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

12/01/2001

  • Five-year gross costs for employment-focused programs were similar to those for education-focused programs in the 10 NEWWS programs examined. Although the Grand Rapids LFA and Portland programs were employment-focused, they produced participation rates in post-secondary and vocational training that were similar to or greater than those found in the education-focused programs. The average cost was $7,749 for the employment-focused programs and $7,499 for the education-focused programs.

The costs presented in this chapter consist of all costs associated with providing employment services and related support services to sample members. The gross cost per program group member consists of costs paid by the welfare department and non-welfare agencies while sample members were enrolled in NEWWS programs, as well as for employment and support services after they exited the programs and left the welfare rolls.

  • The net costs of the NEWWS programs, over and above the cost of services used by control group members, were higher for education-focused programs ($3,972) than for employment-focused ($3,037).

The net cost per program group member is the gross cost per program group member minus what would have been spent in the absence of the NEWWS program  the gross cost per control group member. As discussed in Chapter 3, a sizable number of controls participated on their own in community-provided employment-related activities, usually vocational training or post-secondary education.

  • Gross and net costs were higher for the NEWWS programs than for other programs studied by MDRC.

This is not surprising, given the high rates of participation in higher-cost education activities, such as post-secondary education and vocational training. The average cost of the NEWWS programs was comparable to other high-cost programs: the Alameda and Los Angeles Greater Avenues for Independence (GAIN) programs operated in the late 1980s and early 1990s.

  • As was the case at the two-year follow-up point, the net costs of the HCD programs continued to be higher than those of the LFA programs by about 40 to 90 percent.

This comparison is based on the three sites where head-to-head LFA-HCD tests were conducted: Atlanta, Grand Rapids, and Riverside. Because the Riverside HCD sample includes only those who did not have a high school diploma or GED when they entered the evaluation, the LFA-HCD comparison in this site is limited to this subgroup.

  • Generally, programs spent more on serving those who entered the evaluation with a high school diploma or GED than those who entered without these credentials.

In all programs, gross costs per program group member were higher for the subgroup that entered the evaluation with a high school diploma or GED. As expected, they were more likely to participate in post-secondary education or vocational training activities, whereas those lacking these credentials were more likely to participate in basic education activities, which typically cost less. The differences in net costs between the subgroups were less pronounced, but still higher for those with a high school diploma or GED.

From the perspective of the welfare recipients subject to the programs, the benefit-cost findings show that:

  • The three programs that produced the smallest welfare reductions (under $1,000 for both Atlanta programs and the Detroit program) resulted in net gains to sample members, albeit very small ones; sample members effectively broke even in these programs. All programs with larger five-year welfare reductions (ranging from $1,148 in the Columbus Traditional program to $2,868 in the Riverside LFA program) produced net five-year losses for sample members.
  • A similar pattern was found for the subgroup of sample members who entered the evaluation with a high school diploma or GED, although the Columbus programs, with similarly small welfare reductions, produced net losses. Those who entered without these education credentials generally suffered net losses. Detroit and Portland were the exceptions: Those without a high school diploma or GED experienced a moderate gain in Portland, and those in Detroit effectively broke even.

From the perspective of government budgets, the findings show that:

  • For the full samples, only three programs, all employment-focused, produced gains to government budgets (Grand Rapids LFA, Riverside LFA, and Portland). All programs that produced the smallest welfare reductions, making it difficult for government budgets to break even, resulted in losses. Grand Rapids HCD and Columbus Integrated, with midrange welfare savings, effectively broke even.
  • In terms of the return to budget per net dollar invested, on average the results from the government perspective are more positive than those found in the GAIN evaluation. The NEWWS programs averaged a return of $1.29; the GAIN programs averaged $0.76 per dollar invested. Moreover, the two programs with the highest returns, Portland ($2.83) and Grand Rapids LFA ($2.46), compare favorably with the Riverside GAIN program and the Saturation Work Initiative Model (SWIM) program, which returned $2.84 and $2.34, respectively.
  • With the exception of the two programs in Atlanta, government budgets recouped their investments in sample members who entered the evaluation without a high school diploma or GED. Among sample members who entered the evaluation with a high school diploma or GED, three of the four employment-focused programs produced gains to government budgets (Atlanta LFA broke even) and all of the education-focused programs produced losses.