Implementation, Participation Patterns, Costs, and Two-Year Impacts of the Portland (Oregon) Welfare-to-Work Program: Executive Summary. Discussion and Implications of the Findings

05/01/1998

A.  Comparisons Between the Portland and Riverside GAIN Programs

  • Portland’s program shared two key features with the successful GAIN program run in Riverside, California, in the late 1980s.  Both were employment­focused, mixed services programs; however, Portland emphasized job quality, whereas Riverside encouraged participants to take any job.

The Riverside GAIN (Greater Avenues for Independence) program of the late 1980s produced large employment and earnings gains and welfare reductions and is often considered the benchmark for other welfare­to­work programs.  Portland’s two­year results are similar in magnitude to those in Riverside; however, the people served and the local environments differed in a number of ways.  A higher proportion of Portland’s sample had a high school diploma or GED at program entry and were white (and thus likely faced less racial discrimination in the labor market).  Portland mandated participation for parents with children as young as age 1; 68 percent of the sample had children under age 6.  Riverside mandated participation only for parents with children aged 6 or over.  As mentioned earlier, Portland’s labor market was strong, with low and decreasing unemployment and steadily growing employment.  Riverside’s employment growth was high, but unemployment rates were high and increased throughout the follow­up period.

Despite these differences, impacts were quite similar.  Both programs substantially increased employment levels and produced the largest earnings gains ever found for mandatory welfare­to­work programs.  The Portland program increased two­year earnings by $1,842, a 35 percent increase, and the Riverside GAIN program increased two­year earnings by $2,103, a 56 percent increase.  Both programs had large impacts on AFDC payments as well:  the Portland program reduced payments by 17 percent over two years ($1,196), and Riverside GAIN reduced payments by 14 percent ($1,399).8  In both programs, earnings gains, in dollars, were about one and a half times the amount of AFDC reductions.  Both programs produced impacts for a wide range of subgroups, including the more disadvantaged members of the caseload.

The Portland and Riverside GAIN programs both communicated a strong and pervasive message that employment was the chief program goal.  Both programs enforced this message through extensive use of job search activities and through the use of job developers to assist recipients in gaining access to job opportunities.  Although job search was the most common activity in both programs, many people participated in other activities, including basic education, and, in Portland, vocational training, work experience, and life skills training.  Overall participation patterns were similar for the two programs.  About three­fifths of the program group in each site ever participated in a program activity.  Both programs substantially increased participation in job search and basic education (compared to the activity levels of control group members), and Portland’s program also increased participation in work experience.  Only Portland increased the proportion of people who received a GED certificate or a trade license or certificate.

The programs communicated differing levels of job selectivity.  As previously discussed, Portland staff encouraged participants to wait for "good" jobs.  In sharp contrast, staff in the Riverside GAIN program consistently communicated that any job was worthwhile; they encouraged quick entry into the labor market and communicated that low­paying or part­time jobs should not be turned down.  This difference was both reflected in and fostered by the ways each program used performance standards.  Portland’s standards encouraged placing participants in jobs paying higher than minimum wage that were likely to last; in contrast, Riverside’s individual monthly job placement standards for case managers reflected and emphasized the importance of quickly placing people in any job.

These divergent messages likely contributed to the programs’ somewhat different composition of the earnings impacts.  Earnings impacts in both programs resulted from increases in the proportion of individuals employed and the number of quarters that individuals were employed.  Portland’s impacts, however, were also due to program group members earning more on the job than their control group counterparts.  Survey results from the two programs corroborate this difference:  according to client responses, if one considers only those who were working at the end of the follow­up period, Portland’s program substantially increased average hourly pay, but Riverside program group members earned slightly less per hour than their control group counterparts.

