[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
EFFECTS OF WELFARE REFORM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
MAY 27, 1999
__________
Serial 106-9
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
58-372 CC WASHINGTON : 1999
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Human Resources
NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
RON LEWIS, Kentucky ROBERT T. MATSUI, California
MARK FOLEY, Florida WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of May 20, 1999, announcing the hearing................. 2
WITNESSES
U.S. Department of Health and Human Services, Howard Rolston,
Director, Office of Planning, Research and Evaluation,
Administration for Children and Families....................... 37
U.S. General Accounting Office, Cynthia M. Fagnoni, Director,
Education, Workforce, and Income Security Issues, Health,
Education, and Human Services Division......................... 85
______
American Enterprise Institute, and University of Maryland School
of Public Affairs, Douglas J. Besharov......................... 8
Center on Budget and Policy Priorities, Wendell Primus........... 29
Children's Defense Fund, Deborah Weinstein....................... 98
Manpower Demonstration Research Corporation, Robert C. Granger... 108
Maryland Department of Human Resources, Richard E. Larson........ 77
O'Neill, June, Baruch College.................................... 22
Wisconsin Department of Workforce Development, J. Jean Rogers.... 73
SUBMISSIONS FOR THE RECORD
NETWORK, statement and attachment................................ 147
Stark, Hon. Fortney Pete, a Representative in Congress from the
State of California, statement................................. 149
EFFECTS OF WELFARE REFORM
----------
THURSDAY, MAY 27, 1999
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:53 a.m., in
room B-318, Rayburn House Office Building, Hon. Nancy L.
Johnson (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
FOR IMMEDIATE RELEASE CONTACT: (202) 225-1025
May 20, 1999
No. HR-7
Johnson Announces Hearing
on Effects of Welfare Reform
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Human Resources of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on the effects of welfare
reform. The hearing will take place on Thursday, May 27, 1999, in room
B-318 of the Rayburn House Office Building, beginning at 10:30 a.m.
Oral testimony at this hearing will be from invited witnesses only.
Witnesses will include representatives from the Administration, State
welfare directors, child advocacy groups, and researchers. However, any
individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
The ``Personal Responsibility and Work Opportunity Reconciliation
Act of 1996'' (P.L. 104-193), dramatically changed American social
policy. Perhaps the most dramatic change was that the entitlement-based
Aid to Families with Dependent Children (AFDC) program was replaced
with the Temporary Assistance for Needy Families (TANF) program. The
new program has five major features. First, it ends the entitlement to
cash welfare created by the AFDC program. Second, it creates a block
grant with fixed funding that transfers a great deal of control over
welfare programs to the States. Third, the law requires both States and
individuals to meet stringent new work standards that require an
increasing percentage of the adults on welfare to be involved in actual
work; by 2002, 50 percent of the adults on welfare in every State must
be involved in a work program. Fourth, it imposes strong sanctions on
both States and individuals if they fail to meet program requirements.
Fifth, the law imposes a five-year limit on cash welfare benefits
funded by the TANF program. Taken together, these provisions represent
one of the most substantial changes in a major American social program
ever enacted.
It has now been well over five years since a majority of States
implemented welfare-to-work programs under waivers from pre-1996
welfare law, three years since enactment of the Federal welfare reform
law, and nearly two years since all States were required to implement
their work programs. Many research and evaluation studies have been
undertaken to study the effects of these programs on families, and many
studies have already published results. Thus, it is now possible to
formulate an initial judgment about whether the new work programs are
having their intended effects.
In announcing the hearing, Chairman Johnson stated: ``The 1996
welfare reform law is one of the most important pieces of legislation
enacted in recent years. Now we have a wealth of information about the
effects of the legislation on welfare programs and families on welfare.
We have examined this evidence carefully and come to the conclusion
that so far welfare reform has been a solid success. There are some
issues we need to carefully address--and we are committed to do that--
but I believe an unbiased assessment of the evidence is that the
nation's welfare programs are at last helping poor and low-income
Americans find work and improve their economic status.''
FOCUS OF THE HEARING:
The goal of this hearing is to review important evidence on the
effects of welfare reform, more specifically, information available on
the details of state implementation, State spending, caseload declines,
women's labor force participation, poverty, and the income of female-
headed families.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect 5.1 format, with their name, address, and
hearing date noted on a label, by the close of business, Thursday, June
10, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Human Resources office, room B-317
Rayburn House Office Building, by close of business the day before the
hearing.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
be submitted on an IBM compatible 3.5-inch diskette WordPerfect 5.1
format, typed in single space and may not exceed a total of 10 pages
including attachments. Witnesses are advised that the Committee will
rely on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
comments in response to a published request for comments by the
Committee, must include on his statement or submission a list of all
clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the
name, company, address, telephone and fax numbers where the witness or
the designated representative may be reached. This supplemental sheet
will not be included in the printed record.
The above restrictions and limitations apply only to material being
submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press,
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Chairman Johnson of Connecticut. Good morning. My
apologies for starting this hearing late. I do not like to do
that. The journal vote detained us, and it is hard to get away.
We are here today, though, on a very, very important
purpose. It is very important when you legislate to look back
at what you did--not something that the Congress has been
strong on, but something that is very, very important. And
today, we are going to take a sustained look at what we know
about the effects of the welfare reform legislation that we
passed 3 years ago.
We have a group of witnesses who represent the academic
world, government research, program administration, and the
advocacy community. There will be some disagreements, and that
is healthy. We need to know what those who are out there in the
field following this more closely are concluding about what is
working and what problems remain.
I urge those who have come today and everyone interested in
the effects of welfare reform to read the papers that have been
submitted for today's record. They are sophisticated, based on
national data, well-reasoned, and provocative. This is exactly
the way democracy is supposed to work, and I am proud to be
part of the process and proud of all of you who have brought
the information that we need to us today.
The Republicans have also published a report that details
some of the information about how welfare reform has worked.
There has been a dramatic change in the offices, in the
bureaucracy, amongst the people administering the program, and
frankly, rarely in my 22 years in government have I passed laws
that actually have affected the environment, the mindset, what
is happening in the offices between government and its people
to the degree that welfare reform has succeeded in doing that.
We needed to jostle ourselves up, and we have done that. And I
have been really excited to read some of the reports that have
been done as to what actually is happening out there in the
offices and for the people.
I have been startled and proud of the drop in the number of
people on welfare; the rise in the amount of money that the
States have per welfare recipient to deal with the kinds of
problems that many still face; the drop in poverty and child
poverty, and particularly in black child poverty; the rise in
the number of women heads of households that are now in the
work force. The statistics at this point are for only a few
years, but they are startling. They are unprecedented, both in
their dimensions and in the consecutive number of years that we
are seeing trend lines develop. We have made some profound and
significant change. That does not give us the right to rest.
This Subcommittee will be developing a ``welfare reform
two'' bill, and it is for that reason that we are holding this
hearing, as we held hearings on fatherhood issues earlier.
[The opening statement follows:]
Opening Statement of Nancy L. Johnson, a Representative in Congress
from the State of Connecticut
I have seldom looked forward to a hearing as much as I have
looked forward to this one. Today we are going to take a
sustained look at what we know about the effects of the welfare
reform legislation we passed nearly 3 years ago. To help us
with this examination, we have invited a dazzling set of
witnesses who represent the academic world, government
research, program administration, and the advocacy community.
I'll bet we will have some disagreements among our
distinguished witnesses.
I urge those who have come today and everyone who is
interested in the effects of welfare reform to read the papers
submitted for the record of today's hearing. They are
sophisticated, based on national data, well reasoned, and in
many cases provocative. This is exactly the way democracy is
supposed to work. We passed an important law; now we want to
study its effects. And much to my delight, we find that truly
intelligent, dedicated, and honorable people have been
conducting illuminating studies of the effects of the welfare
law. Here is something we can all agree on--We have a lot to
learn.
Unfortunately, our witnesses do not all come to the same
conclusions. As always, it is up to members of this committee
to survey the evidence and come to our own lessons for public
policy.
If there is to be disagreement, let me speak for myself and
Republicans on our Committee. This morning, Republicans
published a detailed report of what we know to date about the
impacts of welfare reform. Here are the results in brief:
1. There has been dramatic change in welfare offices around
the country. Now when able-bodied adults walk into the welfare
office, they are given help preparing for and finding work.
They are given to understand that welfare is temporary and they
must learn to support themselves--with government assistance if
necessary. Most respond positively. For those who refuse to
work toward self-reliance, sanctions in the form of benefit
reductions are frequently employed.
2. There has been an amazing decline in the welfare rolls.
Since the summer of 1994, the rolls have declined 45 percent.
This decline is completely without precedent in the history of
American social policy. By comparison, the biggest continuous
decline in the AFDC rolls between the Korean War and the
enactment of welfare reform in 1996 was 8 percent.
3. There has been a big increase in the per-family money
available to states to both pay cash benefits and to help
people move into the work force. There has been no race to the
bottom. In fact, if states use their money wisely, they can
maintain benefits and launch new and sophisticated programs to
help even very disadvantaged adults get into the labor force.
4. There has been a striking increase in labor force
participation by mothers. In 1997 we saw an increase of well
over 400,000 in the number of mothers working. Even more
important, between 1993 and 1998, the number of never-married
mothers in the labor force increased 40 percent.
5. Although many predicted the strong work requirements and
time limits in the welfare reform law would increase poverty,
in fact the poverty rate has declined every year as the welfare
rolls were plummeting. In 1997, for example, while the welfare
rolls were falling 20 percent, the biggest single-year decline
in history, overall poverty, child poverty, and poverty among
minority children all declined. In fact, the decline in poverty
among black children was the largest ever.
6. For the first time in several generations, the ratio of
nonmarital to marital births has leveled off and the rate of
nonmarital births per 1,000 unmarried women has even declined
modestly--and in 1998 the rate of teen pregnancy declined for
the sixth year in a row.
We do not argue that all these outcomes were caused by the
welfare reform law. But there is strong evidence that some of
them were. And even a cynic must agree that we're witnessing
some very positive social trends in our nation.
Later this year our Subcommittee will study some of the
problems we see in the implementation of welfare reform. But by
the end of our hearing today, I believe we will find that there
is lots of positive news and very modest bad news.
Chairman Johnson of Connecticut. So with that, I would like
to yield to my Ranking Member, Mr. Cardin, again, with my
apologies to Mr. Cardin and my colleagues on the Subcommittee
who had to wait and to all of you.
Mr. Cardin. Thank you, Madam Chair. And, Madam Chair, let
me compliment you for holding this hearing on the oversight of
welfare reform. I think that is one of the most important
responsibilities of this Subcommittee.
I must tell you--and I would ask that my entire statement,
which is very well balanced, be put into the record--my
comments may not be so balanced right now. And my reason is
that it is my understanding that the Republicans held a press
conference before the hearing, which is a little bit unusual,
to talk about all of their partisan accomplishments on welfare
reform.
I find that regrettable. Reading from the Republican
statement, they said this system was especially generous in
cases of families with children--like it is some crime for us
to take care of children in our society. I would hope that we
would be generous for children in our society. And I was
disappointed that the Republican news conference did not talk
about the 1993 economic program that was passed with Democratic
votes only. It gave us the strong economy we have right now, in
which welfare reform has a much better chance of success
because of what is happening in our economy.
Madam Chair, I am one of those who voted for the welfare
reform bill and worked very hard with Democrats and
Republicans, so that we could change our welfare system. We did
not do that in a partisan way. We did it because we thought the
current system needed to be changed. But make no mistake about
it, we have not achieved our objectives of welfare reform.
Our goal is not to reduce the welfare rolls. Our goal is to
reduce poverty. And as we look at the some of the recent
statistics--we have major concerns as to whether, in fact, we
are reducing poverty in our country. We find that, yes, people
are moving from welfare to work, but, in many cases, they are
worse off than they were before, and not able to continue in
the job for long periods of time. We are finding that a lot of
people who are being forced off of welfare are living in
poverty. What are we doing about that?
People who are entitled to food stamps and Medicaid are not
being enrolled. Why? In some cases, we think that the States
are being overly aggressive, in some cases violating law. Is
that success? I do not think so. These are concerns that I
would hope all of us would have, Democrats and Republicans.
There is a child care gap in our society. It is very
difficult for people to be able to afford decent child care.
Recent events tell us one thing--tell us many things--is that
we have to do a better job in society of taking care of our
children. Is welfare reform succeeding in that regard? I think
that is an open issue and one that we need to debate. Many
individuals have multiple barriers to being able to find
employment. And yet, what are we doing for that population?
Very little.
And then for noncustodial fathers, Madam Chair, you and I
have both talked about doing more for noncustodial parents. So
before we start bragging that we have accomplished our job, let
us look at what is really happening in our community. We have a
long way to go. Yes, we made some initial progress in this
area, but we have a long way to go, and we are never going to
be able to achieve it by partisan news conferences before very
serious hearings.
I regret the way that we have started today's hearing, and
I know the Chair and I know how well she wants to work in a
bipartisan way, and we have worked in a bipartisan way. But I
would hope that this hearing can be conducted in a bipartisan
way; that we can work together for the next chapter of
improving everyone's lot in our society.
[The prepared statement follows:]
Opening Statement of Hon. Benjamin L. Cardin, a Representative in
Congress from the State of Maryland
Madame Chairman, overseeing the implementation of welfare
reform is one of the most important responsibilities of this
Subcommittee. I therefore commend you for holding this hearing
to evaluate the impact of welfare reform on low-income
families.
Before we immerse ourselves in statistics and research
findings, I want to offer a few words of general caution to
both supporters and opponents of welfare reform.
To my friends who may have grave misgivings about the
legislation enacted by Congress almost three years ago, I urge
you not to simply wait for welfare reform to fail. The initial
success States have shown in moving many welfare recipients
into work provides a tremendous opportunity to promote the
permanent self-sufficiency of millions of individuals, not to
mention future generations. With the lowest unemployment rate
in 29 years, there may never be a better time than today to
help even the hardest-to-employ get a foothold in the
workplace.
And to my colleagues who may have concluded that the work
on welfare is done, I remind you that the purpose of welfare
reform is to reduce poverty, not caseloads. On this central
issue, the preliminary data on welfare reform sends us two
cautionary messages.
First, some portion of the poorest Americans have fallen
even deeper into poverty because they have been sanctioned off,
or diverted from, welfare. The rise in the reported use of food
banks and soup kitchens during such a strong economy appears to
reflect this trend, which should be a concern to all of us.
And second, many of those leaving welfare for work have yet
to leave poverty for a better life. Employment is very
important, but replacing a generation of welfare-dependent poor
with a generation of working poor is not my definition of
success. Such a result would strike at the very heart of our
uniquely American concept that every citizen can make a better
life for themselves, and for their children, through hard work.
Therefore, we should not only assist welfare recipients in
finding employment, but we must also help them keep and improve
their jobs. In other words, our focus should evolve from job
placement to career development.
I look forward to hearing from our witnesses on this
critical issue of transforming recent employment gains into
permanent poverty reductions.
In addition, I hope our witnesses will explore four issues
that are important to the long-term success of welfare reform.
First, there are disturbing reports about reduced access to
food stamp and Medicaid benefits for individuals leaving or
being diverted from cash welfare. This Subcommittee needs to
hear how widespread this practice is and how best to prevent
it.
Second, there is evidence that most States are spending the
vast majority of their child care funding on individuals
exiting welfare, leaving little if any resources for other poor
families. In fact, it appears many low-income, working families
have fallen into a child care gap--caught between ineligibility
for day care subsidies and not benefitting from child care tax
credits. I would like to hear from our experts about the need
for increased child care assistance for these families
attempting to meet the dual challenges of working and raising a
family.
Third, I hope to hear suggestions about how to help welfare
recipients with multiple barriers to work, such as a substance
abuse problem, a disability, or the lack of a high school
degree, make the transition to employment.
And fourth, I would like to hear recommendations about how
to help non-custodial fathers play a greater role in the lives
of their children.
I will close by reminding the Subcommittee that the
Administration's proposal to reauthorize the Welfare-to-Work
program addresses both the need to help hard-to-employ welfare
recipients and the need to assist fathers in supporting their
children. And of course, the President's proposal to increase
child care funding would make great strides in filling the
child care gap faced by millions of working families.
Madame Chairman, I look forward to a detailed discussion of
these and many other issues. Thank you.
Chairman Johnson of Connecticut. Well, I certainly hope so,
too. There were certain partisan controversies during the
welfare reform debate. Luckily, they mostly came together in a
lot of bipartisan agreement, but I think the revolution that
has made welfare reform a success is truly a bipartisan
revolution, because it has to do with expanding the EITC, the
earned income tax credit, which certainly was in the
President's proposal as has been in Republican Presidents'
proposals, and the other support systems for working people,
and we did certainly point out that bipartisan aspect of the
revolution.
We will call the first panel now.
Mr. Camp. Madam Chairman, if I could make a comment?
Chairman Johnson of Connecticut. Well, certainly.
Mr. Camp. I just want to say that I think, when we got to
the end of the welfare process, it became fairly bipartisan,
but it certainly did not start that way. And I think you are
very gracious in your comments, and I certainly admire that.
But we had a lot of partisan shots, and I do not think the fact
that some Members hold a news conference is going to affect
what we do in this hearing. There are news conferences all over
this Hill every day and on every issue, and you certainly
cannot control what people say.
You know there has been tremendous progress made. We are
all here because we know there is more we need to do. And I
just want to be a part of doing that, but I do not really see--
and I was not at that press conference, so I do not know
exactly what was said there, but I do not think that is going
to get in the way of what we are trying to do here.
Chairman Johnson of Connecticut. Thank you, Mr. Camp.
Now we call the first panel: Doug Besharov, resident
scholar of the American Enterprise Institute; June O'Neill,
Wollman Professor of Economics at the Zicklin School of
Business, Baruch College, New York; Wendell Primus, director of
income security, Center on Budget and Policy Priorities; and
Howard Rolston, Director of the Office of Planning, Research
and Evaluation, from HHS.
Mr. Besharov.
STATEMENT OF DOUGLAS J. BESHAROV, RESIDENT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE; AND PROFESSOR, UNIVERSITY OF MARYLAND
SCHOOL OF PUBLIC AFFAIRS
Ms. Besharov. Thank you very much, Chairman Johnson and
Members of the Subcommittee. Thank you for inviting me to
testify here today. Like most of the other witnesses today, I
find that the result of welfare reform has been more work and
less dependency. My testimony is long and has a number of
charts. Chart 1 portrays what you all know, which is the sharp
decline in the caseload.
Although a strong economy, no doubt, helped a lot to reduce
this caseload, and the major expansions of aid to the working
poor, as Chairman Johnson mentioned, also has helped, I think
most impartial experts agree that without welfare reform, the
caseloads would not have fallen nearly as much as they did. And
that is widely agreed upon, even by the administration, by
outsiders, and so forth.
Why is that? Because the key elements of welfare reform--
work first, diversion, job search, yes, even sanctions and time
limits--encourage mothers to work, help them to work, and make
some other mothers think twice before seeking benefits. I will
get back to that point in a moment.
So what is happening to the people who have left the rolls?
That is the big question, and that is the question that Mr.
Cardin mentioned, and which I think Wendell Primus will be
talking about as well.
Today's Washington Post summarizes the GAO report. My own
sense is that the GAO report is about right, although if I use
the phrase regular work as opposed to any work, it is more in
the neighborhood of 50 to 60 percent. What about those leaving
welfare who are not working? Either way, we have large numbers
who are not working.
My own work, and I think those of many others, suggests
that many of those leaving are living with others, living in
households either with their parents, relatives, or a
boyfriend, often with the boyfriend being a parent of one of
their children.
And that is why so many people are worried that the folks
who have left welfare are suffering more hardship. So my
testimony, the rest of it, is really somewhat defensive, and I
wasn't sure how I was going to bring it up until I heard Mr.
Cardin speak.
Let me draw your attention to my chart 2, which is
relatively complicated. I am not going to walk you through it.
I just want you to see that especially between 1994 and 1998,
the Congress has sharply increased child care spending to about
$3 billion a year by 1998. My assessment, which is in my
testimony, and which I believe is concurred--I do not want to
assert that too strongly--by the Children's Defense Fund, is
that there is enough money in what you all have already passed
to meet the child care needs of people leaving welfare. The big
issue is the working poor. That is a different issue, but for
welfare reform, I think there is no disagreement that you all
have appropriated enough money.
Second, there has been an argument--and Mr. Cardin
mentioned it--about declines in food stamp participation, so I
am glad that I have chart 5, which actually is a play on
something that the center on Budget and Priorities presented.
The center tends to talk about the period from 1995 to 1997 in
order to show that a large number of people--I think six times
larger--left food stamps than left poverty.
However, if you examine the longer period, from 1993 to
1997, and if you include the people excluded from the Food
Stamp Program by policy decisions of this Congress, mainly
legal aliens and able-bodied workers, what you find in chart 5
is that the differences between the declines in food stamps and
the declines in poverty are about equal. As usual in this town,
it depends on when you measure.
Getting to measurement issues, take a look at chart 6.
Again, in the time I have I won't walk through this whole
chart, but what this says is you should take everyone's
statistics, including mine, with a grain of salt. Most analyses
use the Current Population Survey of the Census Bureau to
determine what is happening to low-income Americans. This chart
shows you that, whether it is Medicaid receipt, AFDC, Aid to
Families With Dependent Children, TANF, Temporary Aid to Needy
Families, or food stamps, the Census is becoming increasingly
unable to measure accurately participation in these programs.
If you look at these numbers, we are talking about only 65
percent of TANF recipients being identified.
Where does that take me in conclusion? Again, take all
these numbers with a grain of salt. There is a concern that Dr.
Primus mentions about the reductions in income among the lowest
quintile of single-mother families. You will see in my last
chart, chart 7, that if you look at households, that is, where
these families live: First, the income is almost twice as high
as what we are used to seeing. And second, there is not a
downward trend in the income.
What this says to me is that when we think about welfare
reform, we should think not just about people leaving welfare
for work, but we should also think about the households in
which these families are embedded. And we should be worrying
about the well being of those households. And in the 10 seconds
or so I have left, what that means is strengthening those
relationships when they are cohabitations. I applaud the
Subcommittee, because I understand that you are considering
legislation to help erase the marriage penalties, both in the
tax law in general, but more particularly in the EITC and in
child support. Those marriage penalties affect these numbers
very directly.
Thank you very much.
[The prepared statement and attachment follow:]
Statement of Douglas J. Besharov, Resident Scholar, American Enterprise
Institute; and Professor, University of Maryland School of Public
Affairs
Chairman Johnson and Members of the Subcommittee on Human
Resources:
Thank you for inviting me to testify about the impact of
the 1996 welfare reform law and associated policy changes. My
name is Douglas Besharov. I am a resident scholar at the
American Enterprise Institute for Public Policy Research, where
I conduct research on children and families. I am also a
professor at the University of Maryland School of Public
Affairs, where I teach courses on family policy, welfare
reform, and evaluation.
Welfare reform in 1996--embodied in the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(PRWORA) and the Temporary Assistance for Needy Families (TANF)
block grant--resulted in massive changes in the operations of
state and local welfare agencies. Many have gone from being
check-writing offices to being engines of employment and
personal and family responsibility. Contemporaneously, welfare
caseloads declined sharply. (This was actually the first
serious caseload decline in at least 30 years.) Although the
strong economy helped, experts are unanimous that ``welfare
reform'' is a major explanation for this unprecedented
decline--now reaching 44 percent since March 1994. (Chart 1.)
[GRAPHIC] [TIFF OMITTED] T8372.014
Even many of the harshest critics of the welfare reform law
have been impressed with what has been accomplished. Besides
lower caseloads, there has been an explosion of work among
never-married mothers with children--the women most likely to
become long-term welfare dependents. Since 1993, their
employment rate has risen from 44 percent to 61.5 percent.
I recount some of these developments below. But my real
focus is on the concerns of those who say that this decline in
welfare and increase in work has been accompanied by increased
levels of material hardship on what once would have been
welfare families. Any such increase in material hardship should
be of concern to us all. If we found increased hardship, we
would have to make the difficult ethical determination about
whether the hardship was justified by all the good that has
also been accomplished by the welfare reform law. However, and
this is the key point in my testimony, with the measures
available, there is no evidence of significant increases in
material hardship.
Why Caseloads Are Falling
As I mentioned, welfare rolls are down an amazing 44
percent since their historic high in March 1994. That's about
2.2 million fewer families (or about 6.7 million fewer parents
and children) on welfare. At least fifteen states have seen
declines of over 50 percent. Fewer families are going on
welfare, and more are leaving.
Unfortunately, political credit claiming and ideological
preconceptions, assisted by limited data, have obscured what is
really going on. There is nothing new in that, of course. But
without a true understanding of what is driving down welfare
rolls, we cannot judge whether the decline is a good thing, nor
capitalize on its lessons.
A strong economy is the obvious first explanation, and the
one most attractive to those who think that welfare dependency
is largely a reaction to a lack of opportunity. Between January
1994 and September 1998, for example, the unemployment rate
fell a remarkable 30 percent, from 6.7 percent to 4.6 percent.
In that period, 7.5 million more people entered the labor
force. Even more striking: Never-married mothers, the group
most prone to long-term welfare dependency, are 40 percent more
likely to be working since 1993 (from 44 percent to 61.5
percent).
But we have had strong economies before, without such sharp
declines in welfare. In fact, most studies suggest that the
good economy accounts for no more than about 20 percent of the
total decline. What else is going on?
The end of the welfare entitlement, or, as Candidate Bill
Clinton used to say, the ``end of welfare as we know it,''
seems to be the best explanation. Across the nation, the
culture of welfare offices has changed--from places where
mothers sign up for benefits to places where they are helped,
cajoled, and, yes, pressured to get a job or rely on others for
support.
Many welfare offices are now ``job centers,'' where workers
help applicants and recipients find employment. Depending on
the office, they teach how to write resumes and handle job
interviews; provide access to word processors, fax machines,
telephones and even clothes; offer career counseling and
financial planning services; and refer them to specific
employers with job openings. In a survey of former welfare
recipients in Texas who left the rolls in December, 1996, over
60 percent said the welfare agency ``gave me the kind of help I
needed.''
Some of this is boosterism, plain and simple, with workers
giving young mothers the moral support they so often need. As
one worker said, ``Some of these women never thought that they
could get a job. We give them the confidence to try.''
Also helping are the recent massive increases in federal
aid to low-earning parents, to ``make work pay.'' Since 1993, a
conservative estimate is that total aid to the working poor
increased by about $30 billion, almost doubling. For example,
between 1993 and 1997, the Earned Income Tax Credit's cash
subsidy to single mothers with two children working full-time
at the minimum wage more than doubled, rising from $1,511 to
$3,656. Often of even more importance to mothers with young
children, most welfare agencies can now offer child care to any
applicant or recipient who gets a job.
This genuine help to mothers--and it permeates the
implementation of welfare reform in most states--unquestionably
assists many to leave welfare for work. But this isn't the
whole story: Only about half the mothers who leave welfare seem
to have jobs, often very low-paying jobs. The other half are
just leaving--perhaps to work eventually, but more immediately
they are moving in with family, friends, or boyfriends, or
being supported by them. Some are simply getting by with less
income. (So far, there is little evidence of more marriage,
even though that has traditionally been a major reason for
leaving welfare.) Why are they leaving without having jobs?
The other palpable aspect of welfare reform has been the
reintroduction of a long-gone aspect of being on welfare:
hassle. In most places, a new element, ``diversion,'' has been
added to the application process. Diversion is encapsulated in
two simple questions now asked of welfare applicants: Have you
looked for a job? Can someone else support you? Many welfare
agencies maintain a bank of phones that applicants must use to
call 5, 10, or even 20 potential employers before they can
receive benefits. When told of these requirements, many
applicants simply turn around and walk out.
New York City's ``Job Centers,'' for example, exemplify
this interplay between new welfare's help and hassle. All
applicants are encouraged to look for work (and offered
immediate cash support for child care) or support from
relatives or other sources. For those who still decide to apply
for welfare, the new rules require that they go through a 30-
day assessment period during which they complete the
application process and go through a rigorous job-readiness and
job-search regimen involving many sessions at the Job Center
and other offices. At the end of this period, eligible able-
bodied adults who choose to receive assistance are required to
participate in the city's workfare program. As a result, the
percentage of mothers who walk in the door who are eventually
enrolled has fallen by about 40 percent, from about around 50
percent to around 30 percent.
Being on welfare has also changed with the imposition of
various mandatory activities. In almost all states, recipients
are required to sign ``self-sufficiency agreements'' describing
their plan for becoming self-sufficient within a specified time
frame. Iowa, for example, requires able-bodied recipients
without infant children to develop and sign a Family Investment
Agreement, which describes the person's plan for becoming self-
sufficient within a specified time frame. Failure to sign or
comply with this agreement can result in an initial reduction
in benefits, followed soon thereafter by complete termination
of cash assistance. About 10 percent of those who begin this
process have their benefits terminated for a six-month period
for failure to sign or comply with the agreement.
Although these new requirements are intended to help
recipients find and keep jobs, they undeniably raise what
economists would call the ``cost'' of being on welfare. By a
rough calculation that assumes recipients value their time at
the minimum wage, this kind of hassle can reduce the advantage
of being on welfare versus working to zero in very low-benefit
states and, nationally, can reduce the advantage by about 50
percent.
How much of a factor is this hassle? When these new
requirements are explained to applicants and recipients, they
often say things like: ``I guess I might as well get a real
job'' or ``I might as well move back home.'' In the survey of
Texas recipients leaving welfare, about a quarter said that
important factors were either ``unfriendly caseworkers'' or
``new program requirements.'' And in a survey of those who left
welfare in South Carolina between January and March 1997, 60
percent said they felt ``hassled,'' and 13 percent said that's
why they left. About a third said that the state's welfare
program ``wants to get rid of people, not help them.''
So far, at least, this combination of helping and hassling
mothers off welfare--and discouraging them from signing up in
the first place--does not seem to have caused undue hardship.
Surveys of those who have left welfare indicate that, although
some are worse off, most families are doing as well or better
after having left. Perhaps more tellingly, despite intensive
efforts, journalists have found few horror stories with which
to document the harmful effects of welfare reform. And in the
same South Carolina survey where 60 percent of those who left
welfare complained about being hassled, 80 percent said that
the caseworkers treated them ``with perfect fairness.'' Only a
quarter reported that ``life was better'' when they were
receiving welfare.
Indeed, an analysis by Richard Bavier of the Office of
Management and Budget suggests that the decline in welfare
benefits caused by families leaving welfare was offset by two-
or three-fold gains in income due to work. According to Bavier,
from 1993 to 1997, female family heads with children
experienced reductions of $6.7 billion in cash welfare and $2.1
billion in food stamps. However, their earnings increased by
$26.9 billion and their EITC benefits by $5.1 billion. After
including taxes and other noncash benefits in the calculation,
he finds that ``income for this family type increased $19.6
billion in 1997 dollars.''\1\ Although household surveys have
problems of underreporting or misreporting income, the
magnitude of this income gain suggests that it is both real and
substantial.
---------------------------------------------------------------------------
\1\ Richard Bavier, ``An early look at the effects of welfare
reform,'' March 20, 1999, p. 7.
---------------------------------------------------------------------------
As I note below, some argue that these overall gains mask
losses in income among the poorest female-headed families. For
example, Wendell Primus of the Center on Budget and Policy
Priorities has written: ``Between 1993 and 1995, the earnings
and incomes of the poorest fifth of single mother families
increased despite a modest decline in income from welfare
programs. Between 1995 and 1997, however, the very poorest
single mother families faced a significant decline in their
incomes after including all government taxes and transfers
largely due to sizeable declines in their welfare
assistance.''\2\ For the reasons I describe below, I think that
the available data does not support this conclusion.
---------------------------------------------------------------------------
\2\ Wendell Primus, Testimony before the Committee on Government
Reform and Oversight, April 22, 1999.
---------------------------------------------------------------------------
Assessing Welfare Reform
Others today, I am sure, will discuss these developments in
greater detail. Let me focus on the concerns that have been
raised by various advocacy groups.
1. Insufficient child care? During the debate leading up to
the passage of TANF, the provision of adequate child care was a
major bone of contention. As a result, the Congress sharply
increased funding. Was it enough? Testifying before this
committee on March 16 of this year, Helen Blank of the
Children's Defense Fund said: ``enormous gaps still remain in
our efforts to help low-income parents work and take care of
their children. Much more needs to be done to ensure that
families on welfare have the child care assistance they need to
get and keep jobs, without sacrificing low-income families who
are struggling to keep their jobs and stay off welfare.''\3\
---------------------------------------------------------------------------
\3\ Testimony of Helen Blank, Director, Child Care and Development,
Children's Defense Fund, before the Ways and Means Committee, March 16,
1999; p. 4.
---------------------------------------------------------------------------
I have tried to calculate child care needs under welfare
reform compared to this increased funding. Between 1994 and
1998, state and federal child care spending increased by at
least $3.1 billion. If the President's FY 2000 proposals are
approved, they will add another $3.053 billion. Furthermore, if
states use their unexpended TANF funds for child care, that
could add another $4.302 billion by the year 2000. (Chart 2.)
[GRAPHIC] [TIFF OMITTED] T8372.015
As my third chart illustrates, states have enough money to
cover the child care needs generated by welfare reform--so long
as they are not forced to monetize and formalize child care.
(Chart 3.) That is, so long as we do not discourage family
members from caring for children without charging the
government and so long as we do not drive low-cost providers
out of business with onerous (and, in the end, sterile)
regulations.
[GRAPHIC] [TIFF OMITTED] T8372.016
2. Declines in Food Stamp receipt? The critics of welfare
reform often compare changes in program caseloads to changes in
poverty to make claims about the effects of public policy.
Consider a recent statement released by the Center on Budget
and Policy Priorities:
During the two-year period from 1995 to 1997, the decline in
the number of people receiving food stamps--4.4 million--was
five times greater than the decline in the number of people
living in poverty.
The food stamp figures are especially noteworthy because the
income limit for food stamps is slightly above the poverty
line; as a result, families moving from public assistance to
low-wage work that leaves them in poverty do not lose
eligibility for food stamps. These data indicate that the
reductions in the number of households receiving food stamps
have exceeded reductions in need and that the proportion of
poor people receiving basic food assistance to help them secure
an adequate diet has declined.\4\
---------------------------------------------------------------------------
\4\ Center on Budget and Policy Priorities, ``Poverty Rates Fall,
but Remain High for a Period With Such Low Unemployment,'' October 8,
1998.
This analysis is very misleading. It is very sensitive to
the time period chosen. The 1995-1997 period chosen by the
Center just happens to be the one that shows the greatest
difference in the decline between the number of poor and the
number receiving food stamps. Had the Center used 1993 as the
starting point of its comparison, a very different picture
would have emerged. (Chart 4.)
[GRAPHIC] [TIFF OMITTED] T8372.017
Between 1993 and 1995, for example, the figures were
reversed. The decline in poverty was 3.3 times greater that the
decline in food stamps. Thus, if the Center had viewed the
period 1993-1997, the declines would have been more comparable:
5.2 million fewer food stamp recipients compared to 3.7 million
fewer people living in poverty. That would be a decline in food
stamp receipt 40 percent greater than the drop in the number of
poor, not five times greater. (Chart 5.)
[GRAPHIC] [TIFF OMITTED] T8372.018
Furthermore, part of the decline in the food stamp rolls
can be attributed directly to policy decisions contained in the
1996 welfare reform law to remove from the Food Stamp program
certain immigrants and unemployed childless adults (ABAWDs).
According to the U.S. Department of Agriculture, the 1996
welfare reform law made about 1.3 million food stamp
recipients, primarily immigrants and unemployed childless
adults, ineligible for benefits.\5\ Indeed, from July 1996 (the
month before the landmark welfare reform legislation passed) to
September 1997, the number of permanent resident aliens and
ABAWDs declined by 953,000 and 477,000, respectively, for a
total decline of 1.43 million.\6\
---------------------------------------------------------------------------
\5\ Craig Gundersen, Michael LeBlanc, and Betsey Kuhn, ``The
Changing Food Assistance Landscape: The Food Stamp Program in a Post-
Welfare Reform Environment,'' U.S. Department of Agriculture, Economic
Research Institute, Agricultural Economic Report No. 773, March 1999,
p. 5.
\6\ Scott Cody and Laura Castner, Characteristics of Food Stamp
Households: Fiscal Year 1997 (Alexandria, VA: U.S. Department of
Agriculture, Food and Consumer Service, February 1999). The declines
using the average monthly caseloads for FY 1996 to FY 1997 are bit
smaller: 440,000 and 174,000 for a total of 614,000.
---------------------------------------------------------------------------
Taking this longer view and accounting for the deliberate
removal of certain groups from the Food Stamp program almost
erases the difference in declines between poverty and food
stamp recipiency.
I want to emphasize that I believe that the intersection of
the Food Stamp and welfare programs has received insufficient
policy attention. The two programs are in desperate need of
coordination, as I wrote in a recent article for Policy &
Practice, of the American Public Human Services Association.
But that is a very different point.
3. Declines in Medicaid Coverage? A recent report from
Families USA asserts that ``state administrative systems often
continue to treat Medicaid as an extra welfare benefit. This
means that when a family is terminated from welfare, its
Medicaid case is often closed at the same time. Because the two
programs remain connected in the minds of caseworkers and
recipients as well as in state computer eligibility systems,
the new emphasis on closing welfare cases as quickly as
possible is causing many families to be cut off Medicaid, even
when they are still eligible.''\7\ Perhaps, in some places. But
that seems to be a substantial exaggeration of state practices.
---------------------------------------------------------------------------
\7\ Families USA Foundation, Losing Health Insurance: The
Unintended Consequences of Welfare Reform, by Rachel Klein (Washington,
D.C.: Families USA Foundation, May 1999), p. 7.
---------------------------------------------------------------------------
First, there has be a decline in Medicaid recipiency. Two
prime reasons are the strong economy and welfare reform
(including the delinking of Medicaid and TANF eligibility).
Another reason is that many families that are Medicaid eligible
simply forego signing up until a family member gets sick
(something that was almost automatic under AFDC). After all,
unlike private insurance, there is no pre-existing condition
rule for Medicaid.\8\
---------------------------------------------------------------------------
\8\ See Expanding Health Insurance Coverage for Children Under
Title XXI of the Social Security Act (February 1998: Congressional
Budget Office, Washington, D.C.); p. 12, stating that, most likely,
``many children . . . are joining the ranks of those with contingent
coverage: as families sever their ties to the welfare system, they have
less opportunity to enroll their children in Medicaid--if, indeed, they
are even aware that their children may still be eligible for the
program. Although such children are not currently enrolled, they are
still likely to use the program if they become sick.''
---------------------------------------------------------------------------
Second, assertions about declines in Medicaid coverage are
often based on analyses of the Census Bureau's Current
Population Survey (CPS), the government's primary data source
for measuring employment, earnings, poverty, welfare receipt,
and a range of other important outcomes. Unfortunately, the
survey appears to miss about one-third of AFDC/TANF, food
stamp, and Medicaid recipients. Perhaps even more important,
this problem has been getting worse in recent years, a
deterioration that has important implications for judging the
impact of welfare reform. (Chart 6.)
[GRAPHIC] [TIFF OMITTED] T8372.019
For example, according to the CPS, between 1993 and 1997,
the number of children under 15 enrolled in Medicaid declined
by 3.2 million. But reliable administrative data from the
Health Care Financing Administration show an increase of
400,000.\9\ (For the period 1995-1997, HCFA data also show a
decline of 700,000 children, but CPS shows a much larger
decline of 1.7 million.) These kinds of discrepancies led the
authors of an Urban Institute report to conclude: ``until the
phenomenon of Medicaid underreporting is better understood, it
will be difficult to reach firm conclusions about the changing
Medicaid caseloads and their effect on the number of
uninsured.'' \10\
---------------------------------------------------------------------------
\9\ The Census Bureau cautions that ``In the Current Population
Survey (CPS), Medicare and Medicaid coverage estimates are
underreported, compared with enrollment and participation data from the
Health Care Financing Administration (HCFA). A major reason for the
lower CPS estimates is the fact that CPS is not designed to
specifically collect health insurance data. Instead, it is largely a
labor force survey, with minimum interviewer training on health
insurance concepts. Data from HCFA represent the actual number of
people who were enrolled or participated in these programs and is
therefore a more accurate source of data on levels of coverage.'' See
Robert L. Bennefield, Health Insurance Coverage: 1997 (Washington,
D.C.: U.S. Department of Commerce, Bureau of the Census, September 1,
1998), pp. 6-7.
\10\ Kimball Lewis, Marilyn Ellwood, and John L. Czajka, ``Counting
the Uninsured: A Review of the Literature,'' The Urban Institute, June
1998.
---------------------------------------------------------------------------
This problem of underreporting of government benefits also
undermines estimates of income declines for low-income
families. For example, analyses of income trends involving low-
income single mothers will understate their incomes because
they miss an increasing percentage of welfare income.
4. Declines in income? In recent testimony before the
Committee on Government Reform and Oversight, Wendell Primus
said, ``While some poor single mother families have been able
to maintain or raise their income levels because of increased
earnings and the expanded EITC, other poor single mother
families' incomes have fallen substantially and they are now
deeper in poverty than earlier in the decade.'' \11\ As we will
see, on the basis of available evidence, one should not
conclude that ``incomes have fallen substantially'' for a large
number of families. (emphasis added)
---------------------------------------------------------------------------
\11\ Wendell Primus, Testimony before the Committee on Government
Reform and Oversight, April 22, 1999. Dr. Primus also asserted that,
``Between 1995 and 1997, the economic status of persons in the bottom
decile declined. The average incomes of families in the poorest decile
fell by almost $1,000, a statistically significant decline of 16.3
percent.''
---------------------------------------------------------------------------
Such estimates are tremendously dependent on the
assumptions embedded in the analysis. For example, Dr. Primus's
initial estimates did not include a correction for the growing
deterioration of the accuracy of the CPS in reporting welfare
payments. I understand that he has now made a correction for
this problem. His current numbers, which I have not seen, now
suggest a small decline in incomes for some groups of low-
income mothers. My judgement is that the declines he finds are
too small--and too dependent on the assumptions that any
analyst would make--to be the basis of policy.
But Dr. Primus's analysis did encourage us to look further
at what was happening in the female-headed families with the
lowest incomes. His research showed than many of them had zero
incomes. That is, they neither had earnings from work, nor
income from investments, nor did they receive welfare benefits.
But they were also not homeless, nor in shelters. My next chart
helps explain what is happening. (Chart 7.)
[GRAPHIC] [TIFF OMITTED] T8372.020
Based on data from the CPS, as analyzed by Richard Bavier
of the Office of Management and Budget, it appears that about
30 percent of the female family heads with children in the
bottom fifth of the income distribution (based on post-tax,
post-transfer family income) were living with other non-family
household members. The average income of these household
members was over $20,000, with some much higher.
Adding this ``household income'' to the families that Dr.
Primus said lost income suggests that the households containing
these families have at least held their own--and perhaps
improved their situation. (Remember, this is only reported
income.)
This explains, by the way, why as many as a third to half
of the mothers who leave welfare do not report that they are
working. TANF has raised the ``cost'' of being on welfare, as
described above, and these women are simply deciding to forego
the heightened ``hassle'' of being on welfare. They can leave
welfare because someone else--usually a boyfriend--is
supporting them or will support them. This brings me to my
final point.
Cohabitation and marriage penalties
Cohabitation was once unusual and largely limited to low-
income and less-educated couples, whereas now it is more
mainstream. In the mid 1950s, for example, cohabitors were five
times more likely to be high school drop outs than college
graduates, but in either case, the proportions were low (5
percent vs. 1 percent). By the mid 1980s, the figures were
strikingly higher (45 percent vs. 22 percent), with the
difference cut almost in half.\12\
---------------------------------------------------------------------------
\12\ Data from the National Survey of Families and Households shows
that about 5 percent of people with less than a high school education,
and who were born between 1928 and 1932 lived in a cohabiting
relationship prior to age twenty-five (somewhere between 1953 and
1957). The corresponding figure for persons with a college education
born during the same time frame was less than 1 percent. Among the
cohort born between 1958 and 1962 (who hit age twenty-five between 1983
and 1987) the chances of cohabiting before age twenty-five increased
dramatically. A little over 45 percent of people with less than a high
school education born between these years cohabited before age twenty-
five, compared to 35 percent of those with some college education and
about 22 percent of those with a college degree. Thus, over the thirty
year period the differences in cohabitation rates between the least and
most educated were reduced from 80 percent to about 50 percent. [Andrew
J. Cherlin, Marriage, Divorce, Remarriage revised and enlarged edition
(Cambridge, Mass.: Harvard University Press, 1992), p. 12.]
---------------------------------------------------------------------------
The foregoing statistics are for women who have ``ever''
cohabited. What about ``current'' cohabitations? In 1995, about
7 percent of women were currently cohabiting.\13\ Larger
numbers of mothers on welfare report that they are cohabiting,
between 9 and 24 percent,\14\ depending on the survey question.
According to the Panel Survey of Income Dynamics, for example,
9 percent of welfare mothers were cohabiting in 1987. This
included 18 percent of welfare mothers under thirty, with less
than a high school education, and with children under age
eighteen.\15\
---------------------------------------------------------------------------
\13\ National Center for Health Statistics, Fertility, Family
Planning, and Women's Health: New Data From the 1995 National Survey of
Family Growth, by Joyce C. Abma, Anjani Chandra, William D. Mosher,
Linda S. Peterson, and Linda J. Piccinino (Hyatsville, MD: U.S.
Department of Health and Human Services, 1997), Table 33.
\14\ Robert A. Moffitt, Robert Reville, and Anne E. Winkler,
``Beyond Single Mothers: Cohabitation, Marriage, and the U.S. Welfare
System.'' (Discussion paper #1068-95, Madison, Wisc., University of
Wisconsin-Madison, Institute for Research on Poverty, July 1995), pp.
5-6.
\15\ Ibid. These figures may be as much as one-third higher,
however, if they are calculated as the proportion of unmarried women
who receive welfare as opposed to the proportion of all women who
receive welfare.
---------------------------------------------------------------------------
Finally, according to preliminary data from the Fragile
Families study of unmarried parents in twenty-two major
American cities,\16\ as many as half of the children born out
of wedlock may have an unwed father living at home.'' \17\
Similarly, Larry Bumpass and Hsien-Hen Lu, of the Center for
Demography and Ecology at the University of Wisconsin-Madison,
report that according to the National Survey of Family Growth
about 41 percent of births to unmarried mothers from 1990 to
1994 were to women who were currently cohabiting.\18\
---------------------------------------------------------------------------
\16\ Julien Teitler, ``Father Involvement, Child Health, and
Maternal Health Behavior.'' (Paper prepared for the Urban Seminar on
Children's Health and Safety, Cambridge, Mass., April 23-24, 1999),
Table 1.
\17\ Julien Teitler, ``Father Involvement, Child Health, and
Maternal Health Behavior.'' (Paper prepared for the Urban Seminar on
Child's Health and Safety, Cambridge, Mass., April 23-24. 1999), p. 5.
\18\ Larry Bumpass and Hsien-Hen Lu, ``Trends in Cohabitation and
Implications for Children's Family Contexts in the U.S.'' (CDE Working
Paper No. 98-15, Madison, Wisc., University of Wisconsin-Madison,
Center for Demography and Ecology, March 1999), p. 13.
---------------------------------------------------------------------------
To some extent, cohabitation--``informal marriage,'' in the
phrase some analysts use--is a reality of the modern world.
Increasing numbers of affluent couples around the world are
choosing to forego marriage. However, these ``unions'' tend to
be less stable than marriages, and therefore less nurturing for
children. I don't know how (or whether) the government should
encourage marriage, but I do know that it should not discourage
marriage. But that it just what it does with the marriage
penalties embedded in the Earned Income Tax Credit (EITC) and
our refusal to conform child support laws to the realities of
life for low-income families.
I know that many members of congress are concerned about
the marriage penalties embedded in our tax laws. As a
percentage of household income, those penalties pale when
compared to the penalties faced by welfare recipients and the
working poor. According to Eugene Steuerle of the Urban
Institute, for example, ``the marriage penalty faced by a young
couple consisting of a man who is working full time at the
minimum wage and a mother on welfare with two children. He
concluded that, if they marry, the new family's combined
earnings plus benefits would be $16,194, or $3,862 (almost 20
percent) less than the couple's premarriage income.'' \19\
---------------------------------------------------------------------------
\19\ Douglas Besharov and Timothy Sullivan, ``Welfare Reform and
Marriage,'' The Public Interest, No. 125 (Fall 1996), p. 88.
---------------------------------------------------------------------------
If we do not examinine what is happening in these
households, we will miss half of what is happening under
welfare reform.
I sincerely recommend that, in addition to worrying about
good jobs for former welfare recipients, we also worry about
the well-being (and safety) of these informal unions--and do
the best we can to strengthen them by removing the obstacles to
marriage embedded in our welfare laws.
Thank you.
Data Sources and Assumptions
Spending is converted to 1998 dollars using the CPI-U,
including projections from the Budget of the United States,
Fiscal Year 2000.
Head Start: For FY1981-1996, appropriations; source:
Administration for Children and Families. For FY1997-98,
obligations and for FY1999-2004, budget authority; source:
Budget of the United States, Fiscal Year 2000. The budget
authorized Head Start funding for FY2000 only, thus the
``President's Increase'' reflects the increase in spending for
FY2000 above the inflation-adjusted FY1999 level. Although Head
Start has a 20 percent matching requirement, this can be in-
kind or waived, and it was not included here.
Child and Adult Care Food Program (CACFP): For FY1981-1997,
outlays; source: various editions of the Budget of the United
States. For FY1998-2004, budget authority; source:
Congressional Budget Office.
Social Services Block Grant (SSBG): Child care spending was
estimated to be 20 percent of the SSBG in FY1997 (Children's
Defense Fund, ``Federal and State Government: Partners in Child
Care,'' October 24, 1997); this assumption is applied to
spending throughout the entire period. For FY1981-1997,
outlays; source: Historical Tables, Budget of the United
States, Fiscal Year 1999. For FY1998-2000, budget authority;
source: Budget of the United States, Fiscal Year 1999. For
FY2001-2004, budget authority, source: Congressional Budget
Office, H.R. 2400, Transportation Equity Act for the 21st
Century, CBO pay-as-you-go estimate.
JOBS Child Care and Transitional Child Care (TCC): For
FY1991-1996, federal and state outlays are included; source:
Committee on Ways and Means, 1998 Green Book, for federal
outlays; state spending is estimated assuming that federal
outlays are 56 percent of total spending.
At-Risk Child Care: For FY1991-1996, federal and state
outlays are included; source: 1998 Green Book, for federal
outlays; state spending is estimated assuming that federal
outlays are 56 percent of total spending.
Child Care Development Block Grant (CCDBG): For FY1991-
1996, outlays; source: Congressional Budget Office.
Child Care Development Fund (CCDF): For FY1997, federal
budget authority and state matching funds; source: Budget of
the United States, Fiscal Year 1999 and Administration for
Children and Families data on FY1997 state allocations for the
CCDF. For FY1998-2000, federal budget authority and state
matching funds; source: Budget of the United States, Fiscal
Year 2000 and Administration for Children and Families data on
FY1998-2000 state allocations for the CCDF. For FY2001-2004,
federal budget authority and maximum state matching; source:
Budget of the United States, Fiscal Year 2000 and author's
calculations of state spending based on Administration for
Children and Families data on FY1997-2000 state allocations for
the CCDF. State spending was estimated by assuming that the
federal ``Child care entitlement to states'' amount represents
57 percent of total spending. This assumes that states spend
all of their guaranteed federal entitlement (about $1.2
billion) plus their entire MOE amount (the amount they spent of
their own funds in FY1994 or FY1995, whichever is higher, under
the previous AFDC-related child care programs). In addition, it
includes the state share of matching funds for the remaining
entitlement funds. Finally, an additional $1.2 billion in
discretionary federal funds is authorized for each year. The
``President's Increase'' for FY2000-2004 reflects an additional
$7.5 billion over five years plus state matching funds,
assuming a 20 percent state match rate; source: Budget of the
United States, Fiscal Year 2000. Although the budget does not
specify a match rate, analysts at the Office of Management and
Budget and the Congressional Budget Office indicated a 20
percent state match rate would be applied.
TANF Transfers and Expenditures: For FY1998, Congressional
Research Service, Data on Temporary Assistance for Needy
Families (TANF) and Child Care and Development Fund (CCDF)
Expenditures, statement of Gene Falk before the Subcommittee on
Human Resources, House Committee on Ways and Means, March 16,
1999. For FY1999-2004, 1998 amount was inflation adjusted over
five years.
Unspent TANF Funds: For FY1997-2004, Congressional Budget
Office, Spending Projections for the Temporary Assistance for
Needy Families Program and Federal Child Care Programs, Paul
Cullinan, Unit Chief, Human Resources Cost Estimates Unit,
Budget Analysis Division, Congressional Budget Office,
statement before the Subcommittee on Human Resources, House
Committee on Way and Means, March 16, 1999. TANF is a block
grant, therefore annual unspent TANF funds decrease over the
years as a result of inflation, population growth and other
factors (communication with Paul Cullinan, Unit Chief, Human
Resources Cost Estimates Unit, Budget Analysis Division,
Congressional Budget Office, May 12, 1999).
