How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?. Waivers Operating in Study Regions


As mentioned in Chapter 1, prior to the passage of PRWORA, many states were operating their AFDC programs under waivers granted to them by DHHS to test innovative approaches. Waivers may have reduced the size of caseloads and increased the number of former and current welfare recipients entering the labor force between 1993 and 1996.

Waivers were granted to all states in our study except Alabama, although in New York and South Carolina, the waivers affected counties outside of the study regions. Missouri, Oregon, and Wisconsin approved statewide waivers in 1995 or 1996.(31) Mississippi and Vermont implemented waivers earlier, and as a result, waivers might have had a greater impact on declines in welfare caseloads in these states. Exhibit 3.6 describes the waivers and lists the dates of approval.

Exhibit 3.6 Waivers Covering the Study Regions
State Date Approved Description of Waiver


WorkFirst provided subsidized, private-sector employment for job-ready participants. It also provided for an Individual Development Account for family savings, to which employers contributed one dollar per hour of work. WorkFirst was implemented in six counties (four of which are included in the Rural Mississippi study region).


The Mutual Responsibility Plan required AFDC recipients to sign and fulfill a self-sufficiency agreement that established a plan for work and placed a two-year time limit on benefits (with a two-year extension possible). At the end of the time limit, clients were required to participate in job search or work experience.


Oregon Option limited AFDC to 24 months of benefits in any 7-year period, and required nearly all recipients to participate. Eligible participants were provided with subsidized public or private employment for up to nine months at minimum wage or better. Oregon also extended child care eligibility an additional 12 months for recipients who got jobs.


The Family Independence Project enabled AFDC recipients to retain more income and accumulate more assets than is normally allowed. It also required AFDC recipients to work in a wage-paying job or participate in a community or public service job after they had received AFDC for 30 months (15 months for unemployed-parent families).


Pay for Performance required AFDC applicants to meet with a financial planning resource specialist to explore alternatives to welfare. Those who still planned to apply were required to complete 60 hours of JOBS activities prior to approval. After approval, recipients were required to participate in JOBS activities for up to 40 hours per week.
Source: DHHS, ACF (1996). State Welfare Demonstrations. Washington, DC. Available on-line at: