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

12/01/2001

Table 5.1 shows the average number of months that program and control group members received cash assistance and the payment amounts they received on average. Both of these outcomes were measured over the five-year follow-up period from administrative records collected from state and county welfare systems. The table also shows the impact of the programs (as always, measured as the difference in average outcome levels between the program and control groups) and their levels of statistical significance.(3) Because welfare administrative records were available in Oklahoma City for only three years, results for Oklahoma City are not shown in most tables and figures in this chapter.

 

Table 5.1
Impacts on Welfare Receipt and Payments in Years 1 to 5
Site and Program Sample Size Program Group Control Group Difference (Impact) PercentageChange (%)
Average number of months of welfare receipt in years 1 to 5
Atlanta Labor Force Attachment 2,938 34.4 37.2 -2.9 *** -7.7
Atlanta Human Capital Development 2,992 35.3 37.2 -1.9 *** -5.2
Grand Rapids Labor Force Attachment 3,012 26.9 31.1 -4.2 *** -13.6
Grand Rapids Human Capital Development 2,997 28.2 31.1 -2.9 *** -9.2
Riverside Labor Force Attachment 6,726 27.8 31.0 -3.2 *** -10.5
Lacked high school diploma or basic skills 3,125 30.1 33.3 -3.2 *** -9.6
Riverside Human Capital Development 3,135 30.0 33.3 -3.3 *** -9.8
Columbus Integrated 4,672 23.3 27.2 -3.9 *** -14.4
Columbus Traditional 4,729 24.7 27.2 -2.5 *** -9.2
Detroit 4,459 36.1 37.7 -1.6 *** -4.3
Oklahoma City n/a n/a n/a n/a n/a
Portland 4,028 19.8 25.3 -5.6 *** -21.9
Average total welfare payments received in years 1 to 5 ($)
Atlanta Labor Force Attachment 2,938 9,064 9,946 -881 *** -8.9
Atlanta Human Capital Development 2,992 9,236 9,946 -710 *** -7.1
Grand Rapids Labor Force Attachment 3,012 10,414 12,966 -2,552 *** -19.7
Grand Rapids Human Capital Development 2,997 11,199 12,966 -1,767 *** -13.6
Riverside Labor Force Attachment 6,726 15,584 18,294 -2,710 *** -14.8
Lacked high school diploma or basic skills 3,125 17,171 20,126 -2,955 *** -14.7
Riverside Human Capital Development 3,135 17,176 20,126 -2,949 *** -14.7
Columbus Integrated 4,672 7,481 9,005 -1,523 *** -16.9
Columbus Traditional 4,729 7,899 9,005 -1,105 *** -12.3
Detroit 4,459 15,686 16,247 -561 ** -3.5
Oklahoma City n/a n/a n/a n/a n/a
Portland 4,028 8,940 11,686 -2,746 *** -23.5
SOURCE:  MDRC calculations from state and county administrative records.
NOTES: See Appendix A.1.

Table 5.1 shows that all 10 programs in which welfare payments were available had a significant effect on the number of months that people received welfare. The effect ranged from 1.6 months (over a five-year, or 60-month, period) in Detroit to 5.6 months in Portland. All 10 programs also reduced welfare payments over the five-year period (relative to control group levels), with welfare savings ranging from $561 in Detroit to $2,949 in Riverside HCD (although the percentage change was largest in Portland: 23 percent).

Results by site are generally consistent with the expectations outlined in the prior section. First, the program with the largest effects on employment and earnings  Portland  also had the largest reduction in welfare use. These reductions are especially impressive considering the Portland control group's relatively low welfare use. On average, control group members in Portland received welfare for about 25 months over the 60-month period. In comparison, program group members in Portland received welfare for a little less than 20 months, for a reduction of 5.6 months, or nearly half a year during the five-year follow-up period. Portland also had the second-largest reduction in dollars spent on welfare  an average of $2,746 per program group member.

Second, the site with the most generous grant amounts  Riverside  also generated relatively large welfare savings.(4) Over the five-year period, HCD program group members received nearly $3,000 less than control group members on average while LFA program group members received about $2,700 less than control group members.(5) The fact that the two programs reduced benefits by similar amounts is somewhat surprising considering that the effect of the LFA program on earnings was twice as large as the effect of the HCD program. This finding suggests that the HCD program discouraged a number of people from receiving benefits without helping them get a job. If that occurred, the HCD program will have left individuals with less total income on average than they would have had without the program, an issue addressed in Chapter 6.

Third, reductions in welfare use were fairly large in programs that had tough sanction policies (Columbus Integrated and both programs in Grand Rapids) and fairly small in the site with the least strict sanction policy (Detroit). This comparison is especially revealing because Detroit and Grand Rapids, which are both in Michigan, had similar grant levels and earnings disregards and because the effect on earnings over five years was about as large in Detroit as in Grand Rapids LFA and nearly twice as large as in Grand Rapids HCD. Detroit had the smallest reductions in payment amounts ($561 over five years) and months on welfare (1.6 months on average). In comparison, Grand Rapids LFA reduced time on welfare by 4.2 months and average welfare payments by more than $2,500, and Grand Rapids HCD reduced time by 2.9 months and payments by $1,800.

Finally, reductions in welfare use were relatively small for both programs in Atlanta. Time on welfare was reduced by 2.9 months in the LFA program and 1.9 months in the HCD program, while cash payments over five years were reduced by about $900 in the LFA program and $700 in the HCD program. Decreases in welfare were smaller than in Grand Rapids or Riverside, even though the effects on earnings in Atlanta rivaled those in the other two sites. The relatively low level of welfare savings in Atlanta may reflect the low level of benefits available; people who lost welfare when they went to work could not lose very much.(6) In addition, the site's use of fill-the-gap budgeting allowed working welfare recipients to keep relatively more of their grant than they could in the other sites.