President's Early Learning/School-Age Proposal: For FY2000-
2004, Overview of Additional Funding Proposed in
Administration's 1999 Child Care Initiative, FY2000-FY2004, in
Child Care Issues in the 106th Congress, Congressional Research
Service.
The estimated number of children leaving AFDC/TANF, by age
group, was estimated by subtracting the estimated number of
children on TANF, by age group, in December 1998 from the
number of children on AFDC, by age group, in 1994. The 1994
data are reported in ACF's ``Characteristics and Financial
Circumstances of AFDC Families: FY 1994.'' This information is
not available for December 1998, the last month for which data
on the number of TANF recipients are available. According to
ACF, there were about 7,600,000 TANF recipients in December
1998. Historically, about 70 percent of the recipient caseload
was composed of children, so there were about 5,300,000 child
recipients in December 1998. The age distribution of children
was last reported by ACF for the first nine months of fiscal
year 1997. It was assumed that the same distribution would
apply in December 1998. With the number of children in each age
group for each time period, the difference was used as a proxy
for the number of children who potentially need child care as a
result of the caseload decline.
It was assumed, from a review of leavers' studies, that (at
most) 65 percent of those not on the rolls would be employed.
It was also assumed that 70 percent of those working worked
full-time and 30 percent worked part-time. (This was not an
empirically based assumption, but was deemed reasonable since
part-time work would often not generate enough in earnings for
a case to ``leave'' the rolls.) These percentages were applied
to each age category.
Child care costs were estimated separately by age of child
and whether the employment was full-time vs. part-time. Census
data from 1993 were used to derive these estimates. The cost of
part-time care was about 60 percent of the cost of full-time
care. The cost per school-age child was about 70 percent of the
cost per preschooler. However, because the costs vary by a
number of factors, such as poverty, and the cross-tabulations
available were limited, these estimates should be viewed as
proxies. All estimates are adjusted by the CPI-U and reported
in 1998 dollars.
For preschoolers, child care needs followed the work
patterns of parents. Full-time work was assumed to require
full-time child care and part-time work would require part-time
child care. For four year olds and above, however, the cost of
care for children with full-time earners was based on the part-
time cost of child care, since the children were assumed to be
in Head Start or school most of the time. For children with
part-time earners, the cost of care was assumed to be one-
quarter the rate for part-time employment, since these children
were assumed not to need child care during the school year, but
only for 3 months over the summer.
Census data for all families that use child care. The
annual cost of full-time care for preschoolers was estimated at
$4,100 and the cost of part-time care was estimated at $2,900.
About 63 percent of child care arrangements for preschoolers
are paid when the work is full-time and about 41 percent of
child care arrangements are paid when the work is part-time.
Thus, the average cost was reduced to reflect the fact that a
considerable amount of child care provided is at no cost to the
family. Thus, the average across all preschoolers (including
those who do not pay for child care) was estimated to be $2,583
for full-time care and $1,189 for part-time care. A similar
procedure was applied to school-age children. For school-age
children, the cost of part-time care for those with full-time
working parents was estimated to be $1,740 and for those whose
parents are working part-time, it was estimated to be $435.
Applying the 41 percent estimate for those who pay for child
care results in an estimated $714 for school-age children whose
parents work full-time and $178 for those whose parents work
part-time.
Census data for those families that pay for child care.
This estimate assumes that all children classified as
``leavers'' need paid child care. Thus, the cost for
preschoolers is estimated at $4,100 per child for full-time
care and $2,900 for part-time care. The respective numbers for
school-age children were $1,740 and $435. (The assumptions for
these numbers were described above.) Assuming that all children
who potentially need child care use paid child care overstates
the actual cost needed to provide child care to these children.
Costs under Child Care Development Fund (CCDF). These child
care costs were estimated by dividing the total cost of the
CCDF program by the average monthly number of children in child
care subsidized by the program. Full-time and part-time
payments were approximated by examining state payment
schedules.
Head Start and Head Start-Like Services. The estimated cost
for part-time care under Head Start is $5,411 based on program
data and discussions with ACYF and Head Start officials. For
full-time Head Start care, the cost per child was estimated at
$14,000. This was based on discussion with ACYF and Head Start
officials and a report by the General Accounting Office. (GAO,
``Head Start Programs: Participant Characteristics, Services,
and Funding Letter Report,'' March 31, 1998, GAO/HEHS-98-65.)
The cost increase is based on taking a program that currently
runs part-time, part-year to one running full-time, full-year.
Chairman Johnson of Connecticut. Thank you.
Welcome Ms. O'Neill.
STATEMENT OF JUNE O'NEILL, PROFESSOR OF ECONOMICS AND FINANCE;
AND DIRECTOR, CENTER FOR THE STUDY OF BUSINESS AND GOVERNMENT,
BARUCH COLLEGE, CUNY, NEW YORK, NEW YORK
Ms. O'Neill. Madam Chairman, I appreciate the opportunity
to testify today on welfare reform. I can only echo your
comments and Doug Besharov's comments that the welfare reform
legislation that passed in 1996 and the waivers that preceded
it are true landmarks in social policy, and the results have
certainly exceeded what I and many other long-time observers of
the welfare scene anticipated would be possible. The changes
have been quite dramatic, and, as you mentioned, not only in
the results on caseload declines, but also in reports that
confirm the relationship between the legislation and the
results. Onsite investigations of welfare offices suggest that
in many States the culture has really been transformed. So, it
is not a sheer coincidence that these caseload changes have
occurred.
My testimony addresses whether the shift off of welfare is
having beneficial effects on those affected by the program
change. To preview my conclusions, I find reason for a lot of
optimism, even at this early stage. Single mothers are the
group most closely identified with welfare. Their employment
has surged as the welfare rolls have declined. Their employment
gains are stronger than could be expected based on the
performance of the economy alone. Many critics had doubted that
single mothers would be able to adapt to the stringent work
demands of the reform because of skill deficiencies in addition
to child care burdens. Yet, despite these handicaps single
mothers have significantly changed their lifestyles already, as
a substantial proportion has shifted from welfare to work.
My comments focus specifically on labor market effects and
changes in the level and composition of income for never-
married women with children. First, however, I would like to
point out that the plunge in the welfare caseload is likely to
have occurred in part because of an acceleration of exits from
the program and in part because of a slowdown in the rate of
entrance onto the program. Even under the old AFDC Program, Aid
to Families With Dependent Children, there was considerable
turnover. Although attention is usually focused on the effects
of the policy changes on welfare leaver rates, the ultimate
efficacy of welfare reform is going to turn on the extent to
which it will have changed the incentive structures in the
program, and whether that change is enough to deter young women
from entering in the first place.
It is apparent that the decline in the welfare caseload has
been mirrored by a surge in labor market activity. Let me give
you a few numbers. In March 1994, close to 58.5 percent of
nonmarried mothers were employed. By 1998, just 4 years later,
that percentage had increased to 69 percent, more than a 10-
percentage point gain.
Moreover, those women who are working are working more than
a trivial amount. Close to 70 percent of those who were
employed in March 1998 were full-time workers, that is, they
worked 35 hours a week or more. And looking at both hours and
weeks worked during the year, among those who worked at all
during the year, that was in 1997, the most recent year for
which we have the data, 56 percent worked full time, year
round. That is a considerable work effort.
How much of this change can be attributed to welfare and
how much to the economy? One way to try to answer the question
is to look at changes in employment among groups of women with
differing attachment to welfare. Without longitudinal data, it
is difficult to do that, but we can use marital status as a
proxy for welfare attachment. I would point you to my chart,
which is in the back of the testimony. I have disaggregated
single mothers into the usual categories. Never-married women
have the closest attachment to welfare. Longitudinal data from
the National Longitudinal Survey of Youth show that close to 80
percent of women with a first child born out of wedlock
eventually go on welfare. So we know that this group in the
past has considerable welfare attachment. However, mothers who
were previously married, divorced, separated, or widowed are
less likely to go on welfare. And married mothers have the
lowest incidence of welfare receipt of all.
Now, as the chart shows, married mothers' work
participation has increased. The chart shows the changes in
employment of women in these different marital status
categories over the period 1983 to 1998. You will see that
married mothers' work participation has increased gradually
throughout the period.
However, the employment rates of never-married and
previously married mothers show a sharp upturn in employment,
starting in 1993 to 1994, which is about the time that States
were beginning to change their welfare programs through
waivers. It is particularly striking that the employment rate
of never-married mothers began to soar after 1996, the year of
enactment of TANF, rising much more rapidly even than that of
previously married mothers, while married women's employment
rates appear to have leveled off.
If the economy was the whole story, we would expect to see
much more similar patterns of change between married mothers
and the two unmarried groups. Of course, a full assessment of
the effect of welfare policies on the employment of women with
children would need to control for the effects of the economy
and State welfare policies in a much more detailed and
systematic way, and, in addition, take account of demographic
characteristics of women and changes in their education and
skill. Together, with Terry Devine, I have been working on such
a study and our preliminary results suggest that welfare
policies, after controlling for all of those other factors,
appear to account for one-third to one-half of the increase in
employment for never-married and previously married mothers
after 1995.
The other part of my comments, and I see I do not have much
time to discuss them, but one point that is important to keep
in mind is that wage rates, plus, of course, the amount of
employment, determine the income people earn. And work, finding
and keeping employment is very important, because that is an
important way that work skills are obtained. There is
frequently a focus only on the earnings of single mothers when
they first leave welfare. At that point in time, wages are
going to be low for two reasons: one is that these women have
lower skills than other people in terms of their years of
school completed and their past work experience.
But the other reason is that they are new entrants to the
labor force. This is true of all new entrants, whether they are
immigrants, whether they are veterans who are leaving the armed
forces, whether they are women, married women, who are first
going to work. For example, it was apparent during the sixties
and seventies that married women, who initially entered the
labor force with low earnings, pulled down the average earnings
of women on the whole. So it was assumed that the earnings of
experienced women were falling, particularly compared to that
of men. But that was not really the case. It was only because
there was a compositional change--an influx of inexperienced
women.
But eventually, new entrants, if they hang in there,
develop work experience and their earnings rise.
Chairman Johnson of Connecticut. I think this is something
we will have to come back to.
Ms. O'Neill. Yes. And I think that that is beginning to be
illustrated, and in looking at income data, these are important
things to keep in mind. But even without adjustment, the income
data that I have attached show that earnings have certainly
increased as a share of the income of nonmarried women. And in
addition to that, I think Doug Besharov's point should be
emphasized that standard data really are not very accurate when
it comes to assessing the income of people in lower portions of
the income distribution.
Chairman Johnson of Connecticut. Thank you.
Ms. O'Neill. And half of the never-married women lived in
households that were contributing considerable amounts to the
their general well-being----
Chairman Johnson of Connecticut. Thank you.
Ms. O'Neill. I would certainly commend the Subcommittee not
only for their role in developing the legislation in the first
place, but for monitoring the results.
[The prepared statement follows:]
Statement of June O'Neill, Professor of Economics and Finance; and
Director, Center for the Study of Business and Government, Baruch
College, CUNY, New York, New York
Madam Chairman and Members of the Committee:
Thank you for the opportunity to testify on the effects of
welfare reform. The sweeping welfare reform legislation enacted
in 1996 and the associated state waivers that preceded it are
landmarks in social policy. In my opinion they have begun to
bring positive solutions to problems that not too long ago had
seemed intractable. The dramatic decline in the welfare
caseload since 1994 is well known. Although researchers may
disagree on the precise contribution of welfare reform to the
decline, there is little doubt that it is responsible for much
of the change.
My testimony today addresses a parallel issue--the question
whether the shift off of welfare is having beneficial effects
on those affected by the program change. To preview my
conclusions, I find reason for optimism, even at this early
stage. Single mothers are the group most closely identified
with welfare. and their employment has surged as the welfare
rolls have declined. Their employment gains are stronger than
could be expected based on the performance of the economy
alone. Many critics had doubted that single mothers would be
able to adapt to the stringent work demands of the reform
because of skill deficiencies in addition to child care
burdens. Yet despite these handicaps single mothers have
significantly changed their lifestyles as a substantial
proportion has shifted from welfare to work.
It is useful to recall that the reason why welfare reform
became an urgent policy concern in the first place was the
growing realization that the old AFDC program was itself
inducing long-term welfare dependency with detrimental
consequences for vulnerable women and their children. Those
consequences included the blunting of normal incentives for
self-betterment and marriage.
The 1996 federal legislation that created Temporary
Assistance for Needy Families (TANF) and the preceding State
initiatives implemented through the waivers were intended to
change the perception of welfare from a long-term means of
support to a temporary helping hand. Although earlier efforts
had also aimed to move recipients to jobs, they had done so
mainly by trying to enhance the skills of recipients through
training programs, leaving in place the basic entitlement to
welfare and the financial incentives to claim it. By contrast,
the new welfare reform has terminated the entitlement status of
welfare, converting it instead to a State block grant, and it
has imposed stringent conditions such as a lifetime limit of 60
months for receipt of TANF benefits and a requirement that
adult recipients engage in proscribed work activity within 24
months of welfare receipt. States have moved to the foreground
in the design and implementation of welfare programs and many
States have taken the opportunity to transform the
organizational culture of their programs. One example is the
successful transformation of Massachusetts's program through
its ``Chapter 5'' welfare reform implemented by Governor Weld,
which has been detailed by my colleagues M. Anne Hill and Tom
Main in their study ``Is Welfare Working? The Massachusetts
Reform Three Years Later.''
The momentous changes in the welfare program have not gone
unnoticed and researchers around the country have begun to
evaluate the results. I will briefly review some of the results
of analysis that I have conducted together with colleagues. I
will focus specifically on labor market effects and changes in
the level and composition of income for non-married women with
children, the basic groups which makes up more than 90 percent
of the welfare caseload.
First, however, I would like to point out that the plunge
in the welfare caseload since 1994 undoubtedly occurred in part
because of an acceleration in exits from the program and in
part because of a slowdown in entrants onto the program. Even
under the old AFDC program there was considerable turnover.
Close to half of those who went on welfare did not accumulate
more than five years on the program (frequently involving more
than one spell), although 35 percent stayed on for more than
seven years. The time limit directly aims to reduce welfare
duration. The work requirement reinforces that aim and promotes
self-sufficiency. Although attention is often focussed on the
effects of these policy changes on the welfare leaver rate, the
ultimate efficacy of welfare reform will turn on whether it
will have changed the incentive structure of the program enough
to deter young women from entering in the first place.
Changes in Employment
It is apparent that the decline in the welfare caseload has
been mirrored by a surge in labor market activity among
unmarried mothers with children under age 18. In March of 1994,
58.5 percent of non-married mothers were employed; by 1998 that
percentage had increased to 69.2 percent--more than a 10
percentage point gain. Moreover, these women are working much
more than a trivial amount. Close to 70 percent of those who
are employed are now full-time workers--that is, they work 35
hours or more a week. And looking at both hours and weeks
worked during the year, among those who worked at all during
the year, 56 percent worked full-time and year-round in 1997.
How much of this change can be attributed to welfare
reform? Clearly the booming economy is likely to have played a
role. One simple way to try to answer the question is to look
at changes in employment among sub-groups of women with
differing attachment to welfare. Mothers who have never married
have had a high propensity to go on welfare. Using data from
the National Longitudinal Survey of Youth (NLSY) I find that
close to 80 percent of women with an out-of-wedlock first birth
eventually have gone on welfare. However, mothers who were
previously married--that is, divorced, separated or widowed--
are less likely to have been on welfare. And currently married
mothers have had the lowest incidence of welfare receipt of
all.
I would like to direct you to the Chart at the end of my
Statement which shows the percentage of mothers employed by
these marital status categories. The chart indicates that
married mothers' work participation has increased gradually
throughout the period 1983 to 1998, while never-married and
previously married mothers show a sharp upward turn in
employment starting in 1993-1994, a time when the states were
beginning to change their welfare programs through waivers. It
is particularly striking that the employment rate of never-
married mothers began to soar after 1996, the year of enactment
of TANF, rising much more rapidly than even that of previously
married mothers, while married women's employment rates
appeared to have leveled off. If the economy was the whole
story we would expect to see much more similar patterns of
change between married mothers and the two unmarried groups.
Of course a full assessment of the effect of welfare
policies on the employment of women with children would need to
control for the effects of the economy and State welfare
policies in a more detailed and systematic way and in addition
take into account changes in the demographic characteristics of
women, such as the number and ages of their children, and
changes in their education and skill levels. Theresa Devine and
I have been conducting such a multivariate analysis examining
the entire period 1984-1998. Our preliminary results suggest
that after controlling for year to year changes in unemployment
in a woman's state of residence along with other economic,
demographic and human capital variables, welfare policies
appear to account for one-third to one-half of the increase in
employment for never-married and previously married mothers
after 1995.
Earnings and Income
A key issue in evaluating welfare reform is the extent to
which persons with the attributes of welfare recipients can
actually become self-sufficient. Finding and keeping employment
is one component of self-support; the other is the wage rate of
jobs obtained. The two are related, since work experience and
the skills acquired on the job have significant positive
effects on earnings. Moreover, a woman who stays on welfare
long term will not only lose the experience she could have
gained while working, but may also find that skills acquired in
school or obtained from early work experience have eroded over
time. For those reasons, women who leave welfare for work are
likely to earn less than women who were never on welfare in the
first place, even if they had similar years of schooling and
skill attainment.
Welfare recipients, however, have lower skills than other
women as reflected in a higher high school dropout rate, a much
lower rate of post secondary schooling and much weaker
performance on achievement tests such as The Armed Forces
Qualifications Test (AFQT). Therefore, it is to be expected
that the annual earnings of women who leave welfare may
initially be considerably lower than those of other women. But
if former recipients persist in the labor force, the gap
between their earnings and those of other workers never on
welfare, is likely to narrow over time.
Data on the earnings and incomes of unmarried mothers in
1997 and 1988 permit a comparison of a post welfare reform year
with a pre-reform year that is also at a peak in the business
cycle. Tables 1 and 2 show the comparison for never married and
for previously married mothers respectively. The income data
are expressed in 1997 dollars and only cash income sources are
included.
Among never-married women the declining role of welfare is
apparent. In 1988, 48 percent received welfare benefits; in
1997, only 31 percent did. Because the average welfare benefit
also declined for those receiving it (perhaps because of fewer
months of collection during the year) welfare declined even
more sharply as a share of total income, accounting for only
8.5 percent in 1997 (down from 22 percent). However, both the
percentage with earnings and the average value of earnings for
recipients increased over the decade, and as a result the share
of income from earnings grew to 79 percent. The percentage
receiving child support increased sharply, but is still
incredibly low--only 19 percent. There was also an increase in
SSI, although that remains a minor source of income over all.
On balance, the average income of never married mothers
increased by $2000 to $13,100. Because these amounts exclude
all non-cash sources of income and also exclude the Earned
Income Tax Credit (EITC) they do not give a complete picture.
While food stamp benefits are likely to have declined with
rising earnings, income from the EITC is likely to have
increased, both because of the increase in women with earnings
and the increase in the generosity of the EITC. (Between 1989
and 1997 the average EITC payment per recipient for heads of
household--largely single parents--increased in real terms from
$760 to $1902.)
The income picture for never-married mothers is incomplete
in other ways as well. About six percent report no income from
any source of their own. But a substantial proportion are part
of families and households with other sources of income. Thus
in 1997 about 48 percent were part of households in which other
household members added $27,500 in income.
Previously married women have more education and are likely
to have had more work experience because of their lower welfare
participation. Consequently their earnings and total money
incomes are considerably higher than those of never-married
mothers. The composition of their incomes also has shifted to
more income from earnings and less from welfare, but the change
is smaller because their welfare dependence was always at a
lower level than that of never-married mothers.
On average, the incomes of unmarried mothers have improved
over the past decade. Even the incomes of never-married mothers
show a gain. Fortunately, the dire predictions of some skeptics
have not materialized. In the short run, difficulties could
have been anticipated. Women coming off welfare likely added
significantly to the low skill labor force in certain areas and
that could have depressed wages. Undoubtedly the booming
economy helped. But it should be recognized that in time new
entrants to the labor force gain experience and that will boost
their future earnings.
In conclusion, the initial changes surrounding the
implementation of welfare reform provide grounds for optimism
that the old welfare system and the dysfunctional behavior that
it engendered may finally begin to wane. This committee is to
be commended both for their role in the development of the
legislation and for their continued monitoring of the results.
[GRAPHIC] [TIFF OMITTED] T8372.021
[GRAPHIC] [TIFF OMITTED] T8372.022
[GRAPHIC] [TIFF OMITTED] T8372.023
Chairman Johnson of Connecticut. Thank you. Thank you.
Wendell, welcome back.
STATEMENT OF WENDELL PRIMUS, DIRECTOR OF INCOME SECURITY,
CENTER ON BUDGET AND POLICY PRIORITIES
Mr. Primus. Thank you. Chairman Johnson and Members of the
Subcommittee, thank you for this hearing and the invitation to
testify on the impact of welfare reform.
My testimony today draws upon a larger study that the
Center will be releasing in the near future. Participation in
AFDC and food stamp programs began to decline in 1994. This
decline was gradual until 1996, and then accelerated sharply
after the enactment of the welfare law. And because of that,
the conventional wisdom is welfare reform is working well.
Caseload reduction, however, is a very inadequate measure
of success. The ultimate criterion should include whether the
economic well-being of children and families has been enhanced.
Over the past several years, two major trends have
influenced the economic well-being of the Nation's poorest
families with children. Strong economic growth, unusually low
unemployment rates, continued expansion of the EITC, expanded
availability of Medicaid coverage, and welfare policy changes
have contributed to an increase in employment. Other changes in
the policies of means-tested programs--increased sanction
rates, diversion policies, restricted eligibility for legal
immigrants has led to a dramatic decrease in the number of
families receiving public assistance, many who have left
without having a job.
This analysis uses Census data as well as administrative
data to make an assessment. We employ the same methodology as
the CBO has done in its analysis of family income, and we use a
comprehensive measure of income. We have three major findings,
and it really it is a tale of two time periods.
If you look at that first chart, the caseload declines in
AFDC basically match the decline in poverty between 1993 and
1995. But between 1995 and 1997, the decline in people
receiving cash plummeted by 22 percent, and yet the decline in
poverty was only 5.4 percent for single-mother families.
The next chart shows exactly the same pattern for food
stamps. The caseloads declined here sharply between 1993 and
1995 versus 1995 and 1997. Again, you can see that same
pattern. Poverty declined and food stamps declined at the same
rate between 1993 and 1995, and then very sharp declines in
caseload between 1995 and 1997. And not that much of a change
in poverty.
What has this meant for incomes? Between 1993 and 1995, the
average earnings and incomes of single-mother families
increased substantially. The increases were particularly large
for the poorest 60 percent, or three quintiles, of persons in
single-mother families. They experienced double digit gains in
disposable income.
And the chart here shows that even the income of the bottom
quintile increased by 13.7 percent.
But then the picture changes. Between 1995 and 1997, the
poorest single-mother families experienced a significant
decline in their disposable income, primarily due to sizeable
declines in welfare assistance and food stamps. For the poorest
quintile, income fell by $660. About 80 percent of this, or
$540, was due to the decline in means tested assistance. For
the poorest 10 percent of persons in single mother families,
average income declined by $860. This represents a decline of
15.2 percent, and, again, about 80 percent of this was due to a
decrease in the average amount of means tested assistance.
June and Doug are right that our instrument is not the
best, but we have tried to adjust these numbers for
underreporting.
The next to the poorest fifth had earnings increases of
$900 between 1995 and 1997, and an average EITC increase of
$400 per family. But these gains were completely offset by a
loss of $1,580 in means tested assistance.
As a result, also the antipoverty effectiveness changed
between 1995 and 1997. In 1997, seven hundred thousand fewer
children were lifted out of poverty than in 1995. And about
two-thirds of that was offset by the increase in the
effectiveness of the EITC. It illustrates a simple point: that
when you strengthen a program, you get more poverty reduction;
when you weaken it, you get less.
These findings should be considered an issue. We would like
to see if they are confirmed when we get the 1998 CPS, Current
Population Survey, data, when SIPP, the Survey of Income and
Program Participation, becomes available--the 1997 SIPP becomes
available later.
I think the conclusion I would reach from this is that
there is no doubt that the average income of a significant
number of the poorest single-mother families is lower in 1997
than 2 years earlier compared to their counterparts. And this
is a very surprising and unanticipated finding, given the
strong economic growth. And when I look at that chart and say
what is going on here? The only policy change I can come to is
the difference in the decline in the number of people getting
welfare assistance.
So, Chairman Johnson, I am not here today to argue that
welfare reform has been a complete failure. I think you have
done the right thing by writing to States and saying to spend
their surplus TANF money wisely. And I think the administration
has also done the right thing by changing the final TANF
regulations considerably. What I think these data suggest is
that we make a midcourse correction, and that we deemphasize
caseload reduction and emphasize the goal of increasing the
welfare, the income, of our poorest single-mother families with
children. And we have to do that by making sure that families
who are entitled to Medicaid and food stamps actually receive
that assistance.
My further suggestion would be that the high performance
bonus that the Secretary controls under the law be changed to
reward States that have increased the number of children
getting food stamps among the working poor and that have
increased the amount of children getting Medicaid and emphasize
poverty reduction in addition to emphasizing work. And I think
there are also some other suggestions I will make. But I think,
again, some families have been hurt by welfare reform. I think
no matter how you cut the data, that will stand up. I would
like to see it change in the future if we do change some things
that are going on in State welfare offices. And, yes, some
families are better off. But it is a very mixed picture right
now. And it is way too early to pronounce welfare reform an
unqualified success.
Thank you.
[The prepared statement and attachments follow:]
Statement of Wendell Primus, Director of Income Security, Center on
Budget and Policy Priorities
Mr. Chairman and Members of the Subcommittee on Human
Resources of the Committee on Ways and Means:
I very much appreciate your invitation to testify on the
impact of welfare reform on low-income families. My name is
Wendell Primus and I am Director of Income Security at the
Center on Budget and Policy Priorities. The Center is a
nonpartisan, nonprofit policy organization that conducts
research and analysis on a wide range of issues affecting low-
and moderate-income families. We are primarily funded by
foundations and receive no federal funding.
My testimony today will draw on some preliminary findings
from a much larger analysis of the initial impacts of welfare
reform that is nearing completion and will be released by the
Center on Budget and Policy Priorities in the near future.
Introduction
Participation in the Aid to Families with Dependent
Children (AFDC) and food stamp programs began to decline in
1994; this decline was gradual until 1996 and accelerated after
enactment of the federal welfare law. Because AFDC (which has
been replaced by the Temporary Assistance to Needy Families or
TANF block grant) and food stamp participation have declined so
sharply, the conventional wisdom is that the federal welfare
law and state welfare reforms are working very well.
Caseload reduction alone, however, is an inadequate measure
of the success of welfare reform. The ultimate criteria should
include whether the economic well-being of children and
families has been enhanced. For that to occur, the loss of
benefits would have to be more than offset by increases in
other sources of income: through increased labor force
participation and earnings of custodial parents, increased
child support collections received by custodial parents, or an
increase in the number of children who reside with both
parents.
Over the past several years, two major trends have
influenced the economic well-being of the nation's poorest
families with children. First, strong economic growth,
unusually low unemployment rates, continued expansion of the
Earned Income Tax Credit (EITC), expanded availability of
Medicaid coverage for children in low-income working families,
and welfare policy changes have contributed to an increase in
employment among poor families. Second, at the same time, other
changes in the policies of means-tested programs \1\ (e.g.,
increased sanction rates, diversion policies, and restricted
eligibility for legal immigrants) have led to a dramatic
decrease in the number of families receiving public assistance,
many of whom have left without having a job.
---------------------------------------------------------------------------
\1\ Means-tested programs include cash assistance such as welfare
and SSI as well as non-cash means-tested programs including food
stamps, school lunch, and housing assistance.
---------------------------------------------------------------------------
Data that begin to shed light on the combined effect of
these divergent trends on the economic well-being of poor
families with children are just becoming available on a
national basis. This study focuses on the effects on single-
mother families and their children, as reflected in Census
data.
These data show that the disposable incomes of single-
mother families rose substantially and across-the-board from
1993 to 1995. The data from 1995 to 1997, which cover the
period from just before passage of the federal welfare law in
1996 to just after, tell a different and less promising story.
Despite continued growth in the national economy and further
expansion in the EITC, the average disposable income of the
poorest fifth of single-mother families fell during this two-
year period, with a substantial drop in means-tested benefits
the primary contributing factor. The average disposable income
of the next-to-the-bottom fifth of single-mother families was
unchanged--earnings and EITC gains were completely offset by
declines in means-tested assistance, leaving the families no
better off.
Data Sources and Methodology Issues
This analysis uses the Census Bureau's Current Population
Survey (CPS) data as well as administrative data from means-
tested programs to examine trends in the economic well-being of
mothers and children in single-parent families, with a
particular focus on the poorest single-mother families. We
examine a cross-section of families each year.\2\ We measure
the welfare receipt and income of a cross-section of families
over the four years from 1993 to 1997, a period of sustained
economic growth and increasing employment. This analysis
examines how the average income of single-mother families
changed between 1993 and 1995, a time when many states were
implementing state welfare reform policy through waivers, and
also examines changes in the economic status of these families
between 1995 and 1997, the year prior to and the year after
enactment of the federal welfare law. During the second period,
state-level reforms began taking effect on a larger scale, and
program participation fell sharply.
---------------------------------------------------------------------------
\2\ The study does not follow the same families over several years;
it is not a longitudinal study. The Current Population Survey is not a
longitudinal survey. The CPS examines a representative sample of
families, including low-income families, each year.
---------------------------------------------------------------------------
To examine changes in the economic well-being of single-
mother families by income level, we first array all single-
mother families from poorest to richest by their incomes,
adjusted for family size. (The methodology used is identical to
that employed by the Congressional Budget Office in its
analyses of family incomes.) We use a comprehensive measure of
income, which includes as income the approximate cash value of
food stamps, school lunch, and housing assistance, and EITC
benefits, and deducts state and federal income taxes as well as
payroll taxes. This is similar to the recommendations of a
distinguished National Academy of Sciences panel in 1995
concerning how to count income when measuring poverty.
As noted, we divided the population into groups of equal
size (such as fifths or tenths of the population) and compared
the average income of persons in one part of the distribution
in a given year to the average income of persons in the same
part of the income distribution in another year. For example,
the average incomes of those in the poorest fifth of single-
mother families in 1995 can be compared to the average income
of those in the poorest fifth of single-mother families in
1997. Each tenth, or decile, of individuals in single-mother
families consists of about three million individuals. Each
fifth, or quintile, includes about six million people.
The analysis examines changes in the average incomes of
single-mother families throughout the income distribution but
with a special emphasis on the bottom three-fifths of single-
mother families, most of which are eligible for means-tested
benefits. All of the single-mother families in the bottom three
quintiles have disposable incomes of below 155 percent of the
poverty line.
Between 1993 and 1997, the under-reporting of means-tested
benefits in Current Population Survey increased. Under-
reporting of income occurs when the total amount of benefits
from a means-tested benefit, as reported in the Current
Population Survey, is less than the total amount of benefits
that data from the program show to have been issued. Under-
reporting of means-tested benefits in the CPS is a well-known
phenomenon; as long as the degree of under-reporting from year
to year remains unchanged, under-reporting does not distort
comparisons of data from different years. In the 1990s,
however, the degree of under-reporting of income from means-
tested benefits increased in the CPS. To ensure that the
results of this analysis are not an artificial result of the
increase in under-reporting of these benefits, this analysis
adjusts both AFDC/TANF benefit receipt and food stamp benefit
receipt to compensate for this decline in reporting.
The analysis does not adjust for work-related expenses
incurred by single-mothers leaving welfare for work. A better
measure of family well-being would take into account the fact
that a family may not be better off if increased earnings are
more than offset by increased work expenses such as child care.
If, on the other hand government expenditures on such work
supports as child care and transportation are sufficient to
compensate families entering the labor force fully for their
increased expenses, income gains among these families would
represent true improvements in well-being. Some preliminary
estimates of the annual cost of child care incurred by single
mothers that have left TANF for work seem to indicate that
increased government expenditures on child care have not been
sufficient to fully compensate families leaving TANF for their
increased child care costs.
Findings
Caseload declines exceed decline in need. AFDC/TANF and
food stamp participation has declined far more sharply in
recent years than can be explained by increases in the earnings
of poor households. For example:
From 1995 to 1997, the number of people in single-
mother families who had income below the poverty line before
receipt of means-tested government benefits declined by 0.8
million people, or 5.4 percent. By contrast, the number of
people receiving AFDC/TANF benefits fell by 3.0 million, or
22.6 percent.
Similarly, from 1995 to 1997, the number of people
(both in single-mother families and in other families) who had
incomes below the poverty line before considering the effects
of means-tested benefits fell 2.5 percent. The number of people
receiving food stamps dropped by 16.6 percent, five times as
much.
Trends in disposable income.\3\ This paper examines
changes in earnings, the EITC, and other sources of income as
well as changes in means-tested benefits. By examining the
change in the income that single-mother families received from
each income source, we can identify the causes of these trends.
(All of the figures noted below are adjusted for inflation and
expressed in 1997 dollars, rounded to the nearest ten dollars;
thus $702 is expressed as $700.) Table 1, which summarizes the
findings of this analysis, shows the following:
---------------------------------------------------------------------------
\3\ Disposable income includes all cash income including both
means-tested and non-means-tested cash transfers, the approximate cash
value of means-tested non-cash transfers including food stamps, school
lunch benefits, and housing assistance, and the EITC, less state and
federal income and payroll taxes.
---------------------------------------------------------------------------
Between 1993 and 1995, the average earnings and
incomes of single-mother families increased substantially. The
increases were particularly large for the poorest 60 percent of
persons in single-mother families, who experienced double-digit
percentage gains in disposable income, on average. For the
poorest 20 percent of individuals in single-mother families,
disposable income increased an average of 13.7 percent between
1993 and 1995, or more than $1,000 per family, after adjusting
for inflation. Earnings increased by one third, or $430 per
family. Income from the Earned Income Tax Credit and means-
tested benefit programs also increased.
Between 1995 and 1997, by contrast, the poorest
single-mother families experienced a significant decline in
their disposable incomes, largely due to sizeable declines in
welfare assistance and food stamps, but also due to a drop in
earnings. Table 2 shows how the various components of income
have changed for the poorest single-mother families. As shown,
among the poorest 20 percent of the population in single-mother
families, average disposable income fell by $660, a 7.6 percent
decline.\4\ About 82 percent, or $540, of this income loss was
due to declines in means-tested assistance.
---------------------------------------------------------------------------
\4\ This is statistically significant at the 90-percent confidence
level.
---------------------------------------------------------------------------
For the poorest 10 percent of persons in single-
mother families, average income declined by $860. This
represents a decline of 15.2 percent.\5\ Nearly 80 percent, or
$660, of this income decline was due to a decrease in the
average amount of means-tested assistance these families
receive.
---------------------------------------------------------------------------
\5\ This is statistically significant at the 90-percent confidence
level. Several other statistical tests show this finding to be robust
and not a product of data anomalies at the bottom of the income
distribution.
---------------------------------------------------------------------------
The next-to-the-poorest fifth of single-mother
families experienced an average increase in earnings of $900
from 1995 to 1997 and an average EITC increase of $400. These
gains were fully offset, however, by an average loss of $1,580
per family in means-tested benefits.\6\ \7\ As a result, their
average incomes remained unchanged despite strong economic
growth.
---------------------------------------------------------------------------
\6\ \7\ These families also gained an average of $274 in ``other''
income. The increase in earnings of $901 plus the increase in the EITC
of $398 and an increase in other income of $274 minus the reduction of
$1,581 in means-tested benefits meant these families had average
incomes of $8 less in 1997 than in 1995. ($901 + $398 + $274-$1,581 =
-$8). The $8 change is not statistically significant.
The average disposable income of the middle fifth of single mother
families did not change significantly from 1995 to 1997. Their average
disposable incomes jumped by $2,400 from 1993 to 1995. The fifth of
single mother families with the highest disposable incomes experienced
a large boost in income from 1995 to 1997, of $4,000 on average. From
1993 to 1995 their disposable income increased by $320 on average.
---------------------------------------------------------------------------
Anti-poverty effectiviness of the safety net. Between 1995
and 1997, a period of rapid caseload declines and extensive
policy changes, certain parts of the safety net for poor
children weakened significantly. Table 3 shows the number and
percent of children lifted from poverty by government programs
in 1989 and each year since 1993. As shown, in 1997, means-
tested benefit programs lifted from poverty smaller percentages
of children who otherwise would be poor--and did a less
effective job of increasing the incomes of children who remain
poor--than in 1995. Some 700,000 more children would have been
lifted out of poverty in 1997 if means-tested benefits had not
weakened since 1995.
The decline in the number of children removed from poverty
by means-tested assistance is offset to a large extent by the
increase in the number of children removed from poverty by
federal tax policy due to the impact of the EITC. Approximately
450,000 more children were removed from poverty by federal
taxes in 1997 than in 1995 due to the strengthening of the
EITC, offsetting slightly less than two-thirds of the decline
in the strength of means-tested assistance. As this example
illustrates, when government programs have been strengthened,
as in the case of the EITC, the number of children removed from
poverty has increased. In contrast, when government programs
have been weakened, as in the cases of TANF and food stamps,
the number of children removed from poverty has declined.
Findings should be considered initial. These findings are
based primarily on data from the Current Population Survey for
1997. Data from another Census Bureau survey, the Survey of
Income and Program Participation, are not yet available for
1997, and 1998 CPS data will be available in several months.
When those data become available, they should be carefully
evaluated to see if they confirm the income trends found in the
1997 CPS data for single-mother families. These results also
should be more carefully reconciled with data from state
studies of families that have left public assistance rolls and
other national evaluations of changes in welfare policies.
(State ``leaver'' studies are surveys of a random sample of
families who have left the TANF or AFDC programs during a given
time period. These surveys examine the employment and financial
circumstances of families that have left the rolls. The
findings from our study are not inconsistent with the leaver
studies conducted to date, which have found that families
leaving welfare for work have below-poverty earnings, that many
leave welfare without work, and that, in some states, the
financial well-being of some children has worsened.)
Conclusions and Policy Recommendations
Among other findings, this study finds that the average
disposable income of a significant percentage of the poorest
single-mother families was lower in 1997 than the average
disposable income of their counterparts (families in the same
place in the income distribution) two years earlier. It also
finds that whereas income trends among poor single-mother
families were very positive from 1993 to 1995, these trends
changed for the worse in the 1995 to 1997 period. These
surprising and unanticipated findings occurred during a period
of strong economic growth and before any sizeable number of
welfare recipients reached their time limits. They suggest
considerable caution ought to be exercised before pronouncing
welfare reform an unqualified success.
Many states now have substantial amounts of unspent TANF
funds that can be used to aid poor families. These funds could
be used to provide more adequate support for families that have
gone to work but remain poor and to provide more intensive
assistance to help families with serious barriers to employment
surmount these barriers. For instance, efforts should be made
to improve the performance of the food stamp program in serving
eligible working poor families. Benefit restorations could be
made to poor households no longer eligible for assistance.
Additional efforts are also needed to reach children and
parents, primarily in working families who are eligible for
health insurance under Medicaid or a state child health
insurance program. States should continue to work with families
that lose assistance due to non-compliance to ensure that the
requirements are understood and that there is a way for these
families to overcome the barriers to compliance.\8\
---------------------------------------------------------------------------
\8\ The states of Tennessee and Connecticut have implemented
innovative approaches in this area.
---------------------------------------------------------------------------
In addition, the formula used to award the ``high
performance'' bonuses provided to some states under the welfare
law should be reexamined in the light of the findings discussed
here. The federal government could allocate a portion of these
funds to reward the states that are most successful in serving
low-income working families in food stamps and Medicaid and in
reducing child poverty. The bonuses currently are rewarded
entirely on state performance in increasing work effort among
TANF recipients, an important goal, but one that should be
supplemented.
The federal welfare law has provided more funding and more
flexibility to states. Many families have benefitted from these
changes. Employment has increased, and there has been a greater
emphasis on work. The flexibility has allowed states to expand
earnings disregards and thereby provide supplemental cash
assistance to more families that go to work, to increase
funding for child care, to treat two-parent families more
equitably, to assist more non-custodial parents, and to
experiment with some innovative measures to assist families
with the most severe employment barriers. One key aspect of the
federal legislation--federal and state time limits--had not yet
been implemented to any great extent by 1997. Most families
will not begin to reach the federal time limits until 2001 or
later. In addition, the law has been in effect for only a short
period of time, during which states have run budget surpluses.
The wide-ranging features of welfare reform are still being
implemented. A final judgment on the law's impacts is
premature. Such a judgment should not be rendered until several
years after time limits are in full effect and we also have
seen how the incomes of the poor change through all phases of
the economic cycle, including recession. In the interim, these
findings provide a preliminary picture of some of the impacts
of welfare reform on the incomes of single-mother families with
children. Some aspects of this picture must be considered
troubling.
Table 1.--Average Earnings and Income of Single-Mother Families by Income Level
[1997 dollars]
----------------------------------------------------------------------------------------------------------------
Change 1993- Change 1995-
1993 1995 1997 95 97
----------------------------------------------------------------------------------------------------------------
Average Earnings:
Poorest Decile............................. $870 $973 $862 $153** $111*
Poorest Quintile........................... $1,270 $1,705 $1,523 $435** -$182**
Second Quintile............................ $3,314 $4,956 $5,857 $1,642** $901**
Third Quintile............................. $10,044 $13,404 $13,299 $3,360** -$105
Fourth Quintile............................ $20,724 $22,742 $23,687 $2,018** $945
Fifth Quintile............................. $45,738 $47,218 $52,453 $1,480 $5,235**
Average Disposable
Income:
Poorest Decile............................. $4,888 $5,688 $4,825 $800** -$863**
Poorest Quintile........................... $7,588 $8,627 $7,968 $1,039** -$659*
Second Quintile............................ $13,433 $15,754 $15,746 $2,321** -$8
Third Quintile............................. $17,908 $20,304 $20,454 $2,396** $150
Fourth Quintile............................ $25,757 $27,972 $27,454 $2,215* -$518
Fifth Quintile............................. $47,638 $47,960 $51,959 $322 $3,999*
----------------------------------------------------------------------------------------------------------------
Note: Averages in the tables are weighted by persons
*Statistically significant, = .1
**Statistically significant, = .05
Explanation of Table 1 : Table 1 shows the average family earnings levels and average family incomes, including
government benefits, of single-mother families weighted by persons by income group for 1993, 1995, and 1997.
Figures in the ``Change'' column with asterisks designate statistically significant differences between 1993
and 1995, and between 1995 and 1997. Figures without asterisks indicate that changes were not statistically
significant. For example, in the poorest quintile, average disposable income was $8,627 in 1995 and was $7,968
in 1997. This represents a $659 difference or a 7.6% decrease in income, which was found to be statistically
significant. The earnings figures in the table represent average family earnings over all single-mother
families, including both families with a worker and families without a worker. Average earnings just among
families with a worker are higher than the average earnings figures in the table.
Table 2.--Income Amounts by Source for Single-Mother Families by Income Level
[1997 dollars]
----------------------------------------------------------------------------------------------------------------
Change 1993- Change 1995-
1993 1995 1997 95 97
----------------------------------------------------------------------------------------------------------------
Poorest tenth:
Earnings................................... $820 $973 $862 $153** -$111*
EITC....................................... $123 $250 $261 $127** $11
Means-tested............................... $2,778 $3,370 $2,706 $592** -$664**
income.............................
Other...................................... $1,413 $1,095 $996 -$318 -$99
Disposable income.......................... $4,888 $5,688 $4,825 $800** -$863**
Poorest quintile:
Earnings................................... $1,270 $1,705 $1,523 $435** -$182**
EITC....................................... $171 $399 $472 $228** $73**
Means-tested............................... $4,868 $5,163 $4,623 $295 -$540**
income.............................
Other...................................... $1,279 $1,360 $1,350 $81 -$10
Disposable income.......................... $7,588 $8,627 $7,968 $1,039** -$659*
Second quintile:
Earnings................................... $3,314 $4,956 $5,857 $1,642** $901**
EITC....................................... $454 $971 $1,369 $517** $398**
Means-tested............................... $7,620 $7,594 $6,013 -$26 -$1,581**
income.............................
Other...................................... $2,054 $2,233 $2,507 $179 $274
Disposable income.......................... $13,433 $15,754 $15,746 $2,321** -$8
----------------------------------------------------------------------------------------------------------------
Includes AFDC/TANF, food stamps, SSI, and housing assistance
*Statistically significant, = .1
**Statistically significant, = .05 Averages in the tables are weighted by persons
Note: Tests for statistical significance were not performed on the ``Other'' source of income category.
Table 3.--Child Poverty and Means-Tested Benefits
[in thousands]
----------------------------------------------------------------------------------------------------------------
Percentage of
Children Poor
No. of Poor No. of Children before Receipt of Percentage
Children before Removed from Government Reduction in
Calendar Year Receipt of Means- Poverty by Means- Benefits who were Child Poverty Gap
tested benefits Tested Programs Removed from due to Means-
Poverty by Means- tested Benefits
Tested Benefits
----------------------------------------------------------------------------------------------------------------
1989................................ 13,846 2,437 17.6% 52.1%
1993................................ 16,685 2,811 16.8% 52.2%
1994................................ 16,324 3,112 19.1% 52.3%
1995................................ 15,717 3,241 20.6% 52.1%
1996................................ 15,426 2,850 18.5% 49.6%
1997................................ 14,898 2,379 16.0% 45.0%
----------------------------------------------------------------------------------------------------------------
Source: CBPP calculations based on Census data
Chairman Johnson of Connecticut. Thank you.
Dr. Rolston.
STATEMENT OF HOWARD ROLSTON, DIRECTOR, OFFICE OF PLANNING,
RESEARCH AND EVALUATION, ADMINISTRATION FOR CHILDREN AND
FAMILIES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Rolston. Madam Chairman, Members of the Subcommittee, I
am pleased to be here today to discuss the critical role of
research and evaluation in the implementation of welfare
reform.
This Subcommittee played a central role in ensuring that
these activities would be an integral part of the Temporary
Assistance to Needy Families, or TANF, Program.
Today, I will describe key elements in the Department's
welfare reform research agenda: what we have learned and what
we will learn.
The broad flexibility provided by TANF creates the
opportunity to evaluate different approaches to welfare reform
to determine which strategies are most effective in moving
families to work and self-sufficiency. We are grateful that
Congress has appropriated funds for HHS to allow us to support
over three-quarters of the States in activities related to the
assessment of welfare reform. Some of the primary areas for
these grants include evaluations of the effectiveness of
welfare reform programs and studies of families leaving
welfare.
While State and local studies provide depth, only national
studies can provide representative information about how
families are faring overall. An important source of national
data is TANF data reported to HHS by the States. In addition, a
number of surveys will be central to the study of welfare
issues, including the Census Bureau's Current Population
Survey, as we have talked about today; its Survey of Income and
Program Participation; and its Survey of Program Dynamics,
which this Subcommittee was instrumental in creating.
The panel study on income dynamics and the National
Longitudinal Survey of Youth are also very important.
Except for the CPS and one fiscal year's quarter of TANF
administrative data, post-TANF data from these national sources
are not yet available.
I will now, though, discuss the information we do have in
three areas: employment, earnings, and income.
First, all available sources show that the employment of
welfare recipients and former recipients has increased
significantly. Analysis of the CPS reveals the employment rate
for previous year recipients increased from 20 percent in 1992
to 34 percent in 1998. Waiver evaluations also indicate
substantial employment gains, and about 18 percent of TANF
adults currently on the roles were employed in the last quarter
of fiscal year 1997, compared to 14 percent in the first three
quarters.
Second, earnings have also increased, but not uniformly.
Welfare reform demonstrations that were strongly oriented
toward increasing employment activities and mandatory
participation typically achieved annual earnings gains in the
$600 to $700 range. But programs which provided only financial
incentives did not increase earnings.
CPS data suggest average earnings for female-headed
families with children have increased substantially between
1993 and 1997. But the early data suggest the gains are not
evenly distributed over the period, with roughly three-quarters
of the gain occurring between 1993 and 1995.
In addition, while employment gains for the bottom one-
fifth of female-headed families with children were stronger
from 1995 to 1997, the average earnings of this group did not
increase over the period.
Better understanding these trends will require both longer
term followup and analysis of other national data as they
became available.
Third, income has increased for some families, but there is
also some preliminary evidence that other families are
experiencing losses.
Data from the four waiver evaluations in which the reform
program succeeded in increasing mandatory work activities,
employment, and earnings suggest mixed effects on family
income, depending on the generosity of benefit levels and of
earnings disregards.
Findings in one State suggest that these effects are not
uniform across recipients, and that higher skilled recipients
may gain income whereas the income of lower skilled recipients
may decline.
CPS data indicate that from 1993 to 1997, the average
annual income of all female-headed families with children
increased. The income increases were unevenly distributed over
the period and across the income distribution. The bottom
quintile in particular did not fare as well as the top four-
fifths, especially in the 1995 to 1997 period, suggesting
preliminarily that we need to be alert to monitoring more
disadvantaged families.
All the findings I have noted are preliminary. Time and
resources will be necessary to produce more definitive results.
These will include longer term followup and more comprehensive
information, especially regarding income. And in addition, we
will obtain more information on more outcomes, with an emphasis
on measuring child well-being. States now have significant
financial resources that are available for investments to
assist families on the caseload to become self-sufficient and
to assist families who leave the rolls to keep their jobs and
move up.
HHS is working with the States to develop and evaluate the
effects of alternative investment strategies. As more post-TANF
data become available from the national surveys, it will be
possible to merge findings from indepth studies in States and
localities with these national data to develop a comprehensive
picture on how the Nation's families are faring under welfare
reform, along with the determining what strategies are most
effective in increasing family sufficiency.
I will be happy to answer your questions.
[The prepared statement follows:]
Statement of Howard Rolston, Director, Office of Planning, Research and
Evaluation, Administration for Children and Families, U.S. Department
of Health and Human Services
Madam Chairman, members of the subcommittee, I am pleased
to be here today to discuss the critical role of research and
evaluation in the implementation of welfare reform. This
subcommittee played a central role in ensuring that these
activities would be an integral part of the Temporary
Assistance to Needy Families (TANF) program.
A central focus of the Department of Health and Human
Services' (HHS') welfare reform research and evaluation effort
is to develop reliable, credible information about how
different strategies are working in order to inform federal and
state policy makers and the public about how welfare reform is
progressing and how families are faring. Today I will describe
key elements of the Department's welfare reform research
agenda, what we have learned so far and what we will learn in
the future. Our efforts have two major parts: working in
partnership with states to develop in-depth information; and
using national data to understand the overall progress of
welfare reform. (There are other important areas, however, for
brevity I'll focus on these two parts today.)
State Evaluation Activities
The broad flexibility provided by TANF creates the
opportunity and the challenge to evaluate a variety of
different approaches to welfare reform to determine which
strategies are most effective in moving families to work and
self-sufficiency. A state-federal partnership is critical to
any successful strategy to evaluate welfare reform for several
reasons.
Studies of processes, programs and populations
that are carried out at a local level can have a depth that is
not possible at the national level, especially given the great
flexibility in program design that TANF permits.
Studies that employ random assignment methods,
which are the most rigorous methods for measuring the magnitude
of the effects of alternative policies and program designs,
must be implemented at the state or local level.
States and localities have access to a rich set of
administrative data, including linked administrative data sets,
that can be used for tracking recipients and former recipients.
Involving states as partners assures that the
information produced will be relevant to state policy makers
and thereby greatly increases the likelihood that states will
use the information as they re-design their TANF programs.
We are grateful that Congress has appropriated funds for
the Administration for Children and Families (ACF) and the
Office of the Assistant Secretary for Planning and Evaluation
(ASPE) to allow us to fund over three-quarters of the states
for activities related to the assessment of welfare reform.
Some of the primary areas for these grants include:
Evaluations of Specific Employment Programs and
Welfare Reform Policies Using Randomized Field Experiments--As
authorized under TANF, we provided funds to nine states to
continue evaluations that began under waivers and use random
assignment to address the effects of alternative welfare reform
programs and policies. In addition, we continued previous
multi-site experiments of welfare-to-work strategies and post-
employment services. Recently, we also funded two
demonstrations to rigorously evaluate: (1) an innovative
strategy to identify and provide treatment linked to employment
and training for welfare recipients who are substance abusers,
and (2) an innovative approach that combines a strong
commitment to work (requiring at least 20 hours of work a week)
with a strong commitment to post-secondary education.
Welfare Leavers--We are providing grants to 11
states and three counties (or consortia of counties) to collect
and analyze, using a combination of administrative and survey
data, information on families that have left welfare. In the
next several months we intend to fund additional studies with
an emphasis on studies of families that have been formally or
informally diverted from coming on the rolls.
