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Welfare-to-work programs have two goals: increasing employment and earnings and reducing welfare receipt and benefit amounts. Chapter 4 discussed which programs were most successful with the work part of the transition. The Portland program had the largest and most persistent effects. Employment-focused programs increased employment quickly, and both employment- and education-focused programs increased employment in the intermediate term. For people who had not graduated from high school, however, job search appeared more effective than education at increasing earnings and employment.
This chapter explores the effects of the programs on welfare and Food Stamp receipt and benefit amounts over five years, estimated from automated state and county payment records. In addition to showing the effects of the programs on these outcomes for all programs for the full report sample, the chapter compares the effects of the programs for high school graduates and nongraduates and compares the effects of the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside.
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How much a welfare-to-work program reduces welfare use will be influenced by a number of factors, including how much the program increased employment and earnings, how strictly it enforced participation mandates by using sanctions, and the generosity of the state's welfare benefits.
In all of the NEWWS sites, as family earnings increased, welfare payments decreased. Therefore, it is reasonable to expect programs that led to the largest increases in earnings over five years — particularly Portland — to also have produced the largest decreases in welfare receipt and expenditures.
Sanctions (described in Chapter 1) also have a direct effect on welfare use. As a result, tough, enforcement-oriented programs like Grand Rapids HCD could have reduced welfare payments much more than they increased employment or earnings. Because the programs studied in NEWWS did not use "full-family sanctions," which remove all of a family's welfare grant,(1) the direct effect of sanctions would be to reduce payment amounts rather than time on welfare. Nevertheless, a family whose benefits were reduced through sanctions might have decided to leave welfare altogether, so that sanctions might have indirectly resulted in fewer people receiving welfare. Requiring people to participate in welfare-to-work services might also encourage them to leave welfare even if it does not increase their employment and earnings. For example, some people might already be working but not reporting their earnings to the welfare system. Going to school or attending a job club might interfere with their ability to perform their job or might be too great a burden on top of working, and they might choose to keep their job and stop receiving benefits.
Differences in maximum welfare grant levels by site and in welfare earnings disregards (described in Chapter 1) could also influence the effects that programs have on welfare use. Other things being equal, savings in welfare expenditures will be larger in high-grant states simply because there are more dollars to save. On the other hand, reductions in months on welfare will be larger in low-grant states because people lose their eligibility for cash assistance at a lower level of earnings. Likewise, reductions in both welfare payment amounts and welfare receipt will be smaller in states with relatively more generous earnings disregards (that is, those that allow working welfare recipients to keep more of their welfare payments), like California and Georgia.
Site-by-site differences in background characteristics of sample members may also be related to program effects on welfare use. Welfare savings may be greater in sites where most sample members had long stays on welfare before random assignment or faced other severe barriers to employment, because control group members in these sites were likely to remain on assistance for a long time. If long-term welfare recipients have severe barriers that keep them from working and that are not ameliorated by the programs, however, then sites with a more disadvantaged caseload might have smaller effects on welfare use. (Chapter 7 examines this question by investigating whether the programs increased the earnings of long-term welfare recipients and reduced their welfare benefit levels.)
In short, we should expect relatively high reductions in welfare receipt and payment amounts in Portland, which increased earnings the most and had relatively generous benefits. We might also expect high reductions in Riverside LFA, which had the second highest impact on earnings and had the most generous benefits, although California's generous earnings disregard might have diminished the program's effect on welfare use. We should expect higher reductions in welfare use in Grand Rapids and Columbus than would be indicated by their impacts on employment and earnings because these sites had some of the toughest sanction policies, but smaller reductions in Detroit than would be indicated by their impacts on employment and earnings because Detroit did not strictly enforce participation mandates for much of the follow-up period. Finally, we should expect relatively small reductions in welfare benefit amounts in Atlanta — even though its two programs increased earnings — because it had such low grant levels and had a more generous earnings disregard policy than any site except Riverside.
The effects of the programs on Food Stamp receipt and benefit amounts are harder to predict. Regarding cash assistance, as earnings increase, Food Stamp benefits decrease. However, additional earnings generally reduce Food Stamps less than welfare: Each additional dollar of earnings reduces Food Stamp amounts by less than a dollar. In addition, Food Stamp grant calculations count a dollar of earnings less than a dollar of welfare, so a person who replaces welfare dollars with earnings may experience a net increase in Food Stamps.(2) It is also possible that recipients gave up Food Stamps after they left welfare for employment or other reasons, even if they still qualified for them, either because they wanted to leave public assistance entirely or because they did not know they were still eligible for noncash assistance.
