Early results from an unusually rigorous study indicate that Connecticut’s statewide welfare reform program, Jobs First, has increased employment and earnings among participating families. Gains were particularly large among those facing the most serious barriers to work: the program nearly doubled their employment rate. The study also found that about half the welfare recipients who have reached the program’s 21-month time limit on cash assistance were granted at least one six-month extension. Most of the recipients whose cases were closed when they reached the time limit were working (combining work and welfare) and earning at least as much as a standard welfare grant.

The new findings are contained in a report released today by the Manpower Demonstration Research Corporation (MDRC), a nonprofit, nonpartisan organization that is conducting a multi-year evaluation of Jobs First under a contract with the Connecticut Department of Social Services. The study is also funded by the U.S. Department of Health and Human Services, the Ford Foundation, and the Smith Richardson Foundation.

The evaluation focuses on the New Haven and Manchester welfare offices, which serve over one-fourth of the state’s caseload. It is tracking nearly 5,000 single-parent welfare applicants and recipients. For purposes of the study, half these people were assigned to Jobs First, while the other half remained subject to the old (AFDC) welfare rules. People were assigned to one or the other group at random, ensuring that the groups were comparable at the start. Thus, any differences that emerge between the groups over time – for example, in employment rates – can be attributed to Jobs First. Because of this research design, the evaluation provides unusually reliable evidence as to what difference Jobs First makes.

"Connecticut is one of only a handful of states that are sponsoring this kind of rigorous study of their welfare reform – one designed to isolate the effects of the program itself from other factors, such as the strong economy," said Judith M. Gueron, President of MDRC. "The study results will provide a strong foundation for future policymaking, in both Connecticut and other states."

Jobs First

Jobs First began operating in January 1996, before the landmark federal welfare law was enacted. Connecticut is the first state where large numbers of families have reached a welfare time limit: By late 1999, some 30,000 families had had their welfare cases closed because of the time limit.

"The short time limit has gotten national attention, but Jobs First is actually hard to pigeonhole," said Dan Bloom, director of the MDRC evaluation. "It combines some of the toughest and most generous features of any state welfare reform."

For example, recipients who go to work and earn less than the federal poverty level ($1,138 per month for a family of three) are allowed to keep their entire welfare grant ($543 per month for a family of three) to supplement their earnings, rather than having their grant reduced. Many states have policies of this type but few, if any, are as generous as Connecticut’s. In addition, Jobs First provides two years of Medicaid coverage for recipients who leave welfare for work and offers child care subsidies to such families for as long as their income remains below 75 percent of the state median; both of these "transitional" benefits were limited to one year under prior rules.

Key Results

The new report primarily focuses on about 2,000 people who were assigned to the two research groups early on, between January and June 1996. Each person was tracked for 2 ½ years (30 months) after entering the study – long enough to see what happened when some members of the Jobs First group began to reach the 21-month time limit.

Employment gains. MDRC found that clients were quite likely to work even without the special incentives and requirements of Jobs First: 74 percent of AFDC group members worked at some point in the follow-up period. Nevertheless, the employment rate for the Jobs First group was higher – 82 percent – indicating that the program increased employment. But the averages mask an important pattern: Jobs First nearly doubled the employment rate for those facing multiple barriers to employment (long-term welfare recipients with no high school diploma and no recent work history), but generated almost no increase in employment or earnings for the most job ready.

Effects on welfare payments. The Jobs First group received almost 20 percent more welfare than the AFDC group in the early part of the study period, before anyone reached the time limit. This result was expected, because Jobs First group members were allowed to keep their welfare benefits when they went to work. The picture changed after families began to reach the time limit and lose their welfare benefits. The Jobs First group received about 18 percent less welfare than the AFDC group in the last three months of the study period.

Family income. Because the Jobs First group had both higher earnings and higher welfare benefits, their overall income was substantially higher than the AFDC group’s during the early period. The higher income led to more savings and a higher rate of car ownership. Once again, the situation changed after families began reaching the limit. In the last part of the follow-up period, the two groups had about the same total income, although Jobs First families received a greater share of their income from earnings and a smaller share from welfare – a result that is consistent with the program goal of replacing welfare with work.