Implementation--We are funding numerous studies of
the implementation of particular policies and programs in order
to identify problems and solutions. For example, we're funding
a study of local devolution across the counties of Maryland, a
study of implementation of state TANF in rural and tribal areas
in Montana, and a study of relocation of families from
economically depressed areas in South Carolina.
Two weeks ago the strength of the state-federal partnership
was demonstrated in ACF's Second Annual Welfare Reform
Evaluation Conference. The two and one-half day meeting was
attended by about 300 people from state and federal agencies,
universities and policy research and evaluation organizations.
The attendees included research and program staff from 49
states plus the District of Columbia who participated in a
lively meeting both presenting and hearing the latest findings
from evaluations. The gathering also provided the venue for two
one-day meetings: an ASPE/ACF-sponsored meeting for states
conducting studies of families leaving assistance and a meeting
of researchers and states working on a book to improve the
design of implementation studies.
Analysis of National Data
While state and local studies provide us with depth, only
national studies can provide nationally representative
information about how families are faring overall. Another
important source of national data is, of course, the national
TANF data reported to HHS by the states. These data provide
information on the characteristics and conditions of families
that continue to receive TANF assistance. There are also a
number of surveys that have long been central to the study of
welfare issues. All capture information on income from various
sources including earnings and transfer payments, and several
contain detailed information on employment, childbearing,
family structure, and child well-being. While the strength of
these surveys is their ability to capture very detailed and
rich information, they also generally suffer from some degree
of underreporting, and there is some evidence that
underreporting of Aid to Families with Dependent Children
(AFDC)/TANF benefits is increasing over time. Specific examples
of the most important national surveys for assessing welfare
reform follow.
The Census Bureau's March Income Supplement to the
Current Population Survey (CPS) provides an annual snapshot of
the economic and employment condition of families.
The Census Bureau also conducts the Survey of
Income and Program Participation (SIPP) which collects in-depth
information three times a year on families' income and program
receipt over four-year periods. This committee was instrumental
in providing an additional $70 million to the Census Bureau to
extend two panels of the SIPP and create the Survey of Program
Dynamics (SPD) which will track some families up to ten years.
The Panel Study on Income Dynamics (PSID) has
tracked a representative sample of families for nearly 30
years, collecting in depth information on income, family
formation, and program participation.
The National Longitudinal Survey of Youth (NLSY)
has tracked a representative sample of youth and young adults
for nearly 20 years collecting detailed information on how
these individuals have moved into adulthood.
No one national survey will provide us with all the
information needed. It is important to link information across
surveys, and also to take advantage of administrative data. For
example, we are funding a project to link SPD data to earnings
records kept by the Social Security Administration, both to get
a better understanding of biases in that SPD sample that may
result for attrition, and to get a longer earnings history to
complement the survey data.
Except for the CPS and one quarter of TANF administrative
data, post-TANF data from these national sources are not yet
available, but ultimately they will provide a critical
complement to data derived from state and local sources. An
important part of what I'll discuss today is based on some
early analysis, by staff in the Administration, of CPS data.
What We've Learned So Far
The employment of welfare recipients and former recipients has
increased significantly.
A key measure of the success of welfare reform is its effect on
employment. Analysis of all available sources of information shows that
the employment rate of current and former TANF recipients has increased
significantly. Each March the CPS, which is used to calculate
unemployment rates, collects information about households' income and
program participation in the previous calendar year in addition to
employment and earnings data reflecting individuals' March employment
status. As a result we know whether adults who received AFDC or TANF in
the preceding calendar year were employed the following March. Between
1992 and 1996, the employment rate increased from 20 percent (its
approximate level for the previous four years) to 27 percent. However,
in the last two years it jumped even more dramatically to 34 percent in
1998. Thus, whereas in 1992 one in five previous year recipients was
working the following spring, in 1998, the figure was one in three.
Large employment gains are also evident from rigorous waiver
evaluations that measure the effects of reform policies by comparing
randomly assigned individuals who were subject to either welfare reform
or standard AFDC rules. Unlike the CPS analysis, which does not
separate out the effects of state welfare reform policies from those of
the economy, other policies which promote employment such as the
enhancement of the Earned Income Tax Credit (EITC) or the expansion of
child care subsidies, the strength of experimental studies is that they
do precisely that. Several studies examined policies which are typical
of state TANF programs in that they increase participation in mandatory
work activities and/or increase the amount of assistance a family can
receive when they go to work. The persistent employment effects of
these programs are in the five to 13 percentage point range. I would
also note that these are probably quite conservative estimates in that
the treatment groups are compared to control groups which received a
substantial level of mandatory employment services and also were not
isolated from the atmosphere of welfare reform, even though they did
not directly experience welfare reform policies.
Preliminary findings from four of the ASPE-funded studies of
families leaving welfare indicate that between one-half and three-
fifths of former TANF recipients found work in jobs which were covered
by their state's Unemployment Insurance program. Employment rates were
even higher--75 to 82 percent--when measured as the percentage of those
who were ever employed within the first 12 months. These employment
rates are consistent with findings in many other leavers' studies,
although methodological differences cause rates to be slightly higher
in some studies (e.g., rates are sometimes higher in studies using
survey data, or limiting study population to leavers who do not return
to welfare). While these employment rates are not radically different
from the patterns of AFDC leavers in earlier studies, they indicate a
dramatically large increase in the absoluteGt1 number of families
leaving welfare with earnings, given the significant caseload decline
in the past few years.
Finally, there has also been a significant increase in employment
of current welfare recipients. Between 1992 and 1997, the percentage of
adults on welfare in direct work activities (including employment, work
experience and community service) has tripled. All states met the
overall work participation rate requirement for 1997. And, the percent
of TANF adults who were employed rose from 14 percent in the first
three quarters of 1997 to 18 percent in the last quarter of 1997. Thus,
each of these sources of information consistently points to higher
levels of employment, among current and former welfare recipients.
Earnings have also increased, but not uniformly.
A second important measure of success in welfare reform is
whether welfare recipients and former recipients are earning
more. Although welfare reform is having a positive effect on
the earnings of some categories of recipients, the story here
is somewhat more complicated than the employment story. For
example, an examination of welfare reform waiver demonstrations
suggests that those programs which were strongly oriented
toward increasing employment activities and mandatory
participation (as measured by an increase in participation and
sanction rates) achieved annual earnings gains in the range of
$600-$700 for a least one primary target group of applicants or
recipients. One employment and training program in Portland
which combined a strong employment focus, an emphasis on moving
recipients into higher paying jobs with benefits, and the
provision of necessary child care produced even larger effects
with averaging earnings gains of over $900 per year. Of state
welfare reform approaches which relied primarily on incentives
without work requirements, earnings gains were not observed.
Along with the employment gains described above, the CPS
data suggests average earnings for all female-headed families
with children have increased substantially between 1993 and
1997 from $14,668 to $17,646 (both in 1997 dollars). However,
the early CPS suggest preliminarily that the gains are not
evenly distributed over the period with roughly three-quarters
of the gain occurring between 1993 and 1995, and only one-
quarter between 1995 and 1997. In addition, while employment
gains for the bottom fifth of female-headed families with
children were stronger from 1995 to 1997, the average earnings
of this group increased from 1993 to 1995 but did not increase
from 1995 to 1997. Better understanding of these trends will
require both longer term follow up and analysis of other
national data sets as they become available.
Finally, TANF administrative data just for welfare
recipients who remain on the rolls indicate that average
monthly earnings for those who are working increased
substantially from $506 in the first three quarters of FY 1997
to $592 in the last quarter.
Income has increased for some families, but there is also some
preliminary evidence that some families are experiencing losses.
Income is another central measure of how families are
faring under welfare reform. Here our results are even more
preliminary than for employment and earnings, although we will
have much better data over time. Much of our current
information relies on administrative records which typically
examine family income defined as the total of TANF, Food Stamps
and earnings. However, these analyses do not take into account
other sources of income, such as the EITC, child support and
Supplemental Security Income (SSI); the income of other
household members; in-kind supports such as child care or
Medicaid; nor, on the other side of the ledger, the expenses
that families incur when they are working. A few current data
sources such as the CPS and some early studies of families
leaving welfare are based on household surveys, and many more
of our studies ultimately will have this information.
Data from the four waiver evaluations in which the reform
program succeeded in increasing mandatory work activities,
employment and earnings suggest mixed effects on family income,
depending on the generosity of benefit levels and earnings
disregards. In the two states with both generous benefits and
earnings disregards, there were increases in average annual
income of $762 for applicants in Iowa, and $1,065 for long term
recipients in Minnesota. In Florida, a program that
accomplished comparable earnings gains, but had low benefits
and generous earnings disregards raised family income by $289,
whereas a fourth program in Indiana that accomplished
comparable earnings gains but had low benefits and retained the
standard AFDC earnings disregards had no effect on income.
Examination of the Florida findings also suggests that
these effects are not uniform across recipients and that
higher-skilled recipients may gain income, whereas the income
of lower-skilled recipients may decline. In Florida, recipients
who had both a high school degree and recent work experience
averaged $752 higher average annual income for the three years
following entry into a welfare reform program, while those with
neither experienced losses of about $485. This gain/decline
pattern is consistent with patterns in some earlier leaver
studies. For example, a study in Iowa of families that lost
their entire benefit because they failed to establish a self-
sufficiency plan showed that about 40 percent increased their
income, about 50 percent suffered a decrease, and about 10
percent had unchanged income.
For the period 1993 to 1997, CPS data indicate that the
average annual income of all female-headed families with
children increased, as did employment and earnings as described
above. This measure of income includes both earnings and a
broad range of transfer programs. Again, the income increases
were unevenly distributed over the period, with larger gains in
the 1993-1995 period, and across the income distribution. The
bottom quintile did not fare as well as the top four fifths,
especially in the 1995-1997 period, suggesting preliminarily
that we need to be alert to monitoring more disadvantaged
families.
What We Will Learn
As described above all the findings I've noted are
preliminary. In almost all the studies I've described above,
additional administrative data are being collected and surveys
are being fielded or will be in the next several years. In the
national surveys, data for 1997 and 1998 have been collected
and are being processed. Thus, time and resources are necessary
to produce more definitive results. I'll describe some of the
more important information that we'll be obtaining.
Longer Term Follow-Up
Our findings are currently based on follow-up periods
ranging from 6 months to 3 years. To understand the effects and
outcomes of welfare reform will require longer term follow-up
on the order of four to six years. Particularly important is
that in most states, very few individuals have reached time
limits, and in many larger states, none have.
More Comprehensive Information
As indicated above most of our current measures of
employment, earnings and income are from administrative
records. Over time we will obtain much more comprehensive
information through surveys, both in conjunction with waiver
demonstrations and through studies of families that have left
TANF. Most importantly, we will be able to learn a great deal
more about the income families have to support themselves and
in particular, what happens to families who leave welfare and
do not have earnings.
More Outcomes, Especially Related to Child Well-Being
A critical measure of the success of welfare reform is how
it affects children. In 1996 ACF provided grants to 12 states
to work with a team of researchers (funded by ASPE) to develop
measures of child well-being to examine how different welfare
reform programs and policies are affecting children. The
partnership proved to be very successful, and subsequently ACF
has augmented the funding of five state welfare reform
evaluations (Connecticut, Florida, Indiana, Iowa, and
Minnesota) to rigorously evaluate the effects of welfare reform
on family processes and child well-being. In addition, ASPE has
provided funds to 13 states to work with the Chapin Hall Center
for Children at the University of Chicago and other experts to
develop indicators of child well-being. Some of the 13 states
are exploring using similar measures to those used in the five
states as well as other administrative and survey data. The
importance of measuring child well-being is vividly illustrated
by the presentation you are hearing today on the New Hope
demonstration. A central finding of the interim effects of this
program designed to support working families was that it
increased significantly boys' school performance along with
increasing their participation in extended day child care and
other structured activities, while having other positive family
effects.
More Rigorous Information about What Works and What Doesn't
Because of caseload reduction, states now have significant
financial resources that are not required for immediate cash
assistance, and thus are available for investments in those
families still on the caseload, including those with the
greatest problems, and to enable families who leave the rolls
to keep their jobs and move up instead of returning to welfare.
As a result, many states are increasingly focused on strategies
to increase job retention and advancement for recipients and
former recipients. ACF is working with thirteen states to
develop, pilot and ultimately rigorously evaluate the effects
of alternative strategies. Through this activity and others, we
will be learning about the role of supports for working
families such as child care, child support and other services
in sustaining and advancing in employment. These kinds of
evaluations are critical to using the flexibility provided by
TANF to maintain a learning environment in which federal and
state tax dollars are used to make investments that really
work.
More Information about Sub-Populations, especially the Harder-
to-Employ
As more in-depth information is developed it will be
possible to understand better how particular sub-populations
are faring. We currently have projects underway to examine
issues related to: non-custodial parents, rural populations,
families with disabled members, Native Americans, victims of
domestic violence, child-only cases and families with mental
health or substance abuse problems. In addition, we will learn
more about the impact of strategies to serve the hardest-to-
employ through our Department's recently begun evaluation of
the Department of Labor's Welfare-to-Work grants program. The
evaluation, which is at an early stage, will include an
examination of the impact of Welfare-to-Work on participants'
employment and wellbeing. We will share these results with
Congress as the project progresses.
More Nationally Representative Data
Over time as more post-TANF data become available from the
national surveys, especially longitudinal data, it will be
possible to merge findings from in-depth studies in states and
localities with nationally representative data and use the
strengths of each to develop a comprehensive picture of how the
nation's families are faring under welfare reform.
Conclusion
The preliminary results I've described above illustrate the
promise of how investments in careful research and evaluation
can produce information that can inform policy makers at all
levels. Perseverance in these investments can play a critical
role in supporting strategies that can realize the goals of
welfare reform.
I will be happy to answer your questions.
Chairman Johnson of Connecticut. Thank you. Thank you very
much. I thank the panel for their testimony.
Wendell, would you repeal welfare reform?
Mr. Primus. No, but I would make the midcourse corrections.
I think, again, I said it is too early for me to give a
definitive recommendation, but I do think the Subcommittee has
to be much more concerned that families who are eligible are
indeed served, particularly under food stamps and the Medicaid
Programs. And I think----
Chairman Johnson of Connecticut. I was very interested in
that part of your remarks, as we are concerned about that, and
we are going to have a special hearing with the States to see
if we can understand better how we might help them make sure
that the intent of the law is passed, that is, the intent that
there should be eligibility for Medicaid and food stamps, and I
think particularly in the diversion program, we probably are
losing eligible people. And that certainly would have an impact
on not only poverty but well being.
Mr. Primus. The only other thing I would say, Chairman
Johnson, is that I think some changes need to be made in terms
of the welfare-to-work reauthorization. The moneys that are the
pipeline, I think, need to be--the regulations need to be
loosened up so that money can really be spent.
I agree with Mr. Cardin that we have to be concerned also
with noncustodial parents. So there are--and that the $50
passthrough has been completely repealed about 30 States. I
think when dads pay, they should get--their children should
actually be better off when dads pay.
I think there are some changes that I clearly would
recommend, but I think the main thing is that you and the
administration can do is send a signal that we care more about
economic well being and less about caseload reduction.
Chairman Johnson of Connecticut. Well, I guess that is the
part of your testimony that I really would not agree with. I do
not think it is an either or. I think the caseload reduction is
spectacular. We now do want to be sure that the people who are
going off welfare are being supported and that ultimately the
money in the system finds a way to deal with the issue of
career development. And I do not think we know how to
legislate. And furthermore, I think States are just beginning
to figure that out. Once they get someone in a low-paying job,
particularly if it is a half-time job, how do you then help
them get the training they need to not only get a full-time
job, but a higher paying job.
But I think there is a material difference, a profoundly
significant difference between getting a half-time wage and
some income disregards, some public stipend as well and getting
the same amount from public stipend, and I think we overlook
the difference between those two things at our peril. And while
I am keenly aware of some of the families that do not seem to
be doing as well as we would think they should be doing, the
comments of the children are touching and should be kept in the
forefront of our mind. The pride, the greater attention to
schoolwork, the greater ambition the children have.
And so, I think those are things that we do not see
reported on here at this moment. We do have to find a way to
understand, because I think they are generationally really the
reason for welfare reform. The reason for welfare reform is not
to save stipend money. The reason for welfare reform is to give
every American the opportunity to make the best of their
abilities. And the old system certainly was not doing that.
I certainly want to see how we get Medicaid and food stamps
going, and we will be doing a lot of work on the welfare-to-
work program. Frankly, it is a total failure. And when you have
$3 billion, and you are spending $84 million. This is a
failure, especially when you know that there are people out
there. When you go out and people say to you, we can get them
the psychological analysis they need, or we know they are
abusing a substance, but we cannot pay for the treatment
program, even though we think they can pay for the treatment
program, you have got a problem.
There are lots of ways we can better use reform two money,
and we are very interested in everybody's thoughts about how to
best do that.
And it is really a joy in today's environment to have some
money that you actually can use to better advantage. But I want
to--my question really goes to the other panelists, because you
are more knowledgeable about data and so on. What do you make
of Wendell's data that there is more, not less, poverty among
some of the people leaving welfare?
Ms. O'Neill. I really do not think one can be sure of that
because the census data are extremely limited, particularly for
the lowest portion of the distribution. For one thing, you can
only infer noncash benefits received by those who are on
welfare and for those who have left welfare and are still
entitled. Food stamps are probably reported reasonably well,
but everything else is inferred like the EITC or not measured
at all.
Also, we are looking at snapshots. These are not the same
people in the bottom quintile from year to year; and without
longitudinal data, one cannot be sure how welfare leavers are
doing over time. Eventually SIPP may offer a better view of
what is actually going on. Also, with these snapshots, you are
picking up people in March and asking them about their sources
of income, their cash income, in the preceding year. And
somebody who collected welfare in January, February, March of
the preceding year, but not hereafter, may not recall and
certainly might not remember how much it was.
And another thing, I was truly surprised at the large
extent to which there was additional household income--that is,
on average--I did not separate the data by quartiles or
deciles, just for the average. In 1997, 48 percent of never-
married women with children were in households and additional
income, apart from the mother's, was $27,500. Should it be
counted or not? Is there cohabitation or other reasons for
sharing of income amongst these household members? We do not
really know. So, without having more information on these
matters, I do not think that we are getting a reliable
barometer of real resources available to those families.
The data certainly do not show what has happened to
particular women who have left welfare. But from what I see,
these women are not worse off. And in terms of the resources
that they have available to live on they may be better off.
Another factor, of course, is the underground economy. There
are strong temptations because of taxes and particularly in
low-income levels, many employers are quite willing to pay
under the table; it is certainly not uncommon. That is another
factor that we do not know about.
Chairman Johnson of Connecticut. Thanks.
Mr. Besharov. I know the red light is on, but could I take
a crack at that?
Chairman Johnson of Connecticut. Yes.
Mr. Besharov. Today's Washington Post has an article about
how the Deputy Chief of Staff in the White House and Chris
Edley are going to cohabit here in Washington, DC. And Chris'
comment here is that a mortgage is much more serious than a
ring, because they are not going to get married.
We have a number of surveys that say--there are a number of
surveys--when we survey welfare recipients, over 20 percent say
they are living with the father of one of their children--live
with. We have two new surveys that say that 50 percent, 50
percent of the children born out of wedlock last year, the
father of that child was living in the home. My message to you
today is that this discussion of just the income of the single
mother is both tremendously limited and misleading. I would ask
you to think of the following:
When we think of middle-class couples and a decision being
made about whether the wife will work--and I hate to put it in
those terms, but that is the tendency--the husband and wife sit
at the proverbial kitchen table, and they decide: Does it pay
for the wife to work, or for the husband to work more hours?
That is the question. They weigh questions about child care,
and so forth.
What you see in these data--what I believe Wendell is
describing in welfare reform--is two things happening. One, in
those households and in those single-mother families, where it
pays for the mother to work, she is going to work and her
income is going to go up.
In the chart I showed you, which shows you the households
in which those women live, you see something else going on. You
see that the income in those households, at least the nonsingle
mothers' income is rising, even when the total is flat. And I
think it is inescapable. I cannot put 15 footnotes on this, but
it is inescapable to me that the following conclusion is true.
Welfare reform is saying to a woman on welfare that she has to
either work or leave welfare. And in some of these embedded
households, a decision is being made to forego the welfare and,
he--and that is what it is, unfortunately, in our kind of our
sex role society--he is working more hours or earning more
money because of the economy.
Now, what is the message there? That is not the message
about a fight about what is going on with welfare reform. My
message and my conclusion here would be: Do not focus all your
efforts on welfare-to-work because many of the households and
families we are most concerned about are couples--these are
families just like Chris Edley and the President's Deputy Chief
of Staff. We should respect those relationships, try to
strengthen them, and the most direct way to raise their
combined income is to raise the income of that household, which
may mean the man working more, and not pushing the mother into
the labor force.
Now there is a difficult and challenging question of how to
do that. And I mentioned just in passing about the marriage
penalties in the earned income tax credit, which can be
substantial, in the thousands of dollars. Gene Steuerle has
estimated that if the couples we are talking about get married,
they lose 20 percent of their income--20 percent of their
income. That is an easy fix, as I understand.
The same is true, as Wendell was mentioning, about child
support. If we do not watch out about how we enforce child
support, we take 30 percent of the income from these
households. So we have to be very careful about how we do it.
Chairman Johnson of Connecticut. Thank you. Let me yield to
my Ranking Member, Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair.
Dr. Rolston, we look at the number of people leaving the
welfare rolls, and certainly those numbers are one indication
of what is happening as far as success of a program. But a
person might be leaving the welfare roll and getting a good
job, and that is great. Other people are leaving the welfare
rolls, getting employment, and living below the poverty or
close to the poverty line. And then you have a third category
that do not have regular employment.
Can you give us some indication as to how many people fall
into those various categories of employment?
Mr. Rolston. I do not think we have good answers to that
right now. I think we will have much better answers to it as
time progresses, as I mentioned in my testimony. Most of the
information we currently have about families leaving welfare
comes from administrative records, mostly from unemployment
insurance, so we know what somebody earned in a quarter.
Currently, many of the activities we are carrying out, the
evaluation activities, are surveys, and there are surveys to
come. It is in that setting that we can get a much better idea
of how these earnings are coming about; and, also, from some of
the national surveys over time.
But right now, we are limited in what we can say about
that.
Mr. Cardin. How much more--how much longer will it take
before we have good, reliable information that tracks people
who have left welfare as to the type of employment that they
have?
Mr. Rolston. I think we will have much better information
over the course of the next year. I think it is broadly
recognized that this is an important issue, and that there need
to be investments made in order to improve people's work
trajectory so that they do not end up in part-time jobs that do
not pay very much and have no benefits.
I think it is also a really important part of learning
agenda, because right now we do not know how to make those
investments very well. But, with diligence and good evaluation,
we can really learn about those things.
Mr. Cardin. I think that information is critically
important to us. We have two programs out there--the earned
income tax credit and minimum wage--that I would suggest have
had as much impact on getting people out of poverty who have
left welfare and found employment as any other program. They
are at least able to get some help from these programs.
I think it would be useful to us in evaluating EITC and
minimum wage as to whether we need to make further adjustments
is to know what is happening to this new wave of people who are
leaving the welfare rolls. I understand that you are dependent
upon the reliability of information, but to the extent that
this information becomes available, I think it will be very
useful to us. Any of you--any one of you, if you could make
that available to our Subcommittee.
One of the very disturbing trends is the fact that there
are a large number of people who are eligible for Medicaid who
are not receiving Medicaid and food stamps. And I am just
wondering whether you all share that observation and what we
can do to make sure that people who are eligible to have
Medicaid, in fact, are enrolled in the program. Is this a
problem with the States just not--doing something that is wrong
or lack of information? What is happening out there?
Mr. Rolston. We certainly share your concern, and I think
it is a complicated situation, and it is a complicated
situation because the world has changed so much in this regard.
Certainly, the Department believes that it is important to
enforce the law as it exists and to make sure that people who
are entitled and eligible and apply for assistance and can
qualify for assistance have access to Medicaid.
We are doing a number of things to encourage States to look
at how some other States are doing this. We recently issued a
handbook, a guidebook, to States around this issue. And we are
also doing a significant amount of research on this issue--for
example, looking at families that have been diverted from
assistance and looking at the underlying processes and how
States can be allowing that to happen and how those processes
can potentially be fixed. I think the issue has a lot to do
with outreach, improving people's knowledge, their access to
the program, and their desire to participate in the program.
So, we think it is a very central agenda.
Mr. Besharov. Could I just jump in on one thing that Howard
just said, their desire to participate? It is a very
complicated issue here because, unlike the rest of us, people
who are Medicaid eligible do not face a preexisting condition
rule. And so, the reason we want them to sign up for Medicaid,
and we all do, is for preventive service. That is the only
reason when you get right down to it. And that is very tricky
to persuade people about. I daresay most of us, if we did not
have to face a preexisting condition rule, would not pay for
health insurance until somebody in the family got sick. There
is evidence that that is a real issue. That does not explain it
all. But it means that any efforts that the Congress makes to
increase eligibility have to fight that problem in the field.
Mr. Cardin. Well, there have at least been some reports
that there has been confusion generated by State administrators
because of the changes in welfare rules that have added to
people not enrolling in Medicaid. Do you subscribe to that?
Mr. Besharov. I surely do. I surely do, and I also would
add, as my chart six shows, that the data we use to make these
judgements are seriously flawed. The CPS, as everyone has
talked about here, is now showing only 69 percent of the people
that HCFA say are getting Medicaid. It is a tremendous problem
of underreporting as well.
Mr. Cardin. And let me just conclude, Mr. Primus, with your
point about the fatherhood programs or the noncustodial parents
with the passthrough of their child support payment to the
family. We had a very interesting debate yesterday in the Ways
and Means Committee on a bill that deals with removing the hold
harmless to the States on child support enforcement. An
amendment was offered by Mr. Kleczka that would have permitted
a set-off for those States that pass through their support. I
see that our next witness will talk about that. I thought that
was a really--it would accomplish two good purposes.
One, it would negate, mitigate some of the pain of removing
the hold harmless, but, second, it would move forward the good
policy of encouraging the States to allow the noncustodial
parents support to actually go to the benefit of the family.
Your comments?
Mr. Primus. I think that is a good amendment. I think it is
small step in the right direction. I think you need to do more
than that, but it clearly is a good first step. But I also--I
guess the point I want to make is to Chairman Johnson in all of
this, is really the issue that we do not have to confuse the
message of work in caseload reduction.
In other words, we can keep a strong message about work,
and I am going around the country urging that some of the same
changes that have been happening to welfare in terms of culture
of the office, in terms of trying to get noncustodial parents
into work, and then making sure that their child support is
actually all passed through, I think you can send the message
about work without necessarily implying that caseload reduction
is, also, comes with it. And, you know, most of the mothers who
go to work here will remain eligible for Medicaid and will
remain eligible for food stamps.
And so that really I think is what has got to change here.
And I think the TANF funds, which is really good right now--
there is lots of it. Maybe a lot of it should be spent on child
care, but there is also a lot of other needs that need to be
addressed. And if we really value child support, why do not we
subsidize it, just like we subsidize the earnings of mothers
through the EITC. I mean, and that is what I think--we have a
long way to go yet to help both parents meet their parental
responsibility.
Mr. Cardin. Thank you. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Mr. English.
Mr. English. Thank you, Madam Chair.
Dr. Besharov, I was intrigued by the parting shot in your
testimony in which you expressed concern about the obstacles to
marriage in the welfare laws. Can you enumerate what you regard
as the biggest barriers, building on your previous testimony?
Mr. Besharov. Sure, and here it goes back to the same
question: Where are these low-income women living today? What
are the relationships they have today, not in some time in the
future, with the men in their lives and the fathers of their
children. Remember that finding. According to a study from
Princeton University and so forth, 50 percent of those newborns
born out of wedlock have a father living at home.
The conversation for the last half hour or so has been
limited to single-mother families and ignores men; ignores them
whether they are living at home, or living outside. When
Wendell speaks about noncustodial parents in child support, I
respond by saying, What about custodial parents? These guys are
living in these households. When we worry about eligibility for
Medicaid, and we determine it by the status of the mother, in
the family, she is embedded in the household. Often the
household is not eligible for either Medicaid or food stamps.
She does not tell the authorities and so forth. I am not
getting into fraud and abuse. What I am into here is that there
is a reality about cohabitation, not just, by the way, for low-
income Americans--8 percent of Americans today live in what we
used to say was ``without benefit of clergy.'' And this
Congress has shown itself to be relatively flexible about these
issues. It is time to be flexible about them when it comes to
low-income Americans, and that means an across-the-board
rethinking of all this.
I have the floor for a second. Look, Wendell's figures say,
these families have $6,000 or $7,000 of income. There are a few
places in Idaho or someplace--I hope no one here--where you can
live on $6,000 a year. Mr. Cardin knows we are from the same
State. I think it is impossible for someone, on their own, to
be living on $6,000. They are living with someone or someone is
providing additional money. That is a reality that ought to
permeate our discussions about welfare.
Now, what does that mean? That means you have one heck of a
problem with, for example, the question of child support.
Twenty or thirty percent of those dads are living at home. If
you dun him for up to 30 percent of his income and keep it in
the welfare, you have made that family poorer. You have not
reflected that he is there and providing some kind of support.
That is a tough fix. It is an expensive fix. It means that the
first step is to not have the kind of conversation we have had
only about single-mother families, but to think about these as
households. An easy fix, and then I will stop talking, is on
the EITC. The EITC has a large marriage penalty. It also has a
marriage benefit. But it has a penalty. I understand it can be
fixed within the dollar amounts--I do not do this kind of
thing--that are available to this Subcommittee. I pass on that.
I know, though, that the marriage penalty in the earned
income tax credit is quite significant. And if I were, in
today's day and age, where there is no stigma to living
unmarried without benefit of clergy, and if you told me that 20
percent of my household income would disappear the day I
married my wife, I would have second thoughts, especially if my
household income were $20,000 a year.
So, one thing we could do here to fix this, and it would
change Wendell's charts immediately, is to deal with the
marriage penalty in the EITC.
Chairman Johnson of Connecticut. Thank you.
Mr. English. Dr. Primus, do you want to comment on that?
Mr. Primus. Yes, let me make a couple of comments. One is
this is a very complicated subject, and right now there are
both marriage bonuses and marriage penalties. And you have to
be aware of that, because if a mother with zero income marries
a single guy with about $13,000 of income, the EITC that is a
big marriage bonus.
The second is if you look at participation of two-parent
families, and I will agree with Doug, their rate of
participation is even lower. The programs right now do not
serve two-parent families. And that is another thing this
Subcommittee ought to be very concerned about. And I think some
of those barriers are being eliminated, but unfortunately the
Welfare Act, with its 90 percent work participation rate, is
really causing a lot of States to say, we want to stay away
from a two-parent family, because, otherwise, we are going to
be concerned about getting a work penalty; and the last thing
you want as a welfare administrator is having your State
assessed with a penalty.
The last thing I want to say, Doug implies that my research
here, if I had just looked at cohabiting, that these income
declines would go away. That is false. The change in the amount
of cohabiting between 1995 and 1997 is maybe somewhere between
1 out of 100, of these single-mother families and 3 out of 100,
at the most. So the declines that I am finding in the bottom
quintile and in that bottom decile are not being eliminated,
and, in fact, I have seen preliminary numbers where the
analysis has been done right, and the cohabiting situation does
not turn around the decline in the numbers that I presented to
the Subcommittee this morning.
Mr. Besharov. Could I have 30 seconds to the word
``false?''
Mr. English. That would be up to the Chair.
Chairman Johnson of Connecticut. Yes, go ahead. Certainly.
Mr. Besharov. The issue is not declines and increases. The
issue is when you do this analysis, you add as much as $6,000
and $7,000 to the money these women have. This is why the
consumption data about these families shows vastly more
consumption than their income. We are not disagreeing about
trends. We are disagreeing about where the base is, and it is a
lot higher, thank goodness.
Chairman Johnson of Connecticut. This is a key issue that I
did not focus on specifically. Let me get through the other----
Mr. English. Madam Chair, I did have a followup question.
Can I hold it possibly until the end after other Members have
asked questions?
Chairman Johnson of Connecticut. That will be fine.
Mr. English. Thank you.
Chairman Johnson of Connecticut. I do think we need to give
the others a chance.
Mr. Stark.
Mr. Stark. Well, Madam Chair, thank you for the hearing. I
hate to rain on your press conference and the glowing glory of
the welfare reform bill, which I might add that four out of the
five Democrats on this Subcommittee oppose. And I might further
add that it is the--I guess the arrogant obscenities that the
Republicans bask in--it is a kind of arrogance that would let
Chairman Archer say, in his press conference today, ``Today,
there are no children on the sewer grates. None of those things
we worried about have come true.'' It does not say what he
worried about, but he sure must be checking all those sewer
grates in this district.
Clay Shaw, who used to chair this Subcommittee, said that
liberals fell down--that may very well be as we did not have
enough votes--and that he has faith in human spirit. But this
is the same man who when referring to children with mental
illness who receive SSI disability checks called those payments
``crazy checks.'' I wonder if he says crazy checks to senior
citizens with Alzheimer's disease.
It is under this attitude that Republicans--Nancy Johnson,
Archer, Shaw, Hastert--refer in this document to illegitimacy
as the scourge of American social policy. In Shakespeare's day,
which is about the political climate that would satisfy the
Republicans, we called them bastards. We do not say
``bastards'' anymore, and we do not say illegitimate. There is
no illegitimate child in the United States, and I hope the
Republicans some day will have enough humanity to understand
that they are harming children who had nothing to do--they do
not vote yet. They have not chosen a religion that some right-
wing religious wacko might suggest will lead them out of
poverty. I get very sick and tired of hearing people say to
children, when you pray right, vote right, things will be good.
Then, they want to go on, and we are talking about
fatherhood programs. Well, let us just force people to be
married. I can suggest to you at least two women in this
country who think that having remained married to their
original husband would have been foolhardy. I can suggest that
in many cases where we force a husband and wife to stay
together, it can lead to abuse and other sorts of problems that
I suppose most adult white males in the Congress would not
understand or recognize.
So, to say that marriage will solve illegitimacy, and
marriage, according to the Bible, and letting faith-based
groups train these people will solve these problems to me is an
obscenity. And it is the height of arrogance. And you ought to
know where this comes from.
And I might add that there were three experts in the
Department of Health and Human Services, Dr. Rolston, who
resigned in protest--Mary Jo Bane, Peter Edelman, Wendell
Primus--considered the leading authorities in this country on
welfare. They resigned in protest, as they should have.
Now, unfortunately, I cannot ask career civil servants to
resign. That is not fair, and it is not fair to blame them for
what the political leaders for whom they work decide.
I presume, Dr. Rolston, that your testimony today was
cleared by the Assistant Secretary for the Administration of
Children and Families, is that correct?
Mr. Rolston. That is correct.
Mr. Stark. All right. I have a letter, if the Chair will
indulge me, to Ms. Golden and to you, sir, with a list of
questions. I would ask unanimous consent that it be placed in
the record, and I would ask you if you could find in the next
30 days to respond, having it cleared, please, to these
questions. They deal with research and research that you are
about to do. Would you do that for us?
Mr. Rolston. Certainly.
Mr. Stark. Thank you. Madam Chair, I would like this in the
record, and would you give Dr. Rolston a copy of this letter?
May 27, 1999
Olivia Golden, Assistant Secretary,
Administration for Children and Families
901 D St. S.W.
Washington, D.C. 20477
Howard Rolston, Director of Planning,
Research and Development
370 L'Enfant Promenade S.W.
Washington, D.C. 20447
Dear Olivia and Howard,
This is a request for HHS to provide answers to the following
questions, which will shed light on the impact of welfare reform on
low-income families. In your response, which I would like to have
within six weeks, please provide copies of relevant research, data and
surveys.
I look forward to reading your responses to these queries at your
earliest possible convenience.
Sincerely,
Pete Stark
Member of Congress
July 9, 1999
The Honorable Pete Stark
House of Representatives
Washington, D.C. 20515
Dear Mr. Stark:
I am pleased to have the opportunity to address the important
questions you raised in your letter of May 27, 1999 regarding welfare
reform. I also appreciate the opportunity to lay out the critically
important agenda that we share: ensuring that supports such as child
care, Medicaid, and food stamps are available to all eligible low-
income families and investing in all families on welfare, including
those with the greatest barriers to employment. To achieve these goals,
in addition to continuing aggressive implementation, enforcement, and
technical assistance activities, I also want to highlight two key
legislative next steps. First, as I noted in my testimony before the
Committee on Ways and Means Human Resources Subcommittee on March 16, I
believe that the President's child care proposal is enormously
important to parents and children in low-income working families.
Second, the proposal to extend and expand the funding authority to
allow States to address the challenges created by the de-linking of
Medicaid from welfare is critical to ensuring access to and enrollment
in the Medicaid program by all eligible families.
The many important questions you raised are part of our on-going
research agenda. For some of these questions, we do not yet have
sufficient evidence to reach definitive conclusions because we are
awaiting findings from ongoing studies and analyses or we have only
preliminary information. However, we are using what information we have
and we are not waiting for each of these studies to be concluded to
begin working on the issues because we believe it is important to have
a strong strategy in place to help families. We will utilize results as
they become available to build on and enhance our efforts.
My responses are presented in the enclosure with the questions in
the order in which they were presented in your letter. We will be
providing relevant reports and studies to supplement those you cite and
we will continue to provide you and your staff with copies of future
research reports on these and related topics as they become available.
I look forward to additional opportunities to discuss new findings
from our observations and sponsored research and related activities. My
staff and I are available to answer any additional questions you may
have or meet with your and your staff to further discuss these
important issues.
Sincerely,
Olivia A. Golden
Assistant Secretary
for Children and Families
Enclosure
Question 1. There are many who maintain that welfare reform is
a success because fewer people are on the rolls today. Aside
from the fact that our booming economy is clearly playing a
role, caseload reduction is a narrow measure that ignores the
question of whether those who are no longer receiving cash
assistance are better off economically once they return to
work, or are diverted or sanctioned off the rolls. Does DHHS
agree that claims of welfare reform ``success'' are premature
until we have answers to the following critical questions:
How many are getting jobs that provide a wage that allows
them to escape poverty?
How many of those leaving welfare--or those who are
diverted--are able to find jobs with health insurance?
How many have jobs where their kids have health insurance?
How many have access to good child care?
Answer. The Department of Health and Human Services (DHHS)
believes that the success of welfare reform has to be judged
based on a multiplicity of outcomes including parental
employment and earnings, family income, and child and family
well-being. There is clear and consistent evidence that welfare
reform has been successful in increasing the employment of low-
income mothers. For example, Census data show that the
percentage of people on welfare who were working the following
year has increased from 20 percent in 1992 to 34 percent in
1996. Studies show that many families are earning more than
they received on welfare. On the other issues there is
currently insufficient evidence to judge success. The specific
questions you raise are important ones. We agree that answering
them is also central to assessing the success of welfare
reform.
We have specifically targeted our research effort and
funding to address many of these questions. Most of the
evaluations of State welfare reform programs include data
collection efforts that will provide valuable information about
the families' circumstances when they are no longer receiving
TANF cash assistance. This will include information on
employment, wage levels, benefits such as health insurance
coverage, and child care arrangements utilized. The special
studies funded to track ``leavers'' and those diverted from
TANF will also provide important information about wage levels
and earnings, benefits available from the job such as health
insurance coverage, family income, and utilization of other
program services, such as Medicaid and food stamps. Interim
reports from several large-scale welfare reform evaluation
studies and some of the first round of ``leavers'' studies have
been received. Additional reports are expected to be submitted
to DHHS over the coming months. We will be reviewing findings
and analyzing the information produced. We would be pleased to
brief you on this work as it is completed.
Question 2. Census data suggests that the poorest families
leaving welfare have ``lost'' economic ground in the last few
years, despite our robust economy. Why is this, and what steps
is HHS prepared to take to get states to start meeting the
needs of extremely poor families?
Answer. The most current post-TANF data available from the
Census Bureau is the March 1998 Current Population Survey
(CPS), reflecting calendar year 1997. As indicated in Howard
Rolston's testimony before the Ways and Means Subcommittee on
Human Resources, analysis of all available sources of
information, including the CPS, shows that the employment rate
of current and former TANF recipients has increased
significantly. Along with these employment gains, early
analysis of the CPS data suggests substantial increases in
average earnings for all female-headed families. When we look
at the bottom fifth of female-headed families with children, we
find that there are employment gains but the average earnings
of this group did not increase from 1995 to 1997. CPS data
indicate that the average annual income of all female-headed
families with children increased. But when we examine
differences between the top four fifths and the bottom group,
those in the latter group did not fare as well. The role of
welfare reform in these changes cannot be determined from these
analyses. Nevertheless, the early indications of a reduction in
income among those in the lowest income group are of concern to
us. We will further examine these outcomes using the March 1999
CPS data as soon as they are available.
The Administration has put in place a number of initiatives
to help families with the greatest challenges. In the 1997
Balanced Budget Act we fought for and obtained an additional $3
billion to assist long-term recipients in high poverty areas.
The Administration's $1 billion proposal to reauthorize this
Welfare-to-Work Program will help long-term welfare recipients
in areas of concentrated poverty get and keep jobs and will
help more low-income fathers increase their employment and
support their children. The Administration secured $7.5 million
for Access to Jobs transportation grants to help welfare
recipients and other low-income workers get to work and has
proposed doubling resources in FY 2000. The Administration has
proposed 25,000 additional welfare to work housing vouchers,
building on a successful request for 59,000 in FY 1999.
Finally, the Administration has proposed extending tax credits
to encourage businesses to hire and retain long-term welfare
recipients and the President has challenged the business
community and the Federal government to do their part. To date,
companies participating in the Welfare-to-Work Partnership have
hired over 410,000 people from the welfare rolls, and the
Federal government has hired over 12,000 recipients.
In addition, we have undertaken a number of efforts to
strongly encourage States to use their existing funds to make
investments in families who are likely to have the greatest
barriers to self-sufficiency. We have taken active steps to
promote and encourage State and local TANF agencies to utilize
the flexibility provided through the final TANF regulations,
including issuance of a guidebook on the use of TANF funds (May
1999). The guidebook provides guidance and examples of how
existing Federal TANF funds, as well as State Maintenance of
Effort (MOE) funds, may be used to address multiple barriers
faced by current or former TANF families. For example, the
guide points out that Federal TANF funds may be used to provide
appropriate counseling services (e.g. mental health services,
anger management counseling, non-medical substance abuse
counseling services) to family members with barriers to
employment and self-sufficiency. Both Federal and State MOE
funds may be used to provide non-medical substance or alcohol
abuse services, including room and board costs at residential
treatment programs. Further, TANF or MOE funds can be used to
help victims of domestic violence relocate somewhere else where
employment or safe housing has been secured. Among other
things, these funds can be used to support collaboration with
domestic violence service providers to screen and identify
victims applying for TANF, establish confidentiality procedures
and ensure safety, and develop appropriate staff training.
Further, we have actively promoted use of the EITC and
encouraged States to make significant investments in strategies
that can move families who enter the workforce at low wages up
to higher wage jobs.
Question 3. Last January, a federal district judge issued an
injunction against New York City, which until then had a policy
of blatantly denying welfare applicants the opportunity to
immediately apply for food stamps and Medicaid. This practice
is not only illegal, it's despicable. Does HHS have any
authority to sanction New York for illegally denying Medicaid
to welfare applicants? If the agency does not have the
authority under TANF to penalize localities and states for this
kind of behavior, does it have any other authority to impose
financial sanctions on localities that are caught denying
benefits? Did HHS recommend that any sanctions be applied in
the New York City case? Would you recommend that sanctions be
used in the future if similar circumstances arise? Or do you
think the courts and letters of guidance like the one HHS
issued on March 22, 1999, are a sufficient response, and that
penalties are inappropriate?
Answer. The Administration is taking aggressive steps to
ensure that States and communities do not undermine the
Medicaid guarantee of coverage in implementing their welfare
programs. DHHS recently issued guidance to States explicitly
underscoring that States with joint applications for TANF and
Medicaid must provide Medicaid applications upon request and
must process Medicaid applications without delay, regardless of
the State rules governing the TANF application. HCFA is
undertaking numerous other activities to ensure that States are
in compliance with the law in this area.
When concerns are identified, HCFA begins the process by
working with the State to reach a satisfactory resolution. If
these efforts fail, HCFA would take all steps available under
the law to ensure that the State takes corrective action. This
could include withholding Federal Financial Participation (FFP)
for the State's program. If HCFA determines that a State is not
in substantial compliance with Federal Medicaid requirements,
there is authority in section 1904 of the Social Security Act,
after notice to the State and a hearing, to withhold FFP from
the State.
After court action and significant HCFA efforts to address
the problems you cite, the New York City Human Resources
Administration has agreed to provide Medicaid applications
without delay at TANF offices in New York City. To ensure
compliance, HCFA has been reviewing several aspects of New
York's eligibility process. HCFA will continue to investigate
all allegations of improper enrollment practices.
Question 4. Some studies show that states using initial full-
check sanctions have seen the highest welfare caseload
declines. At the same time, we know that the very poorest
families who need help the most are losing assistance, and are
not getting jobs that pay anything close to a living wage. In
HHS' view, is it appropriate for states to use full-check
sanctions against these very poor families?
Answer. TANF provides States the flexibility to establish
the size of a sanction for families who fail to cooperate with
work, child support, and other requirements, as long as the
minimum sanction for failure to cooperate with work
requirements is a pro rata reduction of the TANF assistance
grant. Therefore, within the overall structure of welfare
reform, we believe that the amount of the sanction is
appropriately a matter of State flexibility. However, we
believe that it is important for States to apply fairly and
accurately all sanctions, and to provide appropriate assistance
and services where needed in order for parents to comply with
requirements.
As we state elsewhere in our responses, we are taking
various steps through regulations, policy guidance, and
technical assistance to encourage States to use TANF
flexibility and resources to develop policies and strategies to
help TANF families who may have more barriers to self-
sufficiency. For example, we are funding direct technical
assistance and sponsoring conferences and workshops to allow
for important information sharing about promising approaches
among policy makers and practitioners. We also expect that
findings from several research studies will provide important
information about these families and methods to most
effectively help them meet their goals for employment and
meeting the needs of their children. Some of the leavers
studies, for example, explicitly examine the outcomes for
families that leave due to sanctions, as compared to those that
leave for other reasons.
Question 5. There are several published reports suggesting that
many welfare case workers are failing to check the eligibility
of TANF applicants and those leaving welfare for food stamps
and Medicaid. Why aren't all eligible families moving through
the new TANF system, which emphasizes employment, getting
Medicaid and food stamps, as required by law? What policy
changes does HHS recommend to ensure that crucial eligibility
linkages, which are really work supports for low-income
families, are promptly and consistently made?
Answer. We agree that work supports such as Medicaid, food
stamps, transportation, housing, and reliable child care are
needed and should be available to eligible former TANF
recipients and other low-income families, including those
diverted from cash assistance. We have strongly advocated for
policies that support access to and participation in these
programs as reflected in the Administration's budget request.
The request would extend and expand the funding authority for
outreach for Medicaid and help States address other challenges
associated with the de-linking of Medicaid from welfare and the
establishment of section 1931. Examples of the use of funds
under this authority include outreach, education campaigns, and
worker training.
The major changes in the organization and culture of cash
assistance delivery brought about by welfare reform have
created both opportunities and challenges. In many cases, State
and local agencies have been innovative and creative in
developing new policies and practices and utilizing the
flexibility provided to link programs and help to ensure that
families have access to the supports needed as they move toward
self-sufficiency. Federal law and regulations require that
States that use a joint TANF-Medicaid application must furnish
a Medicaid application upon request, may not impose a waiting
period before providing it, and must process Medicaid
applications without delay. We will continue to work with State
and local TANF and Medicaid agencies to ensure that they comply
with existing law and regulation and to find new ways to reach
eligible children and families through the welfare system as
well as outside of it.
We have sent notices to State Medicaid and TANF Directors
outlining the requirements of the law and Federal policy,
alerting them to possible problem areas that may need
attention, and providing them with guidance on ways to improve
their systems and expand Medicaid coverage. Specifically, DHHS
developed and issued a 24-page guide: ``Supporting Families in
Transition: A Guide to Expanding Health Coverage in the Post-
Welfare Reform World.'' This publication was sent to all State
Medicaid and TANF Directors and many other interested parties.
We have a follow-up strategy to this guide that includes an
educational component, aggressive outreach, and a proactive
enforcement process. In the isolated examples where specific
problems have been identified, DHHS has acted aggressively. For
example, in New York, HCFA has been reviewing several aspects
of the eligibility process in the State. We are also
undertaking research activities to find ways to promote
increased participation of eligible individuals in these
programs. While we believe the problems derive from State and
local practices and procedures rather than from problems with
current Federal law and policy, we will continue to consider
proposals to address these issues.
Question 6. There is also research documenting that food bank
use is up in the last several years. At the same time, food
stamp enrollment has declined nationally by 33%, or 9.1 million
people, since September 1994. The Department of Agriculture
says almost all of the drop in food stamp caseload is due to
welfare reform. Does DHHS think this precipitous decline is due
in large part to the fact that TANF recipients and leavers
simply aren't being told they're eligible for food stamps? If
so, what is the agency going to do about it?
Answer. As indicated in our response to the prior question,
we believe that access to and receipt of food stamp benefits,
in addition to Medicaid, transportation, housing, and child
care, are critical work supports which can help meet the
nutritional needs of low-income children and families,
particularly former TANF families. The USDA believes that the
reasons behind the rapid drop in food stamp participation are
complex. Part of the drop is due to the strength of the economy
and the success of welfare reform, which helped move families
from welfare to work. Part of the drop is due to new
restrictions on the participation of certain legal immigrants
and able-bodied unemployed adults without dependent children.
But other factors may also be at work.
Some families who leave welfare for work may not be aware
that they still may be eligible for food stamps; in other
instances, State or local agencies may have discouraged or
prevented those eligible for benefits from applying. In both of
these cases, this ought not to happen. In some cases, families
may have decided that participation was not worth the ``costs''
in terms of time, paperwork burden, or stigma. In any case,
families that work hard and play by the rules ought to have
access to sufficient and nutritious food.
The Administration believes this is a very important issue
and has proposed $7 million for nutrition education and
outreach in the Administration's FY 2000 budget for USDA. We
will continue to work with officials within the USDA and with
State and local agencies to identify and correct policies and
practices that discourage or deter participation, to encourage
outreach, and ensure that families have complete information
about their eligibility.
Question 7. Medicaid enrollment dropped by 2% in 1996 (600,000
people) and by another 3% (800,000 people) in 1997. A recent
Families USA study argues that more than a million people who
were eligible for Medicaid were not covered by the program in
1997 as a consequence of welfare reform. Families USA further
calculates that 675,000 of that 1.25 million were uninsured,
including nearly 420,000 children. These are children who would
have been enrolled in Medicaid under the old linked AFDC-
Medicaid system. This means that the rate of uninsurance among
children has actually increased, according to the study--
despite the fact that States have been busy passing laws in the
last two years to expand Medicaid eligibility among children.
What explains this phenomena and what does DHHS plan to do
about it? What steps is DHHS prepared to take to make it
clearer to States that Congress did not intend for people to
lose access to Medicaid as a result of welfare reform?
Answer. While there are likely many factors that have
contributed to the decline in the number of Medicaid
beneficiaries, such as the robust economy and the strong job
market, the Administration and DHHS believe that people
entitled to Medicaid should be enrolled and we have developed
aggressive responses to address the declines, whatever the
reasons.
As mentioned earlier, we are continuously promoting
approaches to improve access and enrollment by all eligible
families. Our technical assistance and research activities will
be at the forefront of our efforts. We will offer to train
staff in the States on the provisions of law and the
opportunities to fund outreach and expand coverage as outlined
in the ``Expanding Health Coverage'' guide. We are actively
working with States to maximize coverage of low-income working
families under Medicaid and to ensure compliance with the
Medicaid statute. We will support research activities to assess
program policies and practices and document lessons for program
administrators and interested parties. These are important
issues and we are actively taking steps to address them.
In addition, we have fought to expand health care coverage
in the following ways:
Creation of the Children's Health Insurance Program (CHIP).
The President, with bipartisan support from the Congress,
created the CHIP. The Balanced Budget Act of 1997 allocated $24
billion dollars over five years to extend health care coverage
to uninsured children through State-designed programs. States
project that they will ensure 2.5 million children when their
new CHIP programs are fully implemented.
Allowing States to Expand Medicaid to Cover Families. The
welfare law allows States to expand Medicaid coverage under
section 1931 to families who earn too much to be eligible for
Medicaid but not enough to afford health insurance. These
expansions allow States to present Medicaid as a freestanding
health insurance program for low-income families--an important
step towards removing the stigma associated with the program
and reaching families who do not have contact with the TANF
system.
Providing Medicaid Coverage to Low-Income Two-Parent
Families Who Work. In August 1998, the President eliminated a
vestige of the old welfare system by allowing all States to
provide Medicaid coverage to working, two-parent families who
meet State income eligibility requirements. Under the old
regulations, adults in two-parent families who worked more than
100 hours per month could not receive Medicaid regardless of
their income level. Because the same restrictions did not apply
to single-parent families, these regulations created
disincentives to marriage and full-time work. Prior to
eliminating the rule entirely, the Administration allowed a
number of States to waive this rule. The new regulation
eliminates this requirement for all States.
