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

12/01/2001

When planning this evaluation, HHS and MDRC sought to include sites that would demonstrate operation in a diverse range of conditions, though they would not represent all welfare-to-work programs in the country. As shown in Table 1.2, sites varied along several dimensions, such as geographic location, labor market, and welfare grant level.(8) More striking, however, are the changes in the economy, and the concomitant changes in welfare policy and caseloads, that all sites experienced from 1991, when the first group of individuals was randomly assigned as part of the NEWWS Evaluation, to 1999, the end of the five-year follow-up period for the last group of individuals randomly assigned. (Random assignment took place over a roughly two-year time period in each site, falling somewhere between mid 1991 and the end of 1994, depending on the site.) Part of the richness of the evaluation results thus stems from the examination of program effects over a period of time that reflected unprecedented economic growth and a sea change in welfare policies.(9)

Table 1.2
Program Environments

Characteristic

Atlanta Grand Rapids Riverside Columbus Detroit Oklahoma City Portland
Population, 1990 648,779 500,631 1,170,413 961,437 2,111,687 832,624 895,441
Population, 1997 722,540 539,425 1,447,791 1,017,274 2,127,087 889,411 1,015,954
Population growth, 1990-1997 (%) 11.4 7.7 23.7 5.8 0.7 6.8 13.5
Employment growth, 1991-1996 (%) 14.8 15.9 11.9 7.7 5.4 9.1 15.1
1991-1999 25.1 28.9 28.2 11.8 12.8 16.5 17.8
Unemployment rate (%)
1991 5.3 7.8 9.8 3.8 10.5 6.0 a 5.4 b
1992 7.4 7.5 11.6 4.6 10.5 5.5 a 7.3 b
1993 6.4 5.3 11.9 4.5 8.3 5.5 a 6.6 b
1994 5.8 4.2 10.5 3.7 6.7 5.0 a 4.9 b
1995 5.4 3.8 9.6 2.9 6.0 4.0 a 4.1 b
1996 4.9 4.0 8.2 2.9 5.5 3.6 a 5.2 b
1997 4.6 3.2 7.5 2.7 4.7 3.5 a 5.0 b
1998 4.1 2.9 6.6 2.5 4.3 3.9 a 4.9 b
1999 3.8 3.1 5.5 2.5 4.2 2.7 a 5.2 b
AFDC/TANF caseload c
1991 18,507 7,660 23,325 23,192 87,992 12,305 11,234
1992 21,801 7,389 25,581 24,135 88,584 13,392 11,817
1993 23,113 7,508 27,775 24,739 89,083 14,259 11,961
1994 23,121 7,137 32,044 24,807 88,337 14,257 11,981
1995 22,043 7,052 24,650 23,240 88,614 13,959 11,231
1996 19,620 5,836 25,076 19,474 74,051 12,488 10,097
1997 15,754 5,362 23,519 17,363 70,052 10,239 6,721
1998 12,007 4,551 19,278 13,341 59,060 8,273 5,306
1999 8,907 3,303 15,091 11,082 43,278 7,280 5,229
Welfare grant level for a family of 3 ($)
1993 280 474 624 341 459 324 460
1998 280 459 611 362 459 292 503
Food Stamp benefit level for a family of 3 ($) d
1993 292 252 202 292 252 292 287
1998 329 314 321 329 314 329 310
Income disregard policies Standard;
fill-the-gap
Standard e Extended;
fill-the-gap
Standard Standard e Standard Standard

Maximum that a family of 3 could earn and receive AFDC, January 1993 ($)

In months 1-4 of employment 756 831 1,175 632 809 606 810
In months 5-12 of employment 544 594 823 461 579 444 580
After 12 months of employment 514 564 793 431 549 414 550

Maximum that a family of 3 could earn and receive TANF, December 1998 ($)