Table 5.1 shows the average number of months that program and control group members received cash assistance and the payment amounts they received on average. Both of these outcomes were measured over the five-year follow-up period from administrative records collected from state and county welfare systems. The table also shows the impact of the programs (as always, measured as the difference in average outcome levels between the program and control groups) and their levels of statistical significance.(3) Because welfare administrative records were available in Oklahoma City for only three years, results for Oklahoma City are not shown in most tables and figures in this chapter.
| Site and Program | Sample Size | Program Group | Control Group | Difference (Impact) | PercentageChange (%) |
|---|---|---|---|---|---|
| Average number of months of welfare receipt in years 1 to 5 | |||||
| Atlanta Labor Force Attachment | 2,938 | 34.4 | 37.2 | -2.9 *** | -7.7 |
| Atlanta Human Capital Development | 2,992 | 35.3 | 37.2 | -1.9 *** | -5.2 |
| Grand Rapids Labor Force Attachment | 3,012 | 26.9 | 31.1 | -4.2 *** | -13.6 |
| Grand Rapids Human Capital Development | 2,997 | 28.2 | 31.1 | -2.9 *** | -9.2 |
| Riverside Labor Force Attachment | 6,726 | 27.8 | 31.0 | -3.2 *** | -10.5 |
| Lacked high school diploma or basic skills | 3,125 | 30.1 | 33.3 | -3.2 *** | -9.6 |
| Riverside Human Capital Development | 3,135 | 30.0 | 33.3 | -3.3 *** | -9.8 |
| Columbus Integrated | 4,672 | 23.3 | 27.2 | -3.9 *** | -14.4 |
| Columbus Traditional | 4,729 | 24.7 | 27.2 | -2.5 *** | -9.2 |
| Detroit | 4,459 | 36.1 | 37.7 | -1.6 *** | -4.3 |
| Oklahoma City | n/a | n/a | n/a | n/a | n/a |
| Portland | 4,028 | 19.8 | 25.3 | -5.6 *** | -21.9 |
| Average total welfare payments received in years 1 to 5 ($) | |||||
| Atlanta Labor Force Attachment | 2,938 | 9,064 | 9,946 | -881 *** | -8.9 |
| Atlanta Human Capital Development | 2,992 | 9,236 | 9,946 | -710 *** | -7.1 |
| Grand Rapids Labor Force Attachment | 3,012 | 10,414 | 12,966 | -2,552 *** | -19.7 |
| Grand Rapids Human Capital Development | 2,997 | 11,199 | 12,966 | -1,767 *** | -13.6 |
| Riverside Labor Force Attachment | 6,726 | 15,584 | 18,294 | -2,710 *** | -14.8 |
| Lacked high school diploma or basic skills | 3,125 | 17,171 | 20,126 | -2,955 *** | -14.7 |
| Riverside Human Capital Development | 3,135 | 17,176 | 20,126 | -2,949 *** | -14.7 |
| Columbus Integrated | 4,672 | 7,481 | 9,005 | -1,523 *** | -16.9 |
| Columbus Traditional | 4,729 | 7,899 | 9,005 | -1,105 *** | -12.3 |
| Detroit | 4,459 | 15,686 | 16,247 | -561 ** | -3.5 |
| Oklahoma City | n/a | n/a | n/a | n/a | n/a |
| Portland | 4,028 | 8,940 | 11,686 | -2,746 *** | -23.5 |
| SOURCE: MDRC calculations from state and
county administrative records. NOTES: See Appendix A.1. |
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Table 5.1 shows that all 10 programs in which welfare payments were available had a significant effect on the number of months that people received welfare. The effect ranged from 1.6 months (over a five-year, or 60-month, period) in Detroit to 5.6 months in Portland. All 10 programs also reduced welfare payments over the five-year period (relative to control group levels), with welfare savings ranging from $561 in Detroit to $2,949 in Riverside HCD (although the percentage change was largest in Portland: 23 percent).
Results by site are generally consistent with the expectations outlined in the prior section. First, the program with the largest effects on employment and earnings — Portland — also had the largest reduction in welfare use. These reductions are especially impressive considering the Portland control group's relatively low welfare use. On average, control group members in Portland received welfare for about 25 months over the 60-month period. In comparison, program group members in Portland received welfare for a little less than 20 months, for a reduction of 5.6 months, or nearly half a year during the five-year follow-up period. Portland also had the second-largest reduction in dollars spent on welfare — an average of $2,746 per program group member.
