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

Chapter 3:
Study Regions

[ Main Page of Report | Contents of Report ]

Contents

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

Endnotes

Chapter 3:
Study Regions

We selected 12 regions for this study, which include a mix of rural and small metropolitan areas (the latter are defined as having fewer than 200,000 residents). The regions vary widely in population characteristics and labor market conditions and implemented a wide range of welfare policies. We considered only areas for which we could obtain required labor and welfare data and that were large enough in size for meaningful statistical analyses. In several instances, this meant combining neighboring counties to obtain a region that had an adequate size population. Exhibit 3.1 lists the study regions and the counties included in each region (see Exhibit 3.2 for a map of the regions).⁽³⁰⁾

Exhibit 3.2
Map of Study Regions

I. Characteristics of population

Exhibit 3.3 summarizes the demographic characteristics of the population in each of the study regions, as well as the U.S. population for comparison purposes. As Exhibit 3.3 shows, the majority of residents in all sites are white, although the southern regions have a higher share of blacks. The southern states also have a relatively high share of adults without a high school degree (from 16 to 20 percent), although Southeast Missouri has the highest percent of high school dropouts (25 percent).

II. Labor Market Conditions

As Exhibit 3.4 shows, in three study regions — Rural Mississippi, Southeast Missouri, and Florence, South Carolina — over 20 percent of the residents were living in poverty in 1995. Correspondingly, these three regions have relatively low median household incomes.

Unemployment rates began increasing in most regions sometime after 1989 or 1990 and peaked by 1993 or 1994. In 1993, the unemployment rate reached 10 percent in Southeast Missouri, followed by North Country, New York (9.2 percent), and Central Oregon and Florence, South Carolina (both 8.7 percent). By 1996, unemployment rates had dropped in all regions except Rural Mississippi and the Oregon regions, which did not see a drop in unemployment until 1997. By 1998, seven regions had unemployment rates that were lower than the national average (5.3 percent) and two had rates near the national average (5.5 and 5.7 percent).

Exhibit 3.5 presents the share of all jobs by major industry for the study regions and the U.S. As this exhibit shows, overall, the regions had a higher share of manufacturing jobs and a lower share of service jobs than the U.S. As discussed in Chapter 2, rural areas had a higher share of manufacturing employment than urban areas, although jobs in this industry continued to decline.

As Exhibit 3.5 also shows, there was some variation across the study regions:

• Manufacturing jobs were well-represented in Wausau, Wisconsin; Decatur and Florence, Alabama; Jamestown, New York; and Joplin, Missouri (about 25 percent of jobs or higher).
• Eau Claire had a relatively high share of jobs in the retail trade industry — Eau Claire County’s largest employer was a building materials dealer, which provided over 1,000 jobs.
• Jobs in the transportation industry were prevalent in Joplin, Missouri.
• Interestingly, while Vermont was one of the most rural regions, the share of jobs in each industry closely mirrored the U.S.

Finally, it is important to note that we selected regions where the predominant industry was not agriculture because of data limitations; specifically, the Occupational Employment Statistics (OES) survey, which is discussed in Chapter 4 and is used in our analysis, surveys only non-farm establishments.

III. Welfare Policies

A. Waivers Operating in Study Regions

As mentioned in Chapter 1, prior to the passage of PRWORA, many states were operating their AFDC programs under waivers granted to them by DHHS to test innovative approaches. Waivers may have reduced the size of caseloads and increased the number of former and current welfare recipients entering the labor force between 1993 and 1996.

Waivers were granted to all states in our study except Alabama, although in New York and South Carolina, the waivers affected counties outside of the study regions. Missouri, Oregon, and Wisconsin approved statewide waivers in 1995 or 1996.⁽³¹⁾ Mississippi and Vermont implemented waivers earlier, and as a result, waivers might have had a greater impact on declines in welfare caseloads in these states. Exhibit 3.6 describes the waivers and lists the dates of approval.