B.  Factors Influencing Portland’s Impacts

Research has shown that a variety of program approaches can produce positive effects.  While it is difficult to distinguish which of many program features and environmental factors may have fueled Portland’s unusual success, it is likely to be due to a combination of factors.  Portland’s program may have worked particularly well in the specific environment in which it was implemented:  Portland’s caseload was not as disadvantaged as some of the populations in the other six NEWWS Evaluation sites, and the labor market in the Portland area during the follow­up period was strong, allowing people to find and obtain "good" jobs.  Furthermore, Oregon has a history of progressive social legislation, including generously funded welfare programs and a state minimum wage that is higher than the federal standard.  Although this study cannot prove the causality of any program feature or set of features, the report suggests a number of influential factors.

  • Three key features of the Portland program have previously been found to be associated with successful welfare­to­work programs:  a strong employment focus, a mixed services strategy, and close monitoring of participation in mandated activities.

Portland’s strong employment message and extensive use of job search, coupled with a willingness to impose sanctions for program noncompliance, affected how much and how seriously people looked for a job.  Portland also offered strong job development and placement services, which provided a direct link to employers and job openings not otherwise available or apparent.  Although, in previous studies, increasing participation in job search alone has not been found to be consistently related to large impacts, this combination of message, willingness to impose sanctions, and program services (similar to the combination in Riverside GAIN) probably increased participants’ incentive and opportunity to get a job, and thus increased job finding.

Programs employing a mixed services strategy upon program entry (again, such as Riverside GAIN) also have been found to be more effective than programs that offer only job search or programs that rely mainly on long­term skills­building education and training services; the findings for Portland corroborate this.  The non­job search services, designed to improve employability, were targeted, and participants were not allowed to "languish" in activities, but were encouraged to complete activities and then look for work.

Staff closely monitored people in program activities and followed up quickly when attendance problems arose.  Staff communicated the importance of participating in activities, emphasizing the potential benefits for recipients and their families.  When people did not eventually comply with program requirements, staff imposed financial sanctions.  (However, the sanction rate in Portland was substantially lower than the rate in some other programs.)

  • Other important aspects of the Portland program included a strong partnership with community agencies, high­quality services, and an integrated case management structure; the program also increased receipt of GEDs and trade certificates.  Less is currently known, however, about the link between these factors and welfare­to­work program impacts.

As discussed earlier, Portland’s program was designed and implemented through a strong partnership between the welfare agency and various contractor service agencies.  Typically, welfare departments that contract out various portions of their welfare­to­work programs do so after the program model is chosen and planned; the contractors simply implement the program as the welfare department envisioned.  Portland’s arrangement allowed the contractors to participate in defining the program from the ground up, which fostered a sense of "ownership" and a strong commitment to the program in the contractor agencies.

Overall, Portland’s services were of high quality:  the job club and job development and placement services were unusually well supported and creative; the basic education classes were more highly rated by participants than classes in the other programs in the NEWWS Evaluation; and staff had relatively more experience in employment­related positions.

It is possible that combining the income maintenance and the employment and training aspects of welfare recipients’ cases yields some positive results.  Compared to traditional case management, which requires people to interact with two separate workers, integrated case management may allow staff to work sooner with recipients on employment preparation and minimize communication breakdowns between different groups of staff.  Integrated case management has also been hypothesized to help change the "eligibility­compliance culture" of the average welfare office to a "self­sufficiency culture" that focuses more on moving people into the labor market and off welfare than on validating individuals’ credentials to remain on welfare.9  In Portland, once people were active in the program, all of their interactions were with staff who dealt with employment and training issues (integrated case managers, supplementary case managers at the community colleges, and activity instructors).  Various indicators suggest that most of these staff communicated a self­sufficiency message to clients.  Furthermore, in surveys, an overwhelming majority of Portland staff (more than in the other 10 NEWWS Evaluation programs) expressed confidence that the program could help people become self­supporting.10

For those entering the program without a high school diploma or GED, Portland’s program increased the receipt of a GED certificate and a trade certificate or license.  Although no consistent relationship has been found between acquisition of a GED or trade certificate and impacts, some research suggests that it may contribute to a program’s success.

C.  Issues of Particular Relevance in the Current Welfare Environment

  • Portland’s program offered supports for those participating in activities and those working, including parents with young children.  The extensive use of child care benefits resulted in a substantial cost, but also may have enabled parents to move from welfare to work.