Second, the site with the most generous grant amounts — Riverside — also generated relatively large welfare savings.(4) Over the five-year period, HCD program group members received nearly $3,000 less than control group members on average while LFA program group members received about $2,700 less than control group members.(5) The fact that the two programs reduced benefits by similar amounts is somewhat surprising considering that the effect of the LFA program on earnings was twice as large as the effect of the HCD program. This finding suggests that the HCD program discouraged a number of people from receiving benefits without helping them get a job. If that occurred, the HCD program will have left individuals with less total income on average than they would have had without the program, an issue addressed in Chapter 6.
Third, reductions in welfare use were fairly large in programs that had tough sanction policies (Columbus Integrated and both programs in Grand Rapids) and fairly small in the site with the least strict sanction policy (Detroit). This comparison is especially revealing because Detroit and Grand Rapids, which are both in Michigan, had similar grant levels and earnings disregards and because the effect on earnings over five years was about as large in Detroit as in Grand Rapids LFA and nearly twice as large as in Grand Rapids HCD. Detroit had the smallest reductions in payment amounts ($561 over five years) and months on welfare (1.6 months on average). In comparison, Grand Rapids LFA reduced time on welfare by 4.2 months and average welfare payments by more than $2,500, and Grand Rapids HCD reduced time by 2.9 months and payments by $1,800.
Finally, reductions in welfare use were relatively small for both programs in Atlanta. Time on welfare was reduced by 2.9 months in the LFA program and 1.9 months in the HCD program, while cash payments over five years were reduced by about $900 in the LFA program and $700 in the HCD program. Decreases in welfare were smaller than in Grand Rapids or Riverside, even though the effects on earnings in Atlanta rivaled those in the other two sites. The relatively low level of welfare savings in Atlanta may reflect the low level of benefits available; people who lost welfare when they went to work could not lose very much.(6) In addition, the site's use of fill-the-gap budgeting allowed working welfare recipients to keep relatively more of their grant than they could in the other sites.
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As discussed above, there are two direct causes of welfare savings: increased earnings and use of sanctions. Chapter 4 showed that program services had immediate effects in the employment-focused programs, but delayed effects in the education-focused programs. If earnings were primarily responsible for reductions in welfare use, then reductions in welfare use should also have been larger initially in employment-focused programs than in education-focused programs (particularly in the same sites). Although sanctions did not stop people from receiving welfare in any of the sites, sanctions may have given people a reason to voluntarily stop receiving benefits. If reductions in welfare receipt were due to sanctions (indirectly) or to people voluntarily leaving welfare rather than complying with programs requirements, welfare savings should have been fairly close initially in the two types of programs.
Figure 5.1 and Appendix Table D.2 show the proportion of program and control group members who received welfare in the last quarter of each of the five years of follow-up. By showing results by year, the figure and table also can be used to examine results for the first three years, before any control group members were allowed to receive program services. They also indicate how quickly people left welfare and how many remained on welfare at the end of year 5 — a number that may be important in a world of time-limited welfare.
Figure 5.1
Impacts on Welfare Reciept in the Last Quarter of Years 1 to 5
SOURCE: MDRC calculations from state and county
administrative records.
NOTES: See Appendix A.1.
According to Figure 5.1 and Appendix Table D.2, many people left welfare in each site, even in the absence of welfare-to-work services. In Atlanta, as discussed in earlier chapters, virtually everyone was receiving welfare at the time of random assignment (that is, the quarter prior to year 1). By the end of year 1, however, about 83 percent of control group members were still on welfare. The decline in welfare receipt continued throughout the follow-up period. By the last quarter of year 5, less than 40 percent of the control group in Atlanta still received welfare.
Trends in program impacts (that is, the difference in welfare receipt between the program and control groups) suggest that increased employment and earnings were primarily responsible for reductions in welfare receipt — at least during the early years of follow-up. The two Atlanta programs illustrate the basic points.(7) At the end of year 1, Atlanta LFA significantly reduced welfare receipt, but Atlanta HCD did not. This is consistent with the finding in Chapter 4 that the LFA program had a larger initial effect on employment and earnings than the HCD program. Moreover, the magnitude of the impacts on welfare receipt at the end of the first year were similar to the impacts on employment shown in Figure 4.1.
