How Effective Are Different Welfare-to-Work Approaches? Five-Year Adult and Child Impacts for Eleven Programs. Expected Effects

12/01/2001

How much a welfare-to-work program reduces welfare use will be influenced by a number of factors, including how much the program increased employment and earnings, how strictly it enforced participation mandates by using sanctions, and the generosity of the state's welfare benefits.

In all of the NEWWS sites, as family earnings increased, welfare payments decreased. Therefore, it is reasonable to expect programs that led to the largest increases in earnings over five years  particularly Portland  to also have produced the largest decreases in welfare receipt and expenditures.

Sanctions (described in Chapter 1) also have a direct effect on welfare use. As a result, tough, enforcement-oriented programs like Grand Rapids HCD could have reduced welfare payments much more than they increased employment or earnings. Because the programs studied in NEWWS did not use "full-family sanctions," which remove all of a family's welfare grant,(1) the direct effect of sanctions would be to reduce payment amounts rather than time on welfare. Nevertheless, a family whose benefits were reduced through sanctions might have decided to leave welfare altogether, so that sanctions might have indirectly resulted in fewer people receiving welfare. Requiring people to participate in welfare-to-work services might also encourage them to leave welfare even if it does not increase their employment and earnings. For example, some people might already be working but not reporting their earnings to the welfare system. Going to school or attending a job club might interfere with their ability to perform their job or might be too great a burden on top of working, and they might choose to keep their job and stop receiving benefits.

Differences in maximum welfare grant levels by site and in welfare earnings disregards (described in Chapter 1) could also influence the effects that programs have on welfare use. Other things being equal, savings in welfare expenditures will be larger in high-grant states simply because there are more dollars to save. On the other hand, reductions in months on welfare will be larger in low-grant states because people lose their eligibility for cash assistance at a lower level of earnings. Likewise, reductions in both welfare payment amounts and welfare receipt will be smaller in states with relatively more generous earnings disregards (that is, those that allow working welfare recipients to keep more of their welfare payments), like California and Georgia.

Site-by-site differences in background characteristics of sample members may also be related to program effects on welfare use. Welfare savings may be greater in sites where most sample members had long stays on welfare before random assignment or faced other severe barriers to employment, because control group members in these sites were likely to remain on assistance for a long time. If long-term welfare recipients have severe barriers that keep them from working and that are not ameliorated by the programs, however, then sites with a more disadvantaged caseload might have smaller effects on welfare use. (Chapter 7 examines this question by investigating whether the programs increased the earnings of long-term welfare recipients and reduced their welfare benefit levels.)

In short, we should expect relatively high reductions in welfare receipt and payment amounts in Portland, which increased earnings the most and had relatively generous benefits. We might also expect high reductions in Riverside LFA, which had the second highest impact on earnings and had the most generous benefits, although California's generous earnings disregard might have diminished the program's effect on welfare use. We should expect higher reductions in welfare use in Grand Rapids and Columbus than would be indicated by their impacts on employment and earnings because these sites had some of the toughest sanction policies, but smaller reductions in Detroit than would be indicated by their impacts on employment and earnings because Detroit did not strictly enforce participation mandates for much of the follow-up period. Finally, we should expect relatively small reductions in welfare benefit amounts in Atlanta  even though its two programs increased earnings  because it had such low grant levels and had a more generous earnings disregard policy than any site except Riverside.

The effects of the programs on Food Stamp receipt and benefit amounts are harder to predict. Regarding cash assistance, as earnings increase, Food Stamp benefits decrease. However, additional earnings generally reduce Food Stamps less than welfare: Each additional dollar of earnings reduces Food Stamp amounts by less than a dollar. In addition, Food Stamp grant calculations count a dollar of earnings less than a dollar of welfare, so a person who replaces welfare dollars with earnings may experience a net increase in Food Stamps.(2) It is also possible that recipients gave up Food Stamps after they left welfare for employment or other reasons, even if they still qualified for them, either because they wanted to leave public assistance entirely or because they did not know they were still eligible for noncash assistance.