Moving People from Welfare to Work. Lessons from the National Evaluation of Welfare-to-Work Strategies.. 1. The National Evaluation of Welfare-to-Work Strategies

The programs studied in NEWWS were initially run under the federal Family Support Act (FSA). Enacted in 1988, FSA required the government to provide education, employment, and support services to adults receiving cash welfare assistance, known at the time as Aid to Families with Dependent Children (AFDC). Recipients of AFDC, in turn, were required to participate in the Job Opportunities and Basic Skills Training (JOBS) program created under FSA. The NEWWS programs continued to operate (with some modification) after passage of the most recent federal welfare reform legislation, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), in 1996. Moreover, many of the goals, mandates, and program strategies first spelled out in FSA underpin PRWORA as well.

FSA, under which the NEWWS programs originated, introduced some important new features. Through its mandates and incentives, it encouraged state and local program administrators to serve welfare populations with whom they previously had little contact and to experiment with new types of services, messages, and mandates. In most states for the first time, the majority of single-parent welfare recipients with children aged 3 to 5 (or as young as age 1, at states' option) were required to enroll and participate in a welfare-to-work program, which meant that they had to work or engage in activities aimed at preparing them for work. In addition, FSA mandated that programs reserve at least 55 percent of federal welfare funds to provide services to welfare recipients who were deemed at greatest risk of long-term welfare dependency. FSA also emphasized new types of services: The services offered and supported by the states now had to include adult education -- that is, high school or General Educational Development (GED) exam preparation classes, basic and remedial education, and English as a Second Language (ESL) classes. In addition, teenage custodial parents without a high school diploma or GED had to return to classes in order to obtain one of these credentials. Finally, FSA required enrollees to participate in employment preparation activities for as long as they remained on welfare and eligible for services. Case managers were expected to monitor recipients' participation in program activities and to respond to nonparticipation using a variety of informal and formal measures, including reductions of welfare grants.

The expansion of welfare-to-work programs and the requirement to work with more disadvantaged populations intensified the long-standing debate among program administrators and policymakers concerning how best to help welfare recipients, especially those facing serious barriers to employment, move from welfare to work. Research conducted in the 1980s demonstrated that job-search-first programs sped up the entry of welfare recipients into the labor market. The jobs that people found through such programs, however, tended to be neither long-lasting nor high-paying, leaving many people with little income, living in poverty, and back on the welfare rolls. In addition, the programs did not benefit the most disadvantaged.

Realizing that in the general population people with more education and degrees tend to earn more, policymakers began to focus on the possible value of education and training in welfare-to-work programs. Proponents of education and training argued that making initial investments in building people's skills might enable them -- especially those without a high school diploma or with other employment barriers -- to get better and more stable jobs, increase their income, and become less likely to return to welfare. Critics of this approach believed that mandatory education programs for adult single parents, many of whom had left education institutions as teenagers, not only would be very costly and hard to implement on a large scale but might also delay people's labor market entry without guaranteeing that their foregone earnings would be made up by better jobs later. Proponents of job search programs countered that any job, even a low-paying or temporary one, is the best way to build skills that might lead to better jobs and is cost-effective as well. They advocated enhancing and adding services to job search programs to increase their overall effectiveness; among the new services proposed were instruction on how to find employment, peer support, time-management classes, self-esteem-building exercises, and job development (efforts to increase the pool of available jobs). Critics of the job search approach thought it still did not address the essential need -- namely, to build recipients' skills -- and that the proof of its merits would be in long-term rather than short-term results. Thus, in the wake of FSA, "What works best?" became a pivotal question for policymakers and program administrators alike.

