Initial Synthesis Report of the Findings from ASPE's "Leavers" Grants. III. Employment and Earnings

01/04/2001

A central goal of welfare reform is moving families from welfare to work and, ultimately to self-sufficiency. Eleven of the ASPE-funded leaver studies included here use administrative data from their states' Unemployment Insurance systems to examine the employment and earnings of TANF leavers in the months and years following exit. In addition, five of the studies in this initial synthesis report also use surveys of leavers to examine employment, wage rates, and job characteristics of leavers. While surveys rely on self-reported information, they garner more detailed information than is available through administrative data systems.(10)

It is important to note that administrative data likely under represent the amount of work performed by TANF leavers. First, leavers who work across state lines or move to another state entirely will not appear in a state's UI system. Second, not all jobs are reported to a state's UI system-for example, leavers who are self-employed or who work in certain jobs in agriculture or in the federal government are not included in UI data systems. And finally, leavers who are domestic service workers (like nannies or housecleaners) may not appear in the UI system because their employers fail to report them. Thus, some of the leavers who appear to have "never worked" in administrative data may actually be bringing in earnings in some form. Further, some non-working leavers may well have a working spouse or partner.

Across the eleven studies using employment data from state UI systems, we find that slightly over half of all leavers work in the first quarter after exiting welfare. As table III.1 shows, the first quarter employment rates are tightly bunched, ranging from a low of 47 percent in Los Angeles to a high of 64 percent in Georgia.

 

Table III.1:
Employment of Single-Parent Welfare Leavers:
Administrative Data Findings
State/Study Exit Cohort Post-Exit Quarter (%) Ever Worked After Exit (%) Worked All Four Quarters (%)
Q1 Q2 Q3 Q4
Arizona 1Q98 53 51 52 50 73 n.a.
Florida 2Q97 50 51 53 54 71 31
Georgia 1Q97 64 60 59 53 74 n.a.
Illinois 3Q97-4Q98 54 53 54 55 70 39
Missouri1 4Q96 58 58 59 58 n.a. n.a.
New York 1Q97 50 49 48 48 62 40
Washington 4Q97 57 57 58 57 n.a. n.a.
Wisconsin July 1995-
June 1996
63 62 61 62 75 n.a.
Cuyahoga Co.2 3Q96 59 54 56 57 72 40
Los Angeles Co.2 3Q96 47 46 46 47 n.a. 35
San Mateo Co. 1997 50 50 48 50 67 n.a.
1 Missouri reports employment data for all cases, not just for single parent cases.
2 Los Angeles and Cuyahoga counties require a leaver to have at least $100 in earnings to be considered working while others require only $1.
Source: See Appendix B for a complete listing of the leavers studies referenced.

Over time, employment rates of leavers could rise as more leavers find jobs or they could fall as employed leavers encounter difficulties and lose their jobs. Interestingly, table III.1 shows that employment rates do not change much over time. Indeed, the median employment rate reported in these studies is 54 percent in both the first and fourth post-exit quarters. Wisconsin has the highest fourth quarter post-exit employment rate (62 percent) and New York, the lowest (48 percent).

While slightly over half of all leavers work in any given post-exit quarter, it is not uncommon for leavers to cycle in and out of jobs; consequently, the share of leavers who ever worked over the year after exit is considerably higher and the share who worked in all four quarters is considerably lower. Eight of the eleven studies report the share of leavers who worked in any of the four post-exit quarters. They find that about 70 percent of leavers worked in at least one quarter. In six out of eight studies over 70 percent worked (with a high of 75 percent in Wisconsin); 67 percent worked in San Mateo county and 62 percent worked in New York. Five of the eleven studies report the share of leavers who worked in each of the four post-exit quarters. They find between 35 and 40 percent of leavers worked in all four quarters.

Although there are some methodological differences between studies-for example, Los Angeles and Cuyahoga county require a leaver to have at least $100 in earnings to be considered working while others require only $1-these differences do not account for much of the meager variation across studies. Indeed, Cuyahoga county consistently reports high employment rates despite having a higher threshold for employment. Thus overall, these findings from administrative data suggest that the majority of welfare leavers work or have worked since exiting, but nearly three out of ten have never worked in the year following exit.

As of mid-October, 2000, five jurisdictions had submitted findings from surveys of TANF leavers where they asked the leavers themselves about their current employment status. The responses of leavers generally refer to employment about 6 months to a year after exit. Table III.2 compares these self-reported employment rates with fourth quarter post-exit employment rates computed from administrative data. The surveys consistently find higher employment rates than those reported in UI wage records; for the most part, they are about 7 percentage points higher. Illinois' survey presents some instructive information. In its administrative records, Illinois finds that 30 percent of leavers never worked over the first four post-exit quarters. In its survey, Illinois finds that only 15 percent of leavers say they have never worked in the 6 to 8 months since exiting TANF.

