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Report

How Effective Are Different Welfare-to-Work Approaches?

Five-Year Adult and Child Impacts for Eleven Programs

12/2001
| Gayle Hamilton, Stephen Freedman, Lisa Gennetian, Charles Michalopoulos, Johanna Walter, Diana Adams-Ciardullo, Anna Gassman-Pines, Sharon McGroder, Martha Zaslow, Surjeet Ahluwalia, Jennifer Brooks

For the past 30 years, federal and state policymakers have been legislating various types of programs to increase employment among welfare recipients. How people can best move from welfare to work, however, has been the subject of long-standing debate. This report, summarizing the long-term effects of 11 mandatory welfare-to-work programs on welfare recipients and their children, represents a major advance in resolving this debate. The findings are the final ones from the National Evaluation of Welfare-to-Work Strategies (NEWWS), a multi-year study of alternative approaches to helping welfare recipients find jobs, advance in employment, and leave public assistance.

“What works best, and for whom?” is the central question animating this report and the NEWWS Evaluation as a whole. In particular, the evaluation compares the effects of two alternative pre-employment strategies, for different groups of welfare recipients: programs that emphasize short-term job search assistance and encourage people to find employment quickly (referred to as “Labor Force Attachment” [LFA] or, more broadly, “employment-focused” programs); and programs that emphasize longer-term skill-building activities, primarily basic education (referred to as “Human Capital Development” [HCD] or, more broadly, “education-focused” programs). The effects of each approach are estimated from a wealth of data pertaining to over 40,000 single parents (mostly mothers) and their children, and a five-year follow-up period (falling somewhere between 1991 and 1999, depending on the site), using an innovative and rigorous research design based on the random assignment of individuals to one or more program groups (with services) or to a control group (without services).

Findings in Brief

The research designs that were implemented in the NEWWS Evaluation permit many comparisons. The key ones examined the programs’ economic effects on adults and the “spillover” effects on noneconomic outcomes and child well-being, as summarized below.

Comparing All 11 Programs to What Would Have Happened in the Absence of the Programs

  • In the absence of any welfare-to-work program over a five-year follow-up period, approximately three-quarters of single-parent welfare recipients found jobs, and more than half left the welfare rolls. Few of the 11 studied programs improved on this already-high rate of job-finding, but nearly all programs helped single parents work during more quarters of the follow-up and earn more than they would have in the absence of a program. Moreover, all programs decreased welfare receipt and expenditures over the five years.
  • Measured combined income, however, was largely not affected: The programs led to individuals’ replacing welfare and Food Stamp dollars with dollars from earnings and Earned Income Tax Credