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

05/01/1998

Few domestic issues have generated as much attention over the past decade as welfare reform.  Persistent dissatisfaction with the Aid to Families with Dependent Children (AFDC) program — the nation’s principal safety net for poor families — spurred the enactment in August 1996 of the Personal Responsibility and Work Opportunity Reconciliation Act.1  Among its provisions, the law replaced AFDC with a block grant program, Temporary Assistance for Needy Families (TANF), and created financial incentives for states to run mandatory, work­focused welfare­to­work programs.

Welfare­to­work programs provide services such as job search assistance, education, and training to help welfare recipients prepare for and find jobs.  States have run versions of these programs to serve part of the welfare caseload for the past three decades.  Various facets of the 1996 law, however, magnify the need for effective strategies to move people more quickly into jobs and off welfare.  First, states may not use federal funds to support most families for longer than five years and may impose even shorter time limits on assistance (they may also elect to use state funds to support families beyond five years).  Second, to prevent reductions in their block grants, states must meet demanding "participation standards" by engaging large proportions of TANF recipients in work or work­related activities.  To meet these standards, most states will have to engage a wider cross section of the caseload in work or program activities than they did previously.  Third, states’ TANF plans must include how the states will require recipients to work after two years of assistance.

As states and localities transform their welfare­to­work programs in response to the federal legislation, the need to learn about programs that have moved substantial numbers of people into work and off welfare increases.  The two­year findings presented in this report show the Portland, Oregon, welfare­to­work program run between early 1993 and mid 1996 to be among the most successful large­scale mandatory welfare­to­work programs studied, producing large increases in employment and earnings and equally large reductions in welfare receipt for a broad cross section of the welfare caseload.  The positive effects remained very strong at the end of the two­year period studied, and preliminary data suggest they will continue into the third year.

This report is the latest from an evaluation of mandatory welfare­to­work programs in seven sites called the National Evaluation of welfare­to­work Strategies (NEWWS Evaluation), conducted by the Manpower Demonstration Research Corporation (MDRC) under contract to the U.S. Department of Health and Human Services, with support from the U.S. Department of Education.  The report examines the mandatory welfare­to­work program run in Portland (Multnomah and Washington counties).  Through the program, Portland provided employment and support services to a broad cross section of the AFDC caseload, including parents with children as young as one year old.  These people were required to participate in program activities or face reductions in their welfare grants.  Although the program studied was designed and implemented prior to the 1996 reform, its overarching goal was similar to that of the new law:  to foster the self­sufficiency of adult recipients through increased employment and decreased welfare receipt.  (The program that Portland is running under the 1996 welfare reform law includes some key features of the program studied in this report.)2

This report describes the implementation, participation patterns, and cost of the Portland program, and presents estimates of the effects of the program on employment, earnings, and welfare receipt during the two years following people’s entry into the program.  To determine the effects of Portland’s program, 5,547 single­parent AFDC applicants and recipients aged 21 and over who attended a program orientation between February 1993 and December 1994 were randomly assigned to either a program group, eligible for program services and subject to participation requirements, or a control group, not eligible for services and not subject to participation requirements (although they could participate in other services in the community).  Because randomization makes the two groups similar at the start, any differences in average subsequent outcomes (such as two­year earnings) can be confidently attributed to the effects of the program.  These differences, known as program impacts, will be discussed later in the summary and are statistically significant unless otherwise noted.3