The 1996 welfare reform law, PRWORA, built on many aspects of FSA, but it also contained new provisions. First, it replaced AFDC with a flexible, state-directed program called Temporary Assistance for Needy Families (TANF), which provided each state with a block grant -- a lump sum of money -- to spend on welfare programs and benefits. Second, for most families it put a lifetime limit of five years on federally funded cash welfare; any cash assistance beyond that point would have to be funded by the state. Third, PRWORA created financial incentives for states to run mandatory, work-focused welfare-to-work programs and required virtually all welfare recipients to work or participate in program activities. The law's time limit on welfare receipt, its focus on work, and its requirement that the entire welfare caseload work or receive work-directed services fueled the already keen interest in the question of which welfare-to-work approach is most effective at moving people from welfare to work.

The 11 programs in NEWWS were operated in seven sites across the country: Atlanta, Georgia; Grand Rapids, Michigan; Riverside, California; Columbus, Ohio; Detroit, Michigan; Oklahoma City, Oklahoma; and Portland, Oregon (for a list of the programs categorized by type, see Table 2). Because FSA gave states wide latitude to design their welfare-to-work programs and one of the aims of NEWWS was to learn about different program approaches, NEWWS planners at HHS and MDRC sought to include sites that would demonstrate a variety of programs operated in a diverse range of conditions. Although the programs were not selected to be representative of all welfare-to-work programs in the country, they varied along several important dimensions, including geographic location, labor market conditions, and welfare grant levels. To meet the demands of the research, each site had to have a relatively large welfare caseload; as a result, all seven sites include urban areas. The Appendix provides summaries of each of the 11 programs' activities, environments, and results.

Employment- and education-focused programs operated side by side in three sites. As part of an unusual effort to determine whether the employment- or the education-focused program approach works better, each of three sites -- Atlanta, Grand Rapids, and Riverside -- operated two different welfare-to-work programs. The Labor Force Attachment (LFA) program in each site emphasized immediately assigning people to short-term job search activities with the aim of getting them into the labor market quickly. Case managers in the LFA programs stressed the value of people's taking any job, even a low-paying one, and later advancing into stabler, better-paying jobs. The Human Capital Development (HCD) program in each site emphasized first enrolling people in education or training -- primarily basic or remedial education or GED preparation (not college) -- before steering them toward the labor market. The LFA and HCD programs were designed, expressly for the purposes of this research, to magnify the differences between the employment-focused approach and the education-focused approach.

A "hybrid" program in one site. Portland operated an employment-focused program that differed from the LFA programs in using a mixed strategy for making initial acti-vity assignments. Depending on caseworkers' perception of recipients' skills and needs, different recipients were assigned to different types of initial activities. Unlike the LFA programs, the Portland program offered education or training classes to a substantial minority of its enrollees and encouraged everyone to hold out for a job that paid more than the minimum wage and offered a good chance of stable employment.

Education-focused programs in three sites, one with two types of case management. Columbus, Detroit, and Oklahoma City operated education-focused programs. Columbus simultaneously operated two education-focused programs that took different approaches to case management. In the program with traditional case management, welfare recipients interacted with two separate caseworkers: one who dealt with welfare eligibility and payment issues (often called income maintenance) and one who dealt with employment and training issues. In the program with integrated case management, in contrast, recipients worked with only one staff member, who handled both the income maintenance and employment and training aspects of the case.

Other differences among programs. Nine of the 11 programs in NEWWS were considered high enforcement in that, rather than working with recipients most motivated to participate, they worked with a broad cross-section of welfare applicants and recipients who were required to participate; monitored participation closely; and, especially in several of the programs, frequently imposed sanctions -- that is, reduced welfare grant amounts -- as a penalty for not fulfilling participation requirements. The other two programs were considered low enforcement.

It is important to note that the NEWWS programs differed in important ways from many current welfare-to-work programs. First, although several NEWWS programs required some women with children as young as age 1 to participate, none extended the participation mandate to mothers with children younger than 1, which is allowed (at states' option) under TANF. Second, none of the NEWWS programs imposed a time limit on welfare receipt. Third, none included a substantial earned income disregard, a policy that allows welfare recipients to remain eligible to receive benefits and to have earnings up to a higher level than normally allowed. Finally, none of the programs emphasized upfront practices aimed at diverting people from applying for welfare, which some programs now do. NEWWS thus reveals little about these newer policies and practices. Nevertheless, the primary goal of the NEWWS programs, like that of post-PRWORA programs, was to move welfare recipients off cash assistance and into paid employment. As a result, the NEWWS programs faced the same tensions between goals that have long shaped and challenged policies for the poor: improving families' material conditions without discouraging them from working; enforcing work and work-related requirements for parents without adversely affecting their children; and minimizing government costs when it is often cheaper in the short run simply to give low-skilled parents their welfare grants than to make more expensive investments in their education or training.

