The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Can the Labor Market Absorb Three Million Welfare Recipients?. Job Qualifications of Welfare Recipients


Most adults who receive Temporary Assistance for Needy Families (TANF) are young mothers with limited schooling and very low scores on standardized tests of ability and achievement.  Even if these women were not responsible for the care of young children, they would face severe problems finding and holding well-paid jobs.  Child care responsibilities make their employment problems even more formidable.

The educational attainment of aid-dependent mothers, though increasing, remains low.  A survey conducted by the Department of Health and Human Services (HHS) shows that 40 percent of mothers receiving welfare in 1994 had failed to complete high school.(5)  In comparison, more than 85 percent of all 25- to 34-year-old American women in 1994 had completed high school. About 1 percent of recipient mothers had graduated from college, compared with 23 percent of all 25- to 34-year-old women.  Adult welfare recipients also perform poorly on standardized tests of ability and achievement.  Among 25-year-old women who received Aid to Families with Dependent Children (AFDC) year-round in the mid-1980s, for example, almost three-quarters obtained an aptitude test score that placed them in the bottom one-quarter of all test takers.  Only 12 percent obtained a score in the top half of test takers.(6)  Limited education and poor performance on standardized tests greatly restrict the kinds of jobs that most aid recipients can obtain.

The poor preparation of welfare recipients is reflected in their actual job experience.  Few recipients work and few have much recent work experience. Less than 9 percent of the cases included in the 1994 HHS survey reported current wage income, for example.  Some mothers who reported no earnings to welfare offices probably earned unreported wages or received irregular labor income that went unreported.  In addition, many women who initially file for assistance benefits have earned some wages in the recent past.(7)  Most evidence confirms, however, that a majority of single women who are long-term recipients of cash assistance do not currently work and do not accumulate much work experience.  In the fifth year after women were enrolled in these welfare-to-work experiments during the 1980s, the employment rate averaged 38 percent among women who had been enrolled in the experimental welfare-to-work programs and 36 percent among women who had been enrolled in the control group.(8)

The circumstances are now different.  In spite of recipients' educational deficiencies, poor aptitude test scores, and limited work experience, welfare reform will boost their overall employment and labor force participation. Working-age adults who have relied on cash assistance under TANF will be forced under new state programs to search for work, enroll in training programs, or accept workfare jobs.  The question is, how many will actually find jobs?

To form an estimate of the likely effect of reform on overall employment, it is helpful to consider the number of working-age adults who receive welfare and will be affected by reform.  In 1994, when the welfare caseload reached its peak, 5.05 million families received AFDC.  Of these, 4.18 million (or 83 percent) contained at least one adult member and 0.32 million (8 percent) contained two adult members.(9)  The new federal law and reformed state programs imposed new work obligations on adults who receive welfare. On the assumption that one-fifth of adults would be exempted from the requirements because of a physical or mental incapacity or some other temporary or permanent barrier to employment, approximately 3.34 million adults would have been affected by tough work requirements if such requirements had been in place in 1994.

For purposes of comparison, this is about 2.6 percent of the average number of labor force participants in 1994 and 42 percent of the number of unemployed in that year.  Some welfare recipients were already employed in 1994, and reform is unlikely to change the employment status of women who already work. But tabulations of the 1994 Survey of Income and Program Participation (SIPP) survey suggest that 12 percent of recipient mothers were unemployed (that is, jobless but seeking work) and 74 percent were out of the labor force (jobless and not seeking work).(10)  If all these out-of-the-labor-force mothers had been forced to look for work in 1994, the aggregate number of unemployed would have risen almost 2.5 million and the unemployment rate would have jumped 2.3 percentage points (from 6.1 percent to 8.4 percent).