B. Welfare Receipt by Year

As discussed above, there are two direct causes of welfare savings: increased earnings and use of sanctions. Chapter 4 showed that program services had immediate effects in the employment-focused programs, but delayed effects in the education-focused programs. If earnings were primarily responsible for reductions in welfare use, then reductions in welfare use should also have been larger initially in employment-focused programs than in education-focused programs (particularly in the same sites). Although sanctions did not stop people from receiving welfare in any of the sites, sanctions may have given people a reason to voluntarily stop receiving benefits. If reductions in welfare receipt were due to sanctions (indirectly) or to people voluntarily leaving welfare rather than complying with programs requirements, welfare savings should have been fairly close initially in the two types of programs.

Figure 5.1 and Appendix Table D.2 show the proportion of program and control group members who received welfare in the last quarter of each of the five years of follow-up. By showing results by year, the figure and table also can be used to examine results for the first three years, before any control group members were allowed to receive program services. They also indicate how quickly people left welfare and how many remained on welfare at the end of year 5  a number that may be important in a world of time-limited welfare.

Figure 5.1
Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

Figure 5.1 Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5

SOURCE:  MDRC calculations from state and county administrative records.
NOTES:  See Appendix A.1.

According to Figure 5.1 and Appendix Table D.2, many people left welfare in each site, even in the absence of welfare-to-work services. In Atlanta, as discussed in earlier chapters, virtually everyone was receiving welfare at the time of random assignment (that is, the quarter prior to year 1). By the end of year 1, however, about 83 percent of control group members were still on welfare. The decline in welfare receipt continued throughout the follow-up period. By the last quarter of year 5, less than 40 percent of the control group in Atlanta still received welfare.

Trends in program impacts (that is, the difference in welfare receipt between the program and control groups) suggest that increased employment and earnings were primarily responsible for reductions in welfare receipt  at least during the early years of follow-up. The two Atlanta programs illustrate the basic points.(7) At the end of year 1, Atlanta LFA significantly reduced welfare receipt, but Atlanta HCD did not. This is consistent with the finding in Chapter 4 that the LFA program had a larger initial effect on employment and earnings than the HCD program. Moreover, the magnitude of the impacts on welfare receipt at the end of the first year were similar to the impacts on employment shown in Figure 4.1.

The impact of Atlanta HCD on welfare receipt increased after year 1 and was statistically significant in years 2 and 3. This trend paralleled Atlanta HCD impacts on employment and earnings. (See Chapter 4 that) Similarly, Atlanta LFA increased employment and earnings above control group levels in years 2 and 3 and continued to decrease welfare receipt during these years. These patterns suggest that reductions in welfare receipt were driven largely by increases in employment and earnings.

Impacts of the two Atlanta programs on welfare receipt declined toward the end of the follow-up period. However, reductions continued even after these programs ceased to raise employment levels above the control group. In particular, Atlanta LFA continued to significantly reduce welfare receipt at the end of year 5, even though it did not significantly increase employment during year 5. Likewise, Atlanta HCD significantly reduced welfare receipt at the end of year 4, even though it did not significantly increase employment during year 4.

The trends for the other employment-focused and education-focused programs were similar to the patterns for the Atlanta programs. First, many people left welfare in each site, even in the absence of welfare-to-work services. Control group members left the welfare rolls particularly fast in Columbus and Portland. In both sites, fewer than 20 percent of control group members were still receiving welfare at the end of year 5. In comparison, about 35 percent of control group members in Atlanta, Detroit, and Riverside remained on welfare.

The trends in impacts were also similar to the patterns for the two Atlanta programs. During the first year, the employment-focused programs led to larger decreases in welfare receipt than the education-focused programs. All four employment-focused programs significantly reduced welfare receipt, and three of these programs (Grand Rapids and Riverside LFA and Portland) produced the largest decreases (of 7 to 9 percentage points) among the 11 programs. In contrast, five of the seven education-focused programs reduced welfare receipt in year 1, and decreases ranged from 1 to 4 percentage points for most programs.(8)

Like Atlanta HCD, the other education-focused programs led to larger reductions in welfare receipt after year 1. This trend was most noticeable in Detroit, where impacts were not statistically significant in year 1 but became statistically significant in years 2 and 3 (just as Detroit's effects on employment and earnings became statistically significant in years 2 and 3).

Like Atlanta LFA, the other employment-focused programs continued to reduce welfare receipt in years 2 and 3, a trend that (for the most part) mirrored their effects on employment and earnings. For example, Riverside LFA impacts on welfare receipt declined only slightly between years 1 and 2, just as its effects on earnings declined slightly, while Portland impacts on welfare receipt increased between years 1 and 2, just as its effects on employment increased somewhat between the two years.(9)

The impacts on welfare receipt decreased over time in all of the programs, but most programs continued to significantly reduce welfare receipt at the end of year 5. This result is somewhat surprising, given that few programs increased employment and earnings above control group levels in year 5. This pattern is especially striking for Grand Rapids LFA, which decreased receipt below the control group by 3 percentage points at the end of year 5, but led to a similar reduction in percentage employed during that year. This finding implies that some program group members who exited welfare for employment earlier in the follow-up did not return to assistance after leaving employment, even though they were eligible to, a pattern that may reflect the national climate in the aftermath of the federal welfare reform legislation of 1996.