B. After PRWORA

While variation in state AFDC programs existed prior to 1996, PRWORA gave states even more flexibility in designing their programs. Policies that could affect the number of welfare recipients moving to enter the labor market include the grant level, earnings disregards, time limits, work requirements, exemptions to the work requirements, and sanctions.

We selected regions that offered a range of these policies (see Exhibit 3.6 for a summary of the policies in the study regions). While we were not able to individually assess the impact of each policy on labor markets, we believe that variation in the caseload declines and the number of welfare recipients who were combining work and welfare partly reflected the broad range of state policies.

States establish the monthly grant, which depends on family size, family income, earnings disregards, and other factors. The size of the grant may affect an individual’s willingness to forgo welfare benefits for work. As Exhibit 3.7 shows, the maximum grant levels for a family of three in 1998 varied dramatically from a low of $120 in Mississippi to a high of $673 in Wisconsin. While Mississippi had a very low grant level, it had one of the more generous earnings disregards policies. For the first six months, 100 percent of earnings could be disregarded, although individuals must obtain full-time work within 30 days of receiving welfare or participating in a work activity, such as job search. Conversely, Wisconsin had a high grant level, but did not disregard any earnings.

PRWORA established a 60-month federal time limit. Some states have imposed shorter time limits, while other states have agreed to provide assistance to families after they have reached the federal time limit. Among the study states, all except Oregon, New York, South Carolina, and Vermont have implemented the 60-month time limit. Oregon limited welfare benefits to 24 of the first 84 months; New York continued to provide assistance to families, partly in cash and partly in non-cash benefits after 60 months; South Carolina limited cash assistance to 24 of 120 months, imposing a lifetime limit of 60 months; and Vermont adopted a work trigger time limit, meaning that after 30 months (for single-parent households), families were required to work but could continue to receive assistance. We did not expect these time limits to greatly affect the caseloads as of 1998 because few recipients would have reached even their 24-month time limit.

Tough sanctions may have increased the number of welfare recipients who left welfare. Mississippi, South Carolina, and Tennessee imposed a full-family sanction, meaning the grant was terminated if the individual did not comply with program work requirements. Wisconsin reduced benefits for every hour of participation missed. Other states reduced the grant level by a portion until the individuals complied.

IV. Welfare Caseloads

Exhibit 3.8 presents the average monthly caseload in each region at three points in time: 1993, 1996, and 1998. It also depicts the caseload as a percent of the civilian labor force, age 16 and over. As might be expected, while all regions experienced a reduction in caseloads between the three points in time, there was substantial variation in the size of the reduction across the regions (see Exhibit 3.9). In particular, the Wisconsin regions saw the most dramatic declines, while Vermont experienced relatively small reductions.

As might be expected, due to the implementation of PRWORA, caseload declines between 1996 and 1998 exceeded the declines between 1993 and 1996. Why the dramatic decline in welfare caseloads in Wisconsin? Partly, as we will see in Chapter 5, the strong labor market conditions contributed to the decline. Also, Wisconsin adopted one of the most stringent work requirements, requiring all who were job ready to either find unsubsidized work, take a trial job (with subsidies provided to the employer), or take a community service job. Vermont, on the other hand, provided relatively high grants, had a relatively generous earnings disregard, meaning individuals could combine work and welfare, and imposed no time limit on benefits (but does require individuals to work after two years).

Exhibit 3.9 Percent Reductions in AFDC/TANF Caseloads

Endnotes

(30) Jackson, Tennessee was an initial study region, but was excluded due to data limitations. This is discussed in Appendix F. [Back To Text]

(31) Oregon and Wisconsin had earlier waivers in place in selected counties outside the study regions. [Back To Text]

Where to?

Top of Page
Contents

Main Page of Report | Contents of Report

Home Pages:
Human Services Policy (HSP)
Assistant Secretary for Planning and Evaluation (ASPE)
U.S. Department of Health and Human Services (HHS)

Last updated: 05/03/01