Status of Research on the Outcomes of Welfare Reform, 2000. Follow-up on the Wisconsin Project for Tracking Former Welfare Recipients

12/01/2000

In fiscal year 1997, ASPE funded the University of Wisconsin Institute for Research on Poverty to conduct an administrative data study of the outcomes of families who left AFDC in Wisconsin during 1995. The reports produced during the first study provided useful early results for the Department on the short-term economic and employment outcomes of women who left AFDC prior to both the enactment of TANF and the implementation of Wisconsin Works (also known as W-2, Wisconsin's replacement for AFDC). For example, almost half (48 percent) of AFDC recipients in 1995 left welfare for at least two consecutive months between August 1995 and July 1996, but 30 percent later returned. Those who left and did not return were not as poor as those who returned; however, most families who left had incomes below poverty and only a small fraction had incomes above 150 percent of poverty.

A follow-up study, funded in FY 1999, builds on the earlier study and includes an examination of longer-term economic outcomes. Based on analyses of linked state administrative data, this study examines the employment and earnings outcomes of mother-headed families who stopped receiving cash assistance for at least two months beginning in the last quarter of 1995 or 1997. The Interim Report, Before and After TANF: The Economic Well-Being of Women Leaving Welfare, was published in May 2000 (see http://www.ssc.wisc.edu/irp/pubs/sr77.pdf). In comparing women who left welfare under early welfare reforms (i.e., in 1995) with those who left under Wisconsin's post-TANF welfare program (i.e., in 1997), the main findings are as follows:

  • While 1997 recipients appear to have more barriers to work (e.g., less education, more children, very young children) than those in 1995, the rate of exit is much higher in the second time period (i.e., post-TANF).
  • Nearly 70 percent of those leaving welfare in both cohorts left for employment, a somewhat higher employment rate than those found in our other studies (which are summarized earlier in this chapter) of women leaving welfare under recent reforms.
  • Over 80 percent of women in both cohorts had at least some earnings during the first year after exit.
  • Women in the second cohort who worked have lower earnings, are somewhat more likely to have multiple employers throughout the year, and are somewhat less likely to be employed in all four quarters after exit compared to women in the first cohort. (The data do not distinguish whether the multiple employers represent job changes during the quarter or multiple jobs.)
  • Those who left welfare in the last quarter of 1997 were somewhat less likely to return to welfare than those who left in the earlier cohort.
  • Participation in the Food Stamp Program is much higher among women who left welfare in 1997 than among those who left in 1995. For example, 82 percent of women who left welfare in 1997 received food stamps at some point during the first year after exit compared to only 57 percent of the earlier cohort.

In addition to pre- and post-TANF cohort comparisons, the study also examined the longer-term outcomes (i.e., three years after exit) of those women who left welfare in 1995. Several main points emerge from this analysis:

  • A majority of women who left welfare in 1995 (88 percent) worked at some point in the first three years after exit; however, the percent of women with at least some employment in a given year declined somewhat over the three-year period (from 81 percent in the first year to 77 percent in the third).
  • Among those who worked, earnings increased each year; however, three years after exit most of these women have earnings below 150 percent of the poverty line.
  • The proportion of families that would be classified as poor based on own earnings, estimated taxes and Earned Income Tax Credit (EITC) payments, the cash value