The time limit. MDRC found that less than 40 percent of the Jobs First group reached the time limit within 30 months after entering the program. The rest still had some months remaining on their time-limit clocks, either because they had left welfare before accumulating 21 months, or because some of their months of benefit receipt did not count toward the limit because they had been granted an exemption (for example, because they had a child under age 1 when they entered the program or because they were deemed to be incapacitated). Of those who reached the limit, about 55 percent were granted an extension at that point. Most of the recipients whose cases were closed were already working when they reached the time limit.

"The results so far are generally positive, but the story is still unfolding," said Charles Michalopoulos of MDRC, a co-author of the report. "The pattern of results changed near the end of the report’s follow-up period, and we can’t tell what the longer-term picture will look like."

For example, data from the last part of the follow-up period suggest that Jobs First was raising income for some families and lowering income for others. MDRC plans to update the results in late 2000 and again in late 2001, when the study ends; up to four years of follow-up data will be available by that time. The final report will be accompanied by a separate report examining the impact of Jobs First on children.

How the Time Limit Works

MDRC conducted a detailed study of the process that occurs when families reach the time limit. Under program rules, recipients who reach the limit are granted a six-month extension if they have made a "good-faith effort" to find employment but have non-welfare income that is less than the "payment standard" – the maximum welfare grant for their family size. There is no limit to the number of six-month extensions a family may receive, but its welfare grant may be permanently canceled if the parent fails to comply with requirements to look for or prepare for work during an extension period.

MDRC found that almost all of the recipients who showed up for an "exit interview" at the welfare office and had income below the payment standard were granted an extension; they were deemed to have made a good-faith effort to find employment. Conversely, most of those whose cases were closed had income above the payment standard. Many of these recipients were mixing work and welfare and would have become ineligible for benefits earlier had it not been for the special rules allowing working recipients to keep receiving their welfare grants.

Somewhat unexpectedly, most of the people who were granted an extension when they reached the time limit were no longer receiving benefits 15 months later. Most left welfare because they found jobs, but a few had their cases permanently closed because they were found to be noncompliant with employment requirements.

Families whose cases are closed because they have income above the payment standard when they reach the time limit may receive an extension later if their income declines through no fault of their own. However, MDRC found that very few of these families returned to the rolls within 15 months after reaching the time limit.

Because most of the recipients whose cases were closed owing to the time limit were working, MDRC found that relatively few recipients needed to be referred to the Safety Net, a special program set up to assist families whose grants are canceled despite their having income below the payment standard. Longer follow-up is needed to assess whether this pattern continues; recent statewide statistics suggest that the number of Safety Net referrals may be rising, perhaps because a large fraction of the statewide welfare caseload is in extensions, and thus subject to the strict noncompliance penalties discussed above.

"So far, the time limit has been implemented in a relatively benign way, at least in New Haven and Manchester," said Bloom. "Most of the recipients who have been unable to find jobs are receiving extensions."

Program Implementation

The new report also examines how Jobs First has been implemented in the two research sites. In general, MDRC found that the basic features of the program were put in place. For example, most recipients understood the main elements of the new policies, and the Jobs First group was more likely than the AFDC group to participate in activities designed to help them find jobs. At the same time, owing to start-up problems and features of the program design – for example, large worker caseloads, which prevented regular contact between staff and recipients – recipients’ participation in employment activities was not closely monitored and the program message was not strongly reinforced. In addition, an increasingly complex, multi-agency structure has emerged over time to implement specific components of Jobs First, and it has been difficult to coordinate the various players. DSS and its employment services partners — the Department of Labor and the Regional Workforce Development Boards — is currently implementing structural changes designed to address these issues.

"The new results reflect the impacts of Jobs First during its first years of operation," said Bloom. "In that sense, they’re probably a conservative estimate of the program’s potential because, as with most new programs, there have been some start-up problems."

About MDRC

MDRC is a nonprofit, nonpartisan research organization with a quarter century’s experience designing and evaluating social policy initiatives. The organization is based in New York City and has an office in San Francisco. It has completed scores of major studies involving more than half a million people.

The new report is titled Jobs First: Implementation and Early Impacts of Connecticut’s Welfare Reform Initiative. The authors are Dan Bloom, Laura Melton, Charles Michalopoulos, Susan Scrivener, and Johanna Walter.