How Well Have Rural and Small Metropolitan Labor Markets Absorbed Welfare Recipients?

Final Report

Prepared for:
Assistant Secretary for Planning and Evaluation
U.S. Department of Health and Human Services

Prepared by:
The Lewin Group: Mary Farrell, Selen Opcin, and Michael Fishman
Consultant: David Stapleton

April, 2001

This report is available on the Internet at:
http://aspe.hhs.gov/hsp/rural-lm01/index.htm

Obtaining a Printed Copy

Contents

Acknowledgments
Acronyms And Abbreviations

Executive Summary

Chapter 1: Introduction

  1. Purpose of Study
  2. Welfare Reform
    1. 1993 to 1996: Welfare Waivers
    2. 1996 to 1998: PRWORA
  3. Growth of Economy
  4. Other Factors
    1. EITC
    2. Increase in Minimum Wage
    3. Population Growth
    4. Effect of Recession
  5. Past research
  6. Study Overview
    1. Basic Approach
    2. Contents of the Report

Chapter 2: Rural And Small Metropolitan Labor Markets

  1. Characteristics of Jobs
    1. Lower Wages Across Industries
    2. Industry and Occupation Mix
  2. Characteristics of workforce
  3. Barriers to employment

Chapter 3: Study Regions

  1. Characteristics of population
  2. Labor Market Conditions
  3. Welfare Policies
    1. Waivers Operating in Study Regions
    2. After PRWORA
  4. Welfare Caseloads

Chapter 4: Methodology

  1. Economic Model
    1. Assessment of the Impact of Welfare Reform and Economic Expansion
    2. Elasticity of Labor Demand and Labor Supply
    3. Unemployment Rate
    4. Downward Wage Rigidity
    5. Summary
  2. Calculating Low-Skill Employment and Wages
    1. Calculating Employment and Wages by Occupation
    2. Classifying Occupations by Education and Training Requirements
  3. Assumptions of Elasticity of Labor Demand and Labor Supply
  4. Estimating Welfare Recipients in Labor Force

Chapter 5: Findings

  1. Change in Employment, Wages, and Welfare Caseloads between 1993 and 1998
    1. Employment and Wages
    2. Welfare Recipients' Participation in the Labor Force
  2. Decomposing the Effect of Welfare Reform and Economic Expansion
    1. Demand and Supply Shifts
    2. Analysis of Supply Shifts and the Maximum Impact of Welfare Reform
    3. Employment and Wages
    4. Displacement
  3. Projecting the Effect of a Recession
  4. Summary and Implications for Further Research

Appendices

  1. Comparison of NISP Employment Across Regions Using the CPS
  2. Comparison of NISP Payroll Across Regions and Time using the CPS
  3. Comparison of Low-Skill Employment Estimates Calculated using ES-202/NISP and OES
  4. Sensitivity Of Changes In Wages ANd Employment To Alternative Elasticity Assumptions
  5. Employment and Wages By Skill LeveL
  6. Results for Jackson, Tennessee

Acknowledgments

Work on this project was funded by the Assistant Secretary for Planning and Evaluation (ASPE), Department of Health and Human Services (HHS) under a contract to The Lewin Group. This report has benefited greatly from the oversight and input of Laura Chadwick, the ASPE Project Officer, and her predecessor, Davy Norris.

The cooperation of staff from the Department of Labor and state staff in the regions have been critical to the completion of this report. From the Department of Labor, Bureau of Labor Statistics, Douglas Himes provided data from the Occupational Employment Statistics survey for the MSAs, Bernard Bell provided data from the ES-202 system for the MSAs, and Alan Eck provided the education and training codes. From the state labor agencies, William Niblack in Missouri, Jonathan Cole in New York, and Dwayne Stevenson in Oregon provided data from the ES-202 system for the non-MSA regions. From the welfare state agencies, Deborah Wood in Alabama, Richard Koon in Missouri, Chris Christmas in Mississippi, Jine Gleason in New York, Sue Johns in Oregon, Susan Banks in South Carolina, Harriet Drewery in Tennessee, Debra Tighe in Vermont, and Janet VanVleck and Beth Dorschner in Wisconsin provided AFDC/TANF caseload information.

At The Lewin Group, Stephanie Laud and Eunice Lee assisted with the data collection effort, Brian Simonson assisted with the analysis, and Darla Webb assisted with the report's production.

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Acronyms and Abbreviations

AFDC
Aid to Families with Dependent Children
ARF
Area Resource File
ASPE
Assistant Secretary for Planning and Evaluation
BLS
Bureau of Labor Statistics
CEA
Council of Economic Advisors
CPS
Current Population Survey
DHHS
U.S. Department of Health and Human Services
EITC
Earned Income Tax Credit
ES-202
Covered Employment and Wages
HHS
U.S. Department of Health and Human Services
JOBS
Job Opportunity and Basic Skills Training Program
LD
Labor Demand
LS
Labor Supply
MSA
Metropolitan Statistical Area
NA
Not Applicable
NISP
National Industry Staffing Patterns
NSAF
National Survey of America's Families
OBRA
Omnibus Budget Reconciliation Act of 1981
OES
Occupational Employment Statistics
PRWORA
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
SESA
State Employment Security Agency
SIC
Standard Industrial Classification
TANF
Temporary Assistance to Needy Families
USDA
United States Department of Agriculture

[ Go to Contents ]

Obtaining a Printed Copy

To obtain a printed copy of this report, send or fax the title and your name and address to:

Human Services Policy, Rm 404E
Assistant Secretary for Planning and Evaluation
U.S. Department of Health and Human Services
200 Independence Ave, SW
Washington, DC 20201

Fax: (202) 690-6562

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Last updated: 05/03/01