Question 8. Section 1931 of the 1996 welfare law allows States
to count income and resources far more liberally than they
could under the old AFDC law for purposes of determining
eligibility for Medicaid. As I understand Section 1931, this
means that States can offer Medicaid to a far larger number of
the working poor if they choose to do so. Indeed, an August
1998 letter to State Medicaid Directors says that the
implementing regulation allows all ``States.., to provide
health care coverage under Medicaid to virtually all TANF
recipients and to continue that health coverage after a parent
has found employment.'' How actively has DHHS been urging
States to take advantage of this new flexibility to decrease
uninsurance among the working poor? How many States have
submitted 1931 plans, and how many are expanding Medicaid
eligibility under this section to date, and how many more would
you expect to see expand eligibility within the next year?
Answer. DHHS is aggressively promoting State coverage of
working poor families through section 1931. As previously
indicated, we issued the 24-page guide that addresses 1931
expansion options and developed a follow-up strategy to work
with States. In addition, the letter you cite is just one of
many that we issued that discusses the flexibility available
under 1931. We have worked closely with States in the
development of expansions that will assure that the TANF
population is eligible for Medicaid. At this time, 45 States
have submitted 1931 State Plan Amendments (SPAs). Most of these
involve an eligibility expansion, though the degree of
expansion varies considerably. Some have only increased the
vehicle or resource exclusion. At the opposite end, the
District of Columbia will effectively exclude all income below
200 percent of poverty in order to cover all the working poor.
A number of States have already revised their original 1931
amendments to add additional expansions. While we have no way
of predicting how many will do so in the next year, we will
continue to encourage States to expand coverage through 1931.
We do expect that States will continue to use the 1931
flexibility to both simplify and expand Medicaid eligibility in
the future.
As indicated elsewhere, we are taking steps through
research activities, technical assistance, and information
sharing through conferences and workshops to encourage States
to develop policies to support working families, particularly
those leaving TANF rolls.
Question 9. In March 1998, DHHS issued a high performance bonus
guidance document that proposes to reward the 10 States deemed
to be doing the best job at welfare reform every year. It
incorporates only work-related measures in the form of job
gain, job retention and job gain earnings. Wendell Primus of
the Center on Budget and Policy Priorities argues in his
testimony today that additional factors that provide a measure
of how many are receiving Medicaid and food stamps should be
part of any assessment of how well States are doing in
implementing welfare reform. Conceptually, do you agree or
disagree with the Center's approach? Are you willing to
recommend that some measurement of how well States do in
serving low-income families, or a measurement of childhood
poverty, should be a component of a final rule for State high
performance bonuses? If not, then how do you really expect to
convince States that they have to do a far better job than they
have been in enrolling welfare leavers in these work support
programs in order to make welfare ``reform'' truly successful?
Answer. We are exploring a number of possible additional
measures that could be used to assess TANF high performance. In
making decisions about the measures that will be included, it
is important to consider the consistency of measurement across
States, the degree to which there is accurate measurement of
the variable at the state level, and other similar factors. We
plan to issue a proposed rule this summer regarding the High
Performance Bonus in which we will address the issue of moving
beyond the current work measures and hope to obtain valuable
feedback and input from experts and interested parties in
response to the proposed rule.
In addition, as you note, the current High Performance
Bonus measures include retention and earnings gains on the job,
as well as job entry. These measures are likely to reward
States that do a good job of providing supports to working
families such as health care and child care because these
supports help families keep their jobs and move up on the job.
Question 10. On the issue of child care, is there any evidence
that are States are denying child care services to TANF
recipients and leavers? I am told that in the State of Utah,
parents who are being sent to work must first seek out free
child care before they are allowed access to TANF-based child
care services. In how many States is this practice replicated?
Answer. The availability of quality child care is
critically important for all low-income working families,
including those who are transitioning from welfare to work, and
for their children. The Administration and DHHS are dedicated
to increasing our investments in quality child care for TANF
and low-income working families.
We are not aware of any States denying child care services
to TANF recipients if it is needed for participation in
required activities or employment. Federal law and regulations
for the Child Care and Development Block Grant (CCDBG) and TANF
specify that TANF agencies may not impose a sanction on a
single mother of a child under age 6 for refusal to participate
or work if the parent demonstrates an inability to obtain
needed child care based on the State's definitions of
``appropriate child care,'' ``reasonable distance,''
``unsuitability of informal care,'' and ``affordable
arrangements.'' Both the TANF and CCDBG regulations specify
steps that the State must take to carry out this provision,
including a requirement that State TANF and child care agencies
must inform families about these provisions.
With regard to the practice you were informed about in Utah
in which families are encouraged to find free care as a first
option, we are told that the State does not require that
families seek out free child care prior to approval of child
care subsidies. State workers ask parents if child care is
available at no cost. If the parent states that such care is
not available, the TANF worker proceeds with a subsidy request.
The State assures us that no parent is refused child care
services or required to find free care prior to approval of
child care subsidies. We are not aware of any other State that
engages in a similar practice. We will be in a better position
to learn more about current State practices once the State
CCDBG Plans for the 2000-2001 biennium are received and
analyzed. The plans are due July 1. We would find it useful to
hear if you learn of other practices that cause concern.
We also know that after families leave TANF, there is
considerable variation among States in the availability of
child care subsidies. Some States seek to provide child care to
leavers for a set period of time, while others have moved to an
income-based system where low-income families are served on an
equal basis whether or not they came from welfare. The critical
issue for all the States, however, is that there are
insufficient resources to serve all the low-income working
families, both former TANF families and other low-income
families, who need child care subsidies in order to hold onto
their jobs and ensure that their children are in safe and
stable care. Nationally, despite considerable State investments
as described below, data from 1997 showed that only about 1.25
million of the 10 million children who met the Federal income
eligibility standards for the Child Care and Development Block
Grant received a subsidy in 1997.
Because the Administration believes the availability of
safe, affordable, quality child care is so important to working
families, the President has proposed a major initiative to
ensure that America's working parents are not forced to choose
between a job they need and a child they love. We very much
appreciate your and your colleagues' support for this
initiative, which proposes to expand the Child Care and
Development Block Grant by $7.5 billion over five years to
serve an additional 1.15 million children in low-income working
families; to help low and moderate income families who earn too
much to qualify for subsidized care, but still need help paying
for child care by expanding benefits for the Child and
Dependent Care Tax Credit; to expand after-school care to one
million children; and to strengthen the quality of care for our
youngest and most vulnerable children through an investment of
$3 billion over five years for an Early Learning Fund that
communities would use to ensure healthy, safe, and high quality
care for babies, toddlers, and preschoolers.
As indicated in my testimony before the Subcommittee last
spring, States are making considerable investments in child
care but simply cannot meet the needs of low-income working
families for stable care without an additional Federal
commitment. In FY 1998 States obligated 100% of the entitlement
funds available to them through the CCDBG, including the
matching funds that they must supply in order to draw down the
Federal assistance. In 1998 12 States reported expending TANF
funds for child care and 28 States transferred TANF funds to
their CCDBG programs. Yet, even in the States that have made
the largest resource commitments, eligibility levels are often
set far below the allowable Federal level and there are long
waiting lists for services among eligible families. And, States
that have studied the impact on families on waiting lists of
failing to get a child care subsidy report that such families
often return to welfare, having problems paying their bills,
and shuffle their children between unsatisfactory child care
arrangements. For these reasons, we believe that it is
extremely important to families that the President's child care
initiative be enacted.
Question 11. Can you discuss the research showing that the
quality of child care directly affects employment, and can make
a difference in whether low-income women are willing and able
to return to the work force for the long term? And would you
agree that care that is convenient, affordable, and of high
quality may help parents succeed in their transition from
welfare to work while deficits in any of these dimensions may
interfere with parents' education and work activities, not to
mention compromise a child's well-being?
Answer. Child care is centrally important to children's
well-being and to parents' ability to work. As you note,
convenience, affordability and quality of child care are all
critically important dimensions that can enhance parents'
ability to succeed in the transition from welfare to work and,
as noted above, can also influence the ability of low-income
working families to keep their jobs and succeed at work. In
addition, the quality of care is important to children's well-
being, healthy development, and school readiness, as
demonstrated by an expanding body of research. Over the past
several years, in partnership with the Congress, the
Administration has provided leadership by expanding public
investment to serve more needy children and families, by
stronger efforts to improve program quality and accountability,
and by creative work to support partnerships across different
early childhood programs. Yet, as noted above, there are
critical next steps we must take at the Federal level to ensure
quality care. These include enacting the President's proposal
for an Early Learning Fund that would enable communities to
improve care for the youngest children and enacting the
President's proposed budget for Head Start, the nation's
premier early childhood program, which still serves less than
half of eligible children.
Among the most important recent research findings on the
impact of quality child care on children are the following:
The National Institute of Child Health and Human
Development recently reported that higher caliber child care
was consistently related to high levels of cognitive and
language development. In addition, research shows that higher
quality child care is related to stronger pre-mathematics and
social skills.
A recent follow-up to the Cost, Quality, and
Outcomes in Child Care Centers study, co-sponsored by the
Department of Education and several foundations, found that
children who had experienced high quality child care had higher
language and mathematics skills than those who had been in
poorer quality care. Most strikingly, the effects lasted into
the second grade. High quality child care particularly
benefited children whose mothers had lower levels of education.
A rigorous evaluation of a Milwaukee program
designed to provide child care, health care, earnings
subsidies, and guaranteed jobs to low-income working families,
Project New Hope, found that a key impact of the program was to
substantially increase boys' school performance and
substantially reduce boys' behavioral problems. Researchers
attributed this finding to several aspects of the program,
including especially increased participation by the boys in
preschool care, extended-day child care, and other structured
activities.
Given the growing body of research that indicates the
fundamental importance of quality, we have significant concerns
about the quality of care that is available. As noted above,
the President's initiative includes the Early Learning Fund to
support higher quality child care in communities across the
country. The Early Learning Fund will provide challenge grants
to communities for children aged zero-to-five to enhance the
quality of early care and education services for our youngest
and most vulnerable children. A variety of research also
suggests that child care makes a difference in parents' ability
to sustain employment as well as their consistency and
productivity on the job. For example, several studies have
shown that improvements in employee absenteeism, lateness, and
turnover have been shown to be related to the availability of
employer provided child care services. A study sponsored by the
National Conference of State Legislatures (1997) found that
child care issues were cited by surveyed employers as causing
more problems in the workplace than any other family-related
issue.
Continued research and evaluation of issues affecting child
care are essential to improve Federal, State and local
policies, promote effective practice, and increase our capacity
to better serve low-income children and parents. We appreciate
your efforts and those of others in authorizing $10 million for
child care research and evaluation that will become available
in fiscal year 2000. We support continuation of this research
funding authority because it provides us an important
opportunity to enhance our knowledge in critical areas and in
ways that will be helpful to parents, providers, employers,
communities, States, and the country as a whole.
Question 12. Testimony presented by Wendell Primus of the
Center on Budget and Policy Priorities at a May 27 Ways & Means
Human Resources Subcommittee hearing concludes that the average
disposable income of the poorest fifth of single-mother
families fell from 1995-97 by about $660, a 7.6% decline.
Income in the next-to-the-bottom income quintile remained
unchanged. For these families, welfare reform has not produced
``success,'' but dramatic failure. Part of that failure is due
to these families not getting food stamps. How does DHHS think
this poverty gap should be addressed?
Answer. As stated above, analysis of all available sources
of information, including the CPS, shows that the employment
rate of current and former TANF recipients has increased
significantly and for some the analysis suggests there have
also been substantial increases in average earnings. Based on
early analysis of the data, the average earnings for those in
the bottom fifth of female-headed families with children did
not increase. We are concerned with this preliminary finding
and will continue to monitor it. At the same time, we are
aggressively promoting strategies to increase investments to
provide supports to the hardest to employ families and to
increase access to and participation in both the Medicaid and
Food Stamp programs by all eligible families. Our technical
assistance efforts and those of USDA, as well as our recently
issued guidance on the flexibility on the use of TANF funds
based on the final regulations, will encourage States to invest
resources to provide needed supports for the poorest families
and those with multiple problems. As we note in response to
other questions, there are many examples of promising
strategies that State and local TANF agencies are putting in
place to assist families who face more difficult challenges to
self-sufficiency.
Question 13. In other testimony by the American Enterprise
Institute, it is suggested that the poorest women--those in the
bottom income quintile--are doing reasonably well because
they're moving in with non-family members. In DHHS' view, is it
appropriate that very low-income women are being ``hassled'' by
``job centers'' to the extent that no cash assistance or other
aid is extended to them whatsoever?
Answer. While we support State and local TANF agency
efforts to implement strong work requirements for families
applying for and receiving TANF cash assistance, work
requirements must not be applied in a way that deters families
eligible for Food Stamps and Medicaid from applying for and
receiving them. As we have noted in responses to other
questions, we are using a variety of approaches to correct
inappropriate or illegal practices.
Question 14. The ``hassle'' factor referenced in AEI's May 27
testimony has been institutionalized in some State diversion
policies. Unfortunately, these tactics can cause potential
welfare applicants to walk out the door before talking at
length with a caseworker, and in some cases, transformed into
policies to effectively deny benefits illegally, as happened
last year in New York City. Does DHHS believe this suggests
that Federal parameters on State diversion policies are needed?
Answer. DHHS sponsored a research project that examined
State policies to divert families from receipt of TANF cash
assistance and the implications for Medicaid enrollment. The
study surveyed state-level administrators to gain information
about policies and included case studies of five local offices
to examine field operations and practices more closely. The
study found that the new administrative requirements brought
about by de-linking Medicaid and cash assistance and the use of
diversion strategies created both opportunities and challenges
for State and local policymakers and operators. While some
States used the flexibility and expansion opportunities to
directly support their diversion programs, the researchers
found that there were also situations where applications for
Medicaid could potentially ``fall through the cracks'' where
there were diversion programs.
As a result of these and similar findings, DHHS used
issuance of the Guide to Expanding Health Coverage as well as
several letters to State Medicaid and TANF Directors to
emphasize the requirement for States to process applications
for Medicaid without regard to eligibility factors related
solely to TANF and to notify families of their continuing
eligibility for Medicaid despite ineligibility or noncompliance
with TANF requirements. USDA has issued similar guidance
regarding the Food Stamp program. We will continue to address
the issue through a variety of approaches, including technical
assistance, further research, and program monitoring. We will
react quickly to any information about illegal practices. At
this time, DHHS does not believe that Federal parameters on
State TANF diversion policies are necessary.
Question 15. There is information from a number of sources that
some families are indeed worse off since the passage of PRWORA
in 1996. Wendell Primus has testified that the bottom fifth of
single mothers experienced a drop in annual incomes from 1995
to 1997. Also, the Children's Defense Fund has reported that
former welfare families are reporting that they are unable to
pay for food, are falling behind in rent, losing health
coverage, and going without needed medical care. NETWORK, a
National Catholic Social Justice Lobby, also reports that
parents report that they and their children are skipping meals
or eating less per meal. In light of this information, how can
we deny that some families are in fact worse off?
Answer. As noted above, there is clear evidence from
multiple sources that employment rates have increased and that
earnings have increased for many families. But, the early,
preliminary evidence from the CPS does suggest that the income
picture is more complicated, that some families may have gained
income while others lost, and that there is particular reason
for concern about families at the bottom of the income
distribution. We believe that it is important to continue to
monitor this issue. In many of the leavers studies, the States
are examining subgroups of families leaving welfare in order to
understand which are succeeding and which are struggling. This
will enable them to target additional resources to those
families who are most vulnerable.
We are aggressively encouraging States to invest TANF funds
in strategies that will make a difference to these families;
both strategies that support low-income working families who
have left welfare, and strategies that invest in families on
welfare, particularly the most disadvantaged. Further, we
believe that the flexibility provided within the recently
issued final regulations for TANF will make it easier for
States to invest resources to support former welfare families.
We are encouraged by initial State reaction and response to
this new flexibility. In addition, the Administration fought
for an additional $3 billion investment in Welfare-to-Work
funds which are now helping long-term recipients in high
poverty areas get jobs and succeed in the workforce and we have
proposed an additional $1 billion for this effort.
Moreover, the Administration and DHHS have advocated for an
array of important supports for working families so that
families are better off when they choose work over welfare.
These include the Earned Income Tax Credit, increased minimum
wage, expanded Medicaid eligibility, access to food stamps,
transportation and housing vouchers, strong child support
enforcement provisions, and the availability of affordable
quality child care. We are pursuing an aggressive strategy to
work with State and local TANF agencies to support working
families.
Question 16. An amendment was recently offered in the Senate to
require DHHS to submit a report annually to Congress on how
well those leaving welfare do in the first two years after
leaving cash assistance. It failed by only one vote. The
amendment called for DHHS to track employment status, wages,
health insurance status and child care information. Do you
agree that this kind of an overarching broad examination of the
economic well-being of those leaving welfare is integral to a
fair evaluation of welfare reform?
Answer. As we stated in response to the first question in
your letter, we agree that the success of welfare reform should
be judged using a multiplicity of outcomes. We will be
obtaining information about the measures you mentioned from a
variety of research projects that we sponsor (e.g., the
``leavers'') studies, child outcome studies, national surveys)
as well as from studies sponsored by other organizations. Some
relevant measures will also be expected to be available through
the data reported by States participating in the High
Performance Bonus.
Question 17. States have a substantial amount of TANF monies
that have not yet been obligated--about $3 billion in
unobligated funds. Will DHHS recommend that it be used for
helping the hardest-to-serve welfare recipients, for improving
the food stamp program and for Medicaid outreach. Are States
prepared to use the money for these purposes, or should the
Federal government direct States to do so?
Answer. We believe that assisting the ``hardest to serve''
to become self-sufficient and facilitating job retention and
advancement are two of the most central uses for directing
unobligated TANF funds. We are promoting these strategies
aggressively through ongoing technical assistance, information
provision, and research activities. We will use the flexibility
provided in the final TANF regulations and the written guidance
we have provided on the use of TANF funds to aggressively
encourage States to make important investments in those
families facing multiple challenges in their effort to become
self-sufficient.
The types of services or approaches needed to help families
with multiple barriers may be different from those used with
families that exited earlier. State and local agencies are
using a variety of approaches to work with families with
significant barriers to employment. The opportunity provided to
furnish employment-focused services specifically for the
hardest to serve through the Welfare-to-Work Program is
critical to this goal. That is why we fought for the $3 billion
investment in the Welfare-to-Work Program and why we support
reauthorization of the Welfare-to-Work Program and an
additional investment of $1 billion. As mentioned elsewhere, we
are working with other agencies and organizations to identify
promising strategies and practices for working with the hardest
to serve families (e.g., those with substance abuse and mental
health problems, victims of domestic violence, individuals with
disabilities) through peer-to-peer technical assistance,
workshops and conferences, and research.
As noted throughout, we have taken numerous steps to
encourage States to conduct outreach and to examine and correct
policies and practices that result in families being deterred
or discouraged from making application for Medicaid and Food
Stamps. We will continue to address this issue through our
technical assistance strategy, research activity, and program
monitoring.
Question 18. I understand that DHHS will soon be issuing a
proposed regulation on State high performance bonuses, worth
$200 million per year. Temporary guidance for 1999 focuses only
on work-related measures of job entry, job earning gains, and
job retention. Does DHHS think broader measures of family well-
being should be included as incentives to States to bolster
food stamp and Medicaid participation among welfare
participants to help lift them out of poverty?
Answer. As stated above, we are exploring a number of
possible types of measures for inclusion in the High
Performance Bonus that could be used to assess TANF high
performance. We expect that the comments we receive on the
proposed rule will help us in making final decisions about the
types of measures to include. In the meantime, we will continue
to use other means to assist and encourage States to increase
access to and participation in the Medicaid and Food Stamp
programs among former TANF families and other low-income
families.
Question 19. Does DHHS agree that caseload reductions are only
one possible measure of welfare reform? What are some other
markers we should be looking at to assess the success or
shortcomings of welfare reform?
Answer. DHHS believes that the success of welfare reform
has to be judged based on a multiplicity of outcomes including
parental employment and earnings, family income, and child and
family well-being.
Question 20. The General Accounting Office points out in a
report released on May 27, ``Welfare Reform: Information on
Former Recipients' Status,'' that ``there are no Federal
requirements for States to report on the status of former
welfare recipients. As a result, the only systematic data
currently available on families who have left welfare come from
research efforts initiated by States.'' Those State studies
vary considerably in the way they are conducted and are not
generalizable, making it harder to do cross-comparisons. Does
DHHS support a requirement for States to provide data every
year in a report to Congress on uniform parameters--employment
status, wages, health insurance, and child care information--in
order to greatly increase the understanding of the impact of
welfare reform?
Answer. As we stated above, we agree that the success of
welfare reform should be judged using a multiplicity of
outcomes. In addition to the state-sponsored leavers studies
mentioned by GAO, we will also be obtaining information about
the measures you mentioned from a variety of research projects
that we have sponsored as well as from studies sponsored by
others organizations. The number of studies with findings that
were available to GAO at the time of their study was somewhat
limited. Over time, we will have much more information when all
of the studies are completed. DHHS has provided funding to
support 14 ``leavers'' studies using comparable methodologies
and definitions, where possible, and will fund additional
projects or expansions this year. While we will not be able to
generalize the findings to all States, we will have a
considerable amount of information from a large number of
States with different benefit levels and other program
characteristics. Some relevant measures will also be expected
to be available through the data reported by States
participating in the High Performance Bonus and through case
closure data required by the final TANF rules.
The President's budget has requested $27 million in
mandatory and discretionary funding and an additional $5
million for policy research for FY 2000 to continue to support
these and other welfare research efforts. We hope that Congress
will fully fund this request. Proposals to require states to
track all former TANF recipients and collect data about their
employment status, wages, health insurance and child care
services would be a very costly undertaking that raises a
number of complex data collection issues.
Question 21. There are now 31 States using diversion tactics in
their welfare offices, according to GAO. Any comprehensive
assessment of welfare reform and outcomes must determine
whether these diversion practices are negatively affecting
families. What State diversion policies identified by DHHS are
hurting low-income families?
Answer. We believe that any policies that deny individuals
the right to apply for Food Stamps and Medicaid are illegal and
hurt families. Such policies need to be eradicated wherever
they exist and we have taken steps to ensure that States comply
with the law and regulations. Under Federal regulations,
families must be given the opportunity to apply for Medicaid
and Food Stamps without delay.
As mentioned previously, DHHS sponsored a study of State
diversion policies with a special focus on implications for
Medicaid. The findings from the study highlighted both
challenges and opportunities brought about by diversion
programs and the ``de-linking'' of Medicaid from cash
assistance eligibility. We have used the findings from this
study and other sources in developing the Guide to Expanding
Health Coverage to provide specific recommendations and
examples for State and local use and to encourage expansion of
health care coverage. DHHS' follow-up strategy will help to
ensure that States understand and comply with Federal policies.
Question 22. As welfare rolls shrink, some States are concerned
that a growing proportion of people on the rolls are the
hardest-to-employ, such as those with mental health and
substance abuse problems, or victims of domestic violence. In
DHHS' experience visiting States and learning about their TANF
programs, what are some of the programs that have been put into
place to help this population?
Answer. State and local agencies are using a variety of
approaches to work with individuals with these types of
problems. For example, in some areas (e.g., Oregon), the TANF
agency has established an agreement with the local substance
abuse or mental health agency to have a professional from such
organization stationed in the TANF office to conduct
assessments of applicants or recipients or to provide
additional information or consultation to workers. Some States
(e.g., North Carolina and New York) are using Employee
Assistance Programs to address these types of problems and
increase employment. Others have committed resources
specifically for treatment and services to individuals and
families identified as having substance abuse problems (e.g.,
New Jersey) and many have taken steps to provide additional
training to front-line staff in the use of tools to help
identify the existence of problems which could impede the
transition to self-sufficiency.
Under TANF, States have flexibility to give special
treatment to the victims of domestic violence. Under the
``Family Violence Option,'' States may certify that they will
assist victims by: screening for them when they apply for TANF;
referring them to counseling and supportive services; and
waiving program requirements (such as time limits, residency
requirements, child support cooperation, or family cap
provisions) if necessary. Our latest information indicates that
twenty-seven States have certified that they will assist
victims of domestic violence. Examples of State and local
actions include authorization of special appropriations for
services for TANF recipients who are victims of domestic
violence (e.g., Pennsylvania); implementation of demonstrations
to examine new approaches to serving battered women (e.g.,
Tennessee, Illinois, Texas, Massachusetts, Kansas, Arizona,
Utah, Minnesota); and hiring of domestic violence experts as
employees of the TANF agency to work with caseworkers and to
advise on policy (e.g., Massachusetts).
In order to promote policies and practices in these areas,
we have co-sponsored, with the Substance Abuse and Mental
Health Services Administration, numerous conferences throughout
the country which have been attended by hundreds of State and
local welfare staff and practitioners from many disciplines.
Attendees have participated in day-long sessions by experts on
practical approaches to working with the hardest to employ,
including those with mental or physical health problems,
substance abuse problems, and those with very low basic skills
or learning disabilities as well as those who face difficult
challenges simply because they live in very rural areas. In
many cases, the barriers faced by some TANF families may not be
completely overcome in a short period of time. We believe the
flexibility provided in the final TANF regulations will
encourage State and local TANF agencies to continue to work
with working families who face greater challenges to their
continued self-sufficiency. (Under the final TANF regulations,
the expenditure of TANF funds to provide supportive services to
working families will not count towards the 60-month Federal
time limit on the receipt of assistance.)
We have taken active steps to promote and encourage State
and local TANF agencies to utilize the flexibility provided
through the final TANF regulations, including issuance of a
guidebook on the use of TANF funds (May 1999). The booklet
provides guidance and examples of how Federal TANF funds, as
well as State Maintenance of Effort (MOE) funds, may be used to
address multiple barriers faced by current or former TANF
families. For example, the guide points out that Federal TANF
funds may be used to provide appropriate counseling services
(e.g. mental health services, anger management counseling, non-
medical substance abuse counseling services) to family members
with barriers to employment and self-sufficiency. Both Federal
and State MOE funds may be used to provide non-medical
substance or alcohol abuse services, including room and board
costs at residential treatment programs. Further, TANF or MOE
funds can be used to help victims of domestic violence relocate
to an area where employment or safe housing has been secured.
These funds can be used to support collaboration with domestic
violence service providers to screen and identify victims
applying for TANF, establish confidentiality procedures and
ensure safety, and develop appropriate staff training.
We will be using multiple approaches (e.g., presentations,
instructional workshops on the final TANF regulations,
sponsorship of conferences, provision of technical assistance)
to encourage creativity, innovation and replication of
promising practices. In addition, the Department of Labor has
made a special effort to attract applications for competitive
Welfare-to-Work grants in these areas by including substance
abuse, disabilities, and domestic violence as priority groups
for funding.
Question 23. GAO finds that the average hourly wage rates in
leaver studies varies between $5.67 an hour in Tennessee to
$8.09 an hour in Washington State. At $5.67 an hour, annual
income at 32 hours per week for 50 weeks is only $9,072. That's
not enough to break through the Federal poverty level of
slightly over $13,000 for a family of three in 1998. At $8.09
per hour, annual income is $12,944, still below the Federal
poverty level. Is this what DHHS considers a successful outcome
for welfare reform?
Answer. DHHS believes that it is important that working
families have a package of supports available to assist them as
they transition from welfare to self-sufficiency. As indicated
by the findings in the GAO study, a low-wage job may be the
first step for many former welfare recipients. In fact, given
the work experience and skill level of many recipients, we
believe that it will be the likely first step for many parents.
That is why it is critical for such families to receive other
supports such as food stamps, Medicaid, the Earned Income Tax
Credit, and subsidized child care. For example, for tax year
1998, for a family with two qualifying children with earnings
of $9072 and no other income, the EITC would be $3,630. If the
same family earned $12,944, the EITC would be $3,616.
We also believe, and have reflected in all of our
activities, that a key investment area for States is employment
advancement strategies that can move families who enter the
workforce at low wages up to higher wage jobs.
Question 24. In general, state evaluations of people leaving
welfare all point to the fact that individuals who leave
welfare for work earn low wages, with most not earning enough
to raise their income above poverty. The Urban Institute points
out that most of these people get jobs in low-wage industries,
such as fast food restaurants, or clerical or retail positions.
These aren't positions with generous salaries, and you note
that ``a key issue in evaluating welfare reform is the extent
to which persons with the attributes of welfare recipients can
actually become self-sufficient.'' Without work supports such
as child care and health insurance, is it realistic to expect
that former welfare recipients can, as you recommend, ``persist
in the labor force'' until ``the gap between their earnings and
those of other workers never on welfare'' narrows?
Answer. As we cited elsewhere, we believe that families
transitioning from welfare to work and other low-income working
families need a package of supports to help them make and
sustain the transition. We have and will continue to work
aggressively to see that these supports are in place and are
accessible to those who need them. Adequate funding for child
care is critical. High utilization of the EITC by welfare
families is an important step in helping parents in low-wage
jobs move out of poverty.
As we have indicated in responses above, we are actively
working with States to ensure access to the Food Stamp and
Medicaid program benefits by all eligible families, including
those who leave the TANF rolls and ensuring families have the
child care, transportation and housing they need. In addition,
Welfare-to-Work funds can be used to support working families,
and we are supporting a $1 billion reauthorization of that
program. We will continue to use a variety of strategies to
accomplish our goals including technical assistance and
research activities.
Mr. Stark. Yesterday, Senator Wellstone offered an
amendment to require Health and Human Services to submit an
annual report on how well those leaving welfare do in the first
2 years after leaving cash assistance. It would ask HHS to
track employment status, wages, health insurance status, and
child care information. The amendment failed by one vote. It
sounds to me as if we do not want to know what is happening.
All we want to do is get people off the welfare rolls and that
in this case ignorance is bliss.
Wendell, your analysis shows the poorest lost ground. It
seems to me that we report here that under the rosiest
circumstances in the article this morning in the paper that no
one got up to the level of $13,000, even if they worked for
$8.09 an hour in Washington, or $5.67 in Tennessee. Under the
statistics that Ms. O'Neill quoted, they still are not above
poverty. Is there something wrong with those measures? Am I
hearing that all these people are getting so rich, and they are
not making $13,000? Can you comment on that? Am I being misled?
Why are these people doing so well?
Mr. Primus. I think, Congressman, that these data will
stand up under scrutiny. One thing that bothered about Doug's
written testimony is there is the implication, when he compares
analysis being done at OMB with the analysis that I have done
that we are reaching diametrically different results. The truth
is that there is a small cadre of us that are looking at this
same data. And the pattern of results are the same----
Mr. Stark. Just to interrupt for just 1 second, has there
been one advocacy group for children that has applauded this
welfare reform bill?
Mr. Primus. Not that I am aware of, Mr. Stark.
Mr. Stark. OK. Thank you.
Mr. Primus. But I guess the point is here that, again, when
you look at this data, and it is the best data we have, that
the pattern of results from all the researchers that I know of
that have looked between 1993 and 1995 and 1995 to 1997, it is
the same pattern. And I think this Subcommittee has the
resources, they can ask and I recognize that the majority may
not trust analysis that comes from yours truly. But you have
the ability to ask CBO or GAO or CRS to redo the methodology
that we are doing. And I think you will find the same results.
And I think when you look at that, you know, you have to
scratch your head and say, what was going on. Why was 1993 to
1995 so good? And the results change between 1995 and 1997. And
that is really I think the question that this Subcommittee
needs to grapple with.
Mr. Stark. Thank you. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Thank you. I would just
say for the record that this is not the first hearing we have
held in our work to oversee the implementation of welfare
reform. It is at least the third, and there will be a number of
others coming. And that in planning those hearings, we have
invited every witness the Minority has suggested. I regret my
colleague from California's rather intemperate description,
characterization of some of my colleagues and our motives. But
I think there is enough good and enough problems in this new
reform for us to be both proud and concerned. And I, as a
Chairman of this Subcommittee, feel exactly that way.
Mr. McCrery.
Mr. McCrery. Thank you, Madam Chair. The gentleman from
California is a friend of mine. I consider him a friend, and I
also know, from having numerous conversations with him, that he
is very concerned about the poor. He is very well-intentioned
and a very capable advocate for his position.
So is Mr. Primus. And, Mr. Primus, I was intrigued by your
response to the Chairwoman's question, would you repeal welfare
reform? And you said no. I suppose--I am inferring from that
anyway--that you have had a change of heart, because, indeed,
as Mr. Stark pointed out, you did resign in protest over the
President's signing this welfare bill. Is my inferring that
correct? Have you had a change of heart?
Mr. Primus. Yes and no. In many ways, the implications of
this bill, as it actually has played out, is different than I
think the analysis that we made in 1995 and 1996. The fact is
the States do have a lot more money than we anticipated them
having, and so it has not played out exactly the way that we
predicted.
That answer was also tempered by the fact that when you
say, what is welfare if I repeal it. What takes its place? And
I look at the political situation, and I am not so sure that I
think I want this replaced by something else that you might
produce at this particular time. [Laughter.]
That was also part of the answer. And I do--I believe that,
again, there has been some success here. The employment rates
are up. But I also think there has been some down side. And we,
again, we put too much emphasis on caseload reduction, and we
have not paid enough attention to the fathers side; and we have
not paid enough attention--and there is some very good
examples. Tennessee is one, and the State of Connecticut, where
they have gone and carefully reviewed the cases that have been
closed due to noncompliance, due to sanction. And then, when
they reexamine it and make sure recipients really understand
their obligations, 30 percent of that noncompliance goes away.
And more States need to do what Tennessee and Connecticut are
doing, because we are taking off the rolls arbitrarily too many
families. And I think that is what is causing this income
decline, and that is what I think the Subcommittee should be
concerned about.
Mr. McCrery. Well, thank you. That is a fair answer, and I
am pleased that you do recognize some virtue in what we have
done. I would point out that Mr. Stark's comments do
underscore, I think, the fact that welfare reform would not
have happened had it not been for the Republican majority in
place. This was not really a bipartisan effort at its
beginning. It ended up with a bipartisan vote on the House
floor. But, as you will recall, and Mr. Stark just revisited,
we were called all kinds of names at the beginning of that
process that I do not want to repeat. But it was not very
pleasant. Mr. Stark might. But, for those of us who were being
called those names, it was not a pleasant experience.
And the fact is that I remain proud of the effort that we
made in the face of all of that, and I am convinced that
welfare reform has been one of the most successful changes in
social policy in this country in a long, long time. And if we
stick with it, and if we continue to have hearings like this
that examine the things we could do better, then it will,
indeed, I think, pay dividends for future generations in this
country. I see that you would like to make a comment on that.
Mr. Primus. Can I just--two more thoughts? One, I would
also say that these income declines were not necessarily the
result of the 1996 Welfare Act. The States did not have to take
those families off of food stamps and Medicaid. It is
happening.
Mr. McCrery. Well, we think it is happening. You think it
is happening. But HCFA data do show that there is a greater
percentage of folks that are actually getting the benefits than
is being reported by the Census data. So, we are not really
sure what the level of participation is, and we will continue
to work on that. And I agree, but getting to your point, Mr.
Primus, about income decline--and it has been alluded to here a
couple of times--if you look at expenditures by household,
expenditures in the bottom 20 percent and even the bottom 10
percent have gone up, not down. And they have gone up
significantly--6 percent in the bottom decile; 20 percent in
the bottom quintile. So, there is an upward trend in
expenditures for the very people that you are talking about,
and that you are concerned about.
I do not think it is clear from your data or from any other
data that there has, in fact, been a worsening of the condition
of those folks at the lower end. And my conclusion is bolstered
by the fact that poverty data remain down. It continues to show
a decline in overall poverty in this country, so I would say
that the jury is still out at worst, but to me it is--the data
that I have reviewed point to the fact that things are getting
better, not worse, even for the lower quintile, the lowest
quintile and the lowest decile. And if we do some things right,
from here forward in welfare reform, I think it can get even
better.
Mr. Primus. Can I add just one more comment? And that is
that when we made the prediction of some of the declines--what
we thought would have been the declines, and that was due when
the Federal time limits and the State time limits take effect.
I did not anticipate that we would find income losses in 1997.
The time limits are not in effect yet. And I guess I think the
primary thing that I find troubling about the legislation, the
underlying legislation, is when those time limits take effect.
And I think there are some parents in our society, through no
fault of their own, and sometimes they need to work harder--I
do not doubt you there, either--but, they are not going to be
able to support their children without some assistance from the
government, whether that is child care or Medicaid or an
earnings subsidy. And the expectation that we can completely,
especially working families, who are working, doing the right
thing, that we should say, let us withdraw all cash assistance,
I think is still very troubling to me.
Now, some States are doing innovative things. They are
stopping the clock when families are working.
Chairman Johnson of Connecticut. Mr. Primus, we must give
two more Members that have not had a chance to question, their
right to question.
Mr. Camp.
Mr. Camp. Thank you, Madam Chairman.
It is sort of doodling social science data here. But I
think there are a lot of ways to try to get at this idea of
what is happening to families with low income.
And, Mr. Besharov, if I understand some of your testimony,
if you use another look at this, use another measure, which
would be their personal consumption or personal expenditures,
it seems to me the data are saying that families with incomes
under $10,000 and families with incomes under $5,000 are
spending more each year. Is that a fair statement? Is that,
therefore, an indication that they are better off?
Mr. Besharov. Well, consumption data are quite complicated.
But the short answer to your question is yes. These are not my
data. I think these are Committee staff data, but we
historically have seen that low-income Americans, poor
Americans, consume much more than what their family income
indicates.
Chairman Johnson of Connecticut. These are CRS data?
Mr. Besharov. Yes, and it is--some people have always
puzzled and say, ``Where is that? They must have it wrong. That
VCR does not exist there.'' And the answer is that we are a
relatively rich country. And these folks, and I would not want
to trade places with them--I think there is tremendous
disadvantage and suffering and hardship in this country, and we
ought to be doing something about it, or we ought to be
identifying what the culprit here is--these folks are usually
either embedded in family situations or with boyfriends or
someone else is supporting them, or, as June said, there is
other income coming into the household that they are not
reporting. That is why there is more consumption.
This indicates that we are in a range where things are
maybe getting a little better, maybe getting a little worse. I
keep arguing here that we should not worry about $300 or $400
differences between year to year. In these data sets, they are
measurement errors. What we should be looking at is that these
folks are at a level much higher in consumption and in earnings
than when we think about just family income. And, again, that
does not mean we turn our backs on them. It changes the nature
of the discussion. It goes from a discussion of what Wendell
mentioned about welfare response to working mothers to a
discussion on tax policy, EITC, and child support policies that
could be entirely outside the welfare world.
If we are serious about work, and we are looking at incomes
like this, we do not need to talk about welfare. Welfare reform
may have already done its work if it has moved more mothers
into the labor force. And no one argues that that did not
happen.
We should take a positive spin, whatever this welfare
reform number two is, and recognize that these families are
doing not as well as we would like them to do, but better than
before. And let us build on this.
Mr. Camp. So, you are saying there are other things we
should look at for a more accurate view, and particularly the
work among never-married mothers--the dramatic increase there
is a much better measure, or at least a very good measure of
what is happening.
Mr. Besharov. Absolutely. To echo what Dr. O'Neill said,
you expect earnings to be low when people first enter the labor
force. These numbers, one would predict, will go up over time
if history is any kind of indication.
Mr. Camp. I do think, though, it is important to clear up
some of the fog, and I am interested particularly in this whole
idea, and I know you do not like the words decline in the
poverty rate, and the relationship to food stamps--if I
understand what you are saying is if you include EIC, the
number of people in poverty is much, the number of people, the
decrease in the number of people in poverty is much greater;
that there are fewer people in poverty.
Mr. Besharov. That is correct. Yes, at the risk of Wendell
saying again that what I say is false, let us remember the big
picture. As the President would point out, poverty in this
country is down substantially, not just since he took office.
It is down in the period we are talking about here. African-
American poverty is down the last time I looked 24 percent
during the last 6 years. As a nation, we are richer. But what
we are arguing about here is we have taken this loaf of bread,
and we have sliced it and sliced and sliced it until we found a
group that, on average, is either doing about the same as 4
years ago or a little worse. And what I have said is that is
the wrong slice, because a lot of those folks do not even
exist. They live with someone else. Their household earnings
are higher.
Mr. Camp. You have to take into account other factors. You
have to take into account the timeline. You have to take into
account the deliberate removal of people from the Food Stamp
Program, as you have testified to, and to get a--if you want to
slice it down, you have to take in other factors I think is
what I hear you saying.
Well, I appreciate all the witnesses testifying today. I
was around for all the heated debate and rhetoric, and, in
fact, when the Chairman of the Committee was in a working group
when we were in the Minority trying to put this legislation
together quite a few years ago. I appreciate the fact, Dr.
Primus, that you said that, and I think you used the words that
it is not an unqualified success, this legislation. I presume
that means it is a qualified success, and I think you have
testified to that.
And I realize that no piece of legislation is perfect, but
given the doom and gloom we heard about ``race to the bottom''
and 1 million children in poverty and all of that sort of
thing, I think that, looking at some of these other factors,
poverty has declined. More people are working. I think this has
certainly been a very positive hearing, and my time has
expired.
Chairman Johnson of Connecticut. Mr. Coyne. I really need
to go on to Mr. Coyne. There has been a----
Mr. Coyne. I would yield to Mr. Stark.
Mr. Stark. I just wanted to ask, under these expenditure
figures, if somebody buys a car for $5,000, the full $5,000 is
in the expenditure figure, is that correct?
Ms. O'Neill. I do not know how they handle it. They might
handle it according to the consumer's installment expenditure--
and not count the full durable good. But how many people are
buying cars?
Mr. Stark. Well, most working people--most of the poor
people buy a car and pay for it $50, $75, $100 a month. But if
they include the cost in these figures and also the fact that
we just heard that bankruptcies are going up among poor people
because of increased credit card----
Mr. McCrery. If the gentleman--will the gentleman yield? I
will be glad to try to clear that up.
Mr. Stark. OK.
Mr. McCrery. It is possible that those figures are
included. But the fact is that the trend is up. The overall
trend is up 6 percent in the bottom decile.
Mr. Stark. I was just trying to figure out how we arrived
at these figures.
Mr. McCrery. Twenty percent up in the bottom quintile. So
even if----
Mr. Stark. No quarrel. I was just curious.
Mr. McCrery [continuing]. Even if all that is included, the
trend is up, not down.
Chairman Johnson of Connecticut. Mr. Coyne.
Mr. Coyne. Dr. Rolston, we have all heard the stories about
welfare recipients who were given misinformation about the new
rules relative to welfare. And, for example, one woman was told
that she could not receive benefits unless she went to work
immediately. She had to drop out of the welfare rolls, even
though she was in the midst of a 1-year program for a nursing
training program. It is misinformation, as we understand it,
but what are the States doing to retrain caseworkers in these
instances and so they make sure that they are giving applicants
accurate and up-to-date information?
Mr. Rolston. Well, I think that a lot of has been done to
retrain caseworkers, and I think there is also a long way to
go. It is----
Mr. Coyne. So not enough has been done.
Mr. Rolston. It appears to be where we are in general----
Mr. Coyne. Not enough has been done, is that right?
Mr. Rolston. I think more needs to be done. That is my
personal opinion.
Mr. Coyne. Are we doing anything at the Federal level to
move that along?
Mr. Rolston. I think in a number of areas, for example,
related to Medicaid participation, part of the information and
best practice that go out would relate to training of workers;
would relate to outreach activities to ensure that people are
knowledgeable about benefits that they are eligible for.
We have actually over a period of years--I do not know that
we are currently are--have been involved with States and
localities on culture change projects that do have a lot to do
with training workers to have to train for a different set of
skills that they needed to have before, because they are not
just writing checks now and do eligibility work. They are very
heavily focused on self-sufficiency activities. But I think
there is still a long way to go on these issues, and a lot more
they can do and that we can do.
Mr. Coyne. Is there anything your Department, any
initiatives you are making to try to rectify the situation as
quickly as possible?
Mr. Rolston. Well, the ones that I mentioned--putting out
the guidebook related to Medicaid eligibilities has been an
important one; the activities I mentioned related to culture
change did involve training of workers. We are currently
working with HCFA and the Department of Agriculture around a
new project to try to assist States in picking up practices
that other States have had that are effective, and in trying to
measure what the effects of these changes are. So, yes, we are
involved in that.
Mr. Coyne. Thank you.
Chairman Johnson of Connecticut. Thank you. I am going to
move on now to the next panel and forgo any further questions
of this panel because the Speaker has called the Republicans to
a conference at 12:45 p.m., and I want the Republican Members
to be able to at least hear the testimony of the next panel.
But while this panel is leaving, I will stay afterward as long
as people want to question. But----
Mr. Besharov. Can we come to the speakers?
Chairman Johnson of Connecticut. While this panel, though,
is adjourning and the other panel is assembling, I have one
thing I do want to say. And I want to say it very clearly. One
of the things that really makes me angry is stereotypes. And
when Mr. Primus said that he did not want to have--and I do not
object to this. This is his right. I know him very well, and
this is fine for him to say. One of the concerns that he had
was what kind of welfare bill we might write. I was offended by
the laughter that went through the crowd. And this is why I am
offended.
If you look at the statistics, we are providing more money
per recipient than has ever been provided to the States in
America's history. And that is because we froze the TANF
funding, and we kept it there. I was on this Subcommittee when
we reformed welfare under Tom Downey. I was sitting right in
that chair, and I worked hard on it. And you know what happened
to the 1988 reform, the Congress, then controlled both the
House and the Senate, by Democrats, would not provide the money
for day care or for anything else. So we had a great bill, and
we did not have the resources.
Now that is a thumbnail sketch. But I am very proud, and I
consider it a mark of compassion and concern for children that
not only did we freeze our money, but we forced the States to
continue spending 75 percent of the money they had been
spending, even if their caseload dropped 80 percent. And that
does not count the 4.5-percent increase in day care funding.
So I ask you to come to these hearings, and if you are
going to express yourself, remember to be fairminded.
The next members should be sitting here. We do have to move
forward.
Mr. Cardin. Yes, Madam Chair, as a matter of personal
privilege, I think that Mr. Primus was responding to a question
asked by a Member that was a rather difficult question for him
to figure out an appropriate answer. So, I am not so sure we
should be blaming Mr. Primus for that set up. Maybe I should
blame Mr. McCrery.
Chairman Johnson of Connecticut. No, I intended not to
blame Mr. Primus.
Mr. McCrery. I thought it was a pretty clever dodge myself.
Chairman Johnson of Connecticut. I think Mr. Primus was
answering and with some humor. But, you know, when that kind of
laughter goes through, it tells you something. Old stereotypes
are still alive and well, and, by gum, you are each responsible
to wipe them from your mind if you are going to help us face
the future.
Jean Rogers, administrator of the Wisconsin Department of
Workforce Development, Madison.
STATEMENT OF J. JEAN ROGERS, ADMINISTRATOR, WISCONSIN
DEPARTMENT OF WORKFORCE DEVELOPMENT, MADISON, WISCONSIN
Ms. Rogers. Thank you, Madam Chairman. Over the 21 months
that Wisconsin Works has been in operation, we have seen our
cash assistance caseload drop over 75 percent.
Chairman Johnson of Connecticut. Could you speak a little
more directly into the microphone, please? Thank you.
Ms. Rogers. Is that better?
Chairman Johnson of Connecticut. Yes.
Ms. Rogers. OK. Over the 21 months that W-2 has been in
operation, we have seen our cash assistance caseload drop over
75 percent, to under 8,300 families. This has led to a growing
national interest in how our families are doing. Why is
national concern surfacing now? Because with the AFDC Program
in operation, it was too easy to assume that the guarantee of a
welfare check solved these problems.
In contrast, W-2 staff act as counselors and mentors,
helping parents address personal and family problems that may
prevent them from working. Wisconsin has ensured that necessary
support will continue through a package of supportive service.
Public opinion strongly favors the direction that we are
taking in Wisconsin, 83 percent, in fact, on our UW-Milwaukee
poll. AFDC created a culture of dependency that produced
families with several generations living in poverty. Yet,
critics of welfare-to-work restructuring have predicted that
child welfare would suffer as a result of the new focus. Has
it? Let us see.
An Urban Institute study offers a first look at the well
being of children and adults on a variety of measures. How are
we doing? Among the 13 States surveyed, Wisconsin has the
lowest child poverty level and the highest rate of employed
parents. In addition, Wisconsin has the third highest incidence
of children living in two-parent families, at 66 percent, and
what else? Kids Count ranks Wisconsin sixth best in the Nation
in overall child welfare; second best for the lowest percentage
of teen high school dropouts ages 15 to 17; second best for the
lowest percentage of teen high school--of children, excuse me,
not attending school; and in addition, first in the Nation for
SAT and ACT scores. And Wisconsin has more people covered by
health insurance, including children than any other State in
America.
Anecdotal evidence also supports the belief that children
are thriving. A Milwaukee child care director, Vicky Hill, says
home life is getting more structured, and the children also
show new respect for their mothers. Hill says, we hear them say
mom's at work, or grandma's picking me up because mom is
working late, and you can hear the pride in their voices. And
Hill is seeing more dads with their children. She says, we even
had some dads offer to be volunteers.
In January, Wisconsin released the first in a series of
four reports on people who have left W-2. Among the findings:
62 percent were employed at the time of the interview, and that
is compared to 69 percent in the entire work force as an
average. The average wage of those employed was $7.42. An
additional 21 percent were not employed right at that moment,
but had worked since leaving the program. Ninety-four percent
of those who were not working received other family or
government support. Sixty-eight percent said getting a job was
easier than being on welfare, and 60 percent said they would
probably not need welfare again.
As pleased as we have been with the results of W-2, our
remaining families need more expensive services, increased
focus on AODA, alcohol and other drug abuse, treatment. And
with more than 50 percent of our remaining caseload lacking a
high school diploma, more emphasis is being put on basic
education.
W-2's success is also dependent on strong partnerships with
the employer community, and we do so by appealing to the bottom
line, not their sense of social consciousness. And it is
working. Seventy percent of employers rate welfare recipients
positively in terms of attitude and reliability.
It is also important to note another, perhaps most critical
partnership, and that is between the Federal Government and the
States. Wisconsin urges you not to jeopardize our continued
success by abrogating those agreements that were included in
the 1996 welfare reform law. There have been proposals to cut
both our TANF block grants and funding for child support
enforcement. We strongly object to such proposals. We have kept
our part of the bargain, and we urge you to please keep yours.
What is the bottom line? We are training an underutilized
segment of the population to enter the work force. We are
providing the needed support for individuals to sustain those
jobs. The employers are getting workers who are loyal and eager
to get the job done. And through their jobs, our people are
gaining new skills that, over time, will bring them better
employment opportunities, in other words, hope.
Pearlie Duncan, a 17-year veteran bus driver with a
Milwaukee inner-city route, said it best, and I quote: Now that
many people have gotten into it, their morale and self-esteem
is boosted. And you can tell they feel good. Most of the kids
are happy, too. You look into their eyes, they are happy. The
eyes tell no lies.
Thank you.
[The prepared statement follows:]
Statement of J. Jean Rogers, Administrator, Wisconsin Department of
Workforce Development, Madison, Wisconsin
Thank you for the opportunity to share some highlights with
you of the impacts we are seeing from the Wisconsin Works
program. Over the brief period of time (21 months) that W-2 has
been in operation, we have seen our caseload reduced from
34,491 families at the start of the W-2 program down to the
current cash assistance caseload of 8,567 families (as of March
1999). This has lead to a growing national interest, in how
these families are doing.
But stop and think about why this national concern is just
surfacing now. Because with the AFDC program in operation, it
was too easy to assume that the guarantee of a welfare check
solved these families problems. Let me tell you a little bit
more about this welfare guarantee:
In 1994, The Center on Addiction and Substance
Abuse at Columbia University found that more than one in every
four welfare recipients abused alcohol and drugs. And, many of
these recipients were actually excused from the AFDC work
program for this reason. What kind of message were we sending
these individuals?
According to a 1995 study by Kathryn J. Edin
titled, The myths of dependence and self-sufficiency: Women,
welfare, and low-wage work, more than one-third of welfare
mothers interviewed said their total benefits did not cover
their basic housing and food costs. On average, their benefits
were a staggering $311 less than their monthly household
expenses.
Imagine families living under these conditions for years at
a time.
Other studies have found that between 25% and 40%
of the women who left welfare for work were back on AFDC within
a year (1, 2, 3, 4).
When times got tough for these working mothers, under AFDC,
there were no case managers to help them. It wasn't until after
the individual had quit her job or significantly reduced her
work hours and returned to welfare, that the program took
notice of her needs.
In contrast, W-2 staff act as counselors and mentors,
helping parents address personal and family problems that
prevent them from working and providing the parents with
continued support as they make that transition into the
workforce. If the first real job is not successful, the
participant is reassessed to determine what W-2 services are
still needed in order to achieve a better employment outcome.