NEWWS used a random assignment research design to estimate the effects of the studied programs. Welfare recipients were randomly assigned to one of two or three research groups, depending on the site. One of the groups was always a control group. In all the sites, control group members were eligible for welfare as usual. In addition, they were eligible for child care assistance similar to that offered to program group members, provided that they were participating in nonprogram activities in which they had enrolled on their own.

In the three sites that operated both an LFA program and an HCD program, three-way random assignment was performed. Welfare recipients in these sites were randomly assigned to one of three groups: the LFA group, whose members received LFA program services; the HCD group, whose members received HCD program services; or the control group, whose members could not receive services through a welfare-to-work program. A three-way design was also used in Columbus, except that in Columbus the program groups differed only with respect to the case management they received (integrated or traditional).

In Detroit, Oklahoma City, and Portland, two-way random assignment was used to test the effectiveness of existing programs rather than of programs designed for research purposes. In these sites, welfare recipients were randomly assigned to a group that enrolled in the program or to a control group that was not eligible for any welfare-to-work program services.

The study design allowed for many revealing comparisons. The key ones examined the programs' economic effects on adults and spillover effects on families (that is, indirect effects on noneconomic outcomes and effects on children). To determine the net effect of each program, the outcomes for each program group were compared with those for the control group in the same site. In the three-way sites, it was also possible to estimate the relative effects of alternative program approaches by comparing the outcomes for the two program groups directly. What makes the design in the three-way sites particularly robust is that, by making comparisons between programs operated in the same site, it holds constant contextual features (such as population characteristics and local economies) that might vary from site to site and affect the programs' results.

The random assignment research design used in all the sites is what makes NEWWS such a rigorous investigation of the effectiveness of various welfare-to-work approaches. Because people were assigned to groups at random within each site, one can be sure that there were no systematic differences between people in the program and control groups when they entered the study. Therefore, any subsequent differences in outcomes between groups in the same site -- whether between two program groups or between a program group and the control group -- can be confidently attributed to a particular type of program. These differences, called impacts, can relate to any type of outcome -- for instance, rates of participation in education activities, reading test scores, employment rates, earnings levels, number of months on welfare, or assessments of children's well-being (to name but a few of the outcomes examined in NEWWS). Throughout this document, statements concerning whether the NEWWS programs increased or decreased some outcome (such as earnings) refer to their impacts, that is, to differences between how program and control group members fared during the five-year follow-up period -- not to changes in any given research group's behavior over time. (For a discussion of the advantages of using impacts rather than outcomes to assess program effectiveness, see Box 1.) Unless otherwise noted, all the impacts discussed are statistically significant, meaning that they are unlikely to be due to chance.

The 1996 welfare reform law spawned many new welfare policies and encouraged states to experiment with new approaches. Almost all the new policies and innovations, however, take for granted the existence of and build on the quid pro quo established by FSA, namely, that welfare recipients must work or participate in some type of welfare-to-work program in order to receive welfare benefits and services from the government. The new initiatives -- which include substantial earned income disregards, welfare time limits, stricter penalties for nonparticipation, and postemployment services -- are not meant to replace welfare-to-work programs. Rather, they are intended to enhance the anticipated payoffs (such as higher employment) of the changes brought about by welfare-to-work programs. In light of this, the NEWWS results, which suggest how welfare-to-work programs can be made most effective for different groups of people, are highly relevant. As the following sections illustrate, NEWWS provides critical insights regarding how best to design and operate programs in order to maximize the payoff of such programs.