In months 1-4 of employment 756 774 1,447 974 774 704 616
In months 5-12 of employment 544 774 1,447 974 774 704 616
After 12 months of employment 514 774 1,447 974 774 704 616
SOURCES: U.S. House of Representatives, 2000; Gaquin and Littman, 1999; Hall and Gaquin, 1997; Hamilton and Brock, 1994; Hamilton et al., 1997; Scrivener et al., 1998; State Policy Documentation Project; U.S. Department of Labor, Bureau of Labor Statistics; Center on Social Welfare Policy and Law, 1994; Center for Law and Social Policy, 1995; site contacts.
NOTES: Data are for counties: Atlanta (Fulton County), Georgia; Grand Rapids (Kent County), Michigan; Riverside (Riverside County), California; Columbus (Franklin County), Ohio; Detroit (Wayne County), Michigan; Oklahoma City (Oklahoma, Cleveland, and Pottowatomie Counties), Oklahoma; Portland (Multnomah and Washington Counties), Oregon.
a Data are for Oklahoma County. The unemployment rates for Cleveland County are: 1991, 4.4%; 1992, 3.5%; 1993, 3.5%; 1994, 3.5%; 1995, 2.9%; 1996, 2.6%; 1997, 2.6%; 1998, 3.2%; 1999, 2.1%. The unemployment rates for Pottowatomie County are: 1991, 7.6%; 1992, 5.9%; 1993, 5.8%; 1994, 5.7%; 1995, 4.5%; 1996, 4.8%; 1997, 4.8%; 1998, 5.4%; 1999, 3.7%.
b Data are for Multnomah County. The unemployment rates for Washington County are: 1991, 4.5%; 1992, 6.1%; 1993, 5.3%; 1994, 3.7%; 1995, 3.2%; 1996, 3.9%; 1997, 3.8%; 1998, 3.9%; 1999, 4.1%.
c Annual average monthly caseloads, as reported by the state or county. In Atlanta and Portland averages are for calendar years; in all other sites averages are for state fiscal years.
d Assumes the receipt of the maximum AFDC/TANF payment.
e Although Michigan implemented nonstandard earned income disregards during the evaluation period through the To Strengthen Michigan Families initiative, all sample members in the NEWWS Evaluation were excluded from them.

To be included in the NEWWS Evaluation, sites needed large enough welfare caseloads to meet the sample size requirements of the research design. Accordingly, all seven sites include urban areas. Detroit, with a population that was slightly over 2 million in both 1990 and 1997, is the largest urban area studied in the evaluation. Riverside, with a population of over 1 million in 1990, experienced the most growth during this time period, adding almost 24 percent to its population by 1997. Population growth in the other sites during this seven-year period ranged from 6 to 14 percent.(10)

As population grew, so did labor markets. In three sites employment expanded significantly between 1991 and 1999: the employed labor force grew by 29 percent in Grand Rapids, 28 percent in Riverside, and 25 percent in Atlanta. The other four sites experienced 12 to 18 percent gains.

Rising employment, particularly in localities with rising population, does not necessarily indicate declining unemployment rates. Unemployment rates in all seven sites, however, decreased over this period. Following national trends, unemployment rates peaked in 1992 and, in general, were lowest in 1999. Early in the evaluation period unemployment rates in Detroit and Riverside topped 10 percent. Although rates in both localities steadily declined, Riverside rates remained at 8 percent in 1996, significantly higher than the national average. By 1999, unemployment rates in all evaluation sites were below 6 percent. Throughout the evaluation period the Columbus labor market was notably robust; its unemployment rate never exceeded 5 percent, even during the high point of the national recession, and dropped to less than 3 percent in 1999.

Because individuals in the program and control groups within each site were subject to the same labor market, the quality of the economy by itself should not necessarily affect impact estimates; program and control groups shared the same advantages of a tight labor market or disadvantages of a slack one. However, different economic environments can influence the type of people receiving welfare and thus required to participate in welfare-to-work programs. For example, in a good labor market individuals with more serious barriers to work are likely to be left on the welfare rolls.

