Welfare-to-work programs are likely to have small effects if they offer services only to people whose barriers to work are so serious that they cannot take advantage of the services. People without much work experience could represent such a group; the fact that they have not worked much may indicate the presence of barriers that are keeping them from working (if not the possibility that they would rather raise their children than work). Alternatively, welfare-to-work services could have small effects if control group members are so likely to work on their own (that is, without the benefit of program services) that services are unable to improve their outcomes. People who have worked recently clearly have the ability to find work and may represent such a group.
Recent work history does predict future earnings well and may help identify groups that could benefit from welfare-to-work services and groups that have less need to benefit. Across the 11 programs people who had worked in the year prior to random assignment earned about twice as much as people who had not.(4) The most extreme differences occurred in the Riverside HCD program, where control group members who had worked in the year prior to random assignment earned about $19,000 on average in the five years after random assignment, and control group members who had not worked earned less than $7,000. (In Portland, however, those who had worked recently earned only about 50 percent more than those who had not. This could reflect Portland's very strong economy, the removal of the most disadvantaged participants from the study through up-front screening, or some other factor.)
Table 7.2 addresses whether these differences in ability to earn without employment services translated into differential impacts for the two groups. The table offers evidence but far from overwhelming evidence that those who have not worked recently do benefit more from welfare-to-work services, at least in terms of increasing their earnings.
Site and Program
|Sample Size||Average Total Earnings in Years 1 to 5 ($)||Average Welfare Payments in Years 1 to 5 ($)||Combined Income in Years 1 to 5 ($)|
Did not work in year prior to random assignment
|Atlanta Labor Force Attachment||1,869||3,763***||-928***||2,323***|
|Atlanta Human Capital Development||1,937||3,110***||-780***||2,020**|
|Grand Rapids Labor Force Attachment||1,527||1,630||-3,103***||-2,157**|
|Grand Rapids Human Capital Development||1,489||543||-2,112***||-1,896*|
|Riverside Labor Force Attachment||4,010||3,024***||-3,027***||-751|
|Lacked high school diploma or basic skills||2,074||1,986***||-3,286***||-1,978**|
|Riverside Human Capital Development||2,065||1,863***||-2,969***||-1,950**|
Worked in year prior to random assignment
|Atlanta Labor Force Attachment||1,069||370||-782**||-691|
|Atlanta Human Capital Development||1,055||238||-666**||-402|
|Grand Rapids Labor Force Attachment||1,485||1,622||-2,007***||-586|
|Grand Rapids Human Capital Development||1,508||1,240||-1,478***||-565|
|Riverside Labor Force Attachment||2,716||1,788||-2,22***||-1,073|
|Lacked high school diploma or basic skills||1,051||2,958*||-2,320***||202|
|Riverside Human Capital Development||1,070||403||-2,723***||-2,962*|
|SOURCES: MDRC calculations from unemployment insurance (UI) earnings records and AFDC records.
NOTES: Impacts on earnings were significantly different across subgroups in Atlanta LFA.
Impacts on AFDC were significantly different across subgroups in Grand Rapids LFA and Portland.
Impacts on total income were significantly different across subgroups in Atlanta LFA.
N/a = not applicable.
Those without recent work experience. The programs generally led to higher earnings among those without recent work experience, which implies that the services helped those who had not worked recently find jobs (although there are many in this group who did not work much). In all 11 programs, earnings were higher for program group members who had not worked recently than for their control group counterparts.
Once again, however, positive impacts on earnings did not generally translate into positive impacts on income. The most positive findings were in Atlanta, where the programs resulted in income gains of more than $2,000 compared with what would have occurred otherwise. This might reflect Atlanta's fill-the-gap budgeting, which allowed working welfare recipients to keep more of their welfare checks than they kept in other sites, or the relatively low welfare benefit levels in Georgia.
Those with recent work experience. In all 11 programs, earnings were higher for program group members who had worked recently than for their control group counterparts. However, the difference was statistically significant only in Detroit, and the impacts were typically not very big. Only in Detroit and Portland did the impact on earnings exceed $2,000. Despite the relatively small gains in earnings, the programs universally led to reduced welfare benefits for this group. In fact, the modest earnings gains combined with systematic reductions in welfare benefits led to the most systematic reductions in income for any subgroup: In 8 of the 10 programs for which income could be measured, program group members with recent work experi-ence ended up with lower income than their control group counterparts, though only in the Riverside HCD program was this difference large enough to be statistically significant.
Comparing those with and without recent work experience. The differences between those who had worked and those who had not are somewhat greater than the differences between long-term and short-term recipients. In the two Atlanta programs, for example, earnings impacts were virtually the same for long-term and short-term recipients, but were about $3,000 to $3,500 greater for those without recent work experience than for those with recent work experience. In Portland, the impact on earnings for the group without recent work experience was nearly twice as large as the impact for those with recent work experience. In 9 of the 11 programs, in fact, impacts on earnings were larger for those who had not worked recently than for those who had. All of this suggests that people who have not worked in a while benefit the most (in terms of increasing their earnings and self-sufficiency, but not in terms of increasing their income) from these types of welfare-to-work programs.