How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. After PRWORA

04/01/2001

While variation in state AFDC programs existed prior to 1996, PRWORA gave states even more flexibility in designing their programs. Policies that could affect the number of welfare recipients moving to enter the labor market include the grant level, earnings disregards, time limits, work requirements, exemptions to the work requirements, and sanctions.

We selected regions that offered a range of these policies (see Exhibit 3.6 for a summary of the policies in the study regions). While we were not able to individually assess the impact of each policy on labor markets, we believe that variation in the caseload declines and the number of welfare recipients who were combining work and welfare partly reflected the broad range of state policies.

States establish the monthly grant, which depends on family size, family income, earnings disregards, and other factors. The size of the grant may affect an individuals willingness to forgo welfare benefits for work. As Exhibit 3.7 shows, the maximum grant levels for a family of three in 1998 varied dramatically from a low of $120 in Mississippi to a high of $673 in Wisconsin. While Mississippi had a very low grant level, it had one of the more generous earnings disregards policies. For the first six months, 100 percent of earnings could be disregarded, although individuals must obtain full-time work within 30 days of receiving welfare or participating in a work activity, such as job search. Conversely, Wisconsin had a high grant level, but did not disregard any earnings.

PRWORA established a 60-month federal time limit. Some states have imposed shorter time limits, while other states have agreed to provide assistance to families after they have reached the federal time limit. Among the study states, all except Oregon, New York, South Carolina, and Vermont have implemented the 60-month time limit. Oregon limited welfare benefits to 24 of the first 84 months; New York continued to provide assistance to families, partly in cash and partly in non-cash benefits after 60 months; South Carolina limited cash assistance to 24 of 120 months, imposing a lifetime limit of 60 months; and Vermont adopted a work trigger time limit, meaning that after 30 months (for single-parent households), families were required to work but could continue to receive assistance. We did not expect these time limits to greatly affect the caseloads as of 1998 because few recipients would have reached even their 24-month time limit.

Tough sanctions may have increased the number of welfare recipients who left welfare. Mississippi, South Carolina, and Tennessee imposed a full-family sanction, meaning the grant was terminated if the individual did not comply with program work requirements. Wisconsin reduced benefits for every hour of participation missed. Other states reduced the grant level by a portion until the individuals complied.

  Exhibit 3.7 Welfare Policies in Study States
  Maximum Grant for Family of Three (12/98) Earnings Disregards (as of 12/98) Time Limit Weekly Work Requirement for Single-Parent Families (as of 10/99) Exemptions to Work Requirement (as of 10/99) Sanction for Work Noncompliance (as of 4/00)

Alabama

$164 100% for 3 months; 20% in subsequent months 60 months (lifetime) 32-35 hours No exemption criteria First sanction: 25% until compliance; maximum sanction: termination for 6 months

Mississippi

$120 100% for 6 months if families obtain full-time work within 30 days of initial TANF receipt or participating in work activities; $90 in other months. 60 months (lifetime) 30 hours Caring for young child up to 1 year; disabled/temporary illness; caring for disabled household member; 60+years old; domestic violence victim; child care unavailable up to 6 years; pregnant (in third trimester); transportation unavailable. First sanction: termination for at least 2 months until compliance; maximum sanction: termination (permanent)

Missouri

$292 $120 and 1/3 of the remainder for 4 months; $120 for the next 8 months; $90 in subsequent months. 60 months (lifetime) 30 hours Caring for young child (up to 1 year); disabled/temporary illness; caring for disabled household member; 60+ years old; domestic violence victim; child care unavailable up to 6 years; pregnant (in third trimester); living in remote area First sanction: 25% until compliance; maximum sanction: 25% until compliance for at least 3 months

New York

$577 $90 and 45% of the remainder 60 months (safety net assistance is paid to family after time limit is reached) At county discretion Caring for young child up to 3 mths-1 year (at county's discretion); disabled/temporary illness; caring for disabled household member; 60+ years old; pregnant (in ninth month) First sanction: pro-rata reduction until compliance; maximum sanction: pro-rate reduction until compliance for at least 6 months

Oregon

$503 50% 24 in 84 months No Caring for young child up to 3 mths; 60+ years old; pregnant (in ninth month) First sanction: $50; maximum sanction: termination until compliance

South Carolina

$201 50% for 4 months; $100 in subsequent months 24 in 120 months; 60 months (lifetime) 30 hours Caring for young child (up to 1 year); disabled/temporary illness; caring for disabled household member; child care unavailable up to 12 years; transportation unavailable All sanctions: termination until compliance for 30 days

Vermont

$617 $150 and 25% of the remainder Not applicable a/ After reaching time limit only: 20 hours if youngest child is under age 13; 40 hours if 13 or older Caring for young child up to 3 years; disabled/temporary illness; caring for disabled household member; 60+years old; pregnant (at least in fourth month) First sanction: adult portion until compliance; maximum sanction: adult portion until compliance for at least 6 months

Wisconsin

$673 None 60 months (lifetime) At local discretion Caring for young child up to 12 weeks First sanction: pay-for-performance (per hour reduction); maximum sanction: termination (permanent)

Source: State Policy Documentation Project (www.spdp.org/tanf.htm)
a/ Vermont imposed a work-trigger time limit; after 30 months of assistance, most TANF recipients must enroll in a work activity, but their benefits are not reduced or canceled. Vermont was operating under a statewide waiver.