The impact of Atlanta HCD on welfare receipt increased after year 1 and was statistically significant in years 2 and 3. This trend paralleled Atlanta HCD impacts on employment and earnings. (See Chapter 4 that) Similarly, Atlanta LFA increased employment and earnings above control group levels in years 2 and 3 and continued to decrease welfare receipt during these years. These patterns suggest that reductions in welfare receipt were driven largely by increases in employment and earnings.
Impacts of the two Atlanta programs on welfare receipt declined toward the end of the follow-up period. However, reductions continued even after these programs ceased to raise employment levels above the control group. In particular, Atlanta LFA continued to significantly reduce welfare receipt at the end of year 5, even though it did not significantly increase employment during year 5. Likewise, Atlanta HCD significantly reduced welfare receipt at the end of year 4, even though it did not significantly increase employment during year 4.
The trends for the other employment-focused and education-focused programs were similar to the patterns for the Atlanta programs. First, many people left welfare in each site, even in the absence of welfare-to-work services. Control group members left the welfare rolls particularly fast in Columbus and Portland. In both sites, fewer than 20 percent of control group members were still receiving welfare at the end of year 5. In comparison, about 35 percent of control group members in Atlanta, Detroit, and Riverside remained on welfare.
The trends in impacts were also similar to the patterns for the two Atlanta programs. During the first year, the employment-focused programs led to larger decreases in welfare receipt than the education-focused programs. All four employment-focused programs significantly reduced welfare receipt, and three of these programs (Grand Rapids and Riverside LFA and Portland) produced the largest decreases (of 7 to 9 percentage points) among the 11 programs. In contrast, five of the seven education-focused programs reduced welfare receipt in year 1, and decreases ranged from 1 to 4 percentage points for most programs.(8)
Like Atlanta HCD, the other education-focused programs led to larger reductions in welfare receipt after year 1. This trend was most noticeable in Detroit, where impacts were not statistically significant in year 1 but became statistically significant in years 2 and 3 (just as Detroit's effects on employment and earnings became statistically significant in years 2 and 3).
Like Atlanta LFA, the other employment-focused programs continued to reduce welfare receipt in years 2 and 3, a trend that (for the most part) mirrored their effects on employment and earnings. For example, Riverside LFA impacts on welfare receipt declined only slightly between years 1 and 2, just as its effects on earnings declined slightly, while Portland impacts on welfare receipt increased between years 1 and 2, just as its effects on employment increased somewhat between the two years.(9)
The impacts on welfare receipt decreased over time in all of the programs, but most programs continued to significantly reduce welfare receipt at the end of year 5. This result is somewhat surprising, given that few programs increased employment and earnings above control group levels in year 5. This pattern is especially striking for Grand Rapids LFA, which decreased receipt below the control group by 3 percentage points at the end of year 5, but led to a similar reduction in percentage employed during that year. This finding implies that some program group members who exited welfare for employment earlier in the follow-up did not return to assistance after leaving employment, even though they were eligible to, a pattern that may reflect the national climate in the aftermath of the federal welfare reform legislation of 1996.
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As discussed in Chapter 4, employment- and education-focused programs were expected to have different effects on employment and earnings depending on whether people were job-ready or in need of more education. There are also reasons to expect welfare-to-work programs to produce different amounts of welfare savings for the two groups. High school nongraduates received higher welfare benefits on average than graduates, probably because they have a harder time finding work.(10) Welfare savings may therefore be larger for high school nongraduates than for graduates. When they do go to work, however, graduates are likely to earn more than nongraduates, and are probably more likely to find jobs that pay enough to help them leave welfare. A program that is just as likely to help high school graduates as nongraduates find work may therefore produce larger welfare savings for graduates.
Figure 5.2 explores these possibilities by comparing program effects on welfare benefits over five years separately for high school graduates and nongraduates. According to the figure, there is little evidence that the programs reduced benefits more for one group than the other (just as there was little evidence in Chapter 4 that the programs were systematically affecting earnings more for one group than the other). Over five years, virtually all of the programs reduced welfare payments for both subgroups. Moreover, in five of the nine programs where effects could be measured over five years, they were larger for high school nongraduates than graduates (both Grand Rapids programs, both Columbus programs, and Riverside LFA), but in the other four programs effects were larger for graduates than for nongraduates (both Atlanta programs, Detroit, and Portland).
