An unusually rigorous study concluded that Connecticut's statewide welfare reform - which includes a 21-month time limit on welfare benefits - made substantial progress towards its key goal: replacing welfare with work. The program, called Jobs First, also modestly increased family income and generated some small improvements in the behavior of participants' young children, but it did not have consistent effects on families' material well-being. Connecticut's unemployment rate was very low during the study period, and most recipients who were unable to find jobs were granted extensions when they reached the time limit.

The findings are contained in a report released today by the Manpower Demonstration Research Corporation (MDRC), a nonprofit, nonpartisan organization that conducted a large-scale evaluation of Jobs First under a contract with the Connecticut Department of Social Services. The study was also funded by the U.S. Department of Health and Human Services, the Ford Foundation, the Smith Richardson Foundation, and other public and private sources.

The evaluation focused on the New Haven and Manchester welfare offices, which serve over one-fourth of the state's caseload. It tracked nearly 5,000 single-parent welfare applicants and recipients over a four-year period. For purposes of the study, half of these people were assigned to Jobs First, which includes the 21-month time limit, generous financial work incentives, work-related requirements, and other features. The other half had the prior Aid to Families with Dependent Children (AFDC) welfare rules applied to them. (Recipients in other parts of the state were enrolled in Jobs First.)

People were assigned to one or the other group at random, ensuring that the groups were comparable at the start. As a result, any differences that emerged 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 made.

"This is the first rigorous study of a statewide program that includes all of the key elements of the 1990s welfare reforms - time limits, work requirements, and financial work incentives," said Gordon Berlin, Senior Vice President of MDRC. "Connecticut's decision to conduct an in-depth evaluation of its pathbreaking welfare reform has provided a wealth of valuable information to policymakers across the country."

About Jobs First

Jobs First began operating in January 1996, before the landmark federal welfare law was passed, but it anticipated one of the law's most notable features: the imposition of time limits on the receipt of welfare benefits. Under the federal law, states are allowed great flexibility in setting time limit policies but are prohibited from using federal funds to provide assistance to most families for more than 60 months.

At 21 months, the Jobs First time limit is among the shortest in the nation, and Connecticut is the first state where large numbers of families reached a time limit: Well over 30,000 families have had their welfare cases closed because of the limit. Nevertheless, the state's time limit policies include important safeguards: During the study period, recipients who reached the time limit and were not employed (or were earning very little) were granted six-month benefit extensions if they had made a good-faith effort to find work. There was no limit to the number of extensions a family could receive. After the study period ended, Connecticut imposed new rules that limit the circumstances under which recipients who reach the 21-month limit can be granted more than three six-month extensions; the state also imposed a new 60-month time limit that allows few exceptions. The study did not assess those new policies.

Jobs First also features an unusual financial incentive to encourage work: Recipients who take jobs and earn less than the federal poverty level (now $1,220 per month for a family of three) are allowed to keep their entire welfare grant ($543 per month) to supplement their earnings, rather than having their grant reduced. Most states have policies of this type (known as earnings disregards), but Connecticut's is among the most generous: A typical recipient working full-time at $6.25 an hour would have nearly $700 more in monthly income under Jobs First than under AFDC (counting income from work, welfare, Food Stamps, and tax credits). Jobs First also requires recipients to participate in services designed to help them find jobs quickly.

Jobs First operated in an unusually strong economic climate: Connecticut's unemployment rate dropped to 2.3 percent in 2000, the second-lowest rate in the U.S. About 60,000 families were receiving cash assistance statewide when Jobs First began, but the caseload has dropped by nearly 60 percent since then, to around 25,000 families.

Key Effects of Jobs First

MDRC used state administrative data to track welfare receipt and employment for both the Jobs First and AFDC groups over the entire four-year period. Surveys were administered to subsets of people after 18 and 36 months to gather information about job characteristics, material well-being, child outcomes, and other topics.

Employment and earnings increased. With jobs plentiful, most people in the AFDC group went to work. Nevertheless, Jobs First boosted employment and earnings: Members of the Jobs First group earned, on average, $1,817 (7 percent) more than their AFDC group counterparts over the four years. Most of the employed people in both groups worked full time or close to full time; the average hourly wage was $8.53.

The overall results mask an important pattern: Jobs First raised earnings by about $3,600 (37 percent) for recipients facing the most serious barriers to employment, but had almost no effects for the least disadvantaged, many of whom went to work without the program (94 percent of the least disadvantaged AFDC group members worked during the study period).

Welfare use fluctuated. In the first two years of the study period, the Jobs First group received substantially more welfare than the AFDC group. This result was expected, because Jobs First allowed recipients to keep their welfare benefits when they went to work. The pattern reversed after Jobs First group families began reaching the time limit, even though many received extensions: At the end of the four-year period only 19 percent of the Jobs First group was receiving welfare, compared with 28 percent of the AFDC group. In addition, 51 percent of the Jobs First group were working and off welfare, compared with 42 percent of the AFDC group. The decrease in welfare after the time limit offset the earlier increase: Over the entire study period, the two groups received about the same amount of cash assistance. (The Jobs First group received slightly more in Food Stamps.)

