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- Programs that included provisions
to supplement low earnings, usually by allowing recipients
to keep some of their welfare benefits when they took jobs,
increased income and reduced poverty. The programs' rules
typically re-quired parents to work full time in order to
receive supplement payments.
Income is a function of both earnings
and benefits. Under the rules governing the pre-1996 welfare
system, when earnings rose, benefits declined. Because recipients
typically obtain low-wage jobs, earnings alone are often inadequate
to lift a family out of poverty. By contrast, income rises
when recipients who take jobs are allowed to continue receiving
some welfare benefits, or when their meager earnings are supplemented
outside of the welfare system with cash payments tied to their
work effort. The results shown in Figure
4 bear this out. Because both average earnings (Figure
1) and benefits received (Figure
2) increased over the three-year follow-up period, the
three earnings supplement programs increased income (Figure
4). The mandatory employment programs had the opposite
effects - with one exception, earnings gains (Figure
1) offset by benefit declines (Figure
2) led to no change in income or decreased it only slightly
(Figure
4). (The exception was the Los Angeles Jobs-First GAIN
program, which had one of the most generous earnings disregards
in the nation. However, because this program was not designed
to test this disregard and, thus, the supplement was available
to both program group members and control group members, Los
Angeles Jobs-First GAIN is not included as an earnings supplement
program.)
The income gains achieved by the earnings supplement programs
were large enough to also reduce poverty. During the three-year
period when supplements were being paid, both the Minnesota
and the Canadian program increased income by more than $1,000
per year. As a result, both also reduced poverty - an unprecedented
effect. Still, a majority of families remained poor, in part
because only about half of those eligible to participate in
these programs found jobs and took advantage of the supplement.
By the middle of the fifth follow-up year, the Self-Sufficiency
Project's effect on income had largely dissipated. The end
of the supplement (program rules placed a three-year limit
on supplement eligibility) largely explains why the income
gains were not sustained. Back
to income and hardship summary
- Programs that combined mandates,
earnings supplements, and time limits - as most states currently
do - increased income in the period before the time limit
went into effect, but the income gains disappeared once
the time limit was reached and welfare support was withdrawn.
Most states incorporated time limits
of some kind into state law. But because most state laws impose
a 60-month time limit on benefit receipt, and in most states
people did not begin hitting that limit until 2001 and 2002,
there are very little long-term follow-up data indicating
what happened to people who lost their benefits. Impact data
are available for only a handful of time-limited welfare programs,
including the two programs examined here, both of which offered
substantial protections to vulnerable families and both of
which were tested in an unusu-ally strong economy.
Returning to Figure
3 but focusing now on the gray income bars, employment
and benefit receipt generally rose in the pre-time-limit period
when mandates and incentives were the dominant program features,
driving income up in turn (by $1,393 in Connecticut). In the
post-time-limit period, the income gains dissipated in the
absence of continuing welfare benefits to boost earnings,
leaving income unchanged relative to a control group. Back
to income and hardship summary
- Few effects were found on a wide
range of material hardship measures in the studies of programs
with time limits, suggesting that the states put in place
effective protections for vulnerable families.
Little systematic evidence was found
to suggest that time limits significantly increased hardship
relative to control group levels. In both studies, those who
were assigned to the program group, and thus subject to the
time limit, were no more likely to have been evicted or to
find themselves without enough money to buy food than were
control group members who were not subject to time limits.
(A slight increase in homelessness in the final year was found
in the Connecticut study - 3 percent of program group members
were homeless compared with 2 percent of control group members.)
Florida exempted many vulnerable families and offered those
subject to time limits a rich array of services and supports.
Connecticut terminated the benefits only of those people who
were earning more than the welfare grant.
Nonetheless, in the Connecticut and Florida studies, absolute
levels of poverty and hardship remained high, many people
in both the program and the control groups reported sometimes
not having enough money to buy food, and about a third of
all sample members in the two studies reported having no income
from welfare or earnings in the final follow-up period, raising
questions about how these families supported themselves. Time
limits did not exacerbate these numbers - similar numbers
of both program and control group members reported these problems
- but the fact that so many people appear to have had no clear
source of income is a cause for concern. Finally, these studies
were conducted during a period of exceptional economic growth,
which fueled rising employment, increasing wages, and bulging
state treasuries. Results could look very different in an
economic downturn. With budgets now under pressure, states
may be less willing to grant extensions of and exemptions
from time limits; and with employment rates falling, recipients
may be less able to find work. Back
to income and hardship summary
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