Moving People from Welfare to Work. Lessons from the National Evaluation of Welfare-to-Work Strategies.. The LFA Approach Versus the HCD Approach: In head-to-head tests, which is more effective?

07/01/2002

  • Compared with the LFA approach, the HCD approach did not produce additional long-run economic benefits.

In side-by-side comparisons in the same sites, the LFA and HCD approaches' five-year impacts on employment, earnings, months on welfare, and welfare payments were not the same, but the differences were generally not statistically significant -- that is, it could not be confidently concluded that the differences in impacts did not occur by chance. Where there were statistically significant differences between the effects of the two types of programs, however -- such differences were found for some early follow-up years and for some subgroups and outcomes -- the LFA programs always came out ahead. For example, in Grand Rapids, the LFA group worked more quarters on average than did the HCD group, and the average number of months of welfare or food stamp receipt was lower in the LFA group than in the HCD group.

  • The LFA approach moved people into jobs and off welfare more quickly than did the HCD approach -- a clear advantage in an era of time limits on welfare receipt.

As is typical in welfare samples, earnings levels increased during each year in the follow-up period in the LFA and HCD programs as well as the control groups, reflecting increases in employment. Moreover, earnings were higher among both LFA and HCD program members than among control group members early in the follow-up period, but the differences between the program groups and the control group (that is, the programs' impacts) narrowed over time (for the yearly earnings impacts of the LFA and HCD programs averaged across the three sites, see Figure 8). Clearly, however, earnings rose earlier for the LFA group than the HCD group. Similarly, in the first two years of the follow-up period, the LFA programs had larger impacts on welfare receipt than did the HCD programs (for the LFA and HCD programs' yearly impacts on welfare receipt, see Figure 9). In subsequent years, however, the gap between the two lines narrows and ceases to be statistically significant.

  • Relative to the LFA approach, the HCD approach did not produce more earnings growth or increase the likelihood of employment in good jobs.

Neither the HCD nor the LFA approach was generally successful in boosting earning growth or the likelihood of having a good job -- that is, a job that is stable and well-paying -- but the impacts on these measures were especially disappointing for the HCD programs. The education and training services that were part of these programs were intended to help people eventually move into stabler and higher-paying jobs (compared with control group members and LFA program group members), with the goal of more than making up for the earnings foregone early in the follow-up period while welfare recipients were enrolled in classes. However, both the LFA and HCD programs had little or no effect on earnings growth and employment stability. Furthermore, the trend lines in Figures 8 and 9 suggest that the HCD programs' lack of advantage over the LFA programs in this regard would not change if follow-up data beyond five years were available.

  • The LFA approach was much cheaper to operate than the HCD approach.

The HCD programs were 40 percent to 90 percent more expensive than the LFA programs that operated in the same sites (for details on costs, see the second-to-last section of this document).

  • The results of the above comparisons between the LFA and HCD programs' impacts held for nongraduates as well as graduates.

Even among nongraduates, who were expected to derive the greatest benefit from an initial investment in basic education, the employment and earnings impacts of the LFA programs were larger than those of the HCD programs.

  • The LFA and HCD approaches did not differentially affect income or children's well-being in the full NEWWS sample. However, for one subgroup -- nongraduates -- the LFA programs had a larger impact on income than did the HCD programs.

Neither the LFA nor the HCD approach increased income overall. In fact, income impacts varied more by site than by program approach. But the programs did have different effects on income among nongraduates: Although in neither type of program was nongraduates' income higher than control group levels, those in the LFA programs had higher income, on average, than those in the HCD programs. Averaging the results for nongraduates across the three sites that ran LFA and HCD programs, the LFA programs resulted in almost $1,000 more in income over five years than the HCD programs. Few effects on children's well-being were found, and these did not differ consistently by program approach (for details on the effects of income on children, see the next section).


Figure 8.
Impacts on Earnings, by Approach and Year:
LFA Programs Increased Earnings More Quickly than HCD Programs

Impacts on Earnings, by Approach and Year: LFA Programs Increased Earnings More Quickly than HCD Programs.

SOURCE: Hamilton et al., 2001

NOTES: The impacts shown are average for sample members in the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside.
Daggers(†) denote statistical significance levels for LFA-HCD differences: † = 10 percent; †† = 5 percent; ††† = 1 percent;
To ensure comparability to the Riverside HCD sample, the Riverside LFA sample includes only those who nongraduates at study entry.


Figure 9.
Impacts on Welfare Receipt, by Approach and Year:
LFA Program Moved People Off Welfare More Quickly than HCD Programs

Impacts on Welfare Receipt, by Approach and Year: LFA Program Moved People Off Welfare More Quickly than HCD Programs.

SOURCE: Hamilton et al., 2001

NOTES: The impacts shown are average for sample members in the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside.
Daggers(†) denote statistical significance levels for LFA-HCD differences: † = 10 percent; †† = 5 percent; ††† = 1 percent;
To ensure comparability to the Riverside HCD sample, the Riverside LFA sample includes only those who nongraduates at study entry.