Figure 5.2
Impacts on Total Welfare Payments in Years 1 to 5 for Sample Members With
and Without a Hign school Diploma or GED at Random Assignment
SOURCE: MDRC calculations from state and county
administrative records.
NOTES: See Appendix A.1.
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Table 5.2 examines the effects of the programs on the number of months that sample members received Food Stamps and Food Stamp expenditures for the five-year follow-up period. (Appendix Table D.3 shows results on the same outcomes for the first three years of follow-up, which is the period before any control group members could have received program services. Appendix Table D.4 shows results for the last quarter of year 5.)
Site and Program |
Sample Size | Program Group | Control Group | Difference (Impact) | Percentage Change (%) |
|---|---|---|---|---|---|
| Average number of months of Food Stamp receipt in years 1 to 5 | |||||
| Atlanta Labor Force Attachment | 2,938 | 42.1 | 43.4 | -1.4 ** | -3.2 |
| Atlanta Human Capital Development | 2,992 | 42.2 | 43.4 | -1.2 ** | -2.8 |
| Grand Rapids Labor Force Attachment | 3,012 | 30.5 | 33.8 | -3.3 *** | -9.9 |
| Grand Rapids Human Capital Development | 2,997 | 31.7 | 33.8 | -2.1 *** | -6.2 |
| Riverside Labor Force Attachment | 6,726 | 25.3 | 29.0 | -3.6 *** | -12.6 |
| Lacked high school diploma or basic skills | 3,125 | 27.7 | 31.2 | -3.5 *** | -11.2 |
| Riverside Human Capital Development | 3,135 | 27.4 | 31.2 | -3.8 *** | -12.3 |
| Columbus Integrated | 4,672 | 27.9 | 31.2 | -3.4 *** | -10.7 |
| Columbus Traditional | 4,729 | 29.1 | 31.2 | -2.1 *** | -6.6 |
| Detroit | 4,459 | 38.8 | 40.3 | -1.5 *** | -3.8 |
| Oklahoma City | n/a | n/a | n/a | n/a | n/a |
| Portland | 4,028 | 29.4 | 32.5 | -3.1 *** | -9.4 |
| Average total Food Stamps received in years 1 to 5 ($) | |||||
| Atlanta Labor Force Attachment | 2,938 | 10,661 | 11,089 | -428 ** | -3.9 |
| Atlanta Human Capital Development | 2,992 | 10,930 | 11,089 | -159 | -1.4 |
| Grand Rapids Labor Force Attachment | 3,012 | 6,351 | 6,966 | -615 *** | -8.8 |
| Grand Rapids Human Capital Development | 2,997 | 6,580 | 6,966 | -387 *** | -5.6 |
| Riverside Labor Force Attachment | 6,726 | 4,981 | 5,870 | -888 *** | -15.1 |
| Lacked high school diploma or basic skills | 3,125 | 5,577 | 6,504 | -928 *** | -14.3 |
| Riverside Human Capital Development | 3,135 | 5,492 | 6,504 | -1,013 *** | -15.6 |
| Columbus Integrated | 4,672 | 7,160 | 8,185 | -1,025 *** | -12.5 |
| Columbus Traditional | 4,729 | 7,537 | 8,185 | -648 *** | -7.9 |
| Detroit | 4,459 | 9,186 | 9,519 | -334 ** | -3.5 |
| Oklahoma City | n/a | n/a | n/a | n/a | n/a |
| Portland | 4,028 | 6,926 | 7,753 | -827 *** | -10.7 |
| SOURCE: MDRC calculations from state and
county administrative records. NOTES: See Appendix A.1. |
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In all sites except Riverside, control group members received Food Stamps for more months than they received welfare payments. Most likely, some control group members in these sites received too much income from earnings or other sources to receive cash assistance but remained eligible for Food Stamps. The difference between Food Stamp and welfare receipt was largest in Portland, where control group members received Food Stamps for 32 months on average during years 1 to 5, while they received welfare for only about 25 months.(11) Similarly, in Atlanta, which is the only site where the federal maximum Food Stamp allotment exceeded the maximum welfare grant, control group members received Food Stamps for an average of 43 months over five years (the most among the six sites), about six months longer than they received welfare.
