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

12/01/2001

Table 13.8 summarizes the main financial effects from the perspective of welfare sample members. Program-control group differences were defined as gains, indicated by positive values, and losses, indicated by negative values. These results were then summed to attain an estimate of the overall net gain or loss of each program.

Table 13.8
From the Welfare Sample Perspective:
Estimated Monetary Gains and Losses per Program Group Member
Within a Five -Year Follow-Up Period (in 1999 dollars)
Component of Analysis Atlanta LFA ($) Atlanta HCD ($) Grand Rapids LFA ($) Grand Rapids HCD ($) Riverside LFA ($) Columbus Integrated ($) Columbus Traditional ($) Detroit ($) Portland ($)

Gains

Earnings 2,575 2,089 1,678 906 2,697 2,086 1,456 1,490 5,171
Fringe benefitsa 384 311 265 143 369 330 230 235 708
Total 2,959 2,400 1,943 1,050 3,066 2,416 1,687 1,726 5,879

Losses

Tax payments -285 -296 182 24 95 -178 -67 -242 -266
Welfare payments -919 -747 -2,711 -1,860 -2,868 -1,575 -1,148 -571 -2,783
Food Stamps -434 -160 -643 -396 -928 -1,052 -673 -341 -848
Medicaid -1,159 -727 -1,026 -775 -510 -1,102 -875 -309 -2,598
Total -2,797 -1,930 -4,197 -3,007 -4,211 -3,907 -2,763 -1,464 -6,494
Net gain or loss(net present value) 162 471 -2,254 -1,957 -1,145 -1,491 -1,076 262 -615
SOURCES:  MDRC calculations from state welfare and Food Stamp payment records, unemployment insurance (UI) earnings records, and published data on fringe benefits, taxes, and administrative costs.
NOTES:  Estimates reflect discounting and adjustment for inflation.
Estimates were regression-adjusted using ordinary least squares, controlling for pre-random assignment characteristics of sample members.
Rounding may cause slight discrepancies in calculating sums and differences.
Tests of statistical significance were not performed.
a These include employer-paid health and life insurance, pension contributions, and worker's compensation. Paid leave is captured directly by the earnings estimate. Employee-paid Social Security and Medicare taxes are included as tax payments.

The overall financial effect from the welfare sample perspective was estimated by subtracting the value of transfer payment losses from the value of gains in earnings, fringe benefits, and taxes. Clearly, programs where sample members experience large losses in transfer payments are less likely to produce net gains to sample members, because they have greater losses to offset with earned income. The three programs with the smallest welfare reductions (under $1,000 for both Atlanta programs and the Detroit program) produced very small net gains for sample members. However, these gains were very small; sample members effectively broke even. All of the programs with larger welfare reductions (ranging from about $1,148 in the Columbus Traditional program to $2,868 in the Riverside LFA program) produced net losses for sample members.

As noted earlier, this analysis does not take into account losses of time for personal and family activities (leisure) and out-of-pocket expenditures associated with increases in employment. Given that the three programs with gains did no more than break even, even small values attached to these effects would have resulted in losses for all programs.

Table 13.9 shows the net present values from the perspective of welfare sample members who did not have a high school diploma or GED at the time they entered the evaluation. Only two programs (Detroit and Portland) produced gains for these welfare sample members. However, these gains were small (sample members in Detroit effectively broke even). For the subgroup of sample members with a high school diploma or GED, three programs produced gains: both programs in Atlanta and the Detroit program. Again, gains were small. In fact, welfare sample members in the Atlanta LFA and Detroit programs did little more than break even. Generally, those with a high school diploma did better (that is, bigger gains or smaller losses accrued to this subgroup). However, for the Grand Rapids LFA and Portland programs, this trend was reversed. Although welfare reductions in Portland were as large for nongraduates as for graduates, nongraduates experienced smaller losses in Food Stamps and Medicaid, resulting in smaller reductions in total benefits from transfer programs.

Table 13.9
From the Welfare Sample Perspective:
Estimated Monetary Gains and Losses per Program Group Member Within a Five-Year Follow-Up Period,
by High School Diploma or GED Status at Random Assignment (in 1999 dollars)

Component of Analysis

Atlanta LFA ($) Atlanta HCD ($) Grand Rapids LFA ($) Grand Rapids HCD ($) Riverside LFA ($) Riverside HCD ($) Columbus Integrated ($) Columbus Traditional ($) Detroit ($) Portland ($)

Without a high school diploma or GED

Gains

Earnings 1,143 0 3,241 1,143 2,378 1,398 3,066 1,352 1,533 5,067
Fringe benefitsa 170 0 512 181 326 192 484 214 242 694
Total 1,313 0 3,753 1,323 2,704 1,590 3,551 1,565 1,775 5,761

Losses

Tax payments 195 -133 17 -101 452 324 -467 -225 -196 81
Welfare payments -774 -249 -3,218 -2,240 -3,121 -3,058 -2,207 -1,393 -518 -2,628
Food Stamps 14 227 -849 -776 -967 -1,040 -1,489 -809 -444 -273
Medicaid -964 -276 -1,183 -1,019 -533 -767 -1,674 -1,014 -411 -1,858
Total -1,528 -432 -5,233 -4,135 -4,168 -4,541 -5,837 -3,441 -1,568 -4,677

Net gain or loss(net present value)

-215 -432 -1,479 -2,812 -1,465 -2,951 -2,286 -1,876 207 1,084

With a high school diploma or GED

Gains

Earnings 3,452 3,358 535 763 3,117   1,252 1,467 1,318 5,075
Fringe benefitsa 514 500 85 121 427   198 232 208 695
Total 3,966 3,858 619 883 3,545   1,449 1,699 1,527 5,770

Losses

Tax payments -571 -370 299 87 -292   57 5 -198 -384
Welfare payments -1,014 -1,034 -2,359 -1,572 -2,539   -1,124 -969 -576 -2,939
Food Stamps -732 -378 -513 -159 -878   -759 -587 -238 -1,132
Medicaid -1,290 -964 -906 -598 -481   -713 -840 -211 -3,066
Total -3,608 -2,746 -3,478 -2,242 -4,190   -2,540 -2,391 -1,224 -7,521

Net gain or loss(net present value)

358 1,112 -2,859 -1,359 -646   -1,090 -693 303 -1,751
SOURCES: See Table 13.8.
NOTES:  Estimates reflect discounting and adjustment for inflation.
Estimates were regression-adjusted using ordinary least squares, controlling for pre-random assignment characteristics of sample members.
Rounding may cause slight discrepancies in calculating sums and differences.
Tests of statistical significance were not performed.
a These include employer-paid health and life insurance, pension contributions, and worker's compensation. Paid leave is captured directly by the earnings estimate. Employee-paid Social Security and Medicare taxes are included as tax payments.