Status Report on Research on the Outcomes of Welfare Reform, 2001. Employment and Earnings

08/17/2001

Employment

Employment outcomes have been quite consistent across the 15 studies. Employment rates of former recipients ranged from 47 to 68 percent in the first quarter after exit according to administrative data (see Table 2). Moreover, employment rates remained fairly constant in the first year after exit in most study areas. This finding does not mean that the same 50 to 60 percent of leavers were employed every quarter. Some former recipients lost their jobs, while others found new employment, with the result that 62 to 90 percent of leavers had earnings at least once within the first four quarters after exit. Between 31 and 47 percent of leavers were employed in all four quarters (data not shown),(4) according to the eight studies reporting this statistic.

 

Table 2.
Employment Rates of Former Recipients
Grantee & Cohort CY(Qtr) Administrative Data:
Employment Rates
Survey Data:
Employment Rates
1st Qtr post exit 2nd Qtr post exit 3rd Qtr post exit 4th Qtr post exit Any of 4 Qtrs Employed at Interview Employed since exit
Arizona 98(1) 53 51 52 50 73 58 --
Florida 97(2) 50 51 53 54 71 57 --
Georgia 99(1)-00(1) 61 63 59 59 -- 69 --
Illinois 97(3)-98(4)* 54 53 53 54 69 63 85
Iowa 99(2) 57 42 39 38 69 61 --
Massachusetts 99(1)* 60 61 51 -- 68 71 --
Missouri 96(4)* 58 58 59 58 73 65 90
New York 97(1) 50 49 48 48 62 -- --
S. C. 98(4)-99(1) 67 68 67 63 90 60 --
Washington 98(4) 62 58 -- -- -- 59 86
Wisconsin 98(2)-(4)* 67 65 67 67 72 -- --
D. C. 97(4)* 54 58 50 52 -- 60 --
Cuyahoga 98(3) 68 64 67 64 82 70 92
Los Angeles 96(4) 47 46 46 47 -- -- --
San Mateo 98(4) 55 55 55 -- -- 57 --
Notes:  A recipient is considered "employed" if she or he has any earnings in UI-covered employment within the state, except: Cuyahoga and Los Angeles require >$100 per quarter, Washington also counts earnings reported to the welfare system, and D.C. uses data from the National Directory of New Hires. D.C. employment rates would be 8 percentage points higher if leavers without Social Security numbers were excluded from the denominator, as they are in New York, Missouri and possibly other studies.
* Rates are for single-parent leavers, except that Illinois, Massachusetts, Missouri, Wisconsin, and D.C. include small percentages of two-parent leavers.

Three of six jurisdictions analyzing employment across multiple cohorts found that recipients leaving welfare in 1998 had higher employment rates — by 5 to 10 percentage points — than those leaving in 1996 (data not shown). Two other two jurisdictions, however, found no change and one found a decrease in employment.

Administrative data do not capture all employment: quarterly earnings reported to the states' unemployment insurance (UI) programs do not capture earnings from self-employment, employment in the military or federal government, certain agricultural employment, and jobs across state boundaries. In fact, between 57 and 71 percent of former recipients reported working at time of interview. These self-reported employment rates from survey data were higher than the rates based on administrative data in all but one study (see Table 2). The vast majority of leavers - 85 to 92 percent - reported being employed at least once since exit. In addition, three studies found that the household employment rate (counting earnings of anyone in the household) was 9 to 15 percentage points higher than the individual rate for the leaver herself, or about 72 to 80 percent (data not shown).

Earnings

Median quarterly earnings of former recipients with jobs ranged from $1,900 in South Carolina to $3,400 in Washington, D.C. in the first quarter post-exit (see Table 3). In all reporting locations, quarterly earnings rose over the course of the year following exit.(5) Median hourly wages, as reported in survey data from eight studies, ranged from $6.50 to $9.00 an hour. Former recipients with jobs worked an average of 33 to 39 hours per week; median hours averaged 40 hours per week.

In sum, the studies were consistent in finding that about three-fifths of leavers were working, generally 40 hours per week, but with relatively low wages and intermittent spells of unemployment. To what extent do families with these patterns of employment and earnings support themselves, and to what extent do they rely on government programs for support?

 

Table 3.
Earnings of Former Recipients
Grantee & Cohort CY(Qtr) Administrative Data:
Median Quarterly Earnings
Survey Data:
Hourly Wages
1st Qtr post exit 2nd Qtr post exit 3rd Qtr post exit 4th Qtr post exit Mean wages Median wages
Arizona 98(1)** $2,211 $2,354 $2,695 $2,511 $7.52 --
Florida 97(2) $2,007 $2,168 $2,167 $2,329 -- --
Georgia 99(1)** $2,184 $2,319 $2,518 -- -- --
Illinois 97(3)-98(4) $2,471 $2,527 $2,614 $2,720 -- $7.41
Iowa 99(2) $2,177 $2,520 $2,332 $2,417 $7.54 --
Massachusetts 9(1)* $2,645 $2,754 $2,977 -- $8.46 --
Missouri 96(4)* $1,996 $2,171 $2,200 $2,535 -- --
S. C. 98(4)-99(1) $1,871 $1,807 $1,904 $2,148 -- $6.50
Washington 98(4) $2,387 $2,497 -- -- $7.70 $7.00
Wisconsin 98(2)-(4)* $2,272 $2,362 $2,278 $2,561 -- --
D. C. 97(4) admin.data*
D. C. 98(4) survey*
$3,416
--
--
--
$3,395
--
$3,934
--
--
$8.74
--
$8.13
Cuyahoga 98(3) $2,744 $2,489 $2,663 $2,754 $7.50 --
Los Angeles 96(4) $3,248 $3,156 $3,303 $3,290 -- --
San Mateo 98(4) $3,144 $3,439 $3,612 -- -- $9.00
Notes: Excludes leavers without earnings in the quarter. Earnings are reported in nominal dollars.
* Figures are for single-parent leavers, except that Massachusetts, Missouri, Wisconsin, and the District of Columbia include small percentages of two-parent leavers.
** Arizona and Georgia quarterly earnings are mean, rather than median, earnings. Median earnings would be somewhat lower.