Of course for some families, the ability to permanently
leave welfare for work requires ongoing support. Wisconsin has
ensured that the necessary support will continue through a
package of services including job retention services, food
stamps, Medicaid, child care assistance, and the state earned
income credit. And, the Governor's 1999-2001 Budget proposal
strengthens these services even more through several different
approaches: 1) increasing the income eligibility limits and
reducing the co-payment amounts for child care assistance; 2)
expanding education and training opportunities for parents
already in the workforce; and 3) funding local projects aimed
at strengthening workforce retention and advancement among low-
income working parents.
Wisconsin views the 60 month time-limits as an important
means of motivation for the participants. But, for the time-
limits to work in our favor, Wisconsin ensures that all of our
participants are getting immediate, intensive work-training
services that enable them to rapidly move into the workforce.
This is an important distinction from other states who are
continuing to exempt segments of their caseload from
participation while their time-limits loom ever closer. The
time-limits have also impacted on how W-2 caseworkers do
business. They know that a job-opening for a participant today,
may be gone tomorrow if they don't act quickly.
AFDC created a culture of dependency that produced families
with several generations living in poverty. Yet, critics of
welfare to work restructuring have predicted that child welfare
would suffer as a result of the new focus. Has it? Lets see:
An Urban Institute study entitled Snapshots of America's
Families (1/99) offers a first look at the well-being of
children and adults on a variety of measures. The survey sample
included 13 states and was taken between February and November,
1997. Since it was done literally on the eve of W-2
implementation--a point at which Wisconsin had already made a
major shift to a work focused set of reforms--it can also be
used as a measure of effects.
How are we doing? Among the 13 states surveyed:
Wisconsin has the lowest child poverty rate at
11.4%. Nationally the child poverty rate is 20.5%.
Wisconsin has the highest rate of employed
parents. 74.4% of our low-income parents and 86.9% of all our
parents are working. Nationally, 65% of low-income parents and
79.8 percent of all parents are working.
And, Wisconsin has the third highest incidence of
children living in two-parent families at 66.6%. Nationally,
this figure drops to 62.6%.
Anecdotal evidence also supports the belief that children
are thriving in the era of welfare-to-work. A Milwaukee Child
Care Director, Vicky Hill says ``Homelife is getting more
structured. It's 8:30--time to go to bed. It's morning--time to
get up.'' The children also show new respect for their mothers.
Hill says ``We hear them say, `My mom's at work,' or `Grandma's
picking me up cause Mom's working late,' and you can hear the
pride in their voices.'' And, Hill is seeing more dads with
their kids. ``They're coming to check on the kids. We've even
had some dads offer to be volunteers,'' she said. W-2 is
pulling families together and teaching them how to rely on
themselves and their larger communities for support.
As we seek to learn about the status of families who leave
our program, we must be careful not to be too intrusive with
people who are striving to be independent of the system that
has bound them for so long. But hearing their story is an
invaluable tool for program improvement, and so ... we are
asking. And we're learning a great deal that is gratifying
about the progress these families are making, and things we
need to change in order to make the program stronger.
In January, Wisconsin released the first in a series of
four reports on people who have left W-2. The first report is
the result of surveys completed with participants who left
during the first quarter of 1998, a period which contained both
W-2 and AFDC leavers.
Among the findings:
62% were employed at the time of the interview
(69% in entire WI workforce is average).
The average wage of those employed was $7.42.
21% were not employed then, but had worked since
leaving the program.
94% of those not working received other family or
government support.
68% said getting a job was easier than being on
welfare. And,
60% would probably not need welfare again.
Governor Thompson has made a habit of visiting with small
groups of participants periodically, to hear first-hand what
they think. They are usually very forthright, like the woman
who said, ``I hated the program, and I hated you. But I was
really just scared. Now, I'm so proud, and my kids are too.
Look, what I can give you--my very own business card. Can you
believe it?
Another one of those visits with the Governor resulted in a
woman named Michelle Crawford being invited to speak along side
the Governor at this year's State of the State Address.
Michelle summed up her thoughts at the end of the speech with
the following comments: ``My kids see a difference in me. They
see their mother making it. W-2 gave me a chance and I feel
good about myself--so thank you to everyone involved. I
especially want to thank my employers who are here tonight for
believing in me. And I ask others to take a chance on W-2
workers. We won't let you down.''
Michelle was recently the subject of a New York Times
article that focused on the difficulties in her personal life.
That story serves to accentuate how important W-2 really is.
The transition from welfare into a full-time job will not by
itself alleviate all of the personal problem these families
face. But, it's the first step. As individuals increase their
level of confidence in their personal abilities, they develop
positive strategies for dealing with their personal problems.
And they no longer view welfare as their panacea.
As pleased as we've been with the results of W-2, the
dynamics that shape our program are constantly changing,
requiring us to rethink and adjust our policies over time.
While we've been successful in moving parents into the
workforce, our remaining cases have more severe barriers. And
so our efforts must be focused on strategies that help remove
those barriers. Other community based organizations with
expertise in such areas as substance abuse and domestic
violence are partners with the W-2 agencies in this process.
And, with more than 50% of our remaining caseload lacking a
high school or equivalency diploma, more emphasis is being put
on basic education. And, through W-2 case management services
we are encouraging individuals to enhance their skills with
additional education or training in order to help them advance
in their careers.
W-2's success is also dependent on strong partnerships with
the employer community. We do so by appealing to the bottom
line, not their sense of social consciousness. A national
telephone survey of 500 employers conducted for the Assessing
the New Federalism project showed that 70 percent of employers
rate welfare recipients positively in terms of attitude and
reliability. Employers who have already hired welfare
recipients are even more likely to express positive views.
It is also important to note another, perhaps most
critical, partnership--that between the federal government and
states. We would urge you not to jeopardize our continued
success by abrogating those agreements included in the 1996
welfare reform law. There have been proposals to cut both our
TANF block grants and funding for child support enforcement. We
strongly object to such proposals. We have kept our part of the
bargain, we urge you to keep yours.
What's the bottom line? We're training an underutilized
segment of the population to enter the workforce. We're
providing the needed support for individuals to sustain those
jobs. The employers are getting workers who are loyal and eager
to get the job done. And, through their jobs, our people are
gaining new skills, that over time will bring them better
employment opportunities.
Pearlie Duncan, a 17 year veteran bus driver with a
Milwaukee inner-city route said it best. ``When W-2 first
started, there were a lot of complaints. People were afraid--
how would they fit in, everything was new and different. But
now that many people have gotten into it, their morale and
self-esteem is boosted, and you can tell they feel good. Most
of the kids are happy too. You look into their eyes; they're
happy. The eyes tell no lies.''
Sources
1. Pavetti, L.A. The dynamics of welfare and work: Exploring the
process b which women work their way off welfare. Cambridge, MA:
Malcolm Wiener Center for Social Policy, Harvard University, 1993.
2. Thornton, C., and Hershey, A. After REACH: Experience of AFDC
recipients who leave welfare with a job. Princeton, NJ: Mathematica
Policy Research, October 1990.
3. Harris, K.M. Life after welfare: Women, work, and repeat
dependency. American Sociological Review (1996) 61,3:407-26
4. Gleason, P., Rangarajan, A., and Schochet, P. The dynamics of
AFDC spells among teenage parents. Working paper. Princeton, NJ:
Mathematica Policy Research, January 1995.
Chairman Johnson of Connecticut. That was very interesting,
and thank you.
Mr. Larson, the director of the Office of Policy, Research
and Systems, Maryland Department of Human Resources.
STATEMENT OF RICHARD E. LARSON, DIRECTOR, OFFICE OF POLICY,
RESEARCH AND SYSTEMS, FAMILY INVESTMENT ADMINISTRATION,
MARYLAND DEPARTMENT OF HUMAN RESOURCES, BALTIMORE, MARYLAND
Mr. Larson. Madam Chairman and Members of the Subcommittee,
thank you very, very much for the opportunity to come and speak
before you today. I would also like to personally thank you as
a 30-year veteran of welfare, starting as a caseworker in
Baltimore City, for the political risks that the Congress took
in passing welfare reform and in trusting the States. And I
particularly want to thank my Congressman, Mr. Cardin, for
voting for that bill.
It has given Maryland and myself personally the opportunity
and flexibility to develop programs that are specifically
tailored to the citizens of our State and to move them into
independence and to safeguard and take care of those people
with problems that will not be cured by employment.
The Maryland Family Investment Program is the first effect
of welfare reform. We were an early TANF implementer. We
specifically designed the program to help families move into
the work force, and at the same time protect individuals who
were vulnerable and the disabled. Our specific program tools
were devolving to our counties the flexibility that was granted
to us by the Congress and then taking caseload savings, which
we planned for, and ploughing them back into the program,
because we knew from the very beginning, from work we had done
with the University of Maryland, that some of our customers
could, indeed, move off welfare very quickly. Others were going
to have a great deal of difficulty getting there.
The effect on our caseload is reflected in my written
statement. We have had a 61-percent decline in our caseload
since January 1995. There has been some discussion by other
people in this testimony about how much of that do we attribute
to welfare reform and how much of that do we attribute to the
economy. We have actually tried to answer that question with
some work we have done with the Regional Economic Studies
Institute at Towson University. They attribute about 8.1
percent of the decline to the booming economy, and the balance
to welfare reform.
The other chart in the additions to my testimony is one
reflecting the caseload shifts and the way the caseload is
shifting in the State, from primarily the suburbs--it used to
be 60 percent suburbs, 40 percent city. It is now 60 percent
city, 40 percent suburbs. This is pretty much a national
phenomenon, a concentration of the caseload in the urban areas.
With such a decline in caseload, one is going to ask two
questions. One, what happened to the people who left and what
is happening to the people who are still on.
I would like to briefly summarize the results of two
studies we have published as a result of a long research
partnership with the University of Maryland School of Social
Work. The first one is--deals with people who have left, ``Life
After Welfare,'' the third of a series of reports. We are now
reporting on samples of cases of individuals who have left
welfare. We have now gotten about 3,171 families in that
sample. And I do want to point out that Maryland studies all
welfare leavers. Unlike other studies, we look at everybody who
left for whatever reason and whether they came back or not from
day one. So we have probably the most conservative estimates.
Also, our employment data is matched with administrative
records rather than surveys. And again, that produces
conservative findings.
We found out that most people are leaving welfare
voluntarily. Maryland has a very low sanction rate. Only 8
percent of the exits were caused by Maryland's full family
sanction.
We found that over, about 60 percent of the people were
able to find work in unemployment insurance covered employment.
We found that that employment persists over time and that
people's earnings do increase over time.
We also found out that recidivism, true recidivism, not
just caseload churning, is relatively rare. For 3 months post
exit, only about 6 percent of the people come back.
And finally, and a very important question not reported in
Life--what we call ``Life Three'' but ``Life Two,'' our
previous report, is the effect on children. At that time, we
had 3,467 children in our sample of children who left welfare.
Only 15 of them showed up in the foster care caseload after
that. A very, very small number.
We also have begun looking at those who are still on
welfare. I will report briefly on a study we did on Frederick
County. We read all of their cases, everybody who was on cash
assistance in March 1998. We found, in some instances, no
surprises, but we also found the glimmers of the challenges
ahead. For example, of those people still on the caseload,
there were long-term receivers, about three times as many as
those people who have left. They have formidable problems. This
group is going to present a formidable challenge--problems of
substance abuse, physical and mental disability, teen
childbearing, domestic violence. Getting these people to
transition from welfare to work is going to be difficult, time
consuming, and, I think, relatively expensive.
In closing, I would like to make some suggestions based on
all of this.
First of all, we have answered the easy questions. We are
moving into the harder questions. The bar, in a very real
sense, is being raised. We are moving from questions such as,
Are children going to be harmed? Will people go to work? Well,
now that they have gone to work, what kind of jobs are they
going to get? So the bar is constantly raising. We are looking
at job skills enhancement through a pilot project in Maryland,
relooking at the role of education, and really realigning our
Department to look not just at moving people off welfare and
making them satisfied in doing that, but in supporting low-wage
working families.
In closing I have four brief suggestions:
First, avoid premature closure; don't declare victory too
soon--we still have yet to see the results of a recession on
this program; please maintain your current levels of support;
continue and expand State flexibility. And, I know all about
committees of jurisdiction and everything else, but for
somebody who has been on the line for a long time, you need to
come up with common definitions of income and resources among
TANF, food stamps, and medical assistance. These are an
absolute must. The more you--the more we can simplify, the more
we can make clear the better off we will all be. The real end
of the social policy continuum is an individual worker talking
things over with an individual customer. And if we confuse them
we are losing the battle.
Thank you very much for your time.
[The prepared statement follows. Attachments are being
retained in the Committee files.]
Statement of Richard E. Larson, Director, Office of Policy, Research
and Systems, Family Investment Administration, Maryland Department of
Human Resources, Baltimore, Maryland
Good morning, my name is Richard Larson, Director of the
Office of Policy, Research and Systems at the Maryland
Department of Human Resources' Family Investment
Administration. It is a great privilege to be here today to
discuss the early successes of Maryland's welfare reform
program. I would like to thank Chairman Johnson and the
Committee for this opportunity. I would also like to thank all
of you, particularly my Congressman--Ben Cardin, who took the
risk of passing the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996. Based on my thirty
years of experience in this field, starting as a caseworker in
Baltimore City, I think the Temporary Assistance to Needy
Families program has had a dramatic and positive impact not
only on welfare but on the entire human services delivery
system. In Maryland and across the nation, we are making great
strides in assisting families to become independent of welfare
and to enter the workforce. At the same time, we are
safeguarding children, people with disabilities, and other
vulnerable populations by providing needed services. Thanks to
the collaborative efforts and foresight of Governor Parris N.
Glendening and the Maryland General Assembly, our state has
become a leader in welfare reform. Today I will discuss
Maryland's approach to moving families from welfare to work,
our substantial caseload decline and the results of our ongoing
research studies of those who have left welfare and those who
remain on welfare in Maryland.
The First Effect of Welfare Reform: Maryland's Family Investment
Program
The Family Investment Program is Maryland's welfare reform
initiative. We implemented it in October of 1996. The program
is based on the new vision of a Maryland where everyone works,
families are strong, children are nurtured and partnerships are
found among families, businesses, faith and nonprofit
communities and government. Our welfare reform represents a
major shift from an ``income maintenance'' focus to one that
promotes family independence through work, personal and family
responsibility, and community involvement.
We included a broad base of stakeholders in the design of
the Family Investment Program including: legislators, the
president of the local social services directors' association,
local service providers, businesspeople and former customers.
Maryland adopted a workforce attachment model to move as
many families as possible into the work force as quickly as
possible. We are committed to helping Temporary Cash Assistance
customers find employment, keep employment and progress in the
job market.
To do this we:
Designed a program in close partnership with the
Maryland Legislature (Especially its Joint Committee on Welfare
Reform)
Built on the strengths of our recipients
Changed the culture of our welfare offices
Carefully invested our resources
Reinvested savings from caseload declines into
services aimed at those families with multiple barriers to
employment
Pushed resources down to the local level where the
real problems and opportunities exist
Created partnerships with the private and public
sectors
Measured our results
The program has as its two key strategies the innovative
concepts of local flexibility and reinvestment of program
savings. To maximize creativity and experimentation after the
transition from Aid to Families with Dependent Children to
Temporary Assistance to Needy Families, we recognized that one
size does not fit all. We have operated on the principle that
the local departments of social services know best how to meet
the needs of their customers. They know the customers, the
services needed, the resources available, the opportunities
that exist for customers in their area and the creative
partnerships that can be forged. As a result, the Maryland
Department of Human Resources has allocated funds directly to
local departments of social services. We gave them only a brief
outline of a plan which they then filled in to meet the unique
needs of their communities and the families and children in
them. Each local department is implementing its own plan with
measurable performance standards to achieve mutually agreed
upon outcomes.
We also recognized that our labor force attachment model
would result in many people leaving welfare relatively quickly
with the hard to place remaining on the caseload for a longer
time. As the caseload declines due to these early exits,
savings can be plowed back into services for those with
multiple barriers to independence. This reinvestment strategy
allows the local departments to continue their success in
placing customers in appropriate activities that will result in
independence. Local departments use these funds for a variety
of creative programs and partnerships. The accomplishments of
the Family Investment Program are largely attributable to the
partnerships among other State departments, community
organizations, businesses and other agencies that serve our
customers. We have already established fruitful partnerships
with a dynamic group of stakeholders who share in the
commitment to build a program that fosters responsibility and
independence for our customers.
The Effect on Our Caseload
On the highest level--that of caseloads--we have built on
the strengths of our customers and moved many of them to
independence. Since January 1995, we have helped 139,265
Marylanders become independent of welfare. As of April 1999,
our caseload has gone from 227,887 customers to 88,622
customers, a decline of 61.1%. Based on work done by the
Regional Economic Studies Institute of Towson University, the
caseload decline in Maryland can be attributed largely to the
implementation of the Family Investment Program. Towson
University has been forecasting the State's welfare caseload
since 1992 and has projected the caseload in the current
economic environment both with and without welfare reform.
Their forecast shows that without welfare reform, but with the
booming economy, the caseload in Maryland would currently be
209,289, a decline of 8.1%, instead of the actual caseload of
88,622, a decline of 61.1%. The dramatic difference in the rate
of caseload decline is at least partially due to the strong
economy, but even more importantly, is a result of sound policy
decisions.
Maryland's caseload also mirrors the national trend in that
the population remaining on cash assistance is
disproportionately located in urban areas. While the state
caseload has declined 61.1%, the caseload in Baltimore City has
declined 49.8%. As a result of the difference in the rate of
decline, Baltimore City now has 60% of the state's caseload. In
addition, estimates show that the majority of job opportunities
available to people exiting welfare are located in suburban
communities outside of Baltimore City and are difficult for
city residents to access.
The Effects--Those Who Have Left the Caseload
On the more important level of what happens to people after
they leave welfare, our results have also been good. For nearly
20 years, the Department of Human Resources and the University
of Maryland School of Social Work have had a research
partnership to develop solid information to craft welfare
policies. This information provided, and continues to provide,
the empirical backbone for the customer-specific, investment-
focused, locally tailored approach that is Maryland's Family
Investment Program.
The University of Maryland School of Social Work has drawn
a five percent random sample of cash assistance cases that
closed each month during the first 18 months of welfare reform
(October 1996 through March 1998). Together, the 18 monthly
samples include a total of 3,171 families. We note that
Maryland includes in its exit studies all people who leave: for
whatever length of time, for whatever reason, no matter if they
come back, or stay off. We also match with administrative
records. Consequently, our findings are conservative. Based on
this research, we have recently published Life After Welfare:
Third Interim Report (March, 1999) It is clear that the trends
remain positive.
The vast majority of families leaving welfare have
done so voluntarily (92.0%) and not due to full family
sanctions imposed for noncompliance with work requirements
(7.3%) or child support (0.7%).
The majority of exiting adult payees is able to
secure work (59.3%) and work efforts persist in subsequent
quarters. At least 50% of all exiting adults work in the 2nd
through 5th quarters after they stop receiving welfare.
There has been little change in the profile of
exiting cases over time. There is no evidence that early and
later welfare exiters differ in family size, length of time on
welfare, number or age of children. Most adults do work in
unemployment insurance covered jobs after leaving welfare.
Work effort and employment persist over time. Of
those who worked during the first post-exit quarter, 86.7% had
earnings in the second post exit quarter and 77.3% were
employed in the third quarter. Additionally, small gains in
median earnings were reported over time for exiting families.
The most frequent types of employment for
customers exiting welfare were in the areas of wholesale and
retail trade (35%), personal services such as temporary
agencies and motels (23%) and organizational services such as
hospitals and nursing homes (21%).
Research shows that recidivism (returns to
welfare) is relatively rare, but ``administrative churning''
(cases that close but reopen in 30 days or less) happens more
frequently. True recidivism, however, is fairly rare. Excluding
churners, at the three-month post-exit point, only 5.2% of
customers have come back on cash assistance.
In addition to the positive employment outcomes for
families leaving welfare, there is also evidence that children
are not being adversely affected by welfare reform. As reported
in Life After Welfare: Second Interim Report (March, 1998), the
University of Maryland research indicated that foster care
usage among children in families who leave cash assistance has
not increased. Of the 3,467 children in the October 1996
through August 1997 samples, 92 children (2.7%) had been in
foster care at some point before their families left welfare.
After leaving the welfare rolls, fifteen children (0.4%) from
eleven families had at least one foster care placement. Seven
of these fifteen children had a pre-exit history of abuse and/
or neglect and two children had experienced a pre-exit foster
care placement. We are planning a separate report in the near
future updating and expanding our findings in this area.
The Effects--Those Who Are Still on the Caseload
There are still many important challenges in the evolving
welfare-to-work environment in Maryland and across the nation.
One of them is to obtain a better understanding of who is left
on the rolls. Using one county in Maryland which, like many
local subdivisions, has experienced a precipitous drop in the
size of its cash assistance population, the School of Social
Work at University of Maryland has also examined the
characteristics of those still on the rolls 18 months (March
1998) into welfare reform. In keeping with our multi-method
approach to welfare reform research, the researchers took a
different approach from sampling and record matching. They
attempted to look specifically at obstacles or barriers which
may help explain why these families are on assistance and/or
which may impede their ability to exit in the future. This
research attempted to add flesh to the skeletal phrase ``hard
to place,'' that has been used to describe customers who may
not be job ready and/or who, for various reasons, may be at
heightened risk of hitting the five-year lifetime time limit.
The report is Life On Welfare: Who Gets Assistance 18 Months
Into Reform? (November, 1998)
Drawing heavily on case narratives recorded in Maryland's
automated eligibility system for every one of 358 Frederick
County families who received a Temporary Cash Assistance check
in March 1998, the researchers selected 72 study cases and
coded each as to the primary problem or major issue affecting
each family.
In some respects, there are no surprises in the
profile of these cases. The vast majority of Temporary Cash
Assistance families (95%) are headed by women. About half (48%)
of the payees are never-married women, few of them (4.5%) are
under the age of 20 years, and the majority (58.7%) have been
receiving Temporary Cash Assistance continuously for 12 months
or less. Notably, the proportion of families (58%) with a
current spell length of 12 months or less is identical to the
proportion of such cases among those who exited cash assistance
during the first year of reform. Likewise, the median or
midpoint current spell length (10 months) is relatively short
among the active cohort and is again identical to the median
spell length observed among Frederick County families who left
Temporary Cash Assistance during the first year of reform.
However, in other key areas, these cases do differ
from cases which have exited. The most dramatic difference
between on-welfare and off-welfare families is in the
proportion of long-term welfare users. There are about three
times as many families who have been on welfare continuously
for more than five years in the on-welfare group (11.5%) as in
the group who exited welfare (4%) during the first year of
reform. When lifetime welfare use is examined, differences
between the two groups are more dramatic, especially at the
extremes. Among those on Temporary Cash Assistance in Frederick
County in March of this year, just about one of every four
(24.2%) have more than five years of total welfare receipt.
About two-fifths (41.3%) have 12 or fewer months of lifetime
welfare use. In contrast, about one in five cases (20.7%) who
exited Temporary Cash Assistance in the first year of the
Family Investment Program implementation had a lifetime welfare
history of 12 months or less and three in ten (29.7%) had more
than five years of total lifetime welfare use.
It is apparent that families on Temporary Cash
Assistance 18 months post-implementation are a diverse group.
Except for female-headship (95% of cases), there is no one
characteristic which describes the March 1998 caseload in the
study county. The 358 families include those who have been on
Temporary Cash Assistance for just a few short months, but also
those who have received cash assistance continuously for many
years. There are many families who appear to have turned to
Temporary Cash Assistance in times of short-term crisis; for
these families, the transition from welfare to work may not be
terribly difficult. There are many other families, however, for
whom the prospects of a swift, lasting exit from welfare do not
seem very good.
There appears to be an identifiable cohort of
families where problems such as substance abuse, physical/
mental disability, teen childbearing, domestic violence and the
like, acting singly or in combination, present a formidable
challenge insofar as a welfare-to-work transition is concerned.
The case vignettes reveal that many of the families are
struggling with one or more serious issues. Furthermore, these
problems are frequently of longstanding duration. For certain
situations, the needed service, intervention, or behavioral
change seems fairly obvious, but in many other cases,
especially when problems are numerous and heavily intertwined,
solutions are not at all clear-cut.
One group of families--those in which the adult
custodian is a grandparent or other relative--may be of
particular interest and concern, especially with regard to
forecasting future assistance payment expenditures. Although it
is a trend which, in Maryland and nationally, began before
welfare reform, the researchers were struck by the number of
Temporary Cash Assistance cases headed by relatives other than
the child(ren)'s parent, largely by grandmothers. This
situation is not unique in our state, or to Frederick County.
Fully one in four (24.9%) active Temporary Cash Assistance
cases in Maryland in August 1998 were child-only cases. This
compares to a historical, statewide figure of roughly 10-15%.
We note that the actual numbers of this type of case are not
increasing. Rather, they are not declining as rapidly as the
general caseload.
We are finding that it is prudent to take a closer look at
the characteristics and circumstances of these families for
several reasons. First, in a number of such families, there may
be unidentified need for other supportive services. This may be
especially true in cases headed by older grandmothers where
there is no other adult in the home. Second, child-only cases
are exempt from work and time limit requirements and, all else
equal, it might be expected that child-only cases will remain
on cash assistance for longer periods of time than other cases.
Thus, our ability to more accurately forecast likely overall
expenditures for cash assistance in future years would probably
be enhanced by more detailed information about these families.
There is reason for optimism, but also reason for
concern. The quantitative data and the case vignettes indicate
that many families have turned to cash assistance for support
in a time of crisis. Most of them probably will not remain on
Temporary Cash Assistance for extended periods of time and the
majority do not seem at risk of reaching the five-year time
limit in the foreseeable future. There is also reason for
concern, however. The vignettes establish what front-line staff
has long known and what Maryland's welfare reform plan
explicitly recognizes as well: there is a sizeable minority of
families for whom making a successful transition from welfare
to work will be difficult, time consuming and relatively
expensive. For some, transition seems unlikely to happen at all
despite customers' and agencies' best efforts. For this group
of families, the 20% exemption provided for in federal law will
be essential.
To be successful, welfare reform must be understood to be a
community-wide challenge. The case narratives make clear that,
for a great many of the more troubled families especially,
state and local welfare agencies cannot be expected to ``go it
alone.'' Among services clearly needed by families in this
study are: detoxification/rehabilitation, counseling, stress
management, family-life skills training, education, and child
support enforcement, as well as child care and transportation.
Two specific, important examples of the importance of
viewing welfare reform as a community-wide challenge were
thought to be most relevant to the cases reviewed for this
study. One is the invidious problem of substance abuse which
state policy explicitly acknowledges cannot be addressed solely
within the welfare department.
A second example concerns the separate Welfare to Work
Block Grant funds which Maryland also receives. Helping many of
today's Temporary Cash Assistance families to successfully
transition from welfare to work will not be a simple matter. It
seems clear, too, that traditional job placement strategies may
be inappropriate or inadequate in many cases. Thus, it is
imperative for elected and appointed officials to insure that
these Welfare to Work funds are spent effectively and that
results are closely monitored. In this area, as is true with
regard to substance abuse and, indeed, ``welfare reform'' in
its entirety, neither our state nor its low-income families can
afford for us to do any less than our best. The stakes are
simply too high.
Effects on the Program Development Cycle:
The last set of effects I would like to discuss is the one
that affects the Program Development Cycle. In this process,
Maryland used the research we have done to:
Debate and plan the program
Create and operate the program
Define the initial open questions
Answer the initial open questions
Define the new questions
In response to the concerns of Governor Glendening and the
Maryland General Assembly, the Department and the University
have answered, in at least a preliminary way, the open
questions from the initial debate:
Would our customers go to work? They did.
Would they come back? They did not.
Would they be sanctioned off? They were not.
Would there be adverse effects on the Child
Welfare System? There were not.
We have also learned that our work is not finished. Our
answers to the initial questions are giving rise to newer, more
difficult issues, which we are addressing. Among these:
Job Retention. With assistance from planning
grants, and more importantly the exchange of ideas with other
states and HHS, we are devising strategies to insure those who
have left the rolls to become employed stay employed. Among
these is Project Retain which attempts to mobilize existing
resources to help those who experience a post-employment
problem. We have found that this is not enough.
Job Skills Enhancement. While we have seen gains
in earnings, for some there have been none. Accordingly,
Governor Glendening and the Maryland General Assembly have
enacted and funded a Job Skills Enhancement Pilot Project aimed
specifically at those who have left the cash assistance rolls
and who find themselves in need of upgrade training.
The Role of Post-Secondary Education. Maryland has
adopted a Labor Force Attachment Model as its principal and
successful means of helping our customers move quickly into
unsubsidized employment. However, our locally driven,
individually focused approach has also demonstrated that there
are some persons for whom such an approach may not be the most
appropriate. Accordingly, Governor Glendening, advocates and
the Department established a pilot project at the Baltimore
City Community College. This enabled an experimental group to
use post-secondary education as their work activity. Dr.
Catherine Born and her staff at the School of Social Work will
do an evaluation of this pilot project by comparing the welfare
and employment experience of this group with a matched control
group from the rest of the caseload in Baltimore City.
Re-Aligning the Major Welfare Reform Goals of the
Department. In the first stages of our welfare reform effort,
Governor Glendening and the Department developed a Reinvestment
Strategy. Our major articulated goals were caseload reductions
and customer satisfaction with an overall objective of creating
caseload savings and then reinvesting those savings back into
programs that would help those with greater barriers to
independence. The Maryland General Assembly endorsed this
strategy and gave the Department unprecedented fiscal
flexibility to carry forward caseload savings into the future.
Faced with issues of job retention, earnings gain, diversion
and prevention, we are more clearly articulating a goal of the
Support of Low Wage Working Families. The policy shift to
welfare as a temporary support has accentuated the fact that
other means-tested programs are supports to employment and
independence.
--Child Support. We have a Child Support First component in
our program. It is becoming increasingly evident that we need
to formalize a Child Support Last component for those exiting
welfare to ensure that families have the multiple sources of
income necessary to get through the temporary loss of one of
them.
--Child Care. As our welfare caseload projections go down,
our child care projections increase. We are transferring more
TANF funds to Child Care.
--Medical Assistance. In Life After Welfare: Third Interim
Report, our researchers noted the difference between the
reported reason of employment for case closure and the number
of people who were working in the quarter the case closed. The
conclusion was that our customers were not aware of their
eligibility for benefits while working, particularly
Transitional Medical Assistance. Consequently, we are
developing review mechanisms to ensure that Medical Assistance
denials and closing are proper. We are also developing
materials for our customers to ensure that they better
understand the importance of giving us accurate information so
that they can continue to get the benefits for which they are
eligible.
--Food Stamps. This program has taken on increased
importance as cash assistance caseloads have declined. This
program, unfortunately, does not have the flexibility that
exists in TANF.
--Earned Income Tax Credits. The Department continues to
aggressively market both the federal EITC and Maryland's
refundable EITC.
Some Suggestions Based on These Effects: In closing, I
would like to offer the following general observations/
suggestions as you review the effects of welfare reform.
Avoid premature closure. We have been very
successful. However, our research tells us that there are still
many problems we are only beginning to uncover and understand.
We also have yet to see how our progress and programs will fare
in a time of economic downturn.
Maintain current levels of support. We understand
the Subcommittee's concern that some states have accumulated
substantial TANF reserves. I think that these reflect prudence
on the part of the states. We also have yet to see how our
progress and programs will fare in a time of economic downturn.
Continue and expand state flexibility. The final
regulations promulgated by HHS are a dramatic improvement over
the draft regulations. There is a real attempt to create and
maintain a true federal/state partnership. However, there are
some statements that indicate HHS thinks it is constrained by
the statute to limit state flexibility. I would suggest
examination of these areas to consider granting HHS the
explicit authority to increase state flexibility. Areas of
specific concern include: 1) granting flexibility to meet the
two parent work participation rate requirement since these
families have been very difficult to serve in Maryland because
of their relatively small numbers, 2) not limiting the spending
of accumulated reserves to ``assistance,'' and 3) eliminating
the distinction made between supportive services, e.g. child
care and transportation, for unemployed families as
``assistance'' and employed families as not being
``assistance.''
Program Coordination and Simplification. Finally,
I simply cannot stress too strongly the need for program
simplicity and coordination, especially between TANF and Food
Stamps. Nothing confuses customers, workers and the general
public more than the lack of consistency among the rules for
federal means tested programs. Perhaps the truest test of real
welfare reform is that different programs look at the same
thing the same way. That certainly does not happen with a car.
In Maryland's cash assistance program, we do not count the
value of any car against a customer's family because we see it
as means to independence. As long as the family remains on cash
assistance, Food Stamps (because of categorical eligibility)
does not count it either. The minute that family leaves cash
assistance the value of the car has to be figured out (no easy
task) and then, sometimes yes other times no, may make the
family ineligible. Such is a recipe for confusion, error, and
lack of access. I fully realize that this issue is not totally
within the purview of this subcommittee, but I plead it to
whomever I can, wherever I can.
Thank you for your time, attention and the continued risk
of giving Maryland the flexibility we need to succeed in
operationalizing your vision of welfare reform.
[Attachments are being retained in the Committee files.]
Chairman Johnson of Connecticut. Thank you very much, Mr.
Larson.
Cynthia Fagnoni, Director of Education, Workforce, and
Income Security Issues, HEHS, U.S. General Accounting Office.
STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND
HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE
Ms. Fagnoni. Madam Chair and Members of the Subcommittee,
thank you for inviting me here today to discuss our work on
State implementation of welfare reform and information on
families who have left welfare.
My testimony today focuses on States' implementation of
welfare reform, what State-sponsored studies tell us about the
status of children and families leaving welfare, and key issues
involved in assessing the success of welfare reform.
My testimony is based on completed and ongoing work for the
Subcommittee.
Our work shows that States are transforming the Nation's
welfare system into a work-focused, temporary assistance
program for needy families. Many States are refocusing their
programs on moving people into employment rather than signing
them up for monthly cash assistance.
To better support this new work focus, many States are
changing how their offices and workers do business, expanding
the roles of welfare workers to include helping clients address
and solve problems that interfere with employment. In some
instances, applicants are expected to engage in job search
activities as soon as they apply for assistance.
Such changes, made in times of strong economic growth, have
been accompanied by a 45-percent decline in the number of
families receiving welfare, from a peak of about 5,000,000
families in 1994 to under 3,000,0000 as of December 1998.
Caseload reductions serve as only one indication of
progress in meeting the goals of welfare reform, however. An
essential question is: What do these program changes and
caseload reductions mean for needy families with children?
There are no Federal requirements for States to report on the
status of former welfare recipients. As a result, the only
systematic data currently available on families who have left
welfare come from research efforts initiated by States.
Early indications from our review of State-sponsored
studies in seven States are that most of the adults who left
welfare were employed at some time after leaving the rolls,
often at low-paying jobs. Studies measuring whether an adult
and a family had ever been employed since leaving welfare
reported employment rates from 63 to 87 percent.
Regarding the incomes of those who left welfare, average
quarterly earnings for former recipients ranges from $2,378 to
$3,786 in the studies that either reported quarterly earnings
or for which we estimated quarterly earnings.
Extrapolating these quarterly earnings to a year results in
estimated average annual earnings for former welfare recipients
in the seven States ranging from $9,512 to $15,144. These
amounts of annual earned income are greater than the maximum
amount of cash assistance and food stamps that a three-person
family with no other income could have received in these
States. However, if these earnings were the only source of
income for families after they left welfare, many of them would
remain below the Federal poverty level.
While the tracking studies provide information on
individuals' earned incomes, much remains unknown about
families' total household incomes. For example, the studies
generally do not provide complete information on other forms of
household income, such as earnings by other household members,
child support payments, or financial assistance from relatives
and friends.
In addition to information on total household income,
information on the receipt of government supports is key to
understanding the condition of former welfare recipients and
the extent to which they continue to rely on government aid and
have not become economically self-sufficient. Five of the seven
State studies had some information on the receipt of benefits.
For example, between 44 and 83 percent of the families who left
welfare received Medicaid benefits. And between 31 and 60
percent received food stamps.
In addition to interest in welfare recipients who have left
welfare and are employed, there is great interest in how those
families who have left welfare and are not employed are faring.
The South Carolina and Wisconsin surveys asked nonworking
former recipients what stopped them from working for pay. In
both States, the most frequently mentioned reason was their own
physical or mental illness, followed by the inability to find a
job, lack of transportation, and lack of child care.
The Wisconsin study attempted to determine how these
families were supporting themselves. Of the 142 former
recipients not currently working, 18 percent were living with
employed spouses or partners; 65 percent of the families of the
remaining nonworking former recipients were receiving Social
Security, State unemployment insurance, child support or foster
care payments; and 23 percent were not receiving cash
assistance, but were receiving noncash assistance, such as free
housing, rent subsidies, Medicaid, or food stamps.
Two studies, South Carolina's as well as Wisconsin's recent
survey of families leaving welfare during the first quarter of
1998, asked former recipients to compare several aspects of
their general well-being after leaving welfare with their
situation while they were on welfare.
While former recipients in both States were more likely to
experience some deprivations after leaving welfare, over two-
thirds disagreed or strongly disagreed with the statement that
life was better when you were getting welfare.
While these studies help us learn some things about the
status of former welfare recipients in several States, we could
not draw conclusions about the status of most families that
have left welfare nationwide. However, many efforts are
underway to provide information to better understand the
effects of welfare reform on families. In the near and long
term, these efforts promise to provide more data to help us
understand the effects of welfare reform on families.
Additional information from ongoing and future studies will
help us better understand the evolving story of welfare reform
and its impact on families and children.
Madam Chair, that concludes my formal remarks. I will be
happy to answer any questions you may have.
[The prepared statement and attachments follow:]
Statement of Cynthia M. Fagnoni, Director, Education, Workforce, and
Income Security Issues, Health, Education, and Human Services Division,
U.S. General Accounting Office
Madame Chair and Members of the Subcommittee:
Thank you for inviting me here today to discuss our work on
state implementation of welfare reform and information on
families who have left welfare. The Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (PRWORA) (P.L. 104-
193) significantly changed federal welfare policy for low-
income families with children, building upon and expanding
state-level reforms. The act ended the federal entitlement to
assistance for eligible needy families with children under Aid
to Families With Dependent Children (AFDC) and created the
Temporary Assistance for Needy Families (TANF) block grant,
designed to help low-income families reduce their dependence on
welfare and move toward economic independence. Under TANF,
states have much greater flexibility than before to design and
implement programs that meet state and local needs. At the same
time, states must impose federal work and other program
requirements on most adults receiving aid and enforce a
lifetime limit of 5 years, or less at state option, on the
length of time federal assistance is received.
These recent federal and state reforms represent
significant departures from previous policies for helping needy
families with children. To better understand states' program
changes and the status of families who have left welfare, your
Subcommittee, in concert with the Senate Finance Committee,
asked us to review and report on state implementation of
welfare reform and information on families who have left
welfare. To respond to your requests, in June 1998 we issued a
report on implementation of welfare reform in seven states,\1\
and today the Subcommittee has released a second report that
reviews and summarizes state-sponsored studies of families who
left the welfare rolls during or after 1995.\2\ Today I will
summarize these reports' findings, discussing (1) states'
implementation of welfare reform, (2) what state-sponsored
studies tell us about the status of children and families
leaving welfare,\3\ and (3) key issues involved in assessing
the success of welfare reform.
---------------------------------------------------------------------------
\1\ See Welfare Reform: States Are Restructuring Programs to Reduce
Welfare Dependence (GAO/HEHS-98-109, June 18, 1998). States reviewed in
depth were California, Connecticut, Louisiana, Maryland, Oregon, Texas,
and Wisconsin.
\2\ See Welfare Reform: Information on Former Recipients' Status
(GAO/HEHS-99-48, Apr. 28, 1999).
\3\ For the purposes of this report, the term ``welfare'' will
refer to cash assistance received under AFDC or TANF.
---------------------------------------------------------------------------
In summary, our work shows that states are transforming the
nation's welfare system into a work-focused, temporary
assistance program for needy families. Many states are
refocusing their programs on moving people into employment
rather than signing them up for monthly cash assistance. To
better support this new work focus, many states are changing
how their offices and workers do business, expanding the roles
of welfare workers to include helping clients address and solve
problems that interfere with employment. These changes, made in
times of strong economic growth, have been accompanied by a 45-
percent decline in the number of families receiving welfare--
from a peak of about 5 million families in 1994 to fewer than 3
million families as of December 1998.
Caseload reductions serve as only one indication of
progress in meeting the goals of welfare reform, however. An
essential question is: What do these program changes and
caseload reductions mean for needy families with children?
Early indications from our review of state-sponsored studies in
seven states conducted at various periods from 1995 to 1998 are
that most of the adults who left welfare were employed at some
time after leaving the rolls, often at low-paying jobs. There
was little evidence of increased incidence of homelessness or
of children entering foster care after families left welfare,
in the few cases in which these studies addressed these issues.
However, much remains unknown about the economic status and
well-being of most former welfare families nationwide.
Many efforts are under way to provide more information on
the families who have left welfare and the effects of welfare
reform. As this information becomes available, it will permit a
more comprehensive assessment of welfare reform, which will
need to address the following key issues:
How do low-wage earners and their families fare
after leaving welfare for work?
What is happening to eligible families seeking
welfare who are provided other forms of aid, such as job search
assistance, instead of welfare or other aid?
How effectively are states working with hard-to-
serve welfare recipients who remain on the TANF rolls?
How would an economic downturn affect states'
welfare reform programs?
Background
PRWORA specified that the goals of TANF include providing
assistance to needy families so that children may be cared for
in their own homes or in the homes of relatives; ending the
dependence of needy parents on government benefits by promoting
job preparation, work, and marriage; preventing and reducing
the incidence of out-of-wedlock pregnancies; and encouraging
the formation and maintenance of two-parent families. In fiscal
year 1998, states expended or obligated $12.2 billion of the
$14.8 billion in federal funds available for TANF.\4\ In
addition, states spent $11 billion of their own funds on needy
families with children, meeting the requirement to maintain a
specified minimum level of their own spending to receive
federal TANF funds. The Department of Health and Human Services
(HHS) oversees TANF at the federal level.
---------------------------------------------------------------------------
\4\ The Department of Health and Human Services (HHS) awarded
states a total of $16.6 billion under TANF. After some states
transferred some of their TANF funds to the Child Care and Development
Fund or the Social Services Block Grant, as allowed under TANF, $14.8
billion remained available for TANF.
---------------------------------------------------------------------------
Before PRWORA, many states received waivers from federal
rules under the AFDC program to allow them to strengthen work
requirements for adults, impose time limits on the receipt of
aid, and change other aspects of their programs. As a result,
at the time PRWORA was enacted, states were at different stages
of implementing their reform efforts. State programs continue
to evolve at different paces. The great extent of state
experimentation and sweeping changes at the federal level have
generated interest among program administrators, state and
local policymakers, welfare advocates, and the public in
general about state and local welfare programs and the status
of families no longer receiving cash assistance under AFDC or
TANF.
States Are Changing Their Welfare Programs To Emphasize Work
States' have made progress in restructuring their programs
to emphasize work and to reduce families' dependence on
welfare. State efforts include requiring more welfare
recipients to look for work or participate in work activities;
providing other forms of aid, such as child care and
transportation, to keep families from needing monthly cash
assistance; and focusing more on helping families solve
problems that interfere with employment. Although caseloads
have declined, it is not yet clear to what extent states'
program changes, rather than the strong economy, have
contributed to the decline.
Our work and other studies show that many states and
localities are transforming their welfare offices into job
placement centers. The seven states we reviewed in depth
generally had increased the percentage of their clients
required to participate in work-related activities from an
average of 44 percent in 1994 to 65 percent in the early months
of TANF implementation in 1997. In some instances, applicants
are now expected to engage in job search activities as soon as
they apply for assistance. To emphasize the importance of work,
five of the seven states have more strongly enforced work
requirements by adopting provisions for terminating assistance
to the entire family for noncompliance with program
requirements. In addition, we recently reported that 17 states
are drawing upon their existing workforce development systems
to help welfare clients get jobs, often through the use of the
Department of Labor's one-stop career center system.\5\
---------------------------------------------------------------------------
\5\ See Welfare Reform: States' Experiences in Providing Employment
Assistance to TANF Clients (GAO/HEHS-99-22, Feb. 26, 1999).
Many States Are Using New Strategies to Divert Families From
---------------------------------------------------------------------------
Welfare
Requiring applicants to search for work as soon as or
before they apply for aid is part of a major new strategy many
states are using to divert some applicants from monthly cash
assistance. With the end of the entitlement to cash aid and the
increased flexibility now granted states under TANF, states are
sometimes providing other forms of assistance--such as one-
time, lump-sum payments; support services, such as child care
and transportation; and assistance with job searches--in an
attempt to keep families from needing monthly cash assistance.
One-time cash payments can help families to catch up on rent,
repair their car, or get through a medical emergency, allowing
adults within the families to be more able to obtain or retain
a job. Support services such as child care and transportation
may also enable families to maintain their self-sufficiency
without going on the welfare rolls. A study sponsored by HHS
showed that, as of August 1998, 31 states had reported using at
least one ``diversion'' strategy in at least part of the
state.\6\ A 1999 Rockefeller Institute review of 20 states'
welfare programs found that states and localities have
developed a range of diversion programs.\7\ For example, a
diversion program in Texas allows caseworkers to provide
families with employment counseling or refer them to public or
private agencies for a variety of services, while Arizona's
diversion program offers families emergency shelter, rent or
mortgage assistance, or assistance with utility payments.
---------------------------------------------------------------------------
\6\ See Kathleen Maloy and others, A Description and Assessment of
State Approaches to Diversion Programs and Activities Under Welfare
Reform (Washington, D.C.: George Washington University, Aug. 1998) and
Diversion as a Work-Oriented Welfare Reform Strategy and Its Effect on
Access to Medicaid: An Examination of the Experiences of Five Local
Communities (Washington, D.C.: George Washington University, Mar.
1999).
\7\ See Richard P. Nathan and Thomas L. Gais, Implementing the
Personal Responsibility Act of 1996: A First Look (Albany, N.Y.:
Federalism Research Group, The Nelson A. Rockefeller Institute of
Government, 1999).
---------------------------------------------------------------------------
Along with this new emphasis on diverting families from
receiving monthly cash assistance comes concern among some
policymakers, program administrators, and others that families
in need of and eligible for Medicaid and food stamps may not be
receiving these benefits. To ensure continued Medicaid coverage
for low-income families, PRWORA generally preserves the
Medicaid entitlement, setting eligibility standards at the AFDC
levels in effect on July 16, 1996.\8\ Moreover, many families
who do not meet state-defined eligibility criteria for TANF can
still be eligible for food stamps. We have ongoing work for
Representatives Levin and Coyne addressing Medicaid and food
stamp issues that we will be reporting on later this year.
---------------------------------------------------------------------------
\8\ For more information, see Medicaid: Early Implications of
Welfare Reform for Beneficiaries and States (GAO/HEHS-98-62, Feb. 24,
1998).
States Are Providing Supportive Services to Families to
---------------------------------------------------------------------------
Decrease Welfare Dependence
As many welfare offices have increased their emphasis on
work activities, welfare offices and workers are also focusing
more on helping clients address and solve problems that
interfere with employment. The seven states we visited used
some of the additional budgetary resources available under TANF
\9\ to provide services to help families address barriers to
employment, including lack of child care,\10\ lack of
transportation,\11\ and more complex mental and physical health
problems. States are also continuing to provide services to
families that have left the welfare rolls as a result of
employment, including, in some cases, providing case management
services to help ensure that families can deal with problems
that might put parents' jobs at risk. In addition, some states
are providing services to low-income working families not
receiving cash.
---------------------------------------------------------------------------
\9\ For more information, see Welfare Reform: Early Fiscal Effects
of the TANF Block Grant (GAO/HEHS-98-137, Aug. 18, 1998).
\10\ For more information on welfare reform and child care, see
Welfare Reform: State Efforts to Expand Child Care Programs (GAO/HEHS-
98-27, Jan. 13, 1998).
\11\ See Welfare Reform: Transportation's Role in Moving From
Welfare to Work (GAO/RCED-98-161, May 29, 1999) and Welfare Reform:
Implementing DOT's Access to Jobs Program (GAO/RCED-99-36, Dec. 8,
1998).
States Are Anticipating Difficulty in Serving Families Still on
---------------------------------------------------------------------------
the Welfare Rolls
As states require larger percentages of their welfare
caseloads to participate in work-related activities--including
some recipients who were previously exempted because of a
determination of physical or mental disability--and as the most
readily employable recipients leave welfare for employment,
states are concerned that they will be left with a more
difficult-to-serve population. Finding ways to involve these
recipients in work activities was one of the most challenging
and widespread implementation issues cited in the seven states
we visited.
Studies of these hard-to-serve recipients have found that,
in addition to being less likely to have prior work experience
and more likely to have lower literacy levels, they tend to
have multiple problems that make participation in work-related
activities more difficult. These problems include physical and
mental health issues such as depression, anxiety, personality
disorders, substance abuse, and domestic violence. To move
these recipients toward economic self-sufficiency, states have
sought to enhance their capacity to provide mental and physical
health services. For example, in our June 1998 report, we noted
that Oregon officials had estimated that about 50 percent of
the state's welfare caseload requires drug or alcohol treatment
services. Oregon introduced mental health and drug and alcohol
services by integrating them into some of their training
classes for welfare recipients and by placing counselors on-
site at welfare offices.
Welfare Caseloads Have Declined, but No Consensus Exists on the
Cause of the Decline
States' implementation of more work-focused programs,
undertaken under conditions of strong economic growth, has been
accompanied by a 45-percent decline in the number of families
receiving welfare--from a high of about 5 million families in
1994 to 2.7 million families as of December 1998. A large part
of the reduction occurred after enactment of federal reform in
August 1996: the national caseload declined 32 percent between
January 1997 and December 1998 alone. Thirty-five states had
caseload reductions of 25 percent or more during that same time
period. While economic growth and state welfare reforms have
been cited as key factors to explain nationwide caseload
declines, there is no consensus about the extent to which each
factor has contributed to these declines. In any case, it is
important to view caseload reductions as only one measure of
progress in meeting the goals of welfare reform. As stated, the
goals of PRWORA include ending the dependence of needy parents
on government benefits by promoting job preparation, work, and
marriage; encouraging two-parent families; and helping families
care for their children in their own or relatives' homes. As a
result, outcomes for families in the areas of economic status,
family composition, and family and child well-being need to be
assessed.
Several Studies Show Most Adults in Former Welfare Families Were
Employed at Some Time After Leaving Welfare; Little Is Known About
Family Well-Being
There are no federal requirements for states to report on
the status of former welfare recipients. As a result, the only
systematic data currently available on families who have left
welfare come from research efforts initiated by states. We
identified a total of 18 state-conducted or -sponsored studies
in 17 states--2 studies in Wisconsin and 1 in each of the other
16 states--that reported on the status of families who left
welfare in 1995 or later. (See app. I for a list of the
studies.) These state studies differed in important ways, such
as when they were conducted, the categories of families
tracked, the length of time families were tracked, and the
extent to which the families for whom data were available were
representative of all families in the population from which the
sample was drawn.
Taking these factors into account, we determined that only
8 of the 18 tracking studies, covering seven states, had
sufficient data on a sample of families to conclude that the
sample represented the population from which it was taken.\12\
These states are Indiana, Maryland, Oklahoma, South Carolina,
Tennessee, Washington, and Wisconsin. The eight studies from
these states had data on at least 70 percent of the sample of
families from the population of interest in the state or
included a nonresponse analysis that showed no important
differences between the respondents and the nonrespondents. We
estimated that these seven states accounted for about 8 percent
of the families who left welfare nationwide between October
1993 and June 1997. (See app. II for more information on the
seven states' studies.)
---------------------------------------------------------------------------
\12\ While the Iowa study had an 85-percent response rate, results
could be generalized only to families assigned to an alternative
assistance program for AFDC recipients who did not comply with program
rules and for some who volunteered to be in the program, and not to
families leaving welfare for other reasons. None of the 18 studies were
able to locate all families included in the samples to be tracked. The
nonresponse rates ranged from 15 percent to 88 percent for the studies
using surveys; for the two studies using administrative data only,
information about 8 percent and 18 percent of the families being
tracked could not be found in the data being used.
---------------------------------------------------------------------------
Because the seven states' studies differ in key ways,
including time periods covered and categories of families
studied, the results are not completely comparable. However,
the studies provide information on the status of families who
had left welfare in these states at the time of the studies
and, because certain results are consistent across the studies,
suggest a pattern of what is happening to such families.
