Report on Alternative Outcome Measures: Temporary Assistance for Needy Families (TANF) Block Grant . Earnings Gains

12/01/2000

The earnings gains measure would reflect the increase in earnings over a specified time period for employed TANF recipients. Individuals who experience earnings gains are more likely to sustain their self-sufficiency over the long run and to escape poverty. Earnings gains are included as a performance measure for the TANF High Performance Bonus (the data used for making the FY 1999 awards are shown in Table 4) and the WIA program.

Table 4.
Earnings Gain Rate

(Data Reported for FY 1999 High Performance Bonus Awards)
State 1997 Rate 1997 Rank 1998 Rate 1998 Rank 97-98 %
Improvement
Improvement
Rank
Alabama * * * * * *
Alaska * * 16.93 39 * *
Arizona 48.45 5 43.04 6 -11.16 27
Arkansas 27.41 26 20.53 35 -25.08 37
California 23.93 29 21.87 32 -8.62 24
Colorado 47.30 7 42.38 8 -10.39 26
Connecticut 25.50 27 24.50 31 -3.92 15
Delaware 35.40 16 27.03 27 -23.63 36
Dist. of Columbia 19.39 35 29.60 24 52.62 1
Florida 40.50 9 38.53 11 -4.86 19
Georgia 31.30 20 31.79 21 1.58 11
Hawaii 10.69 39 3.91 43 -63.41 40
Idaho * * * * * *
Illinois 21.75 32 20.96 34 -3.62 14
Indiana * * 25.50 29 * *
Iowa 28.86 25 27.53 26 -4.63 18
Kansas 62.50 2 54.31 2 -13.10 30
Kentucky 30.37 23 24.50 30 -19.33 33
Louisiana 23.38 31 21.32 33 -8.80 25
Maine * * * * * *
Maryland 37.52 13 42.96 7 14.52 5
Massachusetts 13.82 37 9.04 42 -34.61 39
Michigan 32.26 18 33.15 19 2.79 10
Minnesota 47.63 6 40.27 9 -15.46 31
Mississippi 37.64 12 30.10 22 -20.03 34
Missouri 36.20 14 33.95 18 -6.21 21
Montana * * 48.99 4 * *
Nebraska * * * * * *
Nevada 31.45 19 32.65 20 3.81 8
New Hampshire 56.47 3 54.24 3 -3.95 16
New Jersey 24.88 28 19.20 36 -22.84 35
New Mexico * * * * * *
New York 15.14 36 15.58 40 2.90 9
North Carolina 36.09 15 36.50 14 1.15 12
North Dakota 55.15 4 40.04 10 -27.41 38
Ohio * * 29.98 23 * *
Oklahoma -5.59 40 -10.79 44 -92.97 41
Oregon 43.52 8 43.29 5 -0.54 13
Pennsylvania 19.49 34 17.06 37 -12.46 28
Rhode Island 20.95 33 17.04 38 -18.69 32
South Carolina 32.46 17 35.70 16 9.98 6
South Dakota 63.81 1 67.98 1 6.54 7
Tennessee 30.17 24 26.28 28 -12.88 29
Texas 39.96 10 36.54 13 -8.56 23
Utah 30.50 22 38.51 12 26.28 4
Vermont 30.68 21 29.12 25 -5.08 20
Virginia * * * * * *
Washington 12.80 38 12.27 41 -4.21 17
West Virginia -26.74 41 -15.46 45 42.17 3
Wisconsin 23.50 30 34.63 17 47.34 2
Wyoming 38.82 11 36.34 15 -6.40 22
* State not participating
This is the sum of the gain in earnings between the initial and second subsequent quarter in each of quarters 1 through 4 of the FY for the adult recipients employed in both these quarters, as a percent of the sum of their initial earnings in each of quarters 1 through 4. (At this point they might be former recipients.) Earnings gain of adult recipients participating in workfare or in fully subsidized employment are not included in either the numerator or the denominator.

Measurement issues. An important question is whether to measure earnings gains (which may be due to any of a number of factors - including an increase in the hourly wage rate, an increase in hours worked, or an increase in the number of days or weeks employed - or a combination of these) or to focus on an increase in hourly wages. Experimental studies have found that welfare-to-work programs have produced most of their earnings gains through increases in the amount of employment rather than through increases in hourly wages.

Another measurement issue relates to the time period over which earnings gains will be measured. The TANF program is likely to be more directly connected to individuals during the initial period after they find jobs, and may have more influence over recipient experiences in this early period. On the other hand, individuals who find jobs may have to spend some time in the labor force before they experience earnings gains. Welfare-to-work programs that use earnings gains as a performance measure typically do so over a relatively short time period. The TANF High Performance Bonus measures earnings gains between one quarter and the second subsequent quarter. The WIA program measures earnings gains over the six months after entry into unsubsidized employment, as compared to earnings in the period prior to WIA program participation.

Data issues. Like the employment retention rate, the earnings gains measure could most feasibly be calculated on a state-by-state basis through UI or NDNH records. While states usually have detailed earnings information in their TANF administrative data for current recipients, they do not systematically track the earnings of former recipients because it would be relatively expensive to collect. Thus, UI or NDNH records provide the highest quality data at the lowest cost.

Using UI or NDNH data, however, means that earnings progression can only be measured between one three-month period (quarter) and a subsequent one. These records do not provide data on the number of hours worked, and so they can not be used to measure wage gains. Moreover, because individuals may start or stop working in the middle of a quarter, earnings in a quarter may reflect a period of unemployment rather than a job with low pay or few hours. This is particularly likely to affect the first quarter of earnings.