Minnesota Welfare-to-Work Plan Helps Families out of Poverty

By Rosenblum, Susan | Nation's Cities Weekly, July 3, 2000 | Go to article overview

Minnesota Welfare-to-Work Plan Helps Families out of Poverty


Rosenblum, Susan, Nation's Cities Weekly


As Congress prepares to consider reauthorization of federal welfare reform in 2001, government officials at all levels are asking, "So what happens to families and children when parents leave welfare for work? Are they truly better off?"

Several national studies are trying to answer the question. One such study, Reforming Welfare and Rewarding Work: Final Report on the Minnesota Family Investment Program (MFIP), looks at the impact of welfare-to-work on families in Minnesota. The study reports findings from an evaluation of Minnesota's welfare reform program by the Manpower Demonstration Research Corporation (MDRC), a nonprofit, nonpartisan research group in New York City. Because MFIP allowed parents who left welfare for work to keep their benefits until their income was at least 40 percent above the poverty line, even low-wage workers had a chance to become more economically self-sufficient.

National League of Cities Second Vice-President, Karen Anderson, Mayor of Minnetonka, Minnesota, notes that local elected officials have a stake in the outcomes for parents in their cities who are trying to move off welfare. "A strong, stable and growing business sector is a benefit to cities, ensuring its continued success has always been a priority for cities," Mayor Anderson notes that programs like the MFIP play a role in helping officials attract the types of companies that keep the city tax base strong. "The labor market is tight and impacts the ability of businesses to grow and expand," Mayor Anderson explains. "But programs like the MFIP, that emphasize putting people to work, provide a resource from which business can draw potential employees."

And although the MFIP pilot cost state government about $2000 more a year per family, the program led to positive outcomes for parents, their children, and the local community as a whole.

Overall, the study found that MFIP not only played a role in reducing poverty, but also promoted a better quality of family life.

The program helped to keep two-parent families together, decrease domestic abuse, provide health care coverage, and improve children's performance at school.

These outcomes may translate into long-term savings to local government by reducing the demand for emergency survival services by low-income families.

Making Work Pay

The MDRC study is gaining national attention because it used rigorous evaluation methods The researchers randomly assigned 14,000 parents who were on welfare in seven counties in Minnesota from 1994 to 1998 to one of two groups: MFIP (the "MFIP group") or the traditional AFDC system (the "AFDC group"). (The AFDC was still in place during the period of the pilot program.)

The major difference between the two groups was that MFIP allowed parents leaving welfare for work to keep more of their benefits until their income was at least 40 percent above the poverty line ($18,200 for a family of three). In addition, childcare subsidies were paid directly to childcare providers for parents who worked.

Researchers compared employment, earnings, and other outcomes for the two groups over a three-year period and found that parents in MFIP fared better and were more likely to move out of poverty.

Other key findings include:

MFIP increased employment and earnings. In an average quarter (three months), nearly half (49.9 percent) of MFIP parents worked, compared with 37 percent of the AFDC parents. MFIP parents' earnings were also about 23 percent higher, on average.

However, MFIP's impact on employment was larger in the urban counties than in rural counties. Researchers also found the impacts fairly consistent across racial and ethnic groups.

MFIP increased employment in full-time jobs with benefits. MFIP parents who obtained jobs were more likely to stay employed and worked in jobs with benefits. After three years, more parents in the MFIP group reported working or having worked full-time (at least 30 hours a week) and more said their jobs offered health benefits.

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