How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. 1993 to 1996: Welfare Waivers


Prior to the enactment of PRWORA in mid-1996, the Family Support Act of 1988 (FSA) required a certain portion of AFDC recipients to participate in the Job Opportunity and Basic Skills Training (JOBS) program. States could apply for waivers to the AFDC/JOBS program to test new strategies. Waivers were granted to more than 40 states, many of which were statewide reforms. The waivers can be categorized by whether they were restrictive (i.e., made receipt more difficult or penalized welfare recipients for noncompliance) or liberalizing changes (made receipt easier or enabled recipients to combine work and welfare):(8)

Restrictive Changes

  • Time limits on benefits (24 states)
  • Tightened work requirements (31 states)
  • Benefits linked to school attendance or performance (26 states)
  • Limited benefits for additional children (family cap) (14 states)
  • Reduced benefits based on relocation (2 states)
  • Fingerprinting as condition of eligibility (1 state)

Liberalizing Changes

  • Enhanced earnings disregards (30 states)
  • Expanded eligibility for Unemployed Parent (UP or two-parent) families (25 states)
  • Increased resource limits (28 states)
  • Increased vehicle asset limit (25 states)
  • Expanded transitional medical and child care (21 states)

The Council of Economic Advisors (CEA) estimated that about 12 to 15 percent of the decline in welfare caseloads during the 1993 to 1996 period was due to waivers, particularly those that authorized more stringent JOBS sanctions.(9) Presumably many of those who left the rolls entered the labor market. In addition to increasing the number of welfare recipients who left the rolls, waivers that enhanced the earnings disregards and expanded eligibility for UP families allowed more individuals to combine work and welfare.