 

Table III.2:
Employment of Welfare Leavers:
Comparison of Administrative and Survey Findings
State/Study Exit Cohort Timing of Survey Employment Rate (%)
Survey Data Administrative Data1
Arizona2 1Q98 12-18 months 57 50
District of Columbia 4Q98 ~12 months 60 n.a.
Illinois2 Dec. 1998 6-8 months 62 55
Missouri 4Q98 26-34 months 65 58
Washington Oct. 1998 6-8 months 59 57
1 Based on employment rate from the 4th post-exit quarter.
2 Employment data reported for single- parent cases.
Source: See Appendix B for a complete listing of the leavers studies referenced.

Beyond employment, it is also important to examine the quality of the jobs held by TANF leavers. The most basic measure of job quality is how much the job pays. Table III.3 shows the quarterly earnings of employed TANF leavers based on UI wage records reported in ten leaver studies. These records include earnings information on all reported jobs a leaver has held during the quarter. The earnings of employed leavers during the first post-TANF exit quarter range from about $2,100 to about $3,500.(11) Over time, average earnings rise, especially in states with lower average earnings; during the fourth post-TANF exit quarter, earnings range from about $2,400 to about $3,600. Note that these figures represent total earnings over a three month period. The data do not provide information on the number of weeks or hours leavers actually worked to achieve their earnings.

 

Table III.3:
Mean Earnings of Employed Single-Parent Leavers:
Administrative Data Findings
State/Study Exit Cohort Post-Exit Earnings ($)
Q1 Q2 Q3 Q4
Arizona 1Q98 2,211 2,354 2,695 2,511
Florida 2Q97 2,163 2,352 2,343 2,496
Georgia 1Q97 2,193 2,272 2,549 2,389
Illinois 3Q97-4Q98 2,663 2,746 2,846 2,959
Missouri1 4Q96 2,192 2,360 2,384 2,698
New York 1Q97 3,393 3,402 3,877 3,602
Washington 4Q97 2,678 2,906 2,975 3,275
Wisconsin July 1995- June 1996 2,440 2,509 2,563 2,686
Cuyahoga Co. 3Q96 2,756 2,756 2,891 2,952
Los Angeles Co. 3Q96 3,414 3,387 3,521 3,576
San Mateo Co. 1997 3,124 3,407 3,457 3,647
1 Missouri reports earnings data for all cases, not just for single parent cases.
Source: See Appendix B for a complete listing of the leavers studies referenced.

Surveys of welfare leavers obtain information on the hours worked and wages of leavers (see table III.4). All five surveys show that employed leavers work close to full-time on average, with mean weekly hours ranging from 35 to 39 and median hours (when reported) reaching 40. Average wages range from $7.52 to $8.74 an hour. If a leaver works 40 hours a week and earns $7.50 an hour, she would earn $3,900 in a quarter providing that she worked all thirteen weeks in the quarter. This is higher than the earnings reported in the UI wage records indicating that some leavers move in and out of jobs and are not continuously employed.

 

Table III.4:
Hours and Wages of Welfare Leavers:
Survey Findings
State/Study Exit Cohort Timing of Survey
Post Exit
Hours Worked Wage Rate
Mean Median Mean Median
Arizona1 1Q98 12-18 months n.a. n.a. $7.52 n.a.
District of Columbia 4Q98 ~12 months 36 40 $8.74 $8.13
Illinois Dec. 1998 6-8 months n.a. 37 $7.89 $7.41
Missouri 4Q98 26-34 months 39 40 n.a. n.a.
Washington1 Oct. 1998 6-8 months 36 40 $7.70 $7.00
1 Earnings data reported for single-parent cases.
Source: See Appendix B for a complete listing of the leavers studies referenced.

In addition to monetary pay, employed leavers may receive non-cash employee benefits through their jobs. Three of the surveys ask explicitly about job-related benefits, and unlike employment and cash earnings, there is considerable variation across the studies. Table III.5 shows that the share of leavers with health insurance is 32 percent in the District of Columbia and 36.0 percent in Washington state. In Missouri, 53 percent of working leavers are offered employer-sponsored health insurance although some decline coverage. The share with paid vacations runs from a low of 31 percent (Washington state) to a high of 62 percent (DC), and the share with paid sick days ranges from 28 percent (Washington state) to 50 percent (DC). Finally, 46 percent of working leavers have retirement benefits in DC compared to 21 percent in Washington state.

 

Table III.5:
Employer Sponsored Benefits of Welfare Leavers:
Survey Findings
State/Study Exit Cohort Timing of Survey
Post Exit
Percent of Leavers (%)
Health Insurance Paid Sick Leave Paid Vacation Pension
District of Columbia 4Q98 ~12 months 32 50 62 46
Missouri 4Q98 26-34 months 53 2 40 52 n.a.
Washington1 Oct. 1998 6-8 months 36 28 31 21
1 Benefits reported for single-parent cases.
2 This is an offer rate, not a coverage rate.
Source: See Appendix B for a complete listing of the leavers studies referenced.