UI as a Safety Net for Former TANF Recipients. Previous research on use of UI by TANF leavers


Some research was done on the interaction between cash assistance and UI before enactment of TANF. Based on employment patterns of women who received Aid to Families with Dependent Children (AFDC) and then left the program, Spalter-Roth, Hartman, and Burr (1994) estimated that only about 10 percent of those who left AFDC for employment would actually collect UI benefits if they subsequently became jobless. Kaye (1997) estimated that about 13 percent of women leaving AFDC would actually draw a UI benefit, while about 35 percent would accumulate sufficient earnings and work experience to qualify for UI (Table 2).


Table 2.
Previous Estimates for Welfare Leavers of Percentage Rates for UI Monetary and Non-Monetary Eligibility and UI Benefit Receipt
Authors Samples Monetarily
UI Eligible
Non-Monetarily UI Eligible Beneficiary of UI
Gustafson and Levine (1997) National Longitudinal Survey of Youth aged 14 to 22 in 1979. Data from 1979 to 1994 on 43,913 job separations including 4,213 by AFDC leavers. Up to 85% About 25% About 10%
Vroman (1998) Estimates based on 1996 UI state wage and earnings, state UI recipiency and eligibility rates, assuming part time minimum wage employment. Up to 20%
Holzer (2000) Estimates based on 1997-1999 employment and earnings of hired welfare recipients in a survey of 3,000 employers in 4 large American cities. Under 30%
Kaye (2001) Survey of Program Dynamics data for the year 2000 on 56,0000 persons. Simulated UI eligibility for those at risk of welfare receipt. 81% 36% 25%
Rangarajan, Razafindrakoto, and Corson (2002) New Jersey data from the Work First NJ evaluation tracking 2,000 TANF beneficiaries in the 18 months starting July 1997. 75% 40% 33%
Rangarajan, and Razafindrakoto (2004) National Evaluation of Welfare-to-Work grants in metropolitan counties in five states. TANF leavers September 1999 to August 2000. Each state sample ranged in size from 1,000 to 15,000. 90%

Gustafson and Levine (1997) examined leavers from AFDC using data from the National Longitudinal Survey of Youth and estimated the proportion who would satisfy simulated UI monetary eligibility in data spanning 1979 to 1994. Among those leaving welfare, they estimated that 70 to 85 percent would satisfy the monetary eligibility requirements for UI and about 25 percent of women with job separations would satisfy non-monetary eligibility requirements for UI. Since only a fraction of UI eligible unemployed actually draw UI compensation, they estimate about 10 percent of AFDC leavers would get UI benefits. They assert that the provision mandating that separations be “involuntary” would prevent most workers from gaining UI eligibility and conjectured that the UI system will provide little additional support to the safety net following welfare reform.

Vroman (1998) examined average earnings rates and UI eligibility requirements across states at the time TANF was implemented. He reported that about 35 percent of all unemployed persons receive UI benefits with that rate higher at the beginning of recessions and in states with weaker eligibility criteria. He speculated that compared to others in the workforce, TANF leavers are likely to have higher jobless rates, lower wage rates, higher rates of voluntary quits and discharges, and lower availability for full-time work. Vroman inferred that among jobless TANF leavers only about 20 percent will qualify for UI benefits. He warns that UI is not likely to evolve in ways that broaden eligibility for TANF leavers and that UI is, “likely to play a very limited support role for TANF leavers.” (Vroman 1998, p. 5)

Holzer (2000) examined earnings and employment of TANF leavers in the years immediately following implementation of TANF. Based on his survey of 3,000 employers in four large American cities between 1997 and 1999, he asserted that more claimants would qualify monetarily for UI than in earlier years. Nonetheless, Holzer warned that several remaining barriers to UI eligibility could be significant. These include: job separations due to voluntary quits and dismissals for cause, lack of availability for full-time work, and employment in informal jobs or others not covered by UI.

Kaye (2001) estimates the likelihood that workers at risk of public assistance receipt would meet UI monetary and non-monetary eligibility requirements in 2000. Her analysis uses the nationally representative Survey of Program Dynamics (SPD). Annual waves of the SPD include responses from about 16,000 households and 56,000 persons. She is able to simulate UI eligibility for all but the nine least populated states. She does not analyze welfare leavers, but rather those at risk of welfare receipt. She estimates that 81 percent of at-risk workers would meet the UI monetary eligibility requirements in 1998. Among these, Kaye estimates that less than three-quarters had a qualifying job separation, 40 percent were not available for full-time work, and 64 percent were unlikely to be both available and actively seeking work. The net result is a beneficiary rate of about 25 percent among likely UI applicants.

Rangarajan, Razafindrakoto, and Corson (2002) studied the extent to which former welfare recipients are likely to be eligible for UI and the rate at which those who leave TANF for work file UI claims. Their analysis is based on data from the Work First New Jersey (WFNJ) evaluation which tracks a representative statewide sample of 2,000 TANF recipients who were paid benefits during the first 18 months after TANF started in July 1997. They found that nearly 75 percent of those who left TANF for employment would be monetarily eligible for UI at some point during the first two years after TANF exit. Among these, about 40 percent would satisfy non-monetary eligibility requirements. UI ineligibility for non-monetary reasons would be twice as high among TANF leavers as for all other UI claimants in New Jersey. This could be driven in part by the TANF requirement to claim UI before returning to TANF. Overall, about one-third of TANF leavers would potentially satisfy both monetary and non-monetary eligibility criteria. Potential monthly UI benefits for this group would average about $866 per month, compared with maximum monthly TANF benefits of $424 for a family of three. Relaxing monetary eligibility requirements would modestly raise the share of TANF leavers who would qualify. Relaxing the weeks of work requirement has a greater effect than relaxing the earnings requirement. Alternative base-period rules that consider more recent earnings would allow TANF leavers to qualify for UI faster, but the proportion qualifying would not increase much.

Sanford et al. (2003) did a correlation analysis of factors related to UI monetary eligibility for a sample of 3,085 of the 3,097 welfare recipients in Wisconsin who left TANF for work in the second quarter of 1998. They found that monetary eligibility for UI had a strong positive correlation with being a high school graduate, and having access to child care and medical insurance coverage. They estimated a negative correlation between UI monetary eligibility and the presence of a child less than 6 years of age.

Rangarajan and Razafindrakoto (2004) study the extent to which former welfare recipients would have monetary eligibility for UI if they were to experience a qualifying job separation. They used data from the national evaluation of the Welfare-to-Work (WtW) Grants Program. The sample included those who left TANF for employment between September 1999 and August 2000. Employment and earnings were tracked for 8 calendar quarters after TANF exit. Sample sizes ranged between 1,000 and 15,000 welfare recipients who exited welfare for work in five sites in Maricopa County, Arizona; Cook County, Illinois; Baltimore County, Maryland; Philadelphia County, Pennsylvania; and Tarrant County, Texas. They estimated that 90 percent would potentially attain UI monetary eligibility in the two-year period after TANF exit, while between 50 percent and 80 percent would qualify in any quarter during the two-year period. The rate of potential monetary eligibility was estimated to increase with the length of time from TANF exit to first jobless experience. Rates of expected monetary eligibility were not sensitive to changes in program eligibility rules. Changes examined included adjustments to consider more recent earnings when determining benefit eligibility and relaxing rules requiring availability for full-time work.

View full report


"report.pdf" (pdf, 593.91Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®