The importance of Food Stamps as an income supplement for control group members varied from place to place. These differences largely reflect the generosity of welfare benefits and Food Stamp rules, which reduce Food Stamps by a certain amount for each dollar of welfare benefits. At one extreme, Atlanta's maximum welfare grant is so low that people received more on average from Food Stamps — about $11,000 from Food Stamps compared with nearly $10,000 from welfare over the five-year period. In Riverside, in contrast, control group members received less than $6,000 in Food Stamp benefits on average, compared with welfare benefits of $18,000. Over five years, all programs significantly reduced total months of Food Stamp receipt and all but one program — Atlanta HCD — significantly reduced Food Stamp expenditures. Although impacts were smaller for Food Stamps than for welfare, programs that reduced welfare the most also tended to be the programs that reduced Food Stamp use the most. For example, five programs reduced welfare receipt by more than three months: Portland, Grand Rapids LFA, both Riverside programs, and Columbus Integrated. (See Table 5.1.) The same five programs reduced Food Stamp receipt by more than three months. Likewise, Atlanta HCD and Detroit reduced both welfare and Food Stamp receipt by less than two months. Because of the complex interaction between welfare and Food Stamp payment amounts, the extent to which programs reduced Food Stamp payment amounts below control group levels was less clear-cut. For example, the Columbus Integrated program, which had effects on welfare benefits in the midrange of the programs being studied, had the largest reduction in Food Stamp payments. However, the programs that reduced welfare payments the most — Portland and the two Riverside programs — also had among the largest effects on Food Stamp payments over five years.
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As discussed in earlier chapters, NEWWS was set up to allow a rigorous comparison of LFA and HCD programs in Atlanta, Grand Rapids, and Riverside (for those in need of basic education). According to Chapter 4, differences were concentrated among high school nongraduates, for whom LFA programs generally resulted in higher employment and earnings than HCD programs (see Table 4.3).
Table 5.3, which shows the effects of the two self-sufficiency approaches on welfare receipt and benefit amounts, tells a similar story. In some sites, there was virtually no difference between the two approaches. Where there were differences, however, the LFA programs resulted in lower welfare use than the HCD programs over five years.
| Site and Program | Sample Size | LFA | HCD | Difference (Impact) | p-Value |
|---|---|---|---|---|---|
| Total welfare payments received in years 1 to 5 ($) | |||||
| Full impact sample | |||||
| Atlanta | 2,936 | 9,064 | 9,236 | -172 | 0.36 |
| Grand Rapids | 3,099 | 10,414 | 11,199 | -785 *** | 0.00 |
| Riverside | 4,980 | 15,584 | n/a | n/a | n/a |
| No high school diploma or GED | |||||
| Atlanta | 1,190 | 10,209 | 10,740 | -531 * | 0.07 |
| Grand Rapids | 1,268 | 12,009 | 12,914 | -905 ** | 0.03 |
| Riverside | 3,182 | 17,171 | 17,176 | -6 | 0.99 |
| High school diploma or GED | |||||
| Atlanta | 1,742 | 8,278 | 8,252 | 27 | 0.91 |
| Grand Rapids | 1,827 | 9,297 | 10,024 | -727 ** | 0.03 |
| Riverside | 1,798 | 13,504 | n/a | n/a | n/a |
| Total months of welfare receipt in years 1 to 5 | |||||
| Full impact sample | |||||
| Atlanta | 2,936 | 34.4 | 35.3 | -0.9 | 0.17 |
| Grand Rapids | 3,099 | 26.9 | 28.2 | -1.4 ** | 0.02 |
| Riverside | 4,980 | 27.8 | n/a | n/a | n/a |
| No high school diploma or GED | |||||
| Atlanta | 1,190 | 38.0 | 40.5 | -2.5 ** | 0.02 |
| Grand Rapids | 1,268 | 30.5 | 32.1 | -1.5 | 0.11 |
| Riverside | 3,182 | 30.1 | 30.0 | 0.1 | 0.92 |
| High school diploma or GED | |||||
| Atlanta | 1,742 | 31.9 | 31.9 | -0.0 | 0.97 |
| Grand Rapids | 1,827 | 24.3 | 25.6 | -1.3 * | 0.10 |
| Riverside | 1,798 | 24.7 | n/a | n/a | n/a |
| SOURCE: MDRC calculations from state and
county administrative records. NOTES: See Appendix A.1. |
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For the full sample, Grand Rapids LFAs received welfare for an average of just under 27 months compared with just over 28 months for Grand Rapids HCDs. Although this difference was fairly small, it was statistically significant and produced a statistically significant welfare savings of nearly $800 per person. Atlanta LFAs were also less likely to receive welfare than Atlanta HCDs and received slightly less in welfare payments, but these differences were not statistically significant.