Adults Had Employment Rates of 61 Percent to 87 Percent, but
Little Is Known About Household Income
Seven of the state studies reported that most of the adults
in families remaining off the welfare rolls were employed at
some time after leaving welfare. As shown in table 1,
employment rates ranged from 61 percent to 87 percent for
adults in these families. However, these employment rates were
measured in different ways. Studies measuring employment at the
time of follow-up reported employment rates from 61 percent to
71 percent. Studies measuring whether an adult in a family had
ever been employed since leaving welfare reported employment
rates from 63 percent to 87 percent. These employment rates
generally exclude families who returned to welfare, which can
be a substantial portion of the families who leave welfare.\13\
The percentages of families who initially left welfare and then
returned to the rolls were significant, ranging from 19 percent
after 3 months in Maryland to 30 percent after 15 months in
Wisconsin. The issue of families' needing to return to welfare
will become more important as increasing numbers of recipients
reach their time limit on aid, since returning to the rolls
will no longer be an option for them.
---------------------------------------------------------------------------
\13\ Removing families who return to welfare from the employment
rate calculations results in higher employment rates, since many former
recipients who return to the welfare rolls are not employed
Table 1.--Employment and Earnings Data From Studies in Seven States
----------------------------------------------------------------------------------------------------------------
Employed at Ever employed Estimated Estimated
State and period during which time of follow- since leaving Average hourly average average
families studied left welfare up welfare wage rate \2\ earnings per earnings per
\1\ (percentage) (percentage) quarter \3\ year
----------------------------------------------------------------------------------------------------------------
Indiana (1995-96) \4\........... 64.3 84.3 $6.34 $2,637 $10,548
Maryland (1996-97).............. (\5\) 63.0 \6\ (\5\) 2,384 \6\ 9,536
Oklahoma (1996-97).............. 64.5 (\5\) 6.51 2,877 11,508
South Carolina (1997)........... 61.8 85.6 6.45 3,019 12,076
Tennessee (1997) \7\............ 61.0 \5\ 5.67 2,727 10,908
Washington (1998)............... 71.0 87.0 8.09 3,786 15,144
Wisconsin (1995-96) \8\......... (\5\) 82.1 \5\ 2,378 \9\ 9,512
Wisconsin (1998) \10\........... 62.0 83.0 7.42 3,473 \9\ 13,892
----------------------------------------------------------------------------------------------------------------
Note: Except where noted, these data include only families who did not return to welfare.
\1\ The year noted indicates the period during which the families studied left welfare. For more detailed
information on the different time periods covered and frequency and length of follow-up of these studies, see
app. II.
\2\ These figures represent the mean wage. While the mean wage tends to be higher than the median wage, we did
not have the median wage for all studies.
\3\ For all studies except Maryland's and the first Wisconsin study, we had to estimate quarterly earnings on
the basis of reported average hourly wages and average number of hours worked per week. Because it is unlikely
that all members of the sample worked all 13 weeks in a quarter, most of these estimates are likely to be
somewhat higher than the actual average earnings per quarter.
\4\ Wage and earnings data for Indiana include those of recipients with earned income who were also on welfare.
Because Indiana did report that average wage rates were significantly higher for former welfare recipients
than for those combining work and welfare, the average wage rate for the combined groups may underestimate the
wage rate for former recipients who are no longer on welfare.
\5\ Data were not available.
\6\ This figure also includes individuals who returned to welfare.
\7\ The Tennessee study reported separately for families who left welfare for noncompliance and for those who
were employed, whether on or off welfare. Employment rates presented here are for both groups, whereas wage
data and earnings estimates are for the employed group only.
\8\ These data are based on a study using administrative data for families leaving welfare from July 1995 to
July 1996.
\9\ Caution must be used in comparing these earnings figures because the earlier study used administrative data
and the later one used survey responses. The administrative data may underestimate earnings because not all
earnings were included. The survey data may be more inclusive of earnings but, because these date were self-
reported, they could understate or overstate earnings.
\10\ These data are based on interviews with families leaving welfare from Jan. 1998 to Mar. 1998.
Turning to the incomes of those who left welfare, average
quarterly earnings ranged from $2,378 to $3,786 in the studies
that either reported quarterly earnings or for which we
estimated quarterly earnings, as shown in table 1.
Extrapolating these quarterly earnings to a year results in
estimated average annual earnings for former welfare recipients
in the seven states that range from $9,512 to $15,144, as also
shown in table 1. These amounts of annual earned income are
greater than the maximum annual amount of cash assistance and
food stamps that a three-person family with no other income
could have received in these states.\14\ However, if these
earnings were the only source of income for families after they
left welfare, many of them would remain below the federal
poverty level.\15\
---------------------------------------------------------------------------
\14\ As of Jan. 1997, in these seven states, the maximum annual
amount of cash assistance and food stamps combined for a single-parent,
three-person family with no income ranged from $6,000 in Tennessee to
$9,744 in Washington.
\15\ For 1998, the federal poverty level for a family of three was
$13,650.
---------------------------------------------------------------------------
While the tracking studies provide information on
individuals' earned incomes, much remains unknown about
families' total household incomes. For example, the studies
generally do not provide complete information on other forms of
household income, such as earnings by other household members,
child support payments, and financial assistance from relatives
and friends. Three of the eight state studies provided some
information on total household income. In the Oklahoma study,
57 percent of the former welfare families reported household
incomes at or below the federal poverty level. In the Indiana
study, 57 percent of the families off welfare at follow-up
reported monthly household income below $1,000. In contrast,
the Washington study reported average total family income,
including child support payments, equal to 130 percent of the
federal poverty level for a family of three. In addition, the
1995-96 Wisconsin study, which focused on earnings rather than
income, found that the proportion of families who had left and
remained off welfare for at least 1 year who had earnings above
the federal poverty level varied by family size. While 35
percent of the families with one child and 24 percent of the
families with two children had earnings above the poverty
level, only 11 percent of the families with three or more
children did.
In addition to information on total household income,
information on the receipt of government supports is key to
understanding the condition of former welfare recipients and
the extent to which they continue to rely on government aid and
have not become economically self-sufficient. Five of the seven
states' studies had some information on the receipt of
benefits. For example, between 44 and 83 percent of the
families who left welfare received Medicaid benefits, and
between 31 and 60 percent received food stamps. As we discussed
earlier, some policymakers and administrators are concerned
that families seeking assistance and being diverted from
welfare may be inappropriately diverted from receiving Medicaid
and food stamps and that those who leave welfare may not
receive Medicaid and food stamps even though they continue to
be eligible for those programs. For example, families that
leave TANF for employment generally may continue to receive
Medicaid for 12 months. In addition, Medicaid coverage is also
available for many low-income children even if their parents
are not eligible.
In addition to interest in welfare recipients who have left
welfare and are employed, there is great interest in how those
families who have left welfare and are not employed are faring.
The South Carolina and Wisconsin surveys asked nonworking
former recipients what stopped them from working for pay. In
both states, the most frequently mentioned reason was their own
physical or mental illness, followed by the inability to find a
job, lack of transportation, and lack of child care. The
Wisconsin study attempted to determine how these families were
supporting themselves. Of the 142 former recipients not
currently working, 18 percent were living with employed spouses
or partners. Sixty-five percent of the families of the
remaining nonworking former recipients were receiving Social
Security, state unemployment insurance, child support, or
foster care payments; 23 percent were not receiving cash
assistance but were receiving noncash assistance, such as free
housing, rent subsidies, Medicaid, or food stamps.
Studies in Seven States Provided Limited Information on the
Well-Being of Children and Families
The seven states' studies generally provided no information
on changes in family composition, such as changes in marital
status or formation of two-parent families, and provided little
information on how former welfare children and families were
doing relative to housing, health, education, and
nutrition.\16\ However, preliminary evidence from a few of
these studies shows no increased incidence in homelessness or
entry of children into foster care at the time of follow-up.
---------------------------------------------------------------------------
\16\ These and other factors are considered indicators of well-
being.
---------------------------------------------------------------------------
Three studies--from Maryland, Oklahoma, and Washington--
reported on the number of children in former recipient families
that had ever been involved with child protective services and
found few cases in which children had been involved with child
protective services since leaving welfare. For example, the
Maryland study reviewed state data from its foster care program
to determine the number of children placed in foster care after
their families left welfare. This study reported that less than
one-half of 1 percent of the children studied entered foster
care after their families left cash assistance. In addition,
South Carolina, in separate analyses, compared the number of
incidents of maltreatment reported to the Child Protective
Services' Central Registry for a sample of families who had
left welfare with the number of incidents for families still on
welfare; it also compared the number of incidents of
maltreatment in a sample of former welfare families before and
after leaving welfare. The differences were not statistically
significant for either comparison.
Two studies, South Carolina's as well as Wisconsin's recent
survey of families leaving welfare during the first quarter of
1998, asked former recipients to compare several aspects of
their general well-being after leaving welfare with their
situation when they were on welfare. Because Wisconsin used a
modified version of the interview schedule developed in South
Carolina, the data are comparable, even though the programs
that the recipients participated in are not. Table 2 shows the
results from the two states' surveys. Former welfare recipients
in both states more often experienced deprivations after
leaving welfare than while on welfare. At the same time, 76
percent and 68 percent of respondents in South Carolina and
Wisconsin, respectively, disagreed or strongly disagreed with
the statement that ``life was better when you were getting
welfare.'' Regarding housing status, an important aspect of
well-being, the limited information from the studies did not
suggest increased incidence of homelessness at the time of
follow-up.
Table 2.--Recipients' Comparisons of Deprivations While on and After Being on Welfare
----------------------------------------------------------------------------------------------------------------
South Carolina \1\ Wisconsin \2\
(Percentage respondiing (percentage responding
Question ``yes'') ``yes'')
---------------------------------------------------
On Off welfare On welfare Off welfare
----------------------------------------------------------------------------------------------------------------
Did you ever get behind in rent or house payments?.......... 13 15 30 37 \3\
Did you ever get behind on a utility bill?.................. 16 18 49 47
Was there ever a time when you could not buy food?.......... 6 9 22 32 \3\
Was there ever a time when you could not afford child care 11 9 22 33 \3\
when needed in order to work?..............................
Did somebody in your home ever get sick or hurt when you 1 7 \3\ 8 11
could not get medical care?................................
Did you have to go to a homeless shelter?................... 2 1 5 3
----------------------------------------------------------------------------------------------------------------
\1\ Based on a sample of 403 former welfare recipients.
\2\ Based on a sample of 375 former welfare recipients.
\3\ These differences are statistically significant at the .05 level.
Sources: South Carolina's Survey of Former Family Independence Program Clients: Cases Closed During July Through
September 1997 and Wisconsin's Survey of Those Leaving AFDC or W-2 January to March 1998, preliminary report.
Efforts Under Way to Further Assess the Success of Welfare Reform
While we were able to learn some things about the status of
former welfare recipients in several states, we could not draw
conclusions about the status of most families that have left
welfare nationwide. In our attempt to describe the condition of
former welfare families, we were constrained by the data
available from these early state tracking studies. However,
efforts are under way at both the federal and state levels to
improve the usefulness of the data being collected to assess
the status of former welfare families. A total of 39 states and
the District of Columbia already are tracking or plan to track
families leaving welfare. In addition, HHS has recently funded
14 projects to track and monitor families who have left welfare
as part of its overall strategy to evaluate welfare reform and
to respond to the Congress' earmarking of $5 million for HHS to
study the outcomes of welfare reform. The HHS projects will
cover families who leave welfare in 10 states, five counties in
2 other states, and the District of Columbia and, in some
cases, will study eligible families diverted from welfare. The
limited nature of the information currently available
emphasizes the importance of additional state efforts such as
those funded by HHS. HHS is funding other efforts also,
including 23 studies in 20 states of welfare reforms that began
under waivers of the AFDC program. Most of these efforts are
looking at issues such as duration and amount of welfare
receipt, rates of self-sufficiency, and participation in
employment. Five of these states' studies also will include
information on outcomes for children.\17\
---------------------------------------------------------------------------
\17\ For more information, see Web sites http://www.acf.dhhs.gov/
programs/opre/rd&e.htm and http://aspe.os.dhhs.gov/hsp/
hspres.htm#outcomes.
---------------------------------------------------------------------------
Other efforts are also under way to provide information to
better understand the effects of welfare reform on families.
For example, to assess the post-reform status of all low-income
families, not just former welfare families, the U.S. Census
Bureau at the direction of the Congress is conducting a
longitudinal survey of a nationally representative sample of
families called the Survey of Program Dynamics. The survey
particularly asks about eligibility for and participation in
welfare programs, employment, earnings, out-of-wedlock births,
and adult and child well-being. In addition, the Urban
Institute is conducting a multiyear project monitoring program
changes and fiscal developments along with changes in the well-
being of children and families. As part of this project, the
Urban Institute has surveyed nearly 50,000 people to obtain
comprehensive information on the well-being of adults and
children as welfare reform is being implemented in the various
states.\18\ A second survey is planned for 1999. Full results
from the Census Bureau and Urban Institute surveys may not be
available until the year 2000. In addition, a multitude of
other studies--some by us, HHS, and other federal agencies;
states and localities; and other researchers--that will be
providing information in the future on various aspects of
welfare reform are under way or planned.\19\ In the near and
long term, these efforts promise to provide more data to help
us understand the effects of welfare reform on families.
---------------------------------------------------------------------------
\18\ The Urban Institute, a research organization located in the
District of Columbia, is analyzing the devolution of responsibility for
social programs from the federal government to the states, focusing
primarily on health care, income security, job training, and social
services. Initial results from the 1997 National Survey of America's
Families are available at the Urban Institute' Web site: www.urban.org.
The survey is representative of the nonelderly population in the nation
as a whole and in 13 states: Alabama, California, Colorado, Florida,
Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York,
Texas, Washington, and Wisconsin.
\19\ For a listing of completed and ongoing studies of welfare
reform, see the Web site www.researchforum.org, created and maintained
by the Research Forum on Children, Families and the New Federalism,
National Center for Children in Poverty, 154 Haven Avenue, New York, NY
10032-1180.
---------------------------------------------------------------------------
In the meantime, our work shows that states have clearly
made progress in restructuring their programs to emphasize the
importance of employment to both clients and welfare workers.
In addition, the information currently available from several
states consistently shows that most families who have left
welfare have at least some attachment to the workforce. In the
longer term, the information that becomes available from
ongoing and future studies will permit a more comprehensive
assessment of welfare reform. Such an assessment will need to
take into account some key questions.
How do families fare after leaving welfare for work?
Our work and other studies consistently show that many of
the individuals in families who have left welfare are employed
in low-wage jobs. While they are now employed, these families'
prospects for achieving some measure of economic stability
remain an important issue in light of prior research showing
that AFDC mothers, who often found jobs with low wages,
generally experienced little rise in wages over time after they
began working.\20\ To the extent that these families' earnings
do not increase over time and their employment-based fringe
benefits are limited, the families' ability to maintain
employment and support themselves may depend to a great extent
on the availability of income supports, such as Medicaid, food
stamps, subsidized child care, and the earned income credit.
The recently expanded earned income credit, for example, can
increase the incomes of qualified low-income families by as
much as $2,271 for families with one child and $3,756 for
families with two or more children.\21\ In some instances,
states and localities have undertaken efforts to help these
low-wage workers upgrade their skills to improve their job
prospects.\22\ Federal and state policies and programs for
assisting low-income working families are likely to play a
critical role in the future success of welfare reform.
---------------------------------------------------------------------------
\20\ See Gary Burtless, ``Employment Prospects of Welfare
Recipients,'' the Work Alternative: Welfare Reform and the Realities of
the Job Market, eds. Demetra Smith Nightingale and Robert H, Haveman
(Washington, D.C.: The Urban Institute Press, 1995).
\21\ The earned income credit is a refundable tax credit for
qualified working people who have earned incomes below certain
specified levels.
\22\ See Rebecca Brown and others, Working Out of Poverty:
Employment Retention and Career Advancement for Welfare Recipients
(Washington, D.C.: National Governors' Association and HHS, 1998); Mark
Elliott, Don Spangler, and Kathy Yorkievitz, What Next After Work
First? (Philadelphia: Public/Private Ventures, spring 1998); and
Brandon Roberts and Jeffrey D. Padden, Welfare to Wages: Strategies to
Assist the Private Sector to Employ Welfare Recipients (Chevy Chase,
Md.: Brandon Roberts and Associates, Aug. 1998). The Work Alternative:
Welfare Reform and the Realities of the Job Market, eds. Demetra Smith
Nightingale and Robert H. Haveman (Washington, D.C.: The Urban
Institute Press, 1995).
What is happening to families who sought but were diverted from
---------------------------------------------------------------------------
cash or other assistance?
In recent years, welfare caseloads have dropped
dramatically. While we have focused in this testimony on
families who have left welfare, states' diverting eligible
families from receiving cash assistance may have contributed to
the large decline. Any comprehensive assessment of welfare
reform and outcomes for families will need to explore state and
local practices of diverting families from aid and the impact
of these practices on families.
How effective are states in working with welfare recipients who
are difficult to employ?
Another issue that has emerged as states have experienced
large caseload reductions is that many of the remaining
recipients have multiple barriers to participation in work
activities, such as mental health and substance abuse problems
and domestic violence. As a result, even if economic conditions
remain favorable, states' initial successes with moving
applicants and recipients into employment will probably slow
over time. In response, states will need to adjust their
approaches to better enable families with a range of problems
to take steps toward becoming more self-supporting. More
research will be needed to identify promising approaches for
working with these welfare families.
How would an economic downturn affect states' welfare reform
programs?
In many states, favorable economic conditions appear to
have facilitated implementation of more work-focused
approaches. It is not yet known, however, how states' welfare
reform programs will perform under weaker economic conditions.
For example, some adults who had previously left welfare for
work could become unemployed. While they could be eligible for
unemployment insurance, some could once again apply for cash
assistance after their unemployment insurance ran out.
Furthermore, if caseloads did increase significantly in a
worsening economy, it is unclear what budgetary responses
states would take in an environment of fixed federal TANF
funding.
While welfare agencies' increased emphasis on employment,
the large number of welfare recipients transitioning into jobs,
and caseload reductions indicate progress in meeting the goals
of welfare reform, additional information from ongoing and
future studies will help us better understand the evolving
story of welfare reform and its impact on families and
children.
Madam Chair, this concludes my formal remarks. I will be
happy to answer any questions you or other Members of the
Subcommittee may have.
Reports from States' Studies of Families Who Left Welfare
Appendix I
IDAHO
Project Self-Reliance TAFI Participant Closure Study II, Idaho
Department of Health and Welfare, spring 1998.
INDIANA
The Indiana Welfare Reform Evaluation: Assessing Program
Implementation and Early Impacts on Cash Assistance, Abt Associates,
Inc., Aug. 1997.
The Indiana Welfare Reform Evaluation: Who Is On and Who Is Off?
Comparing Characteristics and Outcomes for Current and Former TANF
Recipients, Abt Associates, Inc., Sept. 1997.
The Indiana Welfare Reform Evaluation: Program Implementation and
Economic Impacts After Two Years, Abt Associates, Inc., and The Urban
Institute, Nov. 1998.
IOWA
Iowa's Limited Benefit Plan: Summary Report, Mathematica Policy
Research, Inc., and the Institute for Social and Economic Development,
May 1997.
A Study of Well-Being Visits to Families on Iowa's Limited Benefit
Plan, Mathematica Policy Research, Inc., June 1998.
KENTUCKY
From Welfare to Work: Welfare Reform in Kentucky, Welfare Reform
Evaluation No. 1, Center for Policy Research and Evaluation, Urban
Studies Institute, University of Louisville, Jan. 1998.
LOUISIANA
Exiting Welfare: The Experiences of Families in Metro New Orleans,
School of Social Work, Southern University at New Orleans, June 1998.
MARYLAND
Life After Welfare: An Interim Report, University of Maryland
School of Social Work, Sept. 1997.
Life After Welfare: Second Interim Report, University of Maryland
School of Social Work, Mar. 1998.
MICHIGAN
A Study of AFDC Case Closures Due to JOBS Sanctions April 1996,
Michigan Family Independence Agency, May 1997.
MONTANA
Montana's Welfare Reform Project: Families Achieving Independence
in Montana FAIM, February 1998 Update, Montana Department of Public
Health & Human Services, Feb. 12, 1998.
NEW JERSEY
WFNJ (TANF) Sanction Survey, New Jersey Department of Human
Services, July 2, 1998.
NEW MEXICO
Survey of the New Mexico Closed-Case AFDC Recipients July 1996 to
June 1997, Final Report, University of New Mexico, Sept. 1997.
OKLAHOMA
Family Health & Well-Being in Oklahoma: An Exploratory Analysis of
TANF Cases Closed and Denied October 1996 to November 1997, Oklahoma
Department of Human Services, Sept. 1998.
PENNSYLVANIA
TANF Closed-Case Telephone Survey, Pennsylvania Department of
Public Welfare, Mar. 1998.
SOUTH CAROLINA
Survey of Former Family Independence Program Clients: Cases Closed
During January Through March 1997, South Carolina Department of Social
Services, Division of Program Quality Assurance, Mar. 3, 1998.
Survey of Former Family Independence Program Clients: Cases Closed
During July Through September 1997, South Carolina Department of Social
Services, Division of Program Quality Assurance, Oct. 9, 1998.
TENNESSEE
Summary of Surveys of Welfare Recipients Employed or Sanctioned for
Non-Compliance, University of Memphis, Mar. 1998.
WASHINGTON
Washington's TANF Single Parent Families Shortly After Welfare:
Survey of Families Which Exited TANF Between December 7 and March 1998,
Washington DSHS Economic Services Administration, July 1998.
Washington's TANF Single Parent Families After Welfare, Washington
DSHS Economic Services Administration, Jan. 1999.
WISCONSIN
Post-Exit Earnings and Benefit Receipt Among Those Who Left AFDC in
Wisconsin, Institute for Research on Poverty, University of Wisconsin-
Madison, Aug. 17, 1998.
Post-Exit Earnings and Benefit Receipt Among Those Who Left AFDC in
Wisconsin, Institute for Research on Poverty, University of Wisconsin-
Madison, Oct. 30, 1998.
Survey of Those Leaving AFDC or W-2 January to March 1998,
Preliminary Report, State of Wisconsin, Department of Workforce
Development, Jan. 13, 1999.
WYOMING
A Survey of Former POWER Recipients (Personal Opportunities With
Employment Responsibilities), Western Management Services, LLC, for
Wyoming Department of Family Services, May 1998.
Appendix II.--Information on Seven States' Studies of Families Who Have Left Welfare
----------------------------------------------------------------------------------------------------------------
Follow-up
Categories of families and time -------------------------------------------------- Data collection
periods involved Frequency Timing method(s)
----------------------------------------------------------------------------------------------------------------
Indiana:
Families receiving AFDC May 1995 to Once................... 12 to 18 months after Telephone survey
May 1996 who subsequently left AFDC. enrollment.
Maryland:
Families who left TANF Oct. 1996 to Quarterly.............. Up to 12 months after Review of
Sept. 1997. exit. administrative data
Oklahoma:
Families who left or were denied TANF Once................... 2 to 18 months after Telephone survey
Oct. 1996 to Nov. 1997. exit or denial.
South Carolina: \1\
Families with a household member Once................... 9 to 14 months after Telephone survey and
required to seek employment who left exit. some in-person
welfare July to Sept. 1997 and had interviews
not returned at time of follow-up.
Tennessee:
Families who lost TANF benefits Jan. Once................... Approximately 3 months Telephone survey
to Oct. 1997 because they did not after exit.
comply with program rules and TANF
families whose head was employed
full-or part-time Feb. to Oct. 1997.
Washington: \1\
Single-parent families who left TANF Once................... 2 to 4 months after Telephone survey and
Apr. to July 1998 exit. review of
administrative data
Wisconsin:...........................
Single, female-headed families who Five times............. Quarterly for 5 Review of
left AFDC July 1995 to July 1996. quarters after family administrative data
left welfare.
Families who left TANF Jan. to Mar. Once................... 5 to 10 months after Telephone survey and in-
1998 and did not return prior to exit. person interviews
survey.
----------------------------------------------------------------------------------------------------------------
\1\ Both South Carolina and Washington reported on groups of families who had left welfare earlier. We included
the most recent sample in our summary.
Source: GAO analysis of state studies.
Chairman Johnson of Connecticut. Thank you very much.
Ms. Weinstein.
STATEMENT OF DEBORAH WEINSTEIN, DIRECTOR, FAMILY INCOME
DIVISION, CHILDREN'S DEFENSE FUND
Ms. Weinstein. Madam Chair, thanks very much for the
opportunity to testify about the impact of the recent welfare
changes on children and families.
The Children's Defense Fund and the National Coalition for
the Homeless sought to answer the question we are asking today:
welfare to what, in a report we jointly issued last November.
We found that work is up, but that above poverty work is
rare. Looking just at people with earnings in March 1998 who
had received welfare in the previous year, seven out of ten had
below poverty wages.
More than half had earnings below three-quarters of the
poverty line, that is, below $185 a week for a family of three.
Their earnings are so low because their work is unstable.
Wisconsin, with some of the most favorable outcomes
reported, found that almost one-third of those surveyed had
spent from a few days to 3 months at their best job, and the
typical was 34 weeks.
Some families leave welfare because they are unable to
comply with program requirements and earn little, if at all.
Families with severe barriers to employment are likely to fail
to meet work requirements. In Minnesota case managers found
that families being penalized were twice as likely as other
welfare families to have serious mental health problems, five
times as likely to have family violence problems. They will
leave welfare because they are unable to comply with the rules,
not because they found success in the job market.
Some families leaving welfare for below-poverty wages or
for no wages experience hardship trying to secure necessities.
In Wisconsin, about one-third of families leaving welfare
reported not being able to buy food at some point in their
first months off welfare, compared to one in five while they
still received benefits. Reports from Indiana, Kansas, South
Carolina, New York show children and adults doing without
health care.
Projects in six States reported that one-quarter of former
welfare recipients were doubling up in housing to save money.
Poverty matters, and please remember that while the overall
poverty level is down, the number of children living below half
the poverty line, less than $6,400 a year for a family of
three, rose from 1995 to 1997. As for combined household
earnings, those are also low. Only one in five recent welfare
recipients, counting all household earnings, were above poverty
in March 1998. And that is the lowest level in 5 years.
The hardships exacted by continued child poverty have
significant costs. Poor children are more likely to have health
problems, to fall behind in school, to experience mental health
problems and antisocial behavior. That is why lifting families
out of poverty ought to be our national goal for real reform.
So far, for most families, we are not succeeding.
In order to stabilize families' work and raise their
children out of poverty, families need work supports--help like
Medicaid or food stamps, child care, transportation help and
wage subsidies. But while this Subcommittee and Congress
intended that such supports should continue for low-wage
workers who no longer receive TANF, in many States eligible
families are not receiving these vital benefits. Families USA
earlier this month issued a report documenting that by 1997,
675,000 people lost Medicaid and became uninsured. Three out of
five were children.
Families often do not know they are eligible for help. In
South Carolina, over half of former recipients did not know
about child care aid. Food stamp use is declining far more than
poverty is.
Far too often, our new world of welfare includes stories
like one mother, Jo, who got a job and then was wrongfully
denied Medicaid and food stamps. It took 4 months of phone
calls for Jo to get a fair hearing and for Medicaid to be
restored for herself and her children. During the period
without health coverage, Jo came down with pneumonia and other
illnesses. She went without proper treatment, had to borrow
money to fill prescriptions. That is not a recipe for stable
employment.
But Michelle Crawford was luckier. She was struggling with
domestic violence. Her welfare-to-work program let her combine
community service with mental health counseling. Then, she was
placed in a training program to operate a plastics molding
machine and got a job at $7.40 an hour. She got the services
she needed to overcome barriers to employment that, if ignored,
might have made it impossible for her to work. Programs like
Project Match in Chicago, among others, allow that kind of
broad range of activities to count as work as part of a
multistep plan toward work readiness.
What next steps are needed? The Subcommittee should
continue, as it plans wonderfully, to hold oversight hearings
about whether families are getting the package of work supports
they need, to identify good practices as well as determine
whether State practices or omissions are resulting in eligible
families doing without benefits. Hearing more about good
outreach efforts or transportation plans or comprehensive
service delivery systems would help States to do what Madam
Chair Johnson memorably exhorted them to do: to spend the
money.
Based on what is learned from hearings, the Subcommittee
should consider future legislative changes to broaden allowable
work activities to help families with severe employment
barriers, reward States to do a good job with outreach,
penalize States that do not; permit the State-Federal time
limit clock to stop for families who combine partial TANF aid
with low-wage work, approve the extension of the welfare-to-
work programs and increase funding for a seamless web of child
care services.
The real goal of welfare reform is not accomplished until
supports are in place to make work possible and to make work
pay for parents trying to raise their children out of poverty.
There is still much more work to do.
Thank you.
[The prepared statement follows:]
Statement of Deborah Weinstein, Director, Family Income Division,
Children's Defense Fund
Thank you very much for the opportunity to testify about
what the Children's Defense Fund (CDF) has learned so far about
the impact of new welfare policies on families with children.
CDF is a privately supported charity that advocates for the
interests of low income children, and that monitors closely the
effect of welfare changes on child well-being. CDF receives no
federal grants or contracts. In my testimony today, I am not
representing any entity that receives federal grants or
contracts.
The growing body of research about the lives of families in
the aftermath of the 1996 welfare law illuminates three broad
categories of families leaving welfare. One, a distinct
minority, includes parents who are able to secure above-poverty
wages sustained over time. The second category includes
families who have worked after leaving welfare, but at
unstable, below-poverty jobs. A third category includes
families who have left welfare because parents were unable to
comply with various program requirements, and who earn little
if at all. Families certainly move from one to another of these
categories, but considering them separately is important if we
are to encourage policies that increase the likelihood and
stability of work, and to prevent children and families from
being abandoned when severe barriers block their ability to
succeed.
Some, like Jo, get jobs (in her case, a temporary one) and
are wrongfully denied the Medicaid and food stamp help they
need. After four months of fruitless phone calls, Jo was
granted a fair hearing and finally received Medicaid for her
children and herself. Jo and all her children suffer from
asthma. During their period without health coverage, Jo came
down with pneumonia, and an illness that resulted in a lowered
immune system. She went without proper medical treatment, and
had to borrow money to fill urgently needed prescriptions.\1\
Jo's experience is not a recipe for stable employment.
For others, the inability to find or keep work has
devastating consequences. A social service provider in Roxbury,
Massachusetts reported a sharp increase in homelessness among
the mothers with whom she works. She attributed this to
problems in keeping jobs. ``When it doesn't work out for a
variety of reasons, they lose housing, and can't get back on
the system. Hearing from the women, once you're off the system,
everything falls apart.'' \2\ Families unable to keep jobs need
help to keep everything from falling apart: they need services
to overcome barriers to employment, and supports to keep their
families from destitution.
The Children's Defense Fund and the National Coalition for
the Homeless collaborated on an analysis of more than 30
studies of the new law's effects on families with children. We
looked at national data collected from the Census Bureau's
Current Population Survey and at many state and local surveys.
Our report, Welfare to What: Early Findings on Family Hardship
and Well-Being, compiled data to document these central themes:
Work is up. Of those who received welfare in 1997, almost
one-third had a job in March of 1998, according to annual
surveys conducted by the Census Bureau. In contrast, only 20.7
percent of those who had received any welfare in 1989 had a job
in March 1990.\3\
But above-poverty work is rare. By March 1998, only 8
percent of individuals who had received welfare benefits in the
previous year had weekly wages above the three-person poverty
line, barely up from 6 percent in March 1990. That figure
includes all individuals who had received welfare assistance in
the previous year, whether or not they had any earnings. But
even looking solely at the subset of that group with earnings,
only 29 percent had above-poverty wages. Seventy-one percent
did not. While employment increased from 1990 to 1998, two-
thirds of the growth in employment among individuals who had
received welfare in the previous year involved jobs paying far
below poverty levels.
The National Governors' Association (NGA) compiled findings
from state surveys of the effects of changing welfare policies.
They found that ``most of the jobs (held by former recipients)
pay'' between $5.50 and $7 an hour ... not enough to raise a
family out of poverty.''\4\
Not everyone who leaves welfare works. State surveys have
tended to show that about half to two-thirds of families that
leave welfare find employment. (These proportions are higher
than the Census data because the state surveys include only
families who have left welfare. The Census data looks at a
sample of people who had received welfare in the previous year,
and who may or may not still receive benefits during the March
period of the annual survey.) That means about one-third to
one-half do not.
Employment barriers drive some families off the caseload.
Many of the families without work leave welfare because they
are judged not to have complied with program rules. Some fail
to show up for required appointments or fail to bring proper
documentation, and are dropped from the caseload. Others are
penalized for not meeting work requirements. In Minnesota, case
managers found that penalized families were twice as likely as
other welfare families to have serious mental health problems
and five times as likely to have family violence problems.\5\
Similarly, a 1997 Michigan study found much higher rates of
physical or mental health problems, domestic violence, and
lower rates of school completion among mothers on welfare
compared to women in national samples. The more barriers to
employment like these faced by mothers, the less likely they
were to work 20 hours or more per week.\6\ Since work
requirements imposed by the 1996 welfare law are at least 20
hours per week, those with barriers to employment will be far
more likely to face reduced or terminated cash benefits.
Poverty matters
Some treat the news of the dramatic reduction in welfare
caseloads as proof that the new welfare policies are a success.
We ask ``welfare to what?'' because we believe that success
cannot be judged until we know what is happening to children
and families when they leave welfare. The overwhelming evidence
so far is that families who leave welfare do not escape poverty
even when they work. For some families leaving welfare, poverty
and/or specific experiences of hardship have even increased.
Our national commitment to welfare reform ought to promise more
than that to families with children.
It is troubling that despite years of economic recovery,
child poverty has edged downwards only slightly, and that one
in five American children remains poor. It is even more
disturbing that the number of children living below half the
poverty line increased by almost 400,000 from 1995 to 1997 \7\
(half the poverty line for a family of three was less than
$6,400 a year in 1997). This increase in extreme poverty
occurred in female-headed working families, a group likely to
be heavily drawn from families moving from welfare to work.
Changes in welfare policies are not the only reason for the
increase in deep poverty among children in working single-
mother families, but it is fair to say that those changes have
played a part.
We emphasize persistent and deepening poverty among
children because the consequences of continued deep poverty are
grave: \8\
A baby born to a poor mother is more likely to die
before its first birthday than a baby born to an unwed mother,
a high school dropout, or a mother who smoked during pregnancy.
Poor children are more likely to have health
problems, to suffer from stunted growth or unstable living
arrangements, and to score lower on reading, math, and
vocabulary tests, compared to non-poor children.
Poor children are more likely to fall behind in
school and to complete fewer years of education.
New research in 1998 showed that the longer
children are poor in the pivotal first years of childhood, the
more signs they show of anxiety-depression and anti-social
behavior later in their childhood years.
In other words, the hardships exacted by continued child
poverty have significant costs. The goal of real reform of the
nation's welfare system ought to be to help as many families as
possible move out of poverty through work. So far, the findings
from around the nation show that for most families, we are not
succeeding. But that goal is attainable, if we learn from
families' real experiences trying to work and care for their
children, and offer them the supports they need.
Barriers to Employment
Michelle Crawford was struggling with domestic violence and
the break-up of her marriage. Her welfare-to-work program let
her combine community service and several months of mental
health counseling. Then it placed her in a training program to
operate a plastics-molding machine. Within eight months, she
had found a job at $7.40 an hour.\9\
If Michelle had simply been required to work, without any
help to deal with her problems, she might have been
overwhelmed. Her family's aid might have been terminated for
failure to comply with the work requirement. They would have
added to the caseload reduction statistics, but their departure
would not have represented a ``success.''
States like Minnesota and Michigan have led the way by
revealing that severe problems including disability,
illiteracy, and family violence are frequently at the root of
parents' inability to work or comply with program rules. Still,
Michelle was one of the few lucky ones: most states have not
moved effectively to identify the presence of such barriers and
to provide services to overcome them. The Children's Defense
Fund sent a written survey to all fifty states in 1997, to
learn what procedures and services were in place to assist
families with barriers to employment. We received 37 responses,
and we conducted follow-up telephone interviews with certain
states. States were still in early stages of planning their
welfare programs, so the information we collected, while
raising important questions for follow-up, is preliminary.
Many states have some policy accommodations for families
with employment barriers. Twenty-three out of the 37 states
surveyed reported waiving time limits for families facing
severe barriers. Twenty-two reported waiving work requirements,
while 21 reported some form of case management targeted to
families with severe barriers. But adequate training of
caseworkers to help them identify the presence of barriers was
rare, as was a coordinated approach across state agencies to
refer parents to appropriate services. Most states reported
that they had procedures to provide such follow-up, but a
majority either had no knowledge of whether there were
sufficient services available to meet the need, or reported
that the services were insufficient. Our survey plus other
research in this area suggests that only a relative handful of
families with special needs are receiving case management and
services to allow them to make progress. Others are at risk of
penalties for failure to satisfy state requirements without
having barriers to compliance identified or addressed.
As long as states do not identify and serve families to
enable them to overcome their barriers to employment, sanctions
and case closures for failure to comply with various state
policies will continue to hit them hard. HHS data on case
closures for these reasons are not fully informative, because
states do not code reasons for case closures uniformly. But the
wide variation reported by states is troubling. In Florida,
Mississippi, and South Carolina, for example, more than one-
fifth of closed cases in those states occurred through
sanctions; in Indiana, sanctions accounted for more than two-
fifths of closures. Michigan, New Jersey, and Wisconsin
terminated more than half of their closed cases because of
``state policy''--for example, failing to show up for
appointments or to provide required documentation.\10\
Work Experiences for Families: Low Wages, Unstable Work
Findings across state surveys are quite uniform in showing
low earnings and less than full-time, year-round employment. In
Maryland, employed former recipients earned an average of
$2,439 in their second quarter of work--equivalent to less than
$9,800 a year, or about three-quarters of the three-person
poverty line in 1997.\11\ A Cuyahoga County (Cleveland) Ohio
study found that only one in four former TANF recipients who
left the rolls in the last quarter of 1996 showed as much as
$3,000 in quarterly earnings a year later. Nearly half showed
no quarterly earnings at all.\12\
A more recent study tracking Wisconsin's W-2 participants
who left welfare between January and March 1998 contained some
of the most favorable work outcomes revealed so far. But these
findings turn out so favorably in part because families who
left welfare and then returned during the six-to nine-month
period of the survey are excluded from the analysis. In effect,
those who did not succeed are taken out of the calculations.
Eighty-three percent of those who did not return to welfare had
worked at some point since leaving W-2, and 62 percent had jobs
at the time of the survey. Those leaving the rolls were asked
to describe their best current or previous job. The average
wage reported was $7.42 and the typical (median) wage was $7.00
an hour, with an unusually high 40-hour typical work week. The
typical number of weeks at the ``best'' job was 34, with 31
percent of those employed at the time of the survey having
spent a few days to three months at their best job. The
analysis does not show what typical annual earnings were;
without that information, it is impossible to know how sporadic
or steady these employment experiences are.\13\
The recently released two-year evaluation of Milwaukee's
New Hope Project shows that low-income individuals want to
work, but that their work is not steady. These voluntary
participants, who received earnings supplements, child care,
and health coverage if they worked at least 30 hours per week,
worked on average 5.9 quarters out of a possible eight, with
earnings far below the federal poverty level. New Hope was
successful in increasing the amount of work and earnings levels
among its participants (compared to a control group), but its
findings illustrate the difficulty that low-wage workers have
in sustaining employment over time.\14\
The data from states is still very sketchy in tracking
families' job histories over time. Policymakers need to note
that survey findings showing that individuals have worked at
some point during a year may mask sporadic work histories.
Hourly wage rates are an important indicator, but tell a very
incomplete story without taking into account quarterly and
annual total earnings.
Low-income Families: Experiences of Hardship
Whether they find employment or not, troubling numbers of
families experience difficulty in paying for food, housing,
utilities, or health care. These findings occur both in local
surveys of families seeking aid at social service agencies and
in state studies tracking samples of families leaving welfare.
Food: In South Carolina, almost one in five (19 percent)
families were unable to purchase food at some point in their
first few months off welfare, compared to 8 percent while still
receiving welfare benefits.\15\ Strikingly, despite its strong
economy, the situation was worse in Wisconsin. There, about
one-third of all families leaving welfare (32 percent) reported
not being able to buy food at some point in their first months
off welfare, compared to one in five (22 percent) while they
still received benefits.\16\
Early findings from the Children's Defense Fund's Community
Monitoring Project (in seven sites in six states) showed that
38 percent of families who sought help from participating
social service agencies and who had lost welfare benefits in
the preceding six months reported going without food for one or
more days in the past month. Twenty-seven percent of families
currently receiving welfare were experiencing the same
inability to buy food.\17\
The recently released study by NETWORK (compiled from 59
Catholic social service agencies in ten states) documents
hardship among working and non-working poor families (many of
whom do not receive public assistance benefits). NETWORK found
that 41 percent of working parents surveyed at the social
service agencies reported that their children were eating less,
close to the 44 percent of non-working parents reporting such
hardship for their children. Twenty-two percent of employed
parents said their children were going hungry, compared to 25
percent of non-working parents.\18\
Housing: The Community Monitoring Project's seven-site
survey found that 25 percent of former welfare recipients
reported that they had doubled up in housing to save money
(compared to 15 percent of current recipients).
In South Carolina, 26 percent of former welfare recipients
had fallen behind in rent or mortgage, compared to 17 percent
of the same group while they were still receiving benefits.
There is no question that the nation's shortage of
affordable housing causes problems for families whether or not
they have ever been on welfare. Urban Institute's and Child
Trends' Snapshots of America's Families, drawn from extensive
interviews with a large national sample, found that among
parents with incomes below 200 percent of the federal poverty
guidelines, 28 percent reported being unable to pay for rent,
mortgage, or utilities at some point in the preceding twelve
months.\19\ If more than one-quarter of families with incomes
up to about $26,000 (twice the poverty level for a three-person
family) fall behind in housing expenses, it is not surprising
that families leaving welfare for below-poverty wages struggle
with their housing costs.
An early Wisconsin study showed increased homelessness
among families as the state implemented its new welfare
policies in advance of the federal law change. In La Crosse
County, researchers found that the number of children sleeping
in Salvation Army shelters shot up by 50 percent from 1994 to
1996, a period during which the number of homeless men rose by
only one percent.\20\
In Atlanta, a survey of homeless families with children
found that almost half (46 percent) had lost TANF benefits in
the previous 12 months. In contrast, only one-fifth (20
percent) of families in public housing had lost TANF in the
previous year.\21\
Health care: In Indiana, 35 percent of the children of
former recipients had no public or private health
insurance.\22\ Among those working about six months after
leaving welfare in New York City, 46 percent reported no health
insurance coverage.\23\
In Johnson County, Kansas, in a study of 202 Catholic
Community Services clients, 40 percent of former welfare
recipients told researchers they had found it harder to get
health care for their children during the preceding six months.
Only half as many (20 percent) of current recipients reported
similar difficulties.\24\ And nearly one in ten South Carolina
former recipients (9.7 percent) reported that someone in their
home had been sick or hurt and was unable to obtain medical
care, more than three times as many as the 2.8 percent
reporting similar hardship when they were still receiving
welfare.\25\
Failure to Receive Basic Work Supports
When the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 was being debated, proponents
assumed that families that no longer received cash benefits
would still receive Medicaid and subsidized child care at least
for a transitional period if their incomes remained low, and
that low-income families would continue to receive food stamps
indefinitely. But far too often, families leaving welfare do
not receive these basic supports. The inability to secure food
and health care described above is directly related to the loss
of food stamps and Medicaid by families, although many remain
eligible for these benefits.
Medicaid: As of 1997, 1.25 million people with incomes
below 200 percent of the federal poverty line lost Medicaid due
to welfare policy changes, according to a reported issued this
month by Families USA. Of those, 675,000 did not secure other
health insurance. Sixty-two percent of the uninsured were
children.\26\
The Families USA findings are consistent with reports from
states that families do not realize they are still eligible for
Medicaid, or are wrongly dropped from Medicaid by states when
TANF benefits are terminated. In South Carolina, 60 percent of
former recipients did not know that a parent could get
transitional Medicaid. North Carolina announced it would
investigate whether welfare workers erroneously stopped
Medicaid help for 24,000 children who were not receiving
Medicaid coverage two months after their families lost welfare
help.\27\
Food Stamps: From 1996 through November 1998, food stamp
caseloads declined by 21 percent.\28\ Some of this drop can be
attributed to the improving economy, but much occurred either
because eligibility was restricted in the 1996 welfare law or
because eligible families did not know they could receive this
help.
Legal immigrants and able-bodied childless individuals lost
food stamps under the 1996 law. A March 1998 study of Latino
and Asian legal immigrants, conducted by medical researchers in
California, Texas, and Illinois, found high levels of food
insecurity and hunger. Fully 79 percent of the households
surveyed reported that they had cut back on nutritional quality
and quantity of food (seven times the rate of food insecurity
in the general population). \29\ Congress has restored food
stamp benefits for some legal immigrants, and should complete
the restoration this session.
Eligibility changes and the improved economy do not explain
the entire drop in the use of food stamps. Despite the fact
that federal law requires that those who seek food stamps
receive an application immediately, when families are diverted
from receiving TANF, they sometimes do not realize they can get
food stamps. Sometimes, as in the case of New York City, they
are actively discouraged. New York has been cited by the USDA
and in federal court for violations of food stamp and Medicaid
law.\30\ Similarly, when families leave TANF, they may not
realize they continue to be eligible for food stamps and
Medicaid, or they may be unable to get to the welfare office
during business hours to be recertified every month or quarter,
depending on state practice.
Child Care: Child care is one of the most basic work
supports, but it is not uniformly available. There is evidence
that parents do not always know about the possibility of
subsidized child care. In South Carolina, over half of former
recipients in the survey cited above were unaware of child care
assistance (although those who were currently employed were
somewhat better informed). In Milwaukee, a bureaucratic mix-up
resulted in up to 60 percent of child care placements begun by
one agency being canceled by another.
Some parents have been steered towards inexpensive and at
times inadequate child care. In Utah, families were directed to
seek free child care before being offered a subsidy. In
Maryland, caseworkers were sent a memo telling them to
encourage parents to use cheaper, informal care. That policy
was rescinded, but workers were not informed of the change.
Many states do not provide a continuum of child care
available not only to those trying to get off welfare but also
to low-or moderate-income families who cannot work without
affordable child care. As of January 1998, about half the
states had to turn away eligible low-income working families or
put them on waiting lists. Texas, for example, had a waiting
list of 30,000 families.\31\
Promising Approaches
These findings demonstrate that earnings alone rarely place
a family on a route to self-sufficiency. In order to find and
keep jobs, and in order to raise their children in safety and
out of poverty, parents need access to a menu of work supports.
Some states and localities are providing some or all of the
necessary supports: child care, health coverage, continued
access to food stamps, transportation, education/training, job
placement, services to overcome barriers, effective child
support collection, and wage supplements among them. Few areas
offer a comprehensive approach where all of the needed supports
are readily at hand. But good efforts in each of these areas
separately exist, and can point the way for states to develop
the comprehensive menu of items that families need.
Lifting families out of poverty through work and work
supports. The New Hope Project in Milwaukee provided a set of
services and benefits that helped families to increase
earnings, increase work, and increase income. New Hope was a
three-year demonstration offering poor families or individuals
health coverage, child care, and a wage supplement if they
worked at least 30 hours per week. New Hope promised to
supplement low earnings if work plus state and federal earned
income tax credits were not enough to raise the worker and his/
her family out of poverty. The project offered community
service jobs if participants could not work the required hours
through regular employment. New Hope's project representatives
offered referrals to services, guidance about New Hope's rules,
and personal encouragement. An evaluation after two years
showed significant earnings gains, particularly for individuals
who had not worked full-time at the project's outset, and who
had one barrier to employment such as an arrest record or long-
term unemployment. These participants earned 30 percent more
over two years, compared to the control group. Another benefit
emerged from New Hope: boys in New Hope participant families
did much better in school performance and behavior than did the
control group boys. New Hope resulted in more work, higher
earnings, and benefits for children. But it did not provide
solutions for everyone. It was less beneficial for participants
who had multiple barriers to employment, perhaps because New
Hope was not set up to handle such problems. New Hope saw its
approach as necessary, but not in all cases sufficient, to meet
the needs of low-income people.\32\
Illinois also helps to make work pay for families earning
low wages. Families working at least 25 hours per week at low
wages qualify for partial cash assistance benefits. Since
Illinois uses state dollars to pay benefits for these wage-
earning families, their aid does not count towards the federal
time limit.
Helping families to overcome barriers. Project Match in
Chicago has been a pioneer in providing services to families
with multiple barriers to employment. Individualized plans are
modified on a monthly basis, recognizing that in some cases
many steps may be necessary to prepare a parent for employment.
Helping at a child's school, arranging for child support
enforcement help, or signing up for therapy are among the
activities that may be steps in an individual's plan. Project
Match also maintains contact with participants as they move in
and out of employment or training, helping them to make the
transition to the next job or other activity.
While more than twenty states offer waivers of work or time
limits for families with severe barriers, far too few accept
the broad range of productive activities in the Project Match
individual plans as fulfilling the work requirement. Vermont
and Utah are two states that do allow parents who need to take
these steps to count them towards the work requirement.
Making sure that eligible families get food stamps,
Medicaid, or CHIP. At minimum, states must do a better job of
reaching out to poor and near-poor families that do not receive
TANF, so that they know about health coverage and nutrition
help for which they are eligible. Georgia's Right From the
Start Medicaid Project placed 185 eligibility workers in
clinics, hospitals, etc., to sign up children and/or families
eligible for Medicaid.\33\ South Dakota's food stamp caseload
dropped less than the national average from 1994 to 1998. This
may be because the state directs families to food stamps and
Medicaid when they divert them from receiving TANF cash
assistance.
Investing in work supports. Just a few examples: \34\
Maine's Parents as Scholars program provides work-study
opportunities for up to 2,000 post-secondary students who would
otherwise have received TANF. Illinois, Minnesota, North
Carolina, and Arizona are among the states that have committed
state funds to expand the supply of low-cost child care. Rhode
Island has guaranteed child care for all working families below
185 percent of poverty, regardless of welfare status. The
Suburban Job-Link Corporation in Chicago operates a fleet of
eight-passenger buses to transport inner city workers to
suburban jobs. Ten states provide state earned income tax
credits, of which six are refundable. Maryland is one example
of a state that both instituted its own refundable credit and
engages in outreach to inform low-wage workers about the
federal and state credits.
Recommendations
Successful efforts towards welfare reform require
initiatives that can help families in differing stages of work
readiness. For those who can work, supports are needed to
increase work stability while protecting children through
above-poverty income and quality child care. For families with
significant barriers to employment, services are needed that
can overcome barriers. Parents' efforts to progress beyond
their employment barriers should count toward meeting their
work requirements. Among the actions the Subcommittee on Human
Resources of the House Committee on Ways and Means should take
to spur improved performance for families at all stages of work
readiness:
The Subcommittee should continue to hold oversight
hearings about whether families are getting the package of work
supports they need. Since success in welfare-to-work is so
dependent on children and families getting supports such as
Medicaid or CHIP, food stamps, and child care, oversight would
be especially important to determine whether state practices or
omissions are resulting in eligible families doing without
these benefits. Such hearings would serve a very useful purpose
if they identified good state practices, including effective
outreach to ensure that eligible families get the services or
benefits they need. Since the research summarized here
demonstrates the need for a comprehensive menu of services
ranging from education/training to protection from family
violence to transportation help, hearings should illuminate
effective approaches that both (1) provide those services and
(2) guide families to the help most appropriate for them.
Current or former TANF recipients, advocates, and service
providers, as well as state or county officials, would be
important voices to include in oversight hearings.
Looking ahead, the findings from such oversight
should lead to consideration of future federal legislation to
encourage good practices and protect families. Some
possibilities include (1) broadening allowable work activities
to include activities that help parents to overcome work
barriers, as part of an overall self-sufficiency plan; (2)
penalizing states with poor track records in reaching eligible
families with Medicaid, food stamps, and child care benefits
(for example, by denying high performance bonuses to those
states), and specifying rewards for good achievements in these
areas; (3) restoring food stamp eligibility for legal
immigrants; and (4) permitting the federal time limit clock to
stop for families combining partial TANF aid and low-wage work.
The Subcommittee should approve extension of the
Welfare-to-Work program, with funding of $1 billion in FY 2000,
including the changes sought in H.R. 1482, the Welfare-to-Work
Amendments of 1999. The Welfare-to-Work program can provide job
training and placement for non-custodial fathers whose children
need their support. Further, the program will become an
increasingly important part of the menu of work supports as
more families approach time limits.
Child care funding should be increased in order to
provide a seamless web of support to families leaving welfare,
and to low-income working families trying hard to avoid it.
With the necessary supports, and when jobs are available,
work is possible for a majority of parents on welfare. The
Subcommittee is right to look beyond the mere numbers of
caseload decline to see what life is like for the families with
children who leave Temporary Assistance for Needy Families. The
goal of welfare reform is not accomplished until supports are
in place to make work possible, and to make work pay for
parents trying to raise their children out of poverty. The
evidence so far is clear, on this at least: there is much more
work to do.
