Welfare Reform in Agricultural California

By Green, Richard; Martin, Philip et al. | Journal of Agricultural and Resource Economics, April 2003 | Go to article overview

Welfare Reform in Agricultural California


Green, Richard, Martin, Philip, Taylor, J. Edward, Journal of Agricultural and Resource Economics


When welfare reforms were enacted in 1996, a higher than average percentage of residents in the agricultural heartland of California, the San Joaquin Valley, received cash assistance. Average annual unemployment rates during the 1990s ranged from 12% to 20%, and 15% to 20% of residents in major farming counties received cash benefits. This analysis develops and estimates a two-equation cross-sectionally correlated and timewise autoregressive model to test the hypothesis that in agricultural areas, seasonal work, low earnings, and high unemployment, as well as few entry-level jobs that offer wages and benefits equivalent to welfare benefits, promote welfare use and limit the potential of local labor markets to absorb ex-welfare recipients.

Key words: cross-sectionally correlated and timewise autoregressive model, farm workers, immigration, welfare reform

Introduction

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PL 104-193, PRWORA) required states to move able-bodied adults receiving cash assistance into employment after two years, and limited most able-bodied adults to a "lifetime" five years of cash assistance. PRWORA singled out immigrants for additional restrictions: most legal immigrants arriving after August 22, 1996, are not eligible for federal welfare assistance until they have been in the United States at least five years, and many legal immigrants receiving assistance when PRWORA was enacted lost their eligibility for benefits.1

California's agricultural heartland provides a unique test of the feasibility of the PRWORA work-first approach to welfare. The San Joaquin Valley includes a farm work force that is more than 95% immigrant, has unemployment rates which ranged from 12-20% in the 1990s, and includes counties with some of the highest welfare-use rates in the United States-15% to 20% of residents of major agricultural counties were receiving cash welfare benefits in the mid-1990s (Nyberg).

This study utilizes a unique longitudinal database and simultaneous-equation techniques to test the hypothesis that a lack of well-paid jobs with benefits in California's major agricultural counties promotes welfare use and limits the potential of local labor markets to gainfully absorb ex-welfare recipients. The corollary of this hypothesis is that policies limiting adult access to welfare either will reduce the incomes of poor rural households or will induce rural welfare recipients to leave agricultural areas in order to maintain their incomes. Our findings question the assumption underlying the federal welfare reform that there should be a one-size-fits-all welfare policy. The two- and five-year PRWORA limits on cash benefits may have to be adjusted for agricultural areas with large numbers of seasonal farm jobs.

U.S. Welfare Reforms and Expectations

The 1996 welfare reforms mark a watershed in social policy. PRWORA ended welfare as a federal entitlement, replacing the 61-year-old Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) program. Even though socioeconomic conditions differ significantly throughout the United States, all residents are subject to the two- and five-year limits on federal cash assistance.

In California, PRWORA was implemented through the California Work Opportunity and Responsibility to Kids Program (CalWORKS), which went into effect January 1, 1998. Under CalWORKS, individual adult recipients of cash assistance are required to sign welfare-to-work contracts spelling out the requirements imposed by county counselors to engage in job search activities, or to obtain supportive services that make the recipient employable (Klerman, Reardon, and Steinberg; Haider et al.; Nyberg). There are sanctions on individuals who refuse to work, as well as on counties and the state if too few adults are working within specified time periods. In 1996, the percentage of residents receiving welfare assistance in California's 58 counties ranged from 1. …

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