How Effective Are Different Welfare-to-Work Approaches? Five-Year Adult and Child Impacts for Eleven Programs. Comparing the Effects of the LFA and HCD Programs

12/01/2001

As discussed in earlier chapters, NEWWS was set up to allow a rigorous comparison of LFA and HCD programs in Atlanta, Grand Rapids, and Riverside (for those in need of basic education). According to Chapter 4, differences were concentrated among high school nongraduates, for whom LFA programs generally resulted in higher employment and earnings than HCD programs (see Table 4.3).

Table 5.3, which shows the effects of the two self-sufficiency approaches on welfare receipt and benefit amounts, tells a similar story. In some sites, there was virtually no difference between the two approaches. Where there were differences, however, the LFA programs resulted in lower welfare use than the HCD programs over five years.

 

Table 5.3
LFA-HCD Differences in Total Welfare Payments and Receipt in Years 1 to 5
Site and Program Sample Size LFA HCD Difference (Impact) p-Value
Total welfare payments received in years 1 to 5 ($)
Full impact sample
Atlanta 2,936 9,064 9,236 -172 0.36
Grand Rapids 3,099 10,414 11,199 -785 *** 0.00
Riverside 4,980 15,584 n/a n/a n/a
No high school diploma or GED
Atlanta 1,190 10,209 10,740 -531 * 0.07
Grand Rapids 1,268 12,009 12,914 -905 ** 0.03
Riverside 3,182 17,171 17,176 -6 0.99
High school diploma or GED
Atlanta 1,742 8,278 8,252 27 0.91
Grand Rapids 1,827 9,297 10,024 -727 ** 0.03
Riverside 1,798 13,504 n/a n/a n/a
Total months of welfare receipt in years 1 to 5
Full impact sample
Atlanta 2,936 34.4 35.3 -0.9 0.17
Grand Rapids 3,099 26.9 28.2 -1.4 ** 0.02
Riverside 4,980 27.8 n/a n/a n/a
No high school diploma or GED
Atlanta 1,190 38.0 40.5 -2.5 ** 0.02
Grand Rapids 1,268 30.5 32.1 -1.5 0.11
Riverside 3,182 30.1 30.0 0.1 0.92
High school diploma or GED
Atlanta 1,742 31.9 31.9 -0.0 0.97
Grand Rapids 1,827 24.3 25.6 -1.3 * 0.10
Riverside 1,798 24.7 n/a n/a n/a
SOURCE:  MDRC calculations from state and county administrative records.
NOTES: See Appendix A.1.

For the full sample, Grand Rapids LFAs received welfare for an average of just under 27 months compared with just over 28 months for Grand Rapids HCDs. Although this difference was fairly small, it was statistically significant and produced a statistically significant welfare savings of nearly $800 per person. Atlanta LFAs were also less likely to receive welfare than Atlanta HCDs and received slightly less in welfare payments, but these differences were not statistically significant.

At the end of year 5 (not shown in the table) the LFA programs in Atlanta and Grand Rapids continued to have lower welfare use than the HCD programs, although the differences were not statistically significant. Thus, HCD programs are unlikely to produce lower cumulative welfare use than the LFA programs with a longer follow-up period.

In Atlanta and Grand Rapids, results for high school nongraduates were more consistent than results for the full sample. In these two sites, nongraduates in the LFA program received significantly less in welfare payments than nongraduates in the HCD program. However, for nongraduates in Riverside, LFAs and HCDs received welfare benefits for the same number of quarters and averaged the same amount of welfare payments over five years. Still, when averaged across the three sites, LFAs received nearly $500 less in welfare payments over five years than HCDs (($531+$905+$6)/3; the difference was statistically significant). Likewise, a simple average across the three sites indicates that the high school nongraduates in the LFA programs received welfare for 1.3 months less on average than nongraduates in the HCD programs, a difference that was again statistically significant.

For high school graduates, the LFA program produced greater welfare savings in Grand Rapids, but not in Atlanta. In Grand Rapids, LFAs received welfare for an average of 24.3 months and HCDs for 25.6 months. Although the effect was fairly small, the difference was statistically significant, and it led to statistically significant welfare savings of more than $700 per person. In contrast, high school graduates in the two Atlanta programs were about equally likely to receive welfare and received similar benefit amounts on average.

Although the job-search-first approach sometimes resulted in less welfare use than the education-first approach, it is important to keep in mind that (for the full sample) the greatest proportional savings among the NEWWS programs was in Portland, which also generated the largest gains in employment and earnings. The fact that Portland used job search, education, and training with a focus on employment suggests that the combination of approaches is better than either one alone.

Endnotes

1.  Pavetti and Bloom, 2001.

2.  The Food Stamp benefit level equals the maximum benefit level minus 30 percent of a household's countable income. Countable income includes welfare payments plus 80 percent of earnings, so a sample member who replaces welfare with earnings could lower her countable income and thus increase her Food Stamp payments (Ohls and Beebout, 1993).

3.  Appendix Table D.1 shows results on the same outcomes for the first three years of follow-up. Appendix Table D.2 shows results on welfare receipt for the last quarter of each follow-up year.

4.  Welfare spending was also the highest for control group members in Riverside. The notion that savings might be greater in high-grant states does not mean that a state should raise its welfare grant to generate savings.

5.  As shown in Table 5.1, Riverside LFA and HCD led to similarly large reductions in welfare expenditures for sample members determined to need basic education.

6.  An alternative possibility is that Atlanta's low grants meant that control group members left welfare quickly, which was not the case. The average control group member in Atlanta received welfare for 37 months during the five-year follow-up period, longer than in all other sites except Detroit.

7.  The Atlanta programs are discussed here because they appear side by side on the figure and used different self-sufficiency approaches. Section V of this chapter explicitly compares the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside and indicates where the programs resulted in statistically significant outcome differences in outcomes.

8.  The small program-control group difference (of 2 percentage points) for Atlanta LCD had a p-value of .014, just above the 10 percent level for statistical significance.

9.  As discussed above, impacts on welfareon welfare receipt may be larger or smaller than expected, given a program's impact on employment and earnings. For instance, Riverside LFA employment impacts decreased sharply between years 1 and 2, but reductions in welfare receipt changed very little. Similarly, Portland impacts on total earnings increased dramatically between years 1 and 2, but reductions in welfare receipt increased to a lesser extent.

10.  Michalopoulus and Schwartz, 2001. Among control group members in the NEWWS sites, the proportion of high school graduates and GED recipients who ever worked for pay during years 1 to 5 exceeded the proportion of nongraduates by 3 to 11 percentage points (results not shown).

11.  Furthermore, in the last quarter of year 5, twice as many control group members in Portland (34.0 percent versus 17.1 percent) received Food Stamps as were receiving welfare. In addition, more than one-half of control group members in Atlanta were still receiving Food Stamps in the last quarter of year 5 compared with a little more than one-third who received a welfare check. See Appendix Tables D.2 and D.4.