between actual and predicted earnings is consistent with the failure of TANF recipients to sustain employment at the median levels of work and pay for extended periods.

Table II.5
Distribution of Monthly Earnings by Employed Case Heads
Less than $400 28%
$400 to $799 42%
$800 to $1,199 23%
$1,200 or more 7%
Average $616
Median $600
Source: 2001-02 survey of Illinois TANF cases.
  • The earnings of TANF recipients have been stagnant over time.

The two-year quarterly earnings histories of the heads of TANF cases in November 2001 show little progress toward self-sufficiency. Among all case heads, regardless of their employment status, the average earnings per quarter ranged from a low value of $632 in the third quarter of 2001 to a high of $851 in the fourth quarter of 2000 (Figure II.8). The pattern of quarterly averages does not show any consistent growth in earnings over time but mirrors instead the slight variations in quarterly employment rates. When we examine the earnings histories only of those case heads who worked in at least half of the eight quarters, we find the same pattern (results not shown); earnings fluctuate with employment rates without any discernable growth over time.

Figure II.8 Quarterly Earnings and Employment of All TANF Case Heads over the past Two Years

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