At the end of year 5 (not shown in the table) the LFA programs in Atlanta and Grand Rapids continued to have lower welfare use than the HCD programs, although the differences were not statistically significant. Thus, HCD programs are unlikely to produce lower cumulative welfare use than the LFA programs with a longer follow-up period.
In Atlanta and Grand Rapids, results for high school nongraduates were more consistent than results for the full sample. In these two sites, nongraduates in the LFA program received significantly less in welfare payments than nongraduates in the HCD program. However, for nongraduates in Riverside, LFAs and HCDs received welfare benefits for the same number of quarters and averaged the same amount of welfare payments over five years. Still, when averaged across the three sites, LFAs received nearly $500 less in welfare payments over five years than HCDs (($531+$905+$6)/3; the difference was statistically significant). Likewise, a simple average across the three sites indicates that the high school nongraduates in the LFA programs received welfare for 1.3 months less on average than nongraduates in the HCD programs, a difference that was again statistically significant.
For high school graduates, the LFA program produced greater welfare savings in Grand Rapids, but not in Atlanta. In Grand Rapids, LFAs received welfare for an average of 24.3 months and HCDs for 25.6 months. Although the effect was fairly small, the difference was statistically significant, and it led to statistically significant welfare savings of more than $700 per person. In contrast, high school graduates in the two Atlanta programs were about equally likely to receive welfare and received similar benefit amounts on average.
Although the job-search-first approach sometimes resulted in less welfare use than the education-first approach, it is important to keep in mind that (for the full sample) the greatest proportional savings among the NEWWS programs was in Portland, which also generated the largest gains in employment and earnings. The fact that Portland used job search, education, and training with a focus on employment suggests that the combination of approaches is better than either one alone.
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1. Pavetti and Bloom, 2001.
2. The Food Stamp benefit level equals the maximum benefit level minus 30 percent of a household's countable income. Countable income includes welfare payments plus 80 percent of earnings, so a sample member who replaces welfare with earnings could lower her countable income and thus increase her Food Stamp payments (Ohls and Beebout, 1993).
3. Appendix Table D.1 shows results on the same outcomes for the first three years of follow-up. Appendix Table D.2 shows results on welfare receipt for the last quarter of each follow-up year.
4. Welfare spending was also the highest for control group members in Riverside. The notion that savings might be greater in high-grant states does not mean that a state should raise its welfare grant to generate savings.
5. As shown in Table 5.1, Riverside LFA and HCD led to similarly large reductions in welfare expenditures for sample members determined to need basic education.
6. An alternative possibility is that Atlanta's low grants meant that control group members left welfare quickly, which was not the case. The average control group member in Atlanta received welfare for 37 months during the five-year follow-up period, longer than in all other sites except Detroit.
7. The Atlanta programs are discussed here because they appear side by side on the figure and used different self-sufficiency approaches. Section V of this chapter explicitly compares the LFA and HCD programs in Atlanta, Grand Rapids, and Riverside and indicates where the programs resulted in statistically significant outcome differences in outcomes.
8. The small program-control group difference (of 2 percentage points) for Atlanta LCD had a p-value of .014, just above the 10 percent level for statistical significance.
9. As discussed above, impacts on welfareon welfare receipt may be larger or smaller than expected, given a program's impact on employment and earnings. For instance, Riverside LFA employment impacts decreased sharply between years 1 and 2, but reductions in welfare receipt changed very little. Similarly, Portland impacts on total earnings increased dramatically between years 1 and 2, but reductions in welfare receipt increased to a lesser extent.
10. Michalopoulus and Schwartz, 2001. Among control group members in the NEWWS sites, the proportion of high school graduates and GED recipients who ever worked for pay during years 1 to 5 exceeded the proportion of nongraduates by 3 to 11 percentage points (results not shown).
11. Furthermore, in the last quarter of year 5, twice as many control group members in Portland (34.0 percent versus 17.1 percent) received Food Stamps as were receiving welfare. In addition, more than one-half of control group members in Atlanta were still receiving Food Stamps in the last quarter of year 5 compared with a little more than one-third who received a welfare check. See Appendix Tables D.2 and D.4.
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