The size of welfare (AFDC or TANF) caseloads varied with the size of site populations, ranging in 1991, the beginning of the evaluation, from about 7,500 in Grand Rapids to almost 90,000 in Detroit. In general, welfare caseloads grew in the early part of the evaluation period, peaked in 1993 or 1994, and declined to their 1991 levels or below by 1996, shrinking further to 1999. In almost all evaluation sites, welfare caseloads in 1999 were no more than half the size they were in 1991; decreases in Riverside and Oklahoma City were somewhat smaller, with caseloads reduced by 35 and 41 percent, respectively.

There was considerable variation in welfare grant levels among the sites. In 1993 monthly maximum cash payments for a family of three ranged from $280 in Atlanta to $624 in Riverside. Welfare grant levels in 1998 were similar to 1993 levels, with slight reductions in the maximum amount payable in three sites, a slight increase in two sites, and identical levels in two sites. Food Stamp payments, for which means standards are federally set, varied less across the sites, from $202 in Riverside to $292 in Atlanta, Columbus, and Oklahoma City in 1993, with slightly higher benefit levels in all sites in 1998.(11) To some extent, low welfare grants are offset by higher Food Stamp payments, but this does not change the overall rankings of sites on benefit levels.

All states were required to disregard (that is, not count) some earned income when calculating a family's welfare grant and, over time, more generous earnings disregards were put into place in some of the evaluation sites. At the beginning of the NEWWS Evaluation, five sites applied standard earnings disregard rules. Under these, for the first four months of employment $120 of earnings and an additional one-third of the remainder were disregarded. This $120 disregard included both a $30 flat disregard and a $90 disregard for work expenses. In months 5-12 of employment, the additional one-third disregard was eliminated, leaving the total disregard at $120. After the first year of employment only the $90 work expenses disregard was allowed. In addition, individuals were allowed to disregard child care expenses up to $175 per child aged 2 or over and $200 per child under age 2.(12) Atlanta and Riverside applied nonstandard disregard rules that permitted employed recipients to keep more of their welfare check. Throughout the evaluation period Atlanta employed "fill-the-gap" budgeting. Under fill-the-gap, working welfare recipients can earn up to the state-determined "standard of need" before losing all welfare benefits. For example, in 1993 the standard of need for a family of three was $424 (per month). A parent with two children could earn up to $756 in each of the first four months of employment and still remain on AFDC, $544 in months 5-12, and $514 per month thereafter.

Throughout the course of the NEWWS Evaluation five-year follow-up period, states implemented further earnings disregard policies. In California, for example, the state received a waiver at the end of 1993 to eliminate the time limit on the standard earnings disregard applied to the calculation of welfare benefits and also instituted a version of fill-the-gap. By 1998, relative to 1993, all but one of the evaluation sites had implemented policies that allowed welfare recipients to keep more of their earnings, affecting the likelihood that a sample member could work while remaining on welfare. Increases were greatest in Riverside where, in 1998, a family of three could earn as much as $1,447 and still receive TANF. In Columbus and Oklahoma City, welfare recipients in 1998 similarly could earn almost double what they could in 1993 and remain eligible for welfare.

Differences in welfare grants, earnings disregard standards, and the use of fill-the-gap budgeting may explain some variation in program impacts, even though these grant levels and policies applied to both program and control group members in each site. Impacts on welfare payments in low-grant states are likely to be somewhat lower than those in high-grant states, other things being equal, because there are fewer welfare dollars to reduce. In addition, in low-grant states even low-paying jobs may be more attractive than welfare, providing a greater incentive to work. At the same time, in states that have higher grant levels, or generous earnings disregards, it may be easier for individuals to combine work and welfare in a way that will increase total household income and raise the family standard of living, particularly after factoring in the Earned Income Tax Credit (EITC).(13)