Endnotes
\1\ Families USA Foundation. (1999, May). Losing Health Insurance:
the Unintended Consequences of Welfare Reform. Washington, DC:
available on the internet at http://www.familiesusa.org/medicaid.htm
\2\ Cahill, S. (1999, March). Tip of the Iceberg or Bump in the
Road: The Initial Impact of Welfare Reform in Dorchester. Boston:
Massachusetts Human Services Coalition.
\3\ Census Bureau. Unpublished data from the March 1989 Current
Population Survey. Tabulations by the Children's Defense Fund; cited in
Sherman, A., Amey, C., Duffield, B., Ebb, N., & Weinstein, D. (1998).
Welfare to What: Early Findings on Family Hardship and Well-Being.
Washington, DC: Children's Defense Fund and National Coalition for the
Homeless.
\4\ National Governors' Association, National Council of State
Legislatures, and American Public Welfare Association. (1998, April).
Tracking Recipients After They Leave Welfare. Washington, DC: Author.
Available on the Internet at www.nga.org.
\5\ Minnesota Family Investment Program, Minnesota Department of
Human Services. (1995). Survey of Participant Barriers to Employment.
\6\ Danziger, S., Corcoran, M., Danziger, S., Helfin, C., Kalil,
A., Levine, J., Rosen D., Seefeldt, K., Siefert, K., & Tolman, R.
(1998, October). Barriers to the Employment of Welfare Recipients.
Paper presented at the Annual Meeting of the Association for Public
Policy Analysis and Management, New York. Ann Arbor: Work, Poverty
Research and Training Center, School of Social Work, University of
Michigan.
\7\ Information retrieved from the Internet, http://stats.bls.gov,
Feb 19, 1999. See the Selective Access System, Bureau of Labor
Statistics, Current Population Survey. Calculations by the Children's
Defense Fund.
\8\ The first three of the following findings are citations from
Sherman, A. (1997). Poverty Matters. Washington, DC: Children's Defense
Fund. Available on the Internet, www.childrensdefense.org/
fairstart.html. The fourth is a citation from Shanahan, M., Davey, A.,
& Brooks, J. (1998). Dynamic Models of Poverty and Psychological
Adjustment Through Childhood (Unpublished paper). University Park:
Pennsylvania State University. Available on the Internet, http://
www.jcpr.org/shanahan.html.
\9\ New York Times. (1998, October 18). Welfare Experiment: Easy to
Say, Difficult to Do.
\10\ Administration for Children and Families, U.S. Department of
Health and Human Services. (1998). Characteristics and Financial
Circumstances of TANF Recipients. Washington, DC: Author.
\11\ University of Maryland, School of Social Work. (1998, March).
Life After Welfare: Second Interim Report. Baltimore: Author.
\12\ Coulton, C., et al. (1998). Briefing Report No. 9803, Work
After Welfare: Employment in the 1996 Exit Cohort, Cuyahoga County.
Cleveland, OH: Center on Urban Poverty an Social Change.
\13\ Wisconsin Division of Economic Support. (1999, January).
Wisconsin Works: Survey of Those Leaving AFDC or W-2, January to March
1998 (Preliminary Report). Madison: Wisconsin Department of Workforce
Development.
\14\ Bos, H., Huston, A., Granger, R., Duncan, G., Brock, T., &
McLoyd, V. (1999, April) New Hope for People With Low Incomes: Two Year
Results of a Program to Reduce Poverty and Reform Welfare. New York:
Manpower Demonstration Research Corporation.
\15\ South Carolina Department of Social Services. (1998, June).
Survey of Former Family Independence Program Clients: Cases Closed
During October Through December 1997. Columbia: Author.
\16\ Wisconsin Division of Economic Support.. (1999,
January).Wisconsin Works: Survey of Those Leaving AFDC or W-2, January
to March 1998 (Preliminary report). Madison: Wisconsin Department of
Workforce Development.
\17\ Sherman. A., Amey, C., Duffield, B., Ebb, N., & Weinstein, D.
(1998, November). Welfare to What: Early Findings on Family Hardship
and Well-Being. Washington, DC: Children's Defense Fund.
\18\ NETWORK. (1999). Poverty Amid Plenty: The Unfinished Business
of Welfare Reform. Washington, DC: Author.
\19\ Urban Institute and Child Trends, Inc. (1999). Snapshots of
America's Families: A View of the Nation and 13 States from the
National Survey of America's Families. Available on the Internet,
http://newFederalism.urban.org/nsaf/index.htm.
\20\ Whitman, L. (1998, March). In Our Own Words: Mothers' Needs
for Successful Welfare Reform. Parkside, WI: Women and Poverty Public
Education Initiative.
\21\ Task Force for the Homeless. The Impact of Welfare Reform on
Homelessness in Metropolitan Atlanta, and Task Force for the Homeless.
The Impact of Welfare Reform on Homelessness.
\22\ Fein, D. (1997, September). The Indiana Welfare Reform
Evaluation: Who Is On and Who is Off? Cambridge, MA: Abt Associates.
\23\ Bush, A., Desai, S., & Mead, L. Leaving Welfare: Findings From
a Survey of Former New York City Welfare Recipients.
\24\ Smith, C. (1997, December). Monitoring Welfare Reform: A
Report to the Community on the Impact of Welfare Reform in Johnson
County. Overland Park, KS: United Community Services of Johnson County.
\25\ South Carolina Department of Social Services. (1998, June).
Survey of Former Family Independence Program Clients: Cases Closed
During April Through June 1997.
\26\ Families USA Foundation. (1999, May). Losing Health Insurance:
the Unintended Consequences of Welfare Reform. Washington, DC.
Available on the Internet at http://www.familiesusa.org/medicaid.htm.
\27\ Greenberg, M. (1998). Medicaid and the Uninsured. Washington,
DC: Kaiser Family Foundation.
\28\ Food and Nutrition Services Division, Department of
Agriculture. (1999, February). Food Stamp Program Actual Participation,
November 1998. Washington, DC: Author.
\29\ Physicians for Human Rights. (1998, May). Medical group finds
high prevalence of food insecurity and hunger among United States legal
immigrant population. Retrieved from the Internet, www.phrusa.org/
research.html, February, 1999.
\30\ Swarns, R. New York Times. (1998, November 8). Welfare
Policies of the City Face Federal Scrutiny.
\31\ Adams, G., Schulman, K., & Ebb, N. (1998) Locked Doors: States
Struggling to Meet the Child Care Needs of Low-Income Working Families.
Washington, DC: Children's Defense Fund.
\32\ Bos, H., Huston, A., Granger, R., Duncan, G., Brock, T., &
McLoyd, V. (1999, April) New Hope for People With Low Incomes: Two Year
Results of a Program to Reduce Poverty and Reform Welfare. New York:
Manpower Demonstration Research Corporation.
\33\ Welfare Information Network, Issue Notes, Vol. 1, No. 10.
(1997, December). Also see the National Governors' Association, http://
www.nga.org/Pubs/IssuesBriefs/1997/970304HealthCare.asp. For a
thoughtful discussion of ways states can ensure families continue to
get Medicaid, see Liz Schott and Cindy Mann, Assuring That Eligible
Families Receive Medicaid When TANF Assistance Is Denied Or Terminated.
Washington, DC: Center on Budget and Policy Priorities.
\34\ Sherman, A., Amey, C., Duffield, B., Ebb, N., and Weinstein,
D. (1998, November). Welfare to What: Early Findings on Family Hardship
and Well-Being. Washington, DC: Children's Defense Fund and National
Coalition for the Homeless.
Chairman Johnson of Connecticut. Thank you very much,
Deborah, from the Children's Defense Fund.
And now Mr. Granger, senior vice president, Manpower
Demonstration Research Corp., New York.
STATEMENT OF ROBERT C. GRANGER, SENIOR VICE PRESIDENT, MANPOWER
DEMONSTRATION RESEARCH CORPORATION, NEW YORK, NEW YORK
Mr. Granger. Thank you, Madam Chair. Good afternoon, I
guess, and thank you for the opportunity to testify.
In mid-April, the Associated Press reporter filed a story
on the recent report chronicling the 2-year followup to a study
that we released on the New Hope Project. Her story was picked
up in about 135 papers around the country. And the headlines
tell you and other Subcommittee Members something about this
project's findings and the public's reaction to them.
``Program Assists Working Poor'' the Daily, Oklahoman; and
``Wisconsin Program Found to Help the Working,'' Baltimore Sun.
Somewhat in contrast, another reporter at the Milwaukee Journal
Sentinel focused on how New Hope affected the next generation.
``New Hope Families Have Less Stress: Study Finds Improved
School Work.'' And then, indeed, in further contrast, more
recently in the New York Times on the front page above the
fold, ``Project to Rescue Needy Stumbles Against the
Persistence of Poverty.''
Now, while headlines are unquestionably written to get
attention, these are all frankly reasonable responses to the
results that we have released so far. The sample of headlines
also sends I think an important message to Members of this
Subcommittee and to others about the strengths and limits of
policies meant to support the working poor.
I am Bob Granger, senior vice president, at MDRC. We are a
nonprofit research firm dedicated to improving the well being
of low-income people and the effectiveness of public policies
and programs through rigorous research. I direct the evaluation
of something called the New Hope Project. That evaluation team
includes MDRC staff and prominent university-based scholars.
Having submitted the executive summary of this report for
the record, I am only going to highlight four things in my few
moments.
First, a package of earnings supplements, health and child
care benefits, and full-time jobs opportunities can
substantially increase the work effort, earnings, and income of
those who are willing to work full time, but need assistance to
do so. That is true even in an environment of falling
caseloads, a hot economy, and assertive welfare policies. It is
going to be truer in harder times.
Second, such changes in income, employment, and family
supports can have a significant and positive effect on family
well being and on how the children are doing in those families.
Third, that the supports for the working poor may lead to
modest reductions in work effort, especially among those that
are already working lots of hours but happen to be poor. That
can be minimized, but it is going to occur.
And that finally, most of those who applied to New Hope
remain poor 2 years and reliant on some form of public subsidy
to make ends meet.
The New Hope program was designed and operated by a
community-based organization in Milwaukee. It was premised on a
simple assumption: those people who work full time in this
country should not be poor. They should at least be at the
level of poverty. It provided four things: an earnings
supplement, when combined with the EIC got you, on your
earnings up to the level of poverty for your household, at
least.
Two, if you needed child care assistance, it provided child
care assistance.
Three, if you needed health care support, it provided
subsidized health care support.
And finally, if you could not find full-time employment in
the unsubsidized regular employment sector, it provided on a
short-term basis wage paying community service jobs in
nonprofit organizations--jobs meant to be a bridge to
unsubsidized employment.
Let me tell you about the key findings on employment
earnings and how the kids were doing.
The report distinguishes between two groups of people that
came forward. One large group of people were not working full
time. They were poor. Some of them were not working at all.
Some of them were working part time. In that group, this set of
supports increased their earnings. It increased their
employment rates. It increased their family incomes, and, in
fact, it allowed for only the earnings-related income for a
significant proportion of the families in that group on
earnings-related income alone to move their families above the
poverty threshold.
On the other hand, there is another third of the group that
came forward: those people who in this country are working full
time, but are still poor. Within this group, the New Hope
supports caused some reduction in work effort. This was not
cutting back from 30 to 20 hours a week. This was giving up the
over 50-hour second job. It was also giving up the extra
overtime. And as we looked more closely, it seemed that some of
those reductions in time were coursing through the families in
ways that the public and this Subcommittee might find
interesting.
Let me focus on New Hope's effects on the children. A
critical aspect of this and eight other studies that MDRC is
currently doing involves taking a look at the question that you
have posed: What is happening to the kids?
In this study, we found that, using surveys of parents,
children, and their teachers, that the children in these
families were doing better on school achievement, were having
reductions in behavior problems, were having increases in
positive behavior. And as close as we can come to it, it seems
that the possible pathways are a combination of more economic
resources for some of these families through these supports,
better formal child care and other kinds of afterschool
programs for some of these families, decreased stress and
increased family well being among some of these families, and
that all of those things together accumulate and seem to be
showing up in how the kids are doing.
In summary, supports for work such as those embedded in New
Hope help some people earn their way out of poverty. As with
any approach, they are not going to be a panacea.
Second, that supports for work can create important,
positive nonmonetary effects for families and children.
Third, policymakers who want to increase the economic and
emotional well being of families should focus some of their
efforts, as I have heard today, on health insurance and
improving child care resources.
And fourth, concerns that support for work may reduce some
work effort are, in fact, founded, but such reductions can be
minimized and society may benefit in nonmonetary ways.
No single study is definitive. It would be wise to
replicate this kind of work in other environments. But it is
reasonable to assume that in an environment with a less
favorable labor market, less State attention to work, that
these initial results may be, in fact, more encouraging. And
these initial results are encouraging, indeed.
Thank you very much.
[The prepared statement and attachment follow:]
Statement of Robert C. Granger, Senior Vice President, Manpower
Demonstration Research Corporation, New York, New York
Good morning and thank you for the opportunity to testify.
On April 15, 1999 Laura Meckler of the Associated Press
filed a story on the recent report chronicling the two-year
follow-up of participants in the New Hope Project. Her story
was picked up by approximately 135 papers on April 16-18. The
headlines tell you something about the project's findings and
the popular reaction to them. ``Program Assists Working Poor''
(Daily Oklahoman, April 16, 1999); ``Wisconsin Program Found To
Help Working Poor'' (Baltimore Sun, April 16, 1999).
Another reporter at the Milwaukee Journal Sentinel focused
on how New Hope affected the next generation: ``New Hope
Families Had Less Stress: Study Finds Improved School Work.''
(Mary Beth Murphy, Milwaukee Journal Sentinel, April 16, 1999).
More recently, the New York Times announced, on the first
page above the fold: ``Project To Rescue Needy Stumbles Against
the Persistence of Poverty,'' (Jason DeParle, New York Times,
May 15, 1999).
While headlines are unquestionably written to grab
attention, these are all reasonable responses to the interim
results from this project. The sample of headlines also sends
important signals to this Subcommittee and others about the
strengths and limits of policies meant to support the working
poor.
I am Bob Granger, a Senior Vice President at the Manpower
Demonstration Research Corporation (MDRC). MDRC is a non-profit
research firm dedicated to improving the well-being of low
income people and the effectiveness of public policies and
programs through rigorous research. We have been pursuing that
mission for the last 25 years. I direct the New Hope evaluation
team, which includes MDRC staff and prominent university-based
scholars. The work is being done with funding from private
foundations as well as the City of Milwaukee, the State of
Wisconsin, the Federal Department of Health and Human Services,
and the National Institute of Child Health and Development. The
current report will be followed by a long-term follow-up in
three more years.
Having submitted the Executive Summary of our recent report
for the record (attached), I want to briefly highlight four
messages:
1. A package of earnings supplements, health and child care
benefits, and full-time job opportunities can substantially
increase the work effort, earnings, and income of those who are
willing to work full-time, but need assistance to do so. This
is true even in an environment of falling caseloads, a hot
economy, and assertive welfare policies. It may be more true in
harder times.
2. Changes in income, employment, and family supports can
have significant, positive effects on family well-being and
child outcomes.
3. Supports for the working poor may lead to modest
reductions in work effort among those already working a lot of
hours. This can be minimized, but it is likely to occur.
4. Most of those who applied to New Hope remain poor two
years later and reliant on some public subsidy to make ends
meet.
The New Hope Program. New Hope was designed and operated by
the New Hope Project, Inc., a community-based nonprofit
organization in Milwaukee. Focused on any adult who was poor
and living in two low-income areas in Milwaukee, it offered
participants an earnings supplement designed to lift them out
of poverty, when combined with state and federal Earned Income
Credits, provided they worked at least 30 hours a week. The
program also offered these workers low-cost health insurance
and child care if they needed these services. For participants
who could not find full-time work, the program offered access
to wage-paying ``community service jobs''--short-term
subsidized jobs in nonprofit agencies, designed to be stepping
stones into regular employment. With the help of New Hope
staff, participants could access any or all of these services
on an as-needed basis for a three-year period. The program
operated in a flexible, client-focused, and respectful
environment. Designed as a demonstration project, New Hope
began operating in 1994, enrolling approximately 1,360 people
through December 1995. These adults were assigned at random to
one of two groups: the New Hope program group who were eligible
to receive New Hope benefits and the control group, who
differed from the program group only in that they could not
receive New Hope benefits. The evaluation team collected
follow-up data on both groups and the differences between
outcomes for the two groups are attributable to New Hope.
Key Findings on Employment and Income. The report
distinguishes between two groups of New Hope participants. Two-
thirds of the participants were not working full time when they
entered the study. Among these participants, and compared to
the control group that was not in New Hope, the program reduced
by half the number who were never employed during the two years
of the study (from 13 percent for the control group to less
than 6 percent for New Hope participants). Over the two years,
participants earned $1,389 more than the control group, a
difference of more than 13 percent. (This does not include the
earnings supplement.) Their incomes were $2,645 (also
approximately 13 percent) more than the control group's. As a
result, more of these participants had earnings-related income
that was enough to raise their households above the federal
poverty level, although the majority remained poor, primarily
because they did not consistently work full time (and could
receive New Hope benefits only when they did). Also, many did
not apply for the state and federal Earned Income Credits, even
if they qualified. Many used community service jobs, and most
of those who used these jobs found regular unsubsidized
employment afterwards. In short, for this group New Hope showed
how policies can increase work by making work pay and offering
opportunities where they are needed.
One-third of the participants were working full time when
they entered the study. Thus, New Hope had little opportunity
to increase employment among such workers. However, the program
did not leave them unaffected. Having the support of the
program, these workers somewhat reduced their work hours
(compared to the hours worked by the control group), mostly by
cutting back on overtime and second jobs. New Hope improved
parent-child relations in the families in this group, possibly
because these families were better able to balance work and
family life. New Hope did not increase the income of
participants who already were employed full time, but it
reduced these participants' use of public assistance, cutting
second-year AFDC and Food Stamp benefits by $719, or more than
30 percent, compared to control group levels.
New Hope's Effects on Children. A critical aspect of this
study is its complementary focus on assessing the well-being of
families and children, capturing outcomes that are not easily
measured in dollars and cents. Using surveys of parents,
children, and teachers, compared to the control group, parents
in New Hope had less stress, fewer worries, and better parent-
child relations. As judged by teachers, there were substantial
positive effects on children's classroom behavior, school
performance, and social competence. These effects occurred
primarily for boys, who also showed reductions in problem
behavior and higher educational and occupational expectations.
(On these measures, girls generally do better than boys,
leaving less room for improvement. New Hope brought the
outcomes of boys and girls closer together.)
There are several possible pathways to the improved child
well-being. From our analyses, the causes appear to be a
combination of more economic resources for some families,
better parenting for others, the general improvements in adult
well-being, and increased child participation in formal child
care, after-school programs, and structured activities such as
sports and clubs.
In Summary
Supports for work, such as those embedded in New
Hope, help some people earn their way out of poverty. As with
any approach based on employment, they are not a panacea.
Supports for work can create important, positive,
non-monetary effects for families and children.
Policy makers who want to increase the economic
and emotional well-being of low-income families should focus
some of their efforts on providing health insurance and
improving child care resources.
Concerns that supports for work may reduce work
effort for some people appear accurate, but such reductions can
be minimized and society may benefit in non-monetary ways.
No single study is definitive and it would be wise to test
the effects of similar interventions in other locales. But it
is reasonable that the effects might be larger in an
environment with a less favorable labor market or less state
attention to encouraging work. This makes these initial results
encouraging indeed.
Thank you for the opportunity to share my thoughts. I look
forward to your questions and reactions.
Executive Summary--New Hope for People with Low Incomes: Two-Year
Results of a Program to Reduce Poverty and Reform Welfare, by Hans Bos,
Aletha Huston, Robert Granger, Greg Duncan, Tom Brock, Vonnie McLoyd,
with Danielle Crosby, Christina Gibson, Veronica Fellerath, Katherine
Magnuson, Rashmita Mistry, Susan Poglinco, Jennifer Romich, Ana Ventura
Executive Summary and Policy Implications
This is the second report from the evaluation of New Hope,
an innovative project developed and operated in Milwaukee,
Wisconsin, that has sought to improve the lives and reduce the
poverty of low-income workers and their families. New Hope
relied on several components and services to increase the
income, financial security, and access to full-time employment
of low-income workers in two areas of Milwaukee. In these
target areas, all low-income workers (and those not employed,
but willing to work full time) were eligible to receive New
Hope benefits. New Hope began operating as a demonstration
program in 1994, enrolling volunteers during an intake period
that lasted through December 1995.
Reflecting its broad eligibility rules, New Hope served a
diverse group of low-income people. For example, 37.5 percent
were employed at enrollment, and 84.9 percent had been employed
full time during their adult work life (with the average
longest full-time job lasting about three years). While 59.8
percent were never married and 18.3 percent were separated,
divorced, or widowed, 21.8 percent were married. Men made up
28.4 percent of the full sample, and 37.1 percent of the sample
were not receiving AFDC, Food Stamps, General Assistance, or
Medicaid at enrollment. Participants, on average, were 32 years
old.
New Hope offered access to four distinct program
components: an earnings supplement to raise participants'
income to the poverty level for their household, affordable
health insurance, child care subsidies, and a full-time job
opportunity for those unable to find one. (Part-time jobs also
were available for those who needed to supplement an existing
part-time job.) In return, the program required its
participants to work full time (at least 30 hours a week) and
to document their work hours in order to qualify for program
benefits. Program representatives (``project reps'') would meet
frequently with participants to collect their wage stubs,
verify their full-time employment, and discuss any needs or
concerns related to participants' employment. Thus, the project
combined a requirement to work full time with the necessary
supports and guarantees to enable its beneficiaries to meet
this requirement.
New Hope operated outside the existing public assistance
system, though it was designed to be replicable as government
policy. It was funded by a consortium of local, state, and
national organizations interested in work-based antipoverty
policy, as well as by the State of Wisconsin and the federal
government. It was designed and operated by a community-based
nonprofit organization, the New Hope Project, and thus provides
insights into the role nongovernmental agencies can play in
income support.
One goal of the project was to provide credible information
to policymakers on the implementation, effectiveness, and costs
of the New Hope approach. To this end, New Hope contracted with
the Manpower Demonstration Research Corporation (MDRC) to
conduct an independent evaluation, which began with the start
of enrollment. In order to provide a reliable test of the
difference the program made, 1,357 applicants were randomly
assigned in a lottery-like process to either a program group
(with access to New Hope services) or a control group (with no
access to New Hope services, but able to seek other services).
The difference in the two groups' outcomes over time (for
example, their differences in employment rates or average
earnings) are the observed effects or--in the language of
evaluations--``impacts'' of the program. The 678 participants
(that is, the program group members) and their households were
entitled to New Hope's benefits and services for a period of
three years, and the last enrolled participants ended their
spell of New Hope eligibility in December 1998. To determine
New Hope's effectiveness, this report compares the experiences
of these participants during the first two years of their
eligibility with the experiences of the 679-member control
group.
The previous report presented findings on recruitment,
program operations, participation patterns, and participant
characteristics.\1\ Shorter working papers were prepared to
convey early impressions from focus groups with participants,
to describe the neighborhood context of New Hope, and to report
on the program's work opportunity component: community service
jobs, or CSJs.\2\ The present report is the first to show how
the program changed the experiences and lives of New Hope
participants during their first two years in it. A subsequent
report will cover the last year of the program and two further
years of follow-up.
---------------------------------------------------------------------------
\1\ Thomas Brock, Fred Doolittle, Veronica Fellerath, and Michael
Wiseman, Creating New Hope: Implementation of a Program to Reduce
Poverty and Reform Welfare (New York: MDRC, 1997).
\2\ Dudley Benoit, The New Hope Offer: Participants in the New Hope
Demonstration Discuss Work, Family, and Self-Sufficiency (1996);
Michael Wiseman, Who Got New Hope? (1997); and Susan Poglinco, Julian
Brash, and Robert Granger, An Early Look at Community Service Jobs in
the New Hope Demonstration (1998). All were published by MDRC.
---------------------------------------------------------------------------
This report addresses important policy questions pertaining
to the lives of low-income workers and their families, the
choices they make in the labor market, and the effects of
financial and other supports on their material and overall
well-being.
Following a brief summary of the report's key findings, the
Executive Summary introduces the New Hope Project, its context,
and key policy questions. It then presents the report's
findings in detail and concludes with policy implications.
Findings in Brief
Overall, New Hope increased employment and earnings,
leading in turn to increased income during the first year of
follow-up and enabling more low-income workers to earn their
way out of poverty. New Hope's effects on employment and
income, coupled with its provision of health insurance and
child care subsidies, set off a chain of beneficial effects for
participants' families and their children. On average, New Hope
participants were less stressed, had fewer worries, and
experienced less material hardship (particularly that
associated with lack of health insurance) than control group
members. Participants' children had better educational
outcomes, higher occupational and educational expectations, and
more social competence; boys also showed fewer behavior
problems in the classroom.
Analyses found that New Hope's effects varied with the
employment status of its participants at random assignment. On
the one hand, those working part time or not at all needed to
either find a full-time job or increase their hours of work to
qualify for earnings supplements, health insurance, and child
care subsidies. New Hope project staff assisted them in this
process, sometimes by offering CSJs when they were needed. On
the other hand, those working full time (30 hours or more)
could take advantage of program benefits immediately, without
having to increase their work effort. Indeed, New Hope allowed
these participants to make ends meet without excessive overtime
or simultaneously holding multiple jobs.
Among those not employed full time at random assignment
(about two-thirds of the sample), New Hope increased \3\ both
work effort and earnings. Compared to the control group, New
Hope reduced by half the number who were never employed during
the two years of follow-up (from 13 percent for the control
group to less than 6 percent for New Hope participants).
Program group members who were not employed full time at random
assignment worked in 5.5 out of 8 quarters (three-month periods
covered by the earnings data for this report) compared with 4.8
quarters for control group members. The program increased
average two-year earnings of the program group (including those
who had no earnings) by $1,389, from $10,509 for the control
group to $11,898 for the program group. This increase in
earnings, boosted by New Hope's earnings supplement and the
Earned Income Credits (EICs), resulted in a substantial income
gain of $2,645 over the two-year follow-up period, which made
it possible for many of these participants to work their way
out of poverty.
---------------------------------------------------------------------------
\3\ In discussion of impacts ``increases'' and ``decreases'' refer
to differences between the program and control groups, not to change
over time in outcomes for the program group.
---------------------------------------------------------------------------
CSJs were important in bringing about the employment effect
for participants who were not employed full time at random
assignment. However, it is unlikely that the entire employment
effect was due to this program component. For that to be the
case, one would have to assume that no CSJ user would have
worked if there had been no CSJs. The data suggest the
opposite, because most CSJ users transitioned into unsubsidized
employment once their eligibility for CSJ employment ended, and
many CSJ users had both CSJ earnings and earnings from
unsubsidized employment in the same quarter.
For the remaining one-third of the sample (those employed
full time at random assignment), there were modest reductions
in hours worked and earnings. These participants were less
likely to work more than 40 hours a week and did not experience
net income gains, partly because New Hope reduced their receipt
of AFDC and Food Stamps. In the second year of follow-up, New
Hope's effect on income for this group was a reduction of
$1,148, or 7.5 percent.
The evaluation includes a ``Child and Family Study'' (CFS)
of family dynamics and outcomes for children. Focusing on
sample members with children aged 3-12 at the two-year follow-
up--89.8 percent of whom were women, and 69.4 percent of whom
were receiving AFDC at enrollment--this study found evidence
that New Hope increased the use of center-based child care and
other structured out-of-school activities. Among those employed
full time at random assignment, New Hope increased the quality
of parent-child interactions. This may reflect participants'
greater ability to achieve a sustainable balance between work
and parenting by cutting down on long work hours.
To capture possible effects on participants' children, the
CFS obtained permission to survey teachers of these children.
From the teacher reports, it appears that New Hope had
substantial positive effects on the classroom behavior, school
performance, and social competence of children in the sample.
These effects occurred primarily for boys, who also showed less
problem behavior and higher educational and occupational
expectations than boys in the control group.
This report has important implications for policymakers and
program developers who are concerned with improving the lives
of low-income working families. The analyses show that a
package of earnings supplements, health and child care
benefits, and full-time job opportunities can substantially
increase the work effort, earnings, and income of those who are
willing to work full time, but need assistance to do so. Such
effects are not limited to nonworkers and welfare recipients,
but extend to many different groups of low-income people.
On the other hand, the analyses show that earnings
supplements may lead to modest reductions in work effort among
those already working full time or more than full time.
Interestingly, New Hope shows that such reductions can be kept
to a minimum and can actually benefit the families involved to
the extent that these reductions limit excessive overtime or
multiple jobs.
Finally, the New Hope evaluation shows how modest changes
in income, employment, and family resources can have
significant effects on noneconomic outcomes, such as family
well-being and child outcomes. A narrow focus on economic
outcomes may understate the effects of interventions like New
Hope, whose benefits extend beyond those outcomes.
The New Hope Project
New Hope offered low-income workers in two areas of
Milwaukee an opportunity to use a comprehensive set of
integrated program services, designed to address longstanding
problems associated with the low-wage labor market and
delivered in a small-scale, friendly, and respectful
environment. The program had broad eligibility rules, applying
to any adult in the target areas (two zip codes) whose income
was below 150 percent of the federal poverty level and who was
willing to work full time. It was not limited to welfare
recipients or families with children. The program had four
components, which could be used separately or in any
combination suiting program participants. For persons who
worked at least 30 hours a week, New Hope provided the
following:
Earnings supplements, which were designed to
complement the state and federal Earned Income Credits (EICs)--
refundable tax credits for low-income working families--in
order to raise the income of full-time workers to the poverty
level. In designing the structure of these supplements, program
developers tried to make sure that additional work effort or
higher wages would always increase participants' overall
income. This was done by reducing the proportion of each
additional dollar earned that is lost to taxes or reduced
benefits. In other words, program participants were able to
keep more of their earnings gains, giving them an incentive to
increase their hours of work and look for better-paying jobs.
At the same time, the supplements raised their income to the
poverty level. On average, the 78.0 percent of program group
members who received any earnings supplements received $1,165
over the two-year follow-up period. (The average for all
participants was $911.)
Affordable health insurance, which was available
to any participant who did not already have access to such
coverage through an employer or government-provided health
plan. Lack of such insurance is a continuing source of concern
for low-wage workers, one they often cite as an impediment to
their trying to leave welfare for work. New Hope required a
copayment, increasing with income. This service was used by
47.6 percent of participants. (New Hope spent an average of
$1,464 per program group member over two years.)
Child care subsidies, which were available to
parents of children under age 13. The cost of child care is a
major concern to low-income workers and their families.
Although there are public child care subsidies for welfare
recipients who go to work, the programs that provide these
subsidies sometimes have long waiting lists. Low-income workers
who have not recently received welfare have an even harder time
accessing such subsidized child care. New Hope allowed
participants to find their own licensed child care arrangements
and then paid most of the expenses involved (the copay
increased with a family's income). This service was used by
27.9 percent of New Hope participants (38.8 percent of program
group members with children). (New Hope spent an average of
$2,376 per participant over two years.)
For those willing to work 30 hours a week, but unable to
find such full-time employment, New Hope provided:
Community service jobs (CSJs), which were wage-
paying positions with local nonprofit organizations, available
to those who wanted to work full time, but could not find a
full-time job on their own. CSJs were not automatic:
Participants had to apply for them and could lose their CSJ if
their attendance or performance on the job was poor. Each CSJ
was limited to six months in duration, but participants could
work in CSJs for a total of 12 months. CSJs were used by 32.0
percent of all participants. On average, participants who
worked in a CSJ earned $3,000 during the two-year follow-up
period. (The average for all participants was $945.)
Program Context
The New Hope evaluation unfolds in the context of rapidly
changing labor markets and welfare environments, both in
Milwaukee and across the United States. In many ways, the New
Hope Project foreshadowed some of these changes, and in some
instances it directly influenced state and local welfare
policy. During the years covered by this evaluation, active
social policy and a generally vibrant economy combined to make
work easier to find and more rewarding for many low-income
people in Wisconsin. Since New Hope was first conceived,
unemployment in Milwaukee County has fallen from 6.5 percent to
as low as 3.6 percent, the minimum wage has increased from
$4.25 to $5.15, and the state and federal EIC programs have
been expanded twice. Since the end of the two-year follow-up
period covered in this report, state Medicaid programs are
being expanded to include low-income working adults even if
they do not receive public assistance.
At the same time, the state's welfare system has been
dismantled, replaced with a work-based system of public
assistance called Wisconsin Works (W-2). It began during the
last four months of the period covered in this report. More
relevant to the findings presented here was a program preceding
W-2, entitled Pay for Performance, which required work and
work-related activities of every welfare recipient in
Wisconsin. All these changes in state welfare policy took place
within the larger context of federal welfare reform. The
landmark 1996 federal welfare law ended the 60-year-old Aid to
Families with Dependent Children (AFDC) program and its
entitlement to cash welfare assistance, placed a five-year
limit on most families' receipt of federally funded cash
welfare, and required states to place an increasing share of
their caseload in work or work-related activities. States now
have major responsibility for designing programs for the poor,
and they receive block grants of federal Temporary Assistance
for Needy Families (TANF) funds.
The Milwaukee economy, and the policy changes that affect
the supports available to members of both the program and
control groups, makes this a conservative test of New Hope. The
changes have diminished the difference between what New Hope
offers and what is available outside New Hope, making it more
difficult for the project to create a net difference.
Policy Lessons: What Can We Learn from New Hope?
The New Hope Project offers an opportunity to learn about
relevant and innovative approaches to the ongoing problems of
low-income workers. Following are some of the questions that
are particularly important in the current post-AFDC policy
debate about helping families, supporting work, and increasing
self-sufficiency:
With supports that make work pay, will low-income
people work their way out of poverty? How much will various
incentives induce people to work? Is the problem that people
need some support, or are they just unable or unwilling to
work?
Can such supports foster full-time work? Many low-
income people work part time or intermittently. With better
supports, will they work full time?
Is it possible to make work pay without reducing
work effort? The New Hope program supplemented the earnings of
its participants, which in theory is a good way of providing
financial support to low-income families because it rewards
work instead of idleness. However, past research involving
income subsidies for low-income workers (implemented without
providing work incentives like those in New Hope) has left a
legacy of discouraging findings, showing that such subsidies
reduced work effort. Could New Hope do better?
Should interventions like New Hope be targeted at
those not already working full time? Inclusiveness was an
important aspect of the New Hope program, seeking to serve not
just welfare recipients or people with poor work histories.
However, what is the price of inclusiveness? Does it
dramatically increase program cost? Do those already employed
benefit from the program? Does being inclusive have other
benefits?
Does subsidized employment work? New Hope provided
CSJs to participants who could not find full-time work on their
own. This is another promising approach to helping low-income
workers who may have a hard time finding their way into the
labor market. But does it work? Do these jobs increase
employment or do they just offer an easy alternative for people
who otherwise would have found a regular job on their own? Did
they set up and maintain a pool of public service jobs that are
more than ``make work''?
How much do health insurance and child care
subsidies matter? New Hope offered health insurance and child
care subsidies. The need for these services is widely
documented and proclaimed. But would low-income workers use
them? Would they appreciate these benefits as making a
difference in their lives?
How important is the nature of staff-participant
interactions? New Hope operated on a small scale and was based
in the target areas it served. Staff developed a more positive
relationship with participants and interacted with them more
frequently than is typical in welfare offices. Does such an
approach affect the quality of program operations and the use
of program services?
If more people work and their income increases, is
their family life improved? Poverty and low-wage work can be
stressful for families. Is it possible to improve family life
by supporting employment and increasing available income? Could
increased employment have negative consequences for family
well-being?
How do make-work-pay policies affect children? The
American public wants those parents who can work to do so. But
the public remains concerned about the children in poor
families. How might these children be affected by policies that
support work?
Limitations of This Evaluation
In this demonstration, the New Hope offer was available to
program participants alongside the existing welfare system.
While New Hope designers thought of the program as an
alternative to this system, many participants continued to use
public assistance or Medicaid, either along with or instead of
New Hope benefits. Therefore, the demonstration does not fully
answer the question: What if we replaced the current welfare
system with a work-based set of supports like those available
in New Hope? Rather, it addresses the question: What if we
added the supports available in New Hope on top of existing
policies and programs? In addition, the demonstration provides
a definitive answer to that question only for persons like the
volunteers who enrolled in New Hope and who live in labor
markets like Milwaukee.
Theory and Expectations
The design of the New Hope program was guided both by
practical consideration of the challenges facing low-income
workers and by theoretical expectations about how people
respond to financial incentives. As mentioned above, New Hope
was targeted primarily at specific problems inherent in the
low-wage labor market, such as ``poverty wages,'' lack of
health care coverage, intermittent unemployment, and lack of
good, affordable child care. However, as the program was being
developed, the expected behavioral responses of those who would
benefit from program services were very much part of the
discussion. As noted above, prior evaluations of other
interventions targeted at low-income workers had found that
income subsidies could significantly reduce the work effort of
some workers, even if the same programs enticed others to seek
employment. This phenomenon, discussed more extensively in
Chapter 4 of the report, is potentially costly to society and
to participants. In the case of New Hope, these considerations
led program designers to limit benefits to those working at
least 30 hours a week. This ensured that any reductions in work
effort would be small, and it also provided an added incentive
to those not already working full time to make an effort to
reach a higher level of employment.
The goals and expectations of program designers were not
limited to participants' earnings and income. In addition to
those ``economic'' outcomes, they targeted other aspects of
participants' lives, including their access to health insurance
and affordable child care and their overall financial
situation. By guaranteeing a full-time job and by supplementing
participants' earnings, New Hope was expected to reduce the
stress and financial worries that are common among low-income
workers. By allowing some workers to reduce overtime and drop
second jobs, the program might free up more of their time for
personal development and family time. And by exposing sample
members' children to subsidized, good-quality child care and
after-school care, the program might improve their well-being
and school readiness, just as the expected increase in family
income and greater financial stability might benefit these
children.
Data, Samples, and Research Methods
This report relies on a number of data sources for its
estimates of New Hope's effects. All in all, 1,357 applicants
to the program were included in the study and randomly assigned
to program or control group status: 678 to the program group
and 679 to the control group. For each of these sample members,
the researchers collected two years of earnings data from
unemployment insurance (UI) records and AFDC, Food Stamp, and
Medicaid data from other state databases.\4\ These
administrative data were augmented with information collected
from a two-year follow-up survey. This survey covered details
on employment histories, job characteristics, and additional
income sources. It also measured material hardship, access to
health care, and sample members' feelings about their financial
situations, job security, and, in the case of program group
members, their experiences with the New Hope program.
---------------------------------------------------------------------------
\4\ The researchers supplemented the administrative data on
earnings, welfare recept, and program participation with data from the
State of Wisconsin on use of the state and federal EIC. Aggregrate EIC
data (provided in groups of 15 to protect individual confidentiality)
were used to approximate individual EIC benefits, which constitute an
increasingly important source of work-related income for low-wage
workers.
---------------------------------------------------------------------------
Although all program and control group members were
approached for this survey, some could not be found and others
refused to participate, leaving a sample of 1,086 for analyses
involving survey questions.
For the 678 program group members, data from the New Hope
management information system (MIS) were added to the
administrative and survey data. These MIS data cover
participation in the program, use of program benefits, and
earnings from CSJs. Administrative data from New Hope were also
used to estimate program costs.
The analyses of child and family outcomes rely mostly on an
expanded version of the two-year survey, conducted in
respondents' homes. Special age-appropriate modules were added
to the survey to be administered to respondents' children. The
Child and Family Study (CFS) survey was targeted at 745 adult
sample members and completed by 591. In many cases, more than
one child per family was included in the study, resulting in a
sample of 927 children for most analyses.
Finally, if children were in school, their teachers were
sent a questionnaire (with permission and assistance from the
children's parents) which contained a number of scales
measuring behavior and performance in school. These assessments
are a primary source of data on relevant child outcomes; they
are available for 420 children in the study.
Most analyses presented in this report identify program
effects using straightforward comparisons of outcomes for
program and control group members. Because sample members were
randomly assigned to either the program group (and thus
eligible to participate in New Hope) or the control group (not
eligible), the only systematic difference between the two
groups is the assignment of program group members to New Hope.
This means that any differences in outcomes measured at follow-
up are attributable to the New Hope program; as noted earlier,
such differences are called the program's ``impacts.''
Program Implementation and Context
New Hope was implemented successfully and
delivered benefits and services to those who qualified. Some
participants did not access benefits as often as they could
have, either because they did not fully understand the program
procedures or chose not to report their earnings each month as
required.
Implementing a program like New Hope poses important
challenges to program developers, managers, and staff. The New
Hope program was designed around a set of complex rules
centered on the requirement that participants work 30 hours a
week on average to qualify for program benefits; they were
required to submit wage stubs monthly, which then were
incorporated into a management information system for
calculation and distribution of benefits. New Hope program
staff were successful in developing such a system and
implementing it in a real-world setting. Participants were paid
their benefits on time. In interviews, participants expressed
their satisfaction with New Hope, comparing the program
favorably with other employment and welfare programs they had
experienced. They consistently rated the support received from
project reps as ``what they liked best'' about New Hope.
However, New Hope staff and management did experience some
difficulty in getting participants to understand and follow
program rules. Many participants did not maximize their use of
program benefits because they failed to comply with these
rules, falling short of the required work hours or neglecting
to submit required documentation. Participants also
occasionally expressed dismay at the month-to-month variation
in benefit levels, which was a function of sometimes small
month-to-month changes in earnings or in the number of pay
periods in a month. The fact that participants had to ``renew''
their commitment to the program monthly (because they were
required to hand in their pay stubs) may have led some to leave
New Hope even when they were still eligible for benefits. Staff
also had difficulty getting participants to make full use of
the EIC, which is an integral part of the New Hope benefit
calculations. It is likely that some of this confusion would
not occur if New Hope was an ongoing, widely available program.
People's initial experience with New Hope differed
depending on their employment status at the time they enrolled.
Those employed full time could receive benefits immediately,
but those not employed full time were more focused on finding a
job or increasing their hours.
New Hope's requirement that participants work 30 hours a
week made their initial program experience dependent on their
employment status. About one-third of program participants
entered the study working full time, attracted by the financial
benefits and help with health and child care. Program staff
would explain the program rules to participants and help them
access health insurance and child care benefits. The remaining
two-thirds of participants experienced a different initial
contact, which was focused on their need to find a full-time
job. After a job search of eight weeks, these participants
would have access to the program's CSJ component. In the
meantime, project reps would give them job leads and advice on
how to get a job. Thus, these participants would be more likely
to actually experience a change in their initial employment
status, either finding a job if they were not working or
finding a full-time job if they were working part time.
The New Hope program operated in two inner-city
target areas with high rates of poverty and limited economic
opportunities. However, the regional economy was healthy and
other changes in the environment also promoted work among low-
income residents of Milwaukee.
A neighborhood survey conducted in New Hope's target areas
before the program began found high rates of poverty and a
large contingent of low-income workers who could have been
eligible for New Hope if it had operated on a larger scale.
Analyses of job opportunities found most openings to be
dispersed in the suburbs surrounding Milwaukee, either
difficult or impossible to access without a car. Many positions
also required post-secondary educational credentials, which few
low-income residents in New Hope's target areas had.
Nevertheless, the Milwaukee economy was generally very good
during New Hope's implementation, making it relatively easy for
many participants to find and maintain full-time employment.
As discussed earlier, the welfare environment was changing
rapidly during the time of this study. General Assistance (cash
welfare for low-income adults who do not have dependent
children) was eliminated and welfare rolls were reduced through
new welfare-to-work programs like Pay for Performance. New
federal legislation eliminated the AFDC program, replacing it
with TANF, whose incarnation in Wisconsin (labeled Wisconsin
Works, or W-2) took effect, however, near the end of the two-
year follow-up period covered in this report. Changing welfare
rules and attitudes together with an improving economy caused
increasing numbers of welfare recipients to leave the rolls and
enter employment, offering both New Hope participants and
control group members a substantial incentive to work.
Use of Program Services
A large majority of those assigned to New Hope
(79.2 percent) received program benefits, but few received such
benefits every month and for many participants program benefits
were limited in scope and duration.
The design of the New Hope offer directly influenced, and
often limited, the use of program benefits. First, the offer
was extended only to those willing and able to work at least 30
hours a week. If, for any reason, a participant could or did
not want to comply with this requirement, his or her
eligibility for program benefits may have been interrupted
(project reps did continue to extend help and support).\5\
Second, the value of benefits was linked to participants'
income and decreased substantially as their income approached
200 percent of the poverty level for their family, or $30,000 a
year, whichever was higher. At that point, earnings supplements
were quite small, and copayments for health care and child care
were larger. Third, three of the four primary benefits (health
insurance, child care, and CSJs) were useful only to a subset
of participants. For example, participants with Medicaid or
free employer-provided health insurance did not need New Hope's
health coverage or its contribution to employee copayments;
those with steady employment (or good job-seeking skills) did
not need CSJs; and those without children had no use for New
Hope's child care subsidy. Consequently, the program allowed
participants to use the components they needed when they were
ready to use them.
---------------------------------------------------------------------------
\5\ Also, health insurance could be extended for a month if
participants lost their job and were actively looking for a new one.
Similarly, participants who lost a job would be provided with three
hours of child care per day for up to three weeks, as long as they were
actively looking for work. After three weeks, they were eligible for a
CSJ.
---------------------------------------------------------------------------
The consequences of this approach for participation
patterns are presented in Table 1, which shows that 79.2
percent of program group members used any financial program
benefit, with almost all of them (78.0 percent of program group
members) receiving at least one earnings supplement.\6\ In
contrast, only 47.6 percent used New Hope's health plan (or
received help in paying an employee copay), and only 27.9
percent used child care assistance. About a third of all
program group members (32.0 percent) worked in a CSJ. Program
rules and variation in participant needs affected not only
overall benefit use rates, but also the length of time that
participants used New Hope's services. The table shows that
those who received any financial benefit did so for an average
of only 10.8 of the 24 months of follow-up.
---------------------------------------------------------------------------
\6\ All the tables in this Executive Summary summarize more
detailed information given in the main body of the report. For
additional measures and analytical details, see the tables in the full
report.
[GRAPHIC] [TIFF OMITTED] T8372.001
Comparing program benefits across the two employment
subgroups defined above shows that those employed full time at
random assignment received more benefits than those not so
employed, reflecting the fact that the former group could begin
receiving benefits immediately, while the latter group had to
secure a 30-hour-a-week job first. Also, more participants
among those not employed full time at random assignment
experienced significant obstacles to employment, preventing
them from ever meeting the 30-hour requirement (or working in a
CSJ).
In analyzing these figures, it may appear that New Hope's
effect on participants' lives was less profound than it could
have been. However, that is not necessarily the case. First, it
is important to consider the program's effects on participants'
behavior even if they did not receive an earnings supplement or
child care assistance in a particular month. If, for some
reason, participants failed to work 30 hours a week or were not
``ready'' for full-time work, New Hope still offered them an
incentive to continue pursuing full-time employment, an
incentive that was backed up by a CSJ when they needed it. If
participants already had health insurance or child care
arrangements, the availability of a reliable backup might offer
some peace of mind. Second, New Hope's project reps met with
most participants on a regular basis. These meetings, and what
they accomplished, are not reflected in the figures in Table 1,
but the findings on social support shown in Table 7 suggest
that the one-on-one support from project reps meant a great
deal to participants. In fact, it may have been a key program
component, setting New Hope apart from other programs and
benefits available to low-income workers.
Employment and Earnings
New Hope increased the work effort and earnings of
those not already working full time.
For the two-thirds of the sample not employed full time at
random assignment, New Hope provided a clear positive incentive
to work and to work longer hours. The lower panel of Table 2
shows that such an incentive can increase employment,
especially when backed up with CSJs for those who need them. In
the two years of follow-up, New Hope reduced by half the number
of sample members who were never employed (from 13 percent for
the control group to less than 6 percent for program group
members), and it increased the number of quarters that these
sample members were employed by 0.7 of a quarter and increased
earnings by 13.2 percent ($1,389). Both of these effects are
substantial, especially given the high level of work effort
among control group members. (Again, these data are for all
sample members, including those with no employment or
earnings.)
[GRAPHIC] [TIFF OMITTED] T8372.002
Not shown in the table is the extent to which CSJs
contributed to these program effects. Although it is not
possible to know how program group members would have responded
to New Hope in the absence of CSJs, we do know that 32 percent
worked in one and that CSJs contributed $945 to participants'
average two-year earnings. This suggests that CSJs played an
important role in bringing about New Hope's impacts on
employment and earnings.
New Hope did not change the rate of employment of
those employed full time at random assignment, and while it
does appear to have reduced earnings somewhat, this effect was
not statistically significant.
As pointed out above, New Hope offered different incentives
to those who were employed full time at random assignment and
those who were not. One might expect those employed full time
to reduce their work effort in response to the increase in
disposable income experienced while in New Hope. On the other
hand, imposing a 30-hour-a-week minimum on hours worked would
limit any such reductions, and other New Hope services and
guarantees might help these participants to stay employed full
time throughout the follow-up period.
The upper panel of Table 2, showing impacts on employment
and earnings for this group, indicates that New Hope was
moderately successful in preventing reductions in work effort
among those employed full time at random assignment. The very
high levels of employment in the control group make program-
induced increases in employment very difficult to achieve. The
estimated impacts on two-year earnings are negative for this
group, but this reduction is not statistically significant.\7\
It appears that New Hope's supports may have slowed the growth
in earnings of participants who were employed full time when
they entered the program.
---------------------------------------------------------------------------
\7\ A ``statiscally significant'' result is one that has less than
a 10 percent probability of having occurred simply to chance and not as
a result of the program.
---------------------------------------------------------------------------
New Hope somewhat reduced hours worked by those
employed full time at random assignment. It did so primarily by
reducing the number of weeks in which these participants worked
more than 40 hours. There were no statistically significant
reductions in full-time work.
The upper panel of Table 3 shows impacts on hours worked
and on other job characteristics for those employed full time
at random assignment. Aside from the program effects, it is
noteworthy how high the average levels of work effort were in
this subgroup. Members of the control group worked an average
of almost 3,600 hours in the two years of follow-up, which
translates into a weekly average of 34.6 and includes any
periods of unemployment or part-time work. Thus, many control
group members (and program group members) must have worked
substantially more than 35 hours a week when they worked.
[GRAPHIC] [TIFF OMITTED] T8372.003
New Hope reduced hours worked by those employed full time
at random assignment, mostly in the first year of follow-up and
mostly by limiting overtime (and second jobs). In the first
year of follow-up, program group members in this group worked
150 fewer hours than their counterparts in the control group, a
reduction of 8.1 percent.
As expected, given New Hope's program rules, there was no
reduction in the number of people who worked at least 30 hours
a week. There were also no statistically significant reductions
in the number of people working at least 40 hours a week.
However, program participants were less likely to work more
than 40 hours in an average week.
If one looks at job characteristics, it appears that the
jobs held at follow-up by program group members employed full
time at random assignment might not have been as good as those
held by control group members. The average hourly wage at
follow-up was 46 cents lower for program group members than for
control group members, an effect that may be related to the
reduction in overtime, but may also reflect program group
members working in CSJs (which pay only minimum wage). In
addition, control group members had more fringe benefits than
program group members, possibly a result of the fact that New
Hope provided health insurance, reducing participants'
incentive to find a job that provided it.\8\
---------------------------------------------------------------------------
\8\ It is possible that New Hope participants did not always fully
understand the survey question asking them about the availability of
employer-provided health benefits. These participants may have had
access to employer-provided benefits, but may have chosen to use New
Hope-provided health insurance insdtead. In that case, they may have
incorrectly indicated in the survey that they did not ahve employer-
provided health benefits. This, in turn, would have caused the
reduction in employer-provided health insurance to appear larger than
it was.
---------------------------------------------------------------------------
New Hope increased hours worked by those not
employed full time at random assignment. This effect is a
combination of nonworkers becoming employed and others
increasing their hours to meet the 30-hour minimum to receive
benefits.
Program effects on hours worked among those not employed
full time at random assignment were substantial in both years
of follow-up. Overall, hours of work were increased by 285, or
12.1 percent (lower panel of Table 3). This was achieved by
reducing the number of months with no work from 9.2 to 7.9 and
reducing the number of months with some, but fewer than 30,
weekly hours worked from 3.4 to 2.4. These effects represent a
shift in the work patterns of these sample members, brought on
to some extent by participation in CSJs.
There were no statistically significant program effects on
characteristics of the jobs held by those not employed full
time at random assignment.
Among those not employed full time at random
assignment, the strongest earnings effects were found for
participants with only one of a number of potential barriers to
employment.
A further breakdown of the group that was not employed full
time at random assignment revealed a pattern of program impacts
that depended on the number of potential employment barriers
that participants had, such as having limited work experience,
having very young children, or lacking an educational
credential. New Hope program participants best able to
translate program benefits into sustained earnings increases
came into the program with one potential barrier to employment.
The program made less of a difference for those with none of
the potential barriers or those who had two or more. This
pattern of findings (not shown in tables) suggests limits to
the New Hope model, which may be less necessary for some
participants and not strong enough for others.
New Hope's effects on employment and earnings
showed similar patterns across a wide range of subgroups and
did not vary between the two target areas served by the
program.
