Academic journal article Federal Reserve Bank of New York Economic Policy Review

Session 1: Overview and Characteristics of Welfare Leavers

Academic journal article Federal Reserve Bank of New York Economic Policy Review

Session 1: Overview and Characteristics of Welfare Leavers

Article excerpt

PAPER BY

Pamela Loprest

COMMENTARY BY

Hilary Williamson Hoynes

HOW ARE FAMILIES WHO LEFT WELFARE DOING OVER TIME? A COMPARISON OF TWO COHORTS OF WELFARE LEAVERS

INTRODUCTION

One of the stated purposes of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, popularly known as welfare reform, was to "end the dependence of needy parents on government benefits by promoting job preparedness, work, and marriage." To this end, this federal legislation, along with many other changes in state policies before and after passage, has increased incentives and requirements for families receiving benefits to move into work and eventually off welfare. The major cash assistance program for poor families is now named Temporary Assistance for Needy Families (TANF), reflecting the goal that receipt of cash assistance from the government should be a temporary situation for families.

After passage of PRWORA, concerns began to grow about the effect of welfare policy changes on family well-being. These concerns were heightened by the large declines in welfare caseloads--more than 50 percent nationally from 1994 to 1999--and the claims by some that this meant that welfare reform was a success. Although there have always been families leaving the welfare rolls, these recent policy changes have done more to explicitly "create" leavers, mainly through stricter sanctions for failure to meet program requirements and the institution of time limits on benefits receipt.

To address these concerns, a number of state and local welfare agencies as well as some independent researchers began conducting what have come to be known as leaver studies. These studies examine outcomes for families who left welfare over a certain period of time. Early results from these studies showed that a majority of leavers were working and that their wage rates were the same or higher than other similar groups in the labor market.(1) Although results were not all positive (many leavers were not working and few had escaped poverty), it seemed that the goal of increasing work was being met.

However, a cautionary note in interpreting these results, pointed out by many, was that future groups of leavers may not fare as well and that these early results may not be representative of future results. For example, if recipients who can most easily find work leave welfare more quickly, future cohorts could possibly have higher numbers of recipients with obstacles to work, such as inferior job skills and experience.

Now, four years after passage of these welfare program changes, many additional efforts are under way to assess and evaluate whether the goals of reform have been met and how these policy changes have impacted families. Leaver studies have also progressed, in terms of the number and quality. The U.S. Department of Health and Human Services' Office of the Assistant Secretary for Planning and Evaluation (ASPE) provided funding to fourteen states and local areas to conduct studies of families who left the welfare rolls, providing technical assistance to help bolster quality and enhance comparability. Results of these studies are now being released.(2)

This study is also a "leaver study"--describing the economic well-being of families who left welfare and using the National Survey of America's Families (NSAF), conducted by the Urban Institute. It adds to the body of leaver studies by presenting a national picture, providing context for the individual state and local study results, and giving a sense of outcomes on average across the fifty state "experiments" in welfare policy. An initial study of welfare leavers using these data was carried out recently (Loprest 1999); that study presented results for families leaving welfare between 1995 and 1997, compared with other low-income families with children.

This paper focuses on a comparison of outcomes for these early leavers with a more recent cohort of those leaving welfare between 1997 and 1999. …

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