Family income increased, but there were no consistent effects on material well-being. Having both more earnings and more welfare, families in the Jobs First group had total income that was substantially higher than the AFDC group's during the first half of the study period (Figure 1). The income gains disappeared, however, after families began reaching the time limit and, during the last two years, the two groups had about the same amount of income, on average. Owing to the early gains, the Jobs First group had about $2,400 (or 6 percent) more in total income from earnings and public assistance over the full four-year period.

A survey conducted three years after people entered the study found few differences between the groups on most measures of material hardship. Jobs First families reported fewer neighborhood problems such as drug dealers, but they were also slightly more likely to have been homeless in the prior year (less than 3 percent of respondents in both groups had been homeless). The Jobs First group was more likely to have health coverage - a consequence of their increased enrollment in Medicaid.

Overall levels of material hardships were high for both groups: For example, more than 20 percent of each group was classified as "food insecure with hunger" according to a widely used scale recommended by the federal government.

"Jobs First was designed to replace welfare with work, and it made important progress towards that goal," said Dan Bloom, who directed the study for MDRC. "The fact that many families were still struggling at the end of the study period is not attributable to Jobs First, but it does highlight the importance of additional supports for low-income working families."

Few effects on children's well-being. Jobs First children of all ages were more likely to be in child care (owing to the increases in parental employment), and most children in both groups were cared for by relatives or other "informal" providers, rather than in child care centers.

Among elementary school-age children, Jobs First generated some positive effects on behavior (as reported by parents) but, according to both teachers and parents, had no consistent impacts on school performance or engagement. Effects for adolescents were mixed. Teens in the Jobs First group appeared to be doing worse in school than their counterparts in the AFDC group, but they were less likely to have been convicted of a crime.

The Jobs First Time Limit

Just over half of the Jobs First group reached the time limit during the study period. About two-thirds of those who did were granted at least one six-month benefit extension; they were not employed (or had very low earnings) and were deemed to have made a good-faith effort to find work. Most of the recipients who received extensions left welfare within the next year or two. Among recipients whose cases were closed because of the time limit, most were working and earning at least as much as a standard welfare grant.

A relatively small number of people (roughly 5 percent of the entire Jobs First group) had their cases closed at the time limit or during an extension because they were deemed not to have made a good-faith effort to find work. These individuals were referred to the Safety Net, a state-funded program operated by nonprofit organizations that works to prevent harm to children in such families.

"All time limits are not alike, and it is impossible to understand the outcomes of a state's time limit without understanding the specific policy and how it was implemented, said Bloom. "In Connecticut, most of the people whose cases were closed by the time limit were working. Jobs First rules assured that most of the people who weren't working received extensions."

National Implications

Time limits are likely to feature prominently in the policy debate when Congress takes up the reauthorization of the 1996 welfare law this year. The Connecticut study shows that, at least under certain conditions, time limits can be imposed without causing widespread, severe harm. But the authors note that the context is critical to interpreting these results. "Connecticut implemented a time limit, and the sky didn't fall," said Bloom. "But there was virtually full employment when Jobs First was studied, and the time-limit extension policies were relatively generous. We don't know what the results would have been if either of those conditions had been different."

The Connecticut study also builds on a growing body of evidence about the effects of welfare reform on both income and child well-being. Other studies have found that welfare policies without special earnings supplements typically increase employment without increasing income and have few consistent effects on elementary school-age children. Programs that supplement earnings, by contrast, can increase both employment and income and generate benefits for children. Jobs First falls in the middle. It increased employment but, because of its time limit, lifted income only temporarily. Its effects on elementary school-age children were only slightly positive.

About MDRC

MDRC is a nonprofit, nonpartisan research organization with nearly three decades' experience designing and evaluating policies and programs for low-income families and communities. It is based in New York, with an office in Oakland. MDRC has conducted scores of major studies involving more than half a million people.

The new report is titled Jobs First: Final Report on Connecticut's Welfare Reform Initiative. The authors are Dan Bloom, Susan Scrivener, Charles Michalopoulous, Pamela Morris, Richard Hendra, Diana Adams-Ciardullo, and Johanna Walter.

Connecticut's Jobs First Welfare Reform Initiative
Figure 1

Before and After the Time Limit:
Effects of Connecticut's Welfare Reform Initiative On Earnings, Public Assistance, and Income

MDRC researchers found that during the first two years of the study period, Jobs First group members earned $837 more, on average, than AFDC group members (as indicated by the left-most bar in the "pre-time limit" cluster). The Jobs First group also received more in welfare benefits - $1,116 more, on average - than the AFDC group (the second bar in the "pre-time limit" cluster); they also received more in Food Stamps (the third bar). As a consequence, total income for the Jobs First group topped that of the AFDC group by $2,281 (as shown in the right-most bar in the "pre-time limit" cluster).

The bars in the "post-time limit" cluster show the results for Years 3 and 4, after some members of the Jobs First group had reached the time limit. The earnings increase continued, with the Jobs First group earning $980 more, on average, than the AFDC group (the left-most bar in the "post-time limit" cluster). Meanwhile, welfare benefit payments dropped dramatically among the Jobs First group: On average, they received $894 less in cash assistance payments than the AFDC group; they also received $19 less in Food Stamps than the AFDC group (as shown in the middle two bars in the "post-time limit" cluster). The reduction in welfare payments virtually eliminated the difference in total income between the Jobs First group and the AFDC group; the difference dropped to just $68 in Years 3 and 4 (the right-most bar in the "post-time limit" cluster).