In addition to the subgroups defined by employment status
at random assignment, program effects were examined for people
varying in family status, gender, ethnicity, welfare receipt at
random assignment, and target area. None of these analyses
showed significant variation in impacts. This implies that New
Hope's effects were widespread and not limited to a single
group or target area. (These analyses are not shown in tables.)
Welfare Receipt, Income, and Material Well-Being
Overall, New Hope participants did not receive
fewer AFDC and Food Stamp benefits than their counterparts in
the control group. However, in the second year of follow-up
those employed full time at random assignment experienced
larger reductions in their receipt of public assistance than
control groups.
New Hope was not designed or operated as a welfare-to-work
program, although it was billed as an alternative to welfare or
working poor families; that is, the program did not emphasize
typical welfare-to-work services, such as job club and job
training. Although program designers expected to find indirect
effects on welfare receipt by increasing sample members'
earnings or income, pursuit of such effects was not part of the
original program design. New Hope program group members who
were receiving welfare continued to be subject to any mandates
imposed by the welfare department, such as those in the Pay for
Performance program.
One might expect to see reductions in the receipt of AFDC
and Food Stamps as a consequence of the increases in earnings
discussed above. However, this pattern of impacts was not
found. Both program and control group members received
substantially reduced public assistance during the follow-up
period. But rather than further reducing welfare receipt among
those not employed full time at random assignment (the group
experiencing impacts on earnings), the program accelerated
transitions from welfare for those who were employed full time,
and only during the second year of follow-up. Table 4 shows
that in the second year those employed full time at random
assignment received $445 less in AFDC benefits (a reduction of
37.7 percent) and $274 less in Food Stamps (a reduction of 23.5
percent).
[GRAPHIC] [TIFF OMITTED] T8372.004
Thus, rather than reducing welfare receipt through
increased employment, it seems that New Hope effected such
reductions by offering those who were close to leaving welfare
anyway alternative sources of support. In other words, to some
extent New Hope's supplements and in-kind benefits replaced
welfare and Food Stamps for these families.
One might have expected to see reductions in welfare
receipt tied to increased work effort for those not employed
full time at random assignment, but no such reductions
materialized. (In fact, New Hope increased the amount of Food
Stamps received by this subgroup in the second year of follow-
up, a program effect that is difficult to explain.) The lack of
reduction in welfare receipt in this group may be due to
changes in welfare rules that would have delayed or prevented
such reductions--for example, increased earnings disregards,
which allow people to earn more without having their welfare
grant reduced. On the other hand, all participants and control
group members volunteered to enroll in New Hope, expressing
their ability and willingness to work full time. This means
that many would have left welfare anyway, limiting New Hope's
effects on this outcome.
New Hope caused a modest increase in sample
members' income, an effect that was concentrated among those
not employed full time at random assignment.
One of New Hope's primary goals was to increase the income
of low-wage workers and to reduce poverty among them. Table 5
documents the extent to which the program met this goal,
focusing on two-year cash income and Food Stamps for the full
sample and the two employment subgroups. The table shows that
by increasing and supplementing earnings, New Hope increased
both ``earnings-related income'' (income directly tied to one's
earnings) and total income. However, these effects were modest
for the full sample, representing increases of $1,718 and
$1,611 for earnings-related income and total income,
respectively. This represents 10.8 and 7.1 percent of the
income available to these participants in the absence of New
Hope (as captured by the control group).
[GRAPHIC] [TIFF OMITTED] T8372.005
[GRAPHIC] [TIFF OMITTED] T8372.006
The subgroup breakdown shows that all of this effect is
concentrated among those not employed full time at random
assignment, for whom there was a more substantial increase in
total income of $2,645 (11.8 percent), mostly resulting from an
increase of $2,450 in earnings-related income (20.3 percent).
No such effects were found for those working full time at
random assignment, who actually lost some income in the second
year owing to the aforementioned reductions in receipt of AFDC
and Food Stamps.
By supplementing earnings, New Hope increased the
number of sample members whose employment yielded enough income
to lift their family out of poverty.
Another way to look at New Hope's effects on income is to
focus on sample members' ability to rise above the poverty line
using only their own earnings and benefits directly connected
to their work (EIC and New Hope earnings supplements).
Ultimately, this outcome best captures New Hope's underlying
philosophy: making work pay so that full-time workers would not
be poor. Table 6 summarizes the program's effects on this
poverty measure for the two employment subgroups. For the
program group as a whole (not shown in the table), New Hope
increased the number of participants whose earnings-related
income was above the federal poverty line for their family by
5.6 percentage points in year 1 and by 7.8 percentage points in
year 2.
[GRAPHIC] [TIFF OMITTED] T8372.007
Nevertheless, most program participants were unable to
``work their way out of poverty'' using only the regular
earnings and CSJ wages of a single worker, even after New Hope
supplements and EIC were included. The impacts on poverty
status did not vary significantly across the two subgroups
defined by employment status at random assignment.
New Hope reduced material hardship, partly by
increasing participants' incomes, but more importantly by
providing participants' households with health insurance and
subsidized child care.
The effects on income and poverty presented thus far fail
to consider the contributions made by the program in providing
health insurance, child care subsidies, and support by project
staff. As discussed in an earlier section, New Hope spent more
money on health insurance and child care than on earnings
supplements and CSJ wages. Having access to these benefits and
being able to afford them can greatly add to the material well-
being of low-income households. The New Hope survey measured
impacts on material well-being by asking respondents about a
number of different material hardships that commonly affect
low-income households, including unmet medical and dental
needs, periods without health insurance, housing problems, and
utility shutoffs. Program effects on these outcomes are shown
in Table 6.
The table shows that New Hope did not produce improvements
in all of these areas, but significantly reduced material
hardships associated with lack of health insurance. Those
effects were stronger for those not employed full time at
random assignment, although differences across subgroups were
not statistically significant.
Also, analyses of survey data found that program group
members spent significantly less of their own funds on child
care than control group members, despite the fact that they
were more likely to use center-based care, which tends to be
more expensive. (Impacts on child care use are discussed in
more detail in a later section of this Executive Summary.)
Stress, Worries, and Emotional Well-Being
New Hope reduced stress and worries reported by
participants, but it increased time pressure in the lives of
those who worked more in response to the program's incentive.
The program also increased the social support available to
participants. However, New Hope did not improve participants'
feelings of depression, mastery, or self-esteem.
To gauge the less tangible benefits of New Hope, the survey
asked sample members about issues like stress, financial
worries, satisfaction with their standard of living, and social
support. Sample members who were part of the Child and Family
Study (CFS) were also asked about depression, mastery, self-
esteem, feelings of agency, and time pressure. An analysis of
the program's effects on these outcomes showed an interesting
pattern, summarized in Table 7.
[GRAPHIC] [TIFF OMITTED] T8372.008
[GRAPHIC] [TIFF OMITTED] T8372.009
First, sample members in the CFS reported large and
significant increases in social support as a result of their
participation in New Hope, probably because the program
provided valuable advice, assistance, and emotional support.
This effect was strong for both employment subgroups and
identifies an aspect of the program that has not yet been
discussed extensively, namely, the role of project reps. The
frequent interaction of these program staff members with New
Hope participants can almost be considered a fifth program
component (in addition to the earnings supplements, CSJs,
health insurance, and child care subsidies), which may have had
its own effects on sample members' well-being. These services
were especially valuable to participants who were employed full
time at random assignment and were less likely to find case
management in other venues).
Overall, New Hope program group members reported being less
stressed than control group members (effects for the full
sample, not shown in Table 7, were statistically significant).
Reasons for the reduction in stress may include, for example,
greater financial security, less overtime work, and fewer child
care hassles. Among those not employed full time at random
assignment, New Hope also reduced a number of specific worries.
These program group members were less worried about their
medical care, about being able to afford housing, and about
their financial situation in general.
Among CFS parents, effects were found on their feelings of
agency (measured with the Hope Scale), capturing their sense
that they could achieve their goals, but these positive
socioemotional effects were accompanied by an increase in time
pressure, especially for those not employed full time at random
assignment.\9\
---------------------------------------------------------------------------
\9\ The latter two effects were measured only for the CFS people.
---------------------------------------------------------------------------
The evaluation did not find significant program effects for
CFS parents on more stable, personal dispositions such as
depression, mastery, and self-esteem.
Impacts on Parent-Child Relations and Child Care Use
For parents employed full time at random
assignment, New Hope moderately increased parental warmth and
monitoring of children's activities.
The Child and Family Study (CFS) component of the New Hope
evaluation measured family dynamics and the interaction between
parents and children using the participant survey and surveys
administered to children. (See Table 8.) It was expected that
changes in parental employment, material resources, and
emotional well-being would play themselves out in the
relationships between parents and children and in the home
environments in which children grow up. Boys in New Hope
families perceived relationships with their parents to be more
positive (not shown in a table).\10\ Parents in New Hope who
were employed full time at random assignment expressed more
feelings of warmth to their children and monitored their
activities more. These positive effects on parents' behavior
suggest that New Hope modestly improved the lives of these
families, perhaps by allowing parents to cut back their work
hours without significantly reducing their earnings-related
income.
---------------------------------------------------------------------------
\10\ All of these findings are based on scales used in the two-year
follow-up survey. Because it is diffcult to gauge the size of effects
on such scales, researchers like to express them in terms of ``effect
sizes,'' which correspond to the effect divided by the standard
deviation of the outcome. In those terms, New Hope increased reported
warmth and observed warmth by .27 and.22 standard deviations and caused
an effect of .31 of a standard deviation on parental monitoring. All of
these effects are considered moderately large compared with effects in
other intervention studies. For more details, see Chapter 6 of the full
report.
---------------------------------------------------------------------------
Those not employed full time at random assignment did not
experience similar effects on parenting, which may reflect
increased demands and time pressure for these parents that
could offset positive effects from increased resources and
employment.
Through its provision of child care subsidies and
its effects on parental employment, New Hope substantially
increased children's exposure to formal child care, after-
school care, and other organized activities.
The provision of child care subsidies coupled with
increases in parents' employment were expected to increase the
use of child care and to allow parents to select the care they
preferred. As parents consolidated their employment, many used
New Hope to provide formal center-based and school-based child
care for their preschool and school-age children. Although the
program effect was significant for the full sample (not shown
in a table), there was a somewhat stronger effect on use of
center-based care during the preschool and early school years
for girls and on use of school-based extended day care for
school-age boys (see Table 9).
The New Hope subsidy could be used for licensed home-based
child care, but there was no effect of the program on using
this type of care. There was some tendency for program group
members to use less home-based child care (licensed or
unlicensed) than control group members; program group boys were
less likely to be cared for by someone outside the household,
and program group girls received less care by household
members.
[GRAPHIC] [TIFF OMITTED] T8372.010
[GRAPHIC] [TIFF OMITTED] T8372.011
In addition, 9- to 12-year-old children whose parents were
New Hope participants were more likely to engage in structured
out-of-school activities (such as lessons, organized sports,
religious classes, clubs and youth groups, and recreation
centers). They also watched more TV on weekends (not shown in a
table).
Impacts on Child Outcomes
Teachers reported that boys whose parents were in
New Hope had better academic performance, stronger study
skills, higher levels of social competence, and fewer behavior
problems than control group boys.
The Child and Family Study (CFS) component of the New Hope
evaluation included a survey of teachers of children who were
in school. New Hope had large effects on the behavior and
school performance of boys. Using standardized scales, teachers
rated their students' academic performance, classroom skills
(for example, ability to work independently and to make
transitions), positive behavior (for example, social
competence), and behavior problems (for example, aggression).
The teachers, who were unaware of the program or control group
status of their students' families, rated boys whose parents
were in New Hope significantly higher than control group boys
on school performance, classroom skills, and positive behavior
and significantly lower on behavior problems (see Table
10).\11\ No effects occurred for girls, but girls in both
research groups scored better than boys on the above measures,
possibly indicating less need for improvement.
---------------------------------------------------------------------------
\11\ Expressed in effect sizes, the effects on academic
performance, classroom skills, positive behavior, and behavior problems
were .33, .38, .50, and -.48 of a standard deviation, respectively. All
of these effects are considered large compared with effects in other
intervention studies.
[GRAPHIC] [TIFF OMITTED] T8372.012
[GRAPHIC] [TIFF OMITTED] T8372.013
For families in which parents were not employed full time
at random assignment, these effects on school outcomes were
reflected in two measures of school progress: Children in New
Hope families were less likely to be receiving educational
services or to have been retained in a grade than control group
children.
Boys whose parents were in New Hope reported
higher educational expectations and higher occupational
aspirations and expectations, implying that the program
affected their ambitions for future study and careers.
The New Hope survey asked children about their educational
and occupational aspirations. It was hypothesized that New Hope
might change children's feelings in this regard, following its
effects on their parents' employment and the children's own
increased participation in child care and after-school
programs. Again, substantial impacts were found, but they were
limited to boys. Boys whose parents were in New Hope expected
to attend and finish college in greater numbers and were more
likely to aspire to professional and managerial occupations
with high social prestige than boys in the control group.
Two-Year Costs of New Hope
Over two years, New Hope cost about $7,200 per
participant.
It is too soon to write any final assessment of New Hope's
costs and benefits. Two years of costs had been incurred, but
the ultimate benefits for families (in terms of employment,
income, and poverty) and children (in terms of general well-
being and school performance) are not known. Beyond this, the
New Hope vision is not easily summarized in any traditional
benefit-cost framework, since many of its key goals and
achievements cannot be captured in dollar terms. New Hope
sought to reduce poverty, improve family functioning, and
improve the well-being of children.
With this caveat, the results to date do provide some
information on cost effectiveness. Through two years, it cost,
on average, approximately $9,000 per participant to provide the
New Hope package of services and benefits. Offsetting
reductions in public assistance and the value of the work
produced in CSJs reduce the costs to about $7,200 per
participant. In return, New Hope produced clear impacts on
children, moved families out of poverty, and provided
participants with about $4,600 in cash or in-kind benefits.
Future reports will show the extent to which these total
benefits cumulate over time.
Policy Implications
The New Hope program represents a useful tool for
improving the ability of people to earn their way out of
poverty. As with any single approach based on employment,
however, it is not a panacea.
It is unlikely that any effort to reduce poverty through
employment could succeed for all participants, even with bolder
incentives. To the degree that policymakers hold antipoverty
goals, they will need to consider both employment-based
solutions and other means to transfer income.
It is insufficient to focus solely on work effort
and earnings when evaluating employment-related approaches to
reducing poverty. The kinds of positive, nonmonetary effects
for families and children New Hope achieved are important to
many policymakers and the public at large.
While the public wants all low-income adults who are able
to work to do so, it also hopes that policies and programs will
help (or at least not harm) the well-being of families and
children. New Hope demonstrates that packages like the one it
offered can affect families and children in positive ways. This
is encouraging and underscores the need to assess such outcomes
as part of the evaluation of such efforts.
Subsidized community service employment appears to
play a central role in a package of incentives and supports
like New Hope's.
New Hope had strong employment effects for those not
employed full time at random assignment, effects at least
partly accounted for by the CSJs provided by New Hope. However,
it is unlikely that providing full-time employment without
making sure that it benefits participants financially will
produce sustained employment effects. More important, these
findings suggest that it is possible to operate a system of
subsidized employment, providing real wage-paying jobs, and
have people progress into regular employment as these jobs end.
There is little evidence that the availability of CSJs enticed
workers to leave regular jobs to take subsidized employment
instead. However, this may happen and policymakers who are
considering a CSJ-like program should develop safeguards and
disincentives to reduce its occurrence.
Policymakers who want to increase the material and
emotional well-being of low-income families should focus at
least some of their efforts on providing health insurance,
improving child care resources, and offering a user-friendly
support system.
Some of New Hope's strongest impacts were only tangentially
related to participants' employment or cash income, centering
on the other services provided through the program. New Hope's
provision of health insurance and child care subsidies
significantly reduced material hardship and worries, may have
reduced stress, and may have improved both family relations and
child outcomes. In the provision of child care assistance, it
appears important to provide immediate and seamless access to
these benefits. This means anticipating and addressing the
communication difficulties that can occur between parents,
child care providers, and the program. New Hope developed a
functional system to manage this process.
One possible drawback of providing health insurance to low-
income workers is that it dissuades them from looking for a job
that provides these benefits. The evaluation found some
evidence along these lines, and such an effect could have
adverse long-term consequences.
Finally, a key contribution of New Hope to the lives of its
participants was the provision of ``social support.'' Project
reps were not only eligibility workers, but also provided
advice and emotional support that was highly valued by
participants. Although it is difficult to prove, the value of
New Hope's subsidies and services was likely enhanced by the
way in which they were delivered.
Policies that encourage parents with low incomes
to be employed full time, while allowing some reduction in
second jobs and overtime, may represent an optimal strategy.
By increasing the hours worked by some parents and reducing
overtime for others, New Hope enabled its participants to find
a more sustainable balance between work and family life. This
effect translated into important noneconomic benefits for these
families, suggesting that work-based programs should not focus
on increasing employment and earnings at all cost.
Policymakers interested in improving the well-
being of children in low-income families should ensure that
child care is actually provided and that out-of-school
activities for preschool and school-age children are readily
available.
New Hope produced substantial positive impacts on the
behavior and classroom skills of boys, which held up across
different age groups and were consistent across different
measures. This is encouraging, because academic failure and
problem behavior are predictors of later school failure,
dropping out, and delinquency. These risks are high for boys in
low-income families and promising policy alternatives to
improve child outcomes are scarce. Although at this point it is
not clear which features of New Hope affected the outcomes of
these children, formal child care and structured out-of-school
activities are strong candidates. Family dynamics and changes
in income may also have contributed.
Policymakers interested in employment-based
approaches to reducing poverty should consider the strengths
and limits of having broad eligibility rules, rather than
limiting interventions to particular groups of low-income
adults. In New Hope, such rules led to positive economic and
nonmonetary effects for many groups. However, such a policy of
inclusion appears to increase the cost of the program.
One of New Hope's accomplishments was its ability to reach
out to a wide variety of people with low incomes in the target
areas it served, including underserved groups such as men,
families without children, and working poor families without a
welfare history. All of these groups used some parts of the New
Hope offer, even though some groups experienced more profound
effects on their circumstances and well-being than others.
A major benefit of targeting a program like New Hope to
welfare recipients or people with limited work experience is
that those groups are more likely to respond to the program by
increasing their employment and earnings. Such an employment
effect benefits society, offsetting some of the cost of
providing program services. The lack of positive employment
effects among those already working full time makes it more
likely that the program will operate at a net financial loss
for these individuals, especially if they reduce their hours of
work as happened in New Hope. Thus, policymakers face a trade-
off. They can operate a program of work supports that is
narrowly targeted at those least likely to seek employment on
their own or they can choose to extend those services to the
larger population of low-income working families. The former is
likely to be less costly, but the latter may generate
additional nonmonetary benefits that are valued by society.
Other states and localities should consider
testing policies like those New Hope implemented. Such a
program might have bigger effects in a different context: a
weaker labor market, a less employment-driven public assistance
system, or a low-income population with less work experience.
In some ways, this evaluation is a conservative test of New
Hope. The job market was healthy, the welfare system was being
restructured, and the state and federal EIC programs were
expanding, making work an increasingly attractive alternative
for low-income residents of Milwaukee. Adding New Hope to this
picture further enhanced this climate of promoting and
supporting work, producing the program effects detailed in this
report. However, had New Hope been implemented in a less
favorable environment, its effects might have been more
substantial. This report chronicles the potential of a new
approach to helping low-income families succeed in the world of
work. This approach deserves to be put to the test in a wider
range of local environments and economic settings.
April 1999
Manpower Demonstration Research Corporation
MDRC is evaluating the New Hope program under a contract
with the New Hope Project, Inc., supported by the John D. and
Catherine T. MacArthur Foundation, the Helen Bader Foundation,
the Ford Foundation, the State of Wisconsin Department of
Workforce Development, the W. T. Grant Foundation, the Annie E.
Casey Foundation, the U.S. Department of Health and Human
Services, and the National Institute of Child Health and
Development.
Dissemination of MDRC's work is also supported by MDRC's
Public Policy Outreach Funders: the Ford Foundation, the
Ambrose Monell Foundation, the Alcoa Foundation, and the James
Irvine Foundation.
The findings and conclusions presented in this report do
not necessarily represent the official positions or policies of
the funders of the New Hope Demonstration.
For information about MDRC, see our Web site: www.mdrc.org.
MDRC is a registered trademark of the Manpower
Demonstration Research Corporation.
Copyright 1999 by the Manpower Demonstration
Research Corporation. All rights reserved.
Chairman Johnson of Connecticut. Thank you. Thank you very
much. I appreciate the panel's testimony.
It is very important that we continue to do the research
and try to determine, for example, why though poverty is
declining, the number of children in acute poverty is actually
increasing and how much of that is related to our ability to
gather data or not gather data. We certainly want to keep our
attention on that. I think also, as we look at the new welfare,
you know, better use of the welfare-to-work dollars, how do we
take people who are entering the work force at a minimum wage,
but have children, and help them move up the career ladder so
that maybe not after 2 years, but eventually, they do earn
enough to support their children above the poverty level of
income.
It is not surprising to me that on minimum wage, you are
below poverty with children. That is just the way it is, and
you are not going to get above the minimum wage until you have
gotten in the work force for a while. So, I think the problems
in some areas that we are seeing are not surprising, but they
do mean we need a system, and this is one of the reasons why
that TANF level of funding is so terribly important. We need a
system that is able to do things that the current system has
not yet learned how to do. And some of it has to do with
getting people with very difficult problems into the work
force. People with problems such as lack of basic education, or
with serious substance abuse or other kinds of mental health
problems. But, a lot of it is how do we advance this latter
group.
But there were two things that interested me in your
testimony. One, which I just want to call to the attention of
my colleagues. One of you mentioned that--I cannot find it
right now--oh, yes, it was you, Mr. Granger, that some were not
applying for EITC. That is the first time--well, I guess
someone else mentioned it earlier. But in addition to the
Medicaid, food stamp problem, we really have to have a system
that better makes sure that people do get the benefits that are
there, because it is sort of new to have tax benefits as
important as they are now, through EITC and the child benefit.
But I did want to come back to Ms. Fagnoni's comment on annual
earnings. Average annual earnings to former welfare recipients
in the seven States, it ranged from $9,512 to $15,000. That is
such a different picture than we got from Wendell, that I
wonder--you know, maybe I am just not hearing it right. It is
hard when you just hear the statistics for the first time in a
hearing, but is it that you picked States that are pretty
affluent; I mean, that they are the ones that reported, so we
have different information?
Ms. Fagnoni. Well, I should talk about the universe of what
we looked at versus the kinds of national data Wendell and
others are looking at.
What we looked at specifically were State--efforts States
have made to try to determine what has happened to those
individuals who have left welfare. And after looking through
about 17 or 18 different studies that attempted to do that, we
identified eight studies in seven States where the information
was good enough. They get a high enough response rate. It was
generalizable enough that we could learn something about what
was happening to people leaving welfare in those seven States.
So it gives us a more limited universe, I think, than what he
was looking at. We only looked at those leaving welfare in some
specific States where there were enough data collected by those
States for us to be able to look across the studies and talk
about what the findings were.
Chairman Johnson of Connecticut. Thank you. Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. And let me thank all of
you for your testimony. I particularly appreciate those of you
that are on the frontlines of the States for the work that you
are doing.
Mr. Larson, obviously, I am very proud of what Maryland has
achieved and what you have been able to achieve in our State.
We do always cite Maryland here frequently, usually in good
terms. So, thank you.
But you know, it is interesting, in your testimony, you
point out what is happening to people who are leaving welfare,
but also who is left on welfare. And I thought that was a very
important point because we have a very difficult assignment
ahead of us for people who are still receiving cash assistance.
These are more complicated individuals. And we are not going to
have the same degree of success and be using the same
resources. We need to develop new strategies. We have a bill
here that I encourage you to take a look at to reform the
welfare-to-work law, to make it easier and more flexible for
the States to get at that money. And we are hoping that during
the course of this Congress, we will be able to deal with the
welfare-to-work issue so that you can take some of that money
and use it for the people who still are on welfare in a more
flexible way.
Ms. Rogers, let me compliment you also in Wisconsin. We are
very pleased, as I have mentioned earlier, on your way that you
allow the child support collections for the noncustodial parent
to go directly to the family. I think that is a very fine
program. I think only three States do that today, so you are
one of the three States that allow that. And we also understand
that you have established some new initiatives to try to
provide entitlement to childcare subsidies to all low-income
families, which is also encouraging.
But let me just mention a couple facts that have us
somewhat concerned. First, the participation rate in the child
care subsidies is rather low. It appears to be rather low.
Second, there has been at least some reports that some of
the savings in Wisconsin have not been plugged back into the
program or reserved for the more difficult people who might
need additional attention; that it has been used for a property
tax cut within your own State. If, in fact, that is true, it
just lends credibility to those in Congress who say there is
too much money out there for the States; we should be cutting
back.
I do not subscribe to that. I am fighting very hard to
protect the money in TANF and the money in the welfare-to-work
and expand programs to give our States additional resources,
knowing full well that you have a very difficult assignment on
your hands. But if some of these savings are being used
directly, that we are providing, for property tax relief, a
very laudable goal, but it makes it difficult to sustain funds
here. And I would appreciate your comments.
Ms. Rogers. First of all, relative to child care.
Mr. Cardin. Yes.
Chairman Johnson of Connecticut. Would you pull the
microphone closer, please, Ms. Rogers. Thank you very much.
Ms. Rogers. Relative to child care, we are doing a
tremendous amount of outreach and have been, as a matter of
fact, since early last fall, because we want very much to make
sure that everybody is aware of the fact that if they are
entitled to child care subsidy that they take advantage,
particularly the working poor who have never touched the cash
assistance programs, because they are the ones that are least
likely to be familiar with the program. In fact, we have been
investing----
Mr. Cardin. Does that also apply to their eligibility for
Medicaid, because the information we had is that----
Ms. Rogers. Yes.
Mr. Cardin. You were not doing much outreach there also.
Ms. Rogers. Oh, no. We are doing a tremendous amount of
outreach there as well. In fact, specifically on the child care
side, there was an investment of over $85,000, and it is
packaged with information about MA and food stamps just to do
employer-based outreach and specifically with regard to
Medicaid and food stamp outreach in another arena, we are
investing a tremendous amount of effort, as are our local
agencies in establishing additional outreach points. In
Milwaukee alone, we have 40 additional outreach stations at
which people can get full information, places where they are
likely to come--emergency health care and other sites. Where we
can sign them up and let them know what is available in terms
of these supportive services, Medicaid and food stamps, so they
can continue.
With regard to your comment about some of the things that
you have been hearing in terms of potential investment for the
dollars, I think it is important to--for me to share the issues
and programs and proposals that the Governor has put forth in
his budget, all of which are reinvestment of the TANF dollars
in programs that do, in fact, go back to supporting the very
population that we need to help most with these dollars,
including such things as a work force advancement program for
people who are either just leaving the programs or at risk of
falling back into them, and that is, alone, to the tune of $30
million; tremendous increase in additional investment in the
next generation child care programs for developmental
advancements in helping children in child care settings.
Wisconsin is already one of the tops in the Nation in terms
of our child care program, not to mention the dollar amount
that we put into subsidies, all of which child care subsidies
are also being increased in the Governor's budget proposal,
again using these TANF dollars to lower the copays, increase
the scope of the number of people that are covered for
subsidized child care, including disabled children up through
age 18, and the list goes on. Thank you.
Mr. Cardin. Well, so the property tax cut did not use any
of the savings from welfare reform or Federal funds?
Ms. Rogers. I am saying there are a number of discussions
and proposals that are underway. As you might imagine in the
legislative process, but none of what you see there is a part
of the Governor's budget proposal.
Mr. Cardin. OK. Is he supporting the----
Ms. Rogers. Well, he has always been a supporter of tax
breaks, but, in addition to that, he first and foremost is a
supporter of helping of our most----
Mr. Cardin. Let me just caution that it is--again, those of
us who really are working hard to maintain the money. We are
doing it for children. We are doing it for the success of the
program. I love to see States able to. I would like to see the
Federal Government provide tax relief, but let us make sure
that the programs that we are working on, the money is directed
for those needs. And I take your answer to say that you support
that, which I appreciate.
And my time has expired, but I just really want to make an
observation about Mr. Granger and your program. That is exactly
what we should be doing. I am very much impressed by what you
have been able to accomplish. You have put together the
combination of actors that give us a much better chance of
success, and just really wanted to compliment you on what you
are doing and assure you that we are watching.
Mr. Granger. Mr. Cardin, I should take no credit for the
program itself. That was put together by a group of
extraordinary people in Milwaukee. And it was a very bipartisan
coalition that put it together. What we put together was the
evaluation of, and I appreciate your remarks.
Chairman Johnson of Connecticut. Mr. Stark.
Mr. Stark. Thank you, Madam Chair.
Ms. Weinstein, it is my understanding that in Utah parents
who are being sent to work must first seek free child care
before they are allowed access to TANF-based child care
services. Are there other States where this practice is
occurring?
Ms. Weinsten. Well, yes, there are, and I cannot list them
out for you, but we have heard that there are other States
where there is a strong encouragement that people make use of
either the least expensive or no-cost child care.
Mr. Stark. Ms. Rogers, I am--I am troubled and the State of
California is troubled by the State of Wisconsin. I am going
back to Wauwatosa in September for my 50th reunion at Wauwatosa
High School, and most people in California will tell you they
wish I had not left. But, if it was a trade between me and
Eloise Anderson, they would have taken me a thousand times
over.
I remember the Governor testifying here a few years ago on
welfare reform, and he was informed that Archbishop Meyer
opposed the welfare reform, and Governor Thompson said he did
not really care what the Archbishop thought. He does not know
what he is talking about. Anyway, so I want to put into
perspective the good Governor's approach to people who may,
particularly in Milwaukee County, have some strong commitment
to the welfare of children.
Do you still operate--I notice here in item seven in
chapter one of the Wisconsin Works manual, you say that the new
system should provide only as much service as an eligible
person asks for or needs. Many persons will do much better with
a light touch. Is that still the predominant philosophy in your
program?
Ms. Rogers. Absolutely, it is.
Mr. Stark. OK. That is what I thought.
Ms. Rogers. But let us defer to share what the definition
of that----
Mr. Stark. Look, ma'am, I can read. I do not need a whole
lot of definitional mumbo jumbo. It seems to say to me--
particularly when we find the Milwaukee Journal reports that in
one case, the reporter went to one of the contractors on a
Wednesday at 3 p.m. and was told there were no forms available
for food stamp applications, which is, by the way, against the
law, and was told to come the back the next day--that this goes
on quite repeatedly.
I have some other reports here about Milwaukee, they tell
us that 65,000 fewer children receive public support than 5
years ago, which I suppose is all right, except that the 39
percent more Milwaukee County single parents are working poor,
and one out of every three employed single parents had income
earnings below the poverty level in 1997; and two out of three
had income earnings below 185 percent of poverty. And at least
61,000 Milwaukee County children are in employed families with
earnings below poverty. And 111,500 children are in families
with income earnings below 185 percent of poverty. And the
number of children receiving county-administered day care
assistance doubled in the last 3 years, but fewer than 15
percent of eligible low-income families are receiving day care
support; and that the Federal and State earned income tax
credit raised family earnings above poverty level for 16,000
children and about 90 percent of the eligible families are
claiming the credit. Good for them. But the number of working
poor employed families has increased. The number of children
receiving food stamps benefits, however, has dropped by nearly
30,000, and there are numerous articles in newspapers
suggesting that it is your own employees and your policy that
is encouraging people to not inform people, or to make it
difficult for them to get Medicaid and food stamps. And they
point, with some pride, to this idea of light touch, and
interpret it to mean that Wisconsin is denying eligible people
these services.
I think that is inhumane, and you might care to comment on
that.
Ms. Rogers. I would, sir, and thank you for the opportunity
because I would agree with you that if, in fact, that what was
happening, indeed, it would be inhumane.
Mr. Stark. It is happening.
Ms. Rogers. When in reality what is occurring in Wisconsin
is that we are investing a tremendous amount in making sure
that people understand what supportive services are available
to them because those are the very thing that help them----
Mr. Stark. There were no signs posted in these offices,
according to law?
Ms. Rogers. That is not true, sir, and that has since--I
understand you read that in the article. The reporter has since
retracted that statement because it was pointed out to him that
the signs were, in fact, there, and he did agree----
Mr. Stark. He just could not find it.
Ms. Rogers [continuing]. And he did agree that they were
there, but he did not understand what they meant. They are the
kind of signs and specifically the signs that appear all over
the United States. And they really are quite clear, so I am not
sure what his problem was. But that has been clarified. It was
an error in the newspaper.
I must go on, however, and clarify, sir, the kinds of
things that we are doing in Wisconsin, because we believe so
strongly, as you have just mentioned, that these supports are
critical to the ongoing ability of people to make it from
welfare on, because, by definition, people who are on welfare,
even in Wisconsin by the old benefits were generous, were at
about 78 percent below the Federal poverty level. And while we
still have many people who are not above the Federal poverty
level, they are better off, by far, and have an opportunity for
a future that they did not have before.
Compared to the national average, Wisconsin had the fewest
families that worried about buying food, according to the Urban
Institute study. And health insurance coverage in Wisconsin is
the highest of low-income children in the Nation. Medicaid and
family coverage in August 1997 compared to March 1999, we have
had only a very slight decrease in the amount of----
Mr. Stark. But, nonetheless, the number of children
receiving medical assistance coverage declined in Milwaukee
over the last 2\1/2\ years by 24,800.
Ms. Rogers. That is true, but it is a very small amount,
and it is strictly a function of eligibility.
Mr. Stark. What is a smaller--24,000 children in Milwaukee
County is not a small, indeed.
Ms. Rogers. By comparison and relative to Medicaid----
Mr. Stark. Well, I look--comparisons, ma'am--by comparison
to Kosovo, Milwaukee may be doing very well, but do not say
that on the south side.
Ms. Rogers. I would only say, sir, that pick another State,
because we are the best in the Nation for that coverage.
Mr. Stark. And that is good enough?
Ms. Rogers. Never.
Mr. Stark. All right. Then why do you continue to say that
a person should receive only as much service as they ask for
and need. Is not that suggesting to your employees and
contractors that they minimize exposure of the people to these
services? Is not that a sort of a do not ask, do not tell?
Ms. Rogers. No, because the emphasis that seems to be
missed is that they need, and many, many of these families do
need these supportive services, and we do, in fact, do
everything we can to make sure they----
Mr. Stark. Like not having the forms in the office for them
to fill out and asking them to come back the next day.
Ms. Rogers. Not at all. The reporter was not interested in
filling one out at the time.
Mr. Stark. Ma'am, let us take just this report, then, where
they find the same kinds of problems happening time and time
again; that day care support has risen but reaches fewer than
15 percent of the eligible children. I would like to suggest
that while you may be better than the State of California, as I
say because you sent us Eloise, and she will kill children if
she had her way. But I do not know why you can take any pride
in a program that tries to deny entry to people who need it, as
a policy.
Ms. Rogers. Because child per child, sir, we are investing
more in child care subsidy than any other State in the Nation.
Chairman Johnson of Connecticut. Ms. Rogers, I would like
to ask you a question about the really astounding data from the
county department of health and human services regarding child
abuse and neglect referrals in Waukesha County. Would you just
acquaint the Subcommittee a little bit with that? You also did
a followup study of what happened to people who left welfare in
that county, where welfare recipients went from 1,118
recipients down to 37 families. Would you just talk a little
bit about that and also particularly this issue of child abuse
and neglect referrals.
Ms. Rogers. Thank you, Madam Chairman, I would be happy to
do so. And Waukesha County, by the way for those of you who
might not be aware, is right next door to the Congressman from
California's area in Waukesha. Their caseload did, in fact,
drop, from 1995, April 1995 high of 1,118 families down to 37
families in January 1999.
Their population, by the way, was growing at the same time
at the rate of about 5,000 residents for every year since 1990.
Their shelter use, when you compare April 1995 to January 1999,
fell from 235 episodes to 102, down 66 percent. And
specifically relative to families, the number of families that
were served in our shelters remained constant from those two
date line points, so a zero-percent increase in that.
Food pantry usage from January to June 1997 compared to the
same months in 1998 shows that there were 3 months of increase
and 3 months of decrease, but the decreasing months were down
as much as 18 percent, and the increasing months were only up 7
percent. And, of 50 randomly selected families in that county
who received AFDC in 1995 and were then followed again in the
fall of 1998, 86 percent of them reported earned income, with
an average income of $15,892 per family, and that is a
conservative number, because it did not include self-employed,
out of State earnings, EITC, or other household members'
income.
Chairman Johnson of Connecticut. And as to the child abuse
and neglect referrals?
Ms. Rogers. Yes, a decrease of 66 percent.
Chairman Johnson of Connecticut. Sorry, I missed that.
Ms. Rogers. Oh, I am sorry. Excuse me. I am giving you the
wrong statistic. Also down dramatically. In 1994, 963 down to
639 in 1998, about a 25-percent drop.
Chairman Johnson of Connecticut. Now, I want to call the
Subcommittee's attention to this, not just because I think it
is really terrific and really reflects an ability to implement
our service laws and our benefit programs in a way that is
really helping children, but because if this is happening,
around the country, and I am sure it is not happening to this
degree, but that drop in referrals for child abuse and neglect
means that there were also fewer kids referred to foster care.
Right now, Federal money goes to States according to out-of-
home placements. Very, very little of it goes for prevention,
and it goes for prevention only as appropriated. The only
entitlement is for placed children.
With that kind of decline in just one county, in one State,
folks, let me tell you, if we do not reform the way we fund
foster care and child protective services, we need our heads
examined, and we will have neglected the very children we hope
to serve. So, we will be talking about that more in this
Subcommittee. But I was stunned at that decline, and I think it
is very impressive, particularly in a county moving forward.
Now, let me conclude by saying that I appreciate the
excellent testimony of all of you. And, Mr. Larson, I had noted
your interest in expanded flexibility and uniform definitions.
I invite any of you in the audience to submit to us written
recommendations as to what we need to do in the welfare-to-work
money, that is, it is an opportunity to make that money far
more flexible and far more useful to the States. And we intend
to do that. So we appreciate your good work. And, Mr. Larson, I
appreciate your many years of experience out there in the
frontline. And all of you. I thank all of you for excellent
testimony.
[Whereupon, at 1:23 p.m, the hearing was adjourned.]
[Submissions for the record follow:]
Statement of NETWORK
The Problem
Contrary to the widespread publicity about unparalleled
economic prosperity in the United States today, a significant
percentage of the population lives in abject poverty. The
nation rarely hears the voices of most people who are poor
since they are routinely overlooked by poll and census takers.
Many live on the fringes of society--without telephones or
stable addresses--while their struggles and suffering go
unnoticed by society as a whole.
Today, government officials are quick to point out that
national welfare caseloads are at their lowest point in 30
years. However, they are unable to tell us for the most part
what is happening to people after they leave the welfare
rolls--and what is happening to people living in poverty who
never received assistance in the first place. The Welfare
Reform Watch Project provides some early answers to these
critically important questions.
The Project
The Welfare Reform Watch project is an in-depth look at the
lives of people living in poverty. Subsequent to the enactment
of ``welfare reform'' legislation in 1996, and realizing that
virtually nobody had a genuine understanding of the
legislation's impact on people who are poor, NETWORK joined
forces with other faith-based groups to reach out to these
people whose voices had been little heard. NETWORK and its
partners in the study were able to utilize the resources of a
large number of affiliated social services agencies to conduct
one-on-one interviews with people in soup kitchens, homeless
shelters and other facilities. This direct connection among
study sponsors, service providers and clients made the project
a uniquely powerful instrument through which people who are
poor could at last tell their own stories.
As part of the study, a statistical survey instrument
designed by Dr. Douglas Porpora was distributed to 59 Catholic
social service facilities in ten states (California, Florida,
Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio,
Pennsylvania, and Texas). The ten states were selected based on
their heavy caseloads of people who were eligible for AFDC. A
total of 2,555 questionnaires were returned for analysis in
three phases--October 1997 (829 cases), March 1998 (926 cases)
and October 1998 (800 cases). Statistical information in this
report is based on Dr. Porpora's analysis of the questionnaire
responses.
Four hundred fifty ``watchers,'' individuals who followed
implementation of the welfare changes in their own communities,
also took part in the project. Their role was to monitor
effects of the legislation and to report on their findings to
local media outlets and legislators.
The Participants:
41% of the respondents are without operative
telephone numbers, making them difficult to reach for most
surveys and studies.
Clients of the social service facilities included
in this study are predominatly female (79%), with most women
respondents (75%) having minor children who live with them.
38% of the women respondents had not completed
high school, while only 13% received education beyond high
school.
Female respondents under age 30 are less likely
than men of the same age to have jobs (22% versus 36%). Women
and men over 30 have roughly equal levels of employment (20%
and 18%).
Survey respondents are almost evenly divided
according to race/ethnicity: White (29%); Black (35%); Latino
(36%).
38% of the respondents live in non-urban settings.
Key Findings
1. Poverty continues as people receive less government
assistance.
Percentage of respondents receiving welfare
whether unemployed or in transition to work, down sharply (33%
in October 1997--less than 5% in October 1998).
Percentage of the ``disconnected,'' unemployed
people who do not receive welfare benefits, up sharply
(52%-79%).
Percentage of respondents receiving Medicaid down
(76%-60%).
Percentage of respondents receiving food stamps
down (63%-52%).
2. Suffering continues as basic needs go unmet.
Hunger and poor health continue.
--Nearly half (49%) of the respondents report that their
health is only ``fair'' or ``poor.''
--31% unable on accasion to fill physicians' perscriptions
for needed medication due to cost.
--45% unable to meet dental needs due to cost.
--43% eat fewer meals or less per meal due to cost
Women and children are suffering
--14% of the parents unable at times to secure needed
medical care for their shildren due to cost.
--25% of the parents unable at times to secure needed
dental care for their children due to cost.
--24% of the parents report that their children are
skipping meals or eating less per meal due to cost.
--52% of soup kitchen patrons and 42% of respondents at
food pantries unable to provide sufficient food for their
children.
--70% of respondents without any government assistance are
female.
--63% of respondents without any government assistance have
children.
The working poor are suffering.
--41% of respondents with jobs experience hunger.
--The children of respondents with jobs suffer the effects
of their parents' low wages:
--lack of food (22%), lack of adequate health care (14%),
unmet dental needs (24%).
People without government assistance are
suffering.
--Of respondents without government assistance: 51% report
inadequate dental care, 36% report inadequate medical care.
Parents without government assistance report that
their children receive: inadequate dental care (36%),
inadequate medical care (21%).
The Challenge of Poverty in the Midst of Plenty--A Call to Action
In the United States today, a staggering 35 million people
live in poverty while the nation as a whole enjoys unparalleled
economic prosperity. The situation is intolerable. We can and
must do better.
U.S. citizens, policy makers and media must move the
conversation from:
``Wefare reform is working because welfare rolls are
dropping.'' to
``The unfinished agenda of our nation is moving people out
of poverty.''
To alleviate poverty and suffering, the United States must
establish social policies that aim to provide opportunity for
economic security for every household.
The life experience of the people in the Welfare Reform
Watch Project are riddled with debilitating poverty and
suffering. Their experiences raise questions that demand
further study and resolution.
NETWORK will participate in creating social, political and
economic structures that promote economic well-being.
What actions will you take to move people out of poverty
and create economic justice for all?
Project Sponsors:
Daughters of Charity United States Provinces
7800 Natural Bridge Road, St. Louis, MO 63121
Telephone 314-382-2800
Federation of the Sisters of Saint Joseph
1841 Glenmore Ave., Baton Rouge, LA 70808
Telephone 504-927-0273
Institute of Sisters of Mercy of the Americas
8300 Colesville Road, Suite 300, Silver Spring, MD 20910-3243
Telephone 301-587-0423
Pax Christi USA
532 West 8th Street, Erie, PA 16502-1343
Telephone 814-453-4955
NETWORK, A National Catholic Social Justice Lobby
801 Pennsylvania Avenue, Suite 460, Washington, DC 20003
Telephone 202-547-5556
Kathy Thornton, RSM
NETWORK National Coordinator
Statement of Hon. Fortney Pete Stark, a Representative in Congress from
the State of California
In the aftermath of welfare reform under the 1996 Personal
Responsibility and Work Opportunity Reconciliation Act, many
are pointing to plummeting welfare caseloads as a sign of
welfare reform's success. While the rolls have fallen by 4.6
million people, or 38 percent, since the signing of the welfare
reform law, any claims that welfare reform is a success are
premature.
A main factor to consider when assessing the success of
welfare reform is whether individuals and families leaving the
rolls (``welfare leavers'') are better off economically.
Various reports illustrate that these welfare leavers are
earning low wages that do not pull them above the poverty line,
are typically not finding jobs with employment-based health
coverage, and are not being signed-up for food stamps or
Medicaid, two assistance programs that could serve as critical
work supports. In fact, it appears that in their efforts to
deter people from cash assistance, some States are wrongfully
diverting families from Medicaid and food stamps.
Following is an overview of several studies that illustrate
the downside of welfare reform and underscore the need to be
cautious before declaring victory or failure.
Sharon Parrot, Center on Budget and Policy Priorities, Welfare
Recipients Who Find Jobs: What Do We Know About Their Employment and
Earnings?, November 1998.
This report synthesizes findings from recent
studies on employment and earnings patterns for welfare
recipients who left their state's cash assistance program or
who were subject to new rules under welfare reform
``demonstration'' programs. Across the studies, the following
patterns emerged:
Employed former recipients and recipients
combining work and welfare typically are paid less than $8 per
hour and a substantial portion earn less than $6 per hour.
Those who find jobs tend to work a substantial
number of hours--typically more than 30 hours per week during
weeks in which they are employed.
Despite this relatively high number of weekly work
hours, recipients who find jobs typically earn between $2,000
and $2,700 per quarter (or between $8,000 and $10,000
annually), a total well below the poverty line for a family of
three.
Most recipients who do find jobs do not receive
paid vacation or sick leave from their employer or employer-
sponsored health insurance. Many individuals are also not
covered by the Family and Medical Leave Act because they do not
meet the minimum work requirements (worked for their current
employer for at least one year and who worked at least 1,250
hours in the last year).
The report concludes that recipients who find jobs
are likely to have incomes that are inadequate to meet their
families' basic needs. For many families, a combination of
earnings, cash and in-kind government income support, and child
support for single-parents, will be necessary to make ends
meet.
Sharon Parrot and Stacy Dean, Center on Budget and Policy Priorities,
Food Stamps Can Help Low-Income Working Families Put Food on the Table,
March 31, 1999.
This report builds on the state evaluation data
discussed above.
The authors illustrate that, given recent data
indicating that families leaving welfare for work are earning
wages below the poverty line, food stamps can contribute
greatly to a family's income. In combination, food stamps, the
EITC and family earnings can lift a full-time minimum wage
worker almost to, or above, the poverty line.
Data show that as cash assistance rolls have
fallen, so has food stamps participation. However, the decline
in food stamps caseloads far outstrips the decline in the
number of people eligible for food stamps. Many families are
still eligible for food stamps, yet are not participating in
the program. The most recent data on food stamp participation
among low-income households with earnings showed that only 55.2
percent of food stamp eligible households with earnings and
children participated in the food stamp program.
These working poor families could use food stamp
benefits to boost their incomes and the report provides
examples to illustrate that point. For instance, in a family of
three with one person working 30 hours per week at the minimum
wage, ``take-home earnings'' (after taxes, before EITC)
increase by $223 to $283 due to food stamps.
Kaiser Family Foundation, Participation in Welfare and Medicaid
Enrollment, September 1998.
This report summarizes eight state studies that
examined AFDC/TANF exits and health care coverage. The
overarching theme is that when families stop receiving AFDC/
TANF, Medicaid enrollment goes down.
The magnitude of the decline varies between
studies, but often one-third or more of children and most
adults in families that have exited AFDC/TANF are no longer
reported to be receiving Medicaid.
Furthermore, most families entering employment
after having received AFDC/TANF do not have employment-based
health care coverage. Typically, among families who are
employed, the share reporting employment-based coverage is 25%
or less.
Urban Institute, Where Are They Now? What States' Studies of People Who
Left Welfare Tell Us, May 1999.
This report summarizes the findings of eleven
studies examining the well-being of welfare leavers.
While all the studies report employment rates for
welfare leavers of over 50 percent, it is important to note
that these rates can be skewed since some studies may not count
individuals who leave welfare for work but then subsequently
return to welfare, and some studies may count individuals as
employed even if they make only $100 in a three-month period.
In general, the studies show that leavers are not
earning enough to raise their income far above the poverty
line, and that the jobs they find are typically concentrated in
low-wage industries.
Children's Defense Fund, Welfare to What: Early Findings on Family
Hardship and Well-Being, November 1998.
This report found the following:
Only a small fraction of welfare recipients' new jobs pay
wages sufficient to lift a family of three above the poverty line; most
of the new jobs pay far below the poverty line.
Many families who leave welfare are losing income or not
finding steady jobs at all.
Extreme poverty (below one-half of the poverty line) is
growing more common for children, especially those in female-headed and
working families. The number of children in extreme poverty grew from 6
million in 1995 to 6.4 million by 1997, an increase of nearly 7
percent. This increase is surprising since it occurred during a time of
economic growth and a decline in overall child poverty.
Former TANF recipients report increasing difficulty buying
sufficient food, paying their rent and utilities, as well as loss of
Medicaid and greater signs of homelessness.
Potential welfare recipients face administrative barriers
to cash assistance including complex application policies, procedures
discouraging applications, agency errors and poor communication.
Furthermore, workers may fail to tell parents about
protections that can keep them from being sanctioned (e.g., that they
may be exempt from work requirements if they cannot find child care for
pre-school age children.)
Jocelyn Guyer and Cindy Mann, Center on Budget and Policy Priorities,
Employed but Not Insured: A State-by-State Analysis of the Number of
Low-Income Working Parents Who Lack Health Insurance, March 1, 1999.
This report uses 1997 U.S. Census Bureau data to
analyze the number of parents of low-income working families
who are without health insurance.
The data show that these parents are at high risk
of being uninsured. In fact, more than 5.4 million low-income
working parents were uninsured in 1997. These parents have
limited access to publicly funded coverage and are often not
covered through their employers.
Working poor parents are twice as likely to be
uninsured as their unemployed counterparts. In 1997, some 23
percent of poor parents without earnings were uninsured
compared to 46 percent of working poor parents.
A review of state policies found that although
states generally provide Medicaid to parents who are receiving
welfare, and all have recently expanded coverage for low-income
children, few states cover low-income working parents who have
no current or recent attachment to the welfare system. In fact,
43 states do not cover working parents whose earnings bring
them just to the poverty level.
Until passage of PRWORA, federal Medicaid law
limited coverage to parents who were receiving welfare or who
recently had left welfare. Under PRWORA, states now have a new
option to expand coverage more broadly to low-income working
parents. Rhode Island and DC have taken advantage of this, and
Missouri and Wisconsin recently adopted parent coverage
expansions under federal Medicaid waivers.
Families USA, Losing Health Insurance: The Unintended Consequences of
Welfare Reform, May 1999.
In the aftermath of welfare reform, Medicaid
enrollment declined and the number of low-income people without
health insurance increased.
Specifically, Families USA reported that as of
1997, 1.25 million people with incomes under 200 percent of the
poverty level lost their Medicaid coverage.
Of those who moved off of Medicaid in 1997, more
than half, or 675,000 children and adults, were instead
uninsured in 1997.
For the 675,000 people who lost Medicaid after
welfare reform and were uninsured, more than three out of five
were under the age of 19. Most of these children were probably
still eligible for Medicaid and should not have lost coverage.
There are three ways in which these low-income
people lose health care coverage as a result of welfare reform:
(1) they or a family member successfully move from welfare to
work, often to a job with no health insurance, and lose
coverage even though they may still be eligible for
transitional Medicaid; (2) they are terminated from welfare,
resulting in a wrongful loss of Medicaid; and (3) state efforts
to deter people from welfare often can result in people being
denied the opportunity to apply for Medicaid.
NETWORK's National Welfare Reform Watch Project, Poverty and Plenty,
The Unfinished Business of Welfare Reform, May 1999.
NETWORK is a National Catholic Social Justice
Lobby that utilizes the resources of a large number of social
service agencies to conduct one-on-one interviews with people
in soup kitchens, homeless shelters and other facilities
Survey findings highlighted by NETWORK were as
follows:
People are receiving less government assistance
while still living in poverty: the percentage of respondents
receiving Medicaid decreased from 76 percent to 60 percent, the
percentage receiving food stamps decreased from 63 percent to
52 percent, and the percentage receiving welfare, whether
unemployed or in transition to work, decreased from 33 percent
in October 1997 to less than 5 percent in October 1998.
Low-income families report their basic needs are
not being met: among all respondents, 31 percent report being
unable at times to fill physicians' prescriptions due to cost;
14 percent of parents reported being unable to secure medical
care for their children. 45 percent are unable to meet dental
needs; 42 percent eat fewer meals or less per meal due to cost.