How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. Growth of Economy

04/01/2001

While economic conditions vary by region, the U.S. economy has had continued growth since 1993. From January 1993 to January 1999, employment increased by 18 million jobs nationally, the unemployment rate declined from 7.3 percent to 4.3 percent, and average inflation adjusted earnings increased from $12.41 per hour to $13.11 per hour.(10)

The additional jobs at higher hourly wages enticed some welfare recipients into the labor market. The CEA study estimated that between 1993 and 1996, about 26 to 36 percent of the welfare caseload decline was due to the economic expansion, and between 1996 and 1998, about 8 to 10 percent of the decline was due to the improved economy.(11) Several other studies have focused on the earlier pre-1996 period and found that economic factors explain somewhere between 25 and 50 percent of the change in caseloads.(12)