States must engage a large portion of the caseload in work or work­related activities to meet the 1996 welfare law’s increased participation­level targets and must reduce the number of people who return to the welfare rolls and eventually reach a time limit.  Thus, the 1996 law increases the importance of providing adequate supports, including child care benefits, both for those participating in program services and for those working.  The Portland program provided child care benefits for a large portion of the caseload, including parents of younger children.  Although the resulting average child care costs were quite high, it is possible that the support enabled some program group members to participate, and to accept and keep jobs, who would not have been able to do so otherwise.

  • Given the 1996 welfare law’s focus on increasing work and promoting self­sufficiency, it is notable that the Portland program both produced immediate impacts on employment and earnings and increased full­time employment and hourly wages.

Typically, programs that produce immediate increases in employment do so by causing some welfare recipients to find jobs faster than they otherwise would have, but participants usually find the same kinds of low­wage jobs as control group members.  Portland succeeded in moving many recipients quickly into jobs, as well as changing the types of jobs that they had at the end of the two­year follow­up period.  This may be a result of Portland’s simultaneous focus on moving people into the labor market and encouraging them to find "good" jobs (in the context of a strong labor market).  Portland’s approach may serve as a model of how to rethink an employment­focused model in the context of a strong labor market.

  • While Portland’s program was very successful in reducing joblessness and decreasing the proportion of people on AFDC, many people were receiving AFDC benefits and not employed at the end of two years.

The 1996 welfare reform law includes an expectation that all TANF recipients work after receiving two years of federal assistance.  Also, some states have imposed two­year time limits on TANF receipt.  Although Portland did not impose a work requirement or time limits during the period studied, the program findings can shed some light on how an employment­focused, mixed services program might fare in the short term.

Portland’s substantial impacts remained at the end of the two­year follow­up period:  46 percent of the program group worked for pay in the last quarter of follow­up compared to 35 percent of the control group, an 11 percentage point increase.  Similarly, 33 percent of the program group worked for pay and did not receive any AFDC payments in the last quarter compared to 24 percent of the control group, a 9 percentage point increase.

However, despite the positive effects of the program, about two­fifths of program group members were receiving AFDC at the end of the two­year period; moreover, about one­quarter were both receiving AFDC benefits and not working.  Although these proportions are lower than in many previously studied programs, these results offer a caution as states strive to achieve very rapid self­sufficiency for virtually all welfare recipients.

  • Like the work first and skills­building programs studied as part of the NEWWS Evaluation, Portland probably would have failed to meet the participation rates called for in the 1996 welfare law, even though the program achieved many of the law’s aims:  it engaged many people in employment­related activities or imposed financial sanctions on them, increased the number of people who worked during the follow­up period, and decreased welfare expenditures.

The 1996 law specifies that eventually at least one­half of all recipients of federal welfare benefits must be participating intensively (20 to 30 hours per week) in subsidized or unsubsidized work or in employment­related activities.  Although Portland’s program was not operated under the new law’s rules or designed to meet its standards, the extent to which Portland imposed a welfare obligation on sample members can highlight the challenges of these participation standards.

Sample members in Portland were "covered" by the program — participating in an activity (for at least one hour, but usually much more), employed, or sanctioned for nonparticipation — in 38 percent of the follow­up months in which they were receiving AFDC and subject to a participation requirement.  In contrast to the standards in the 1996 law, this calculation considers only those who were "mandatory" for program participation, not all AFDC recipients.  Furthermore, it does not take into account the number of hours each week in which people were participating or employed, but simply counts people as fulfilling a welfare obligation if they were participating or employed at all, or sanctioned, at any point in a month.

"Coverage" rates in Atlanta, Grand Rapids, and Riverside were similar to or higher than the rate in Portland.  However, extensive analysis of participation in these three sites showed that monthly participation rates calculated similarly to those contained in the 1996 welfare law probably would have been quite low.11  This suggests that monthly participation rates would also have been quite low in Portland by the new federal standard.