The Family Support Act (FSA) of 1988, the provisions of which helped shape the programs studied in this report, was designed to help individuals who were most likely to become long-term welfare recipients. The FSA required states to target this group for welfare-to-work resources and to offer services that were thought to provide them the greatest benefit. An important question about the NEWWS programs, therefore, is whether the programs had positive effects for long-term recipients.
Table 7.1 shows impacts on earnings; cash assistance payments; and income from earnings, cash assistance, Food Stamps, and the federal EITC net of payroll taxes, all measured over the five years following random assignment. Impacts are shown for each program for two subgroups: long-term welfare recipients (those who had been on welfare for two years or more prior to random assignment) and short-term welfare recipients and welfare applicants (those who had been on welfare for less than two years prior to random assignment). To allow comparisons between the two Riverside programs to be made, results for the Riverside LFA program are presented both for the entire sample and for sample members considered in need of basic education (the only group assigned to the Riverside HCD program).
Long-term recipients. Table 7.1 shows that the NEWWS programs did increase earnings for long-term recipients. In all of the programs, long-term recipient program group members had higher earnings over three years than long-term recipient control group members. Impacts were highest in Portland, at nearly $6,000 over five years, with most programs having impacts between $1,000 and $3,700 per person. In all cases but three, moreover, the differences were statistically significant.
Site and Program
|SampleSize||Average Total Earnings in Years1 to 5 ($)||Average Welfare Payments in Years 1 to 5 ($)||Combined Income in Years 1 to 5 ($)|
On welfare for two years or more
|Atlanta Labor Force Attachment||2,063||2,522***||-1,137***||1,002|
|Atlanta Human Capital Development||2,100||2,059**||-856***||1,080|
|Grand Rapids Labor Force Attachment||1,791||1,221||-2,931***||-2,206**|
|Grand Rapids Human Capital Development||1,775||205||-2,121***||-2,341**|
|Riverside Labor Force Attachment||3,510||3,657***||-3,427***||-568|
|Lacked high school diploma or basic skills||1,831||3,016***||-3,302***||-901|
|Riverside Human Capital Development||1,841||2,582***||-3,018***||-1,177|
On welfare for less than two years
|Atlanta Labor Force Attachment||840||2,262||-227||1,623|
|Atlanta Human Capital Development||847||1,540||-419||850|
|Grand Rapids Labor Force Attachment||1,219||2,125||-2,002***||-280|
|Grand Rapids Human Capital Development||1,215||1,603||-1,241***||169|
|Riverside Labor Force Attachment||3,101||1,506||-1,979***||-1,111|
|Lacked high school diploma or basic skills||1,248||1,550||-2,565***||-1,624|
|Riverside Human Capital Development||1,238||-415||-2,855***||-4,066***|
|SOURCES: MDRC calculations from unemployment insurance (UI) earnings records and AFDC records.
NOTES: Impacts on earnings were significantly different across subgroups in Riverside HCD.
Impacts on AFDC were significantly different across subgroups in Atlanta LFA and Grand Rapids LFA.
N/a = not applicable.
In all 10 programs for which welfare benefits could be measured, long-term recipients in the program group received less in cash assistance than long-term recipients in the control group. In part, this is a natural consequence of going to work. In all sites, welfare recipients' cash benefits were reduced somewhat when their earnings increased. In a number of programs, however, impacts on cash assistance were greater than impacts on earnings. In addition, as discussed in Chapter 5, sanctions would have resulted in welfare savings over and above the program effects on earnings, particularly in Grand Rapids and Columbus Integrated. Alternatively, some people may have left welfare because they were unable or unwilling to comply with program requirements, and others may not have returned to welfare when they lost their jobs.
Because the programs generally resulted in higher earnings but less cash assistance for long-term recipients than would have occurred otherwise, they generally had relatively small effects on income from earnings, cash assistance, Food Stamps, and projected EITC payments net of payroll taxes. For programs outside Grand Rapids, the impacts on income were small enough that they could not reliably be attributed to the programs. Moreover, the estimated impact was negative in six programs and positive in four, providing a further indication that these programs did not systematically affect income. Nevertheless, the results in Grand Rapids may be considered troubling. The reductions in income that were seen overall (in Chapter 6) appear to be concentrated among long-term recipients.
Short-term recipients. Table 7.1 indicates that the programs also generally had effects for short-term welfare recipients, although not as consistently as for long-term recipients. In all cases, short-term recipient program group members had lower cash assistance payments than their control group counterparts (though the difference was statistically significant in only 7 of the 10 programs). In only 8 of the 11 programs, however, did they have higher earnings and the earnings impact was statistically significant for short-term recipients only in Portland. Particularly troubling are the impacts for the Riverside HCD short-term recipients whose earnings were virtually unchanged, but whose cash assistance was reduced by more than $2,800 over five years. As a result of the program, short-term recipient program group members received more than $4,000 less in income from earnings, cash assistance, and Food Stamps than short-term recipient control group members. The Riverside HCD program was not alone: The Columbus Integrated program reduced income by more than $3,300 for program group members.
Comparing short-term and long-term recipients. Should long-term recipients, short-term recipients, or both be targeted for new services? One means of addressing the question is to look at the relative effects of the programs on the two groups. Even though many of the programs were effective for both groups, long-term recipients were generally helped more than short-term recipients. In 9 of the 11 programs (the only exception was in Grand Rapids), the impact on earnings for long-term recipients was greater than the impact on earnings for short-term recipients. This suggests that the approach of the programs studied in this report was effective at increasing the earnings of long-term recipients.
If a goal of welfare reform is to increase income, however, then these programs were generally equally ineffective for long-term recipients and short-term recipients. If they are not already doing so, states should consider further supplementing the earnings of welfare recipients or recent welfare recipients through enhanced earnings disregards, state Earned Income Tax Credits, or other means, to make it more likely that the programs that encourage them to work also help them to obtain greater financial resources.(3)
Another means of asking whether one group or another should be targeted for future services is to look at their outcomes. If the earnings levels of long-term recipients remained low despite the fact that the programs were generally effective for this group it might suggest the need for more or different services to further ameliorate their barriers to work. Across the 11 programs there is generally a large gap in the earnings levels of the two groups: earnings of long-term recipients were generally about 60 to 75 percent of earnings for short-term recipients (result not shown in Table 7.1). For example, in the Atlanta LFA program, earnings for long-term recipients in the program groups were about $16,500 over five years compared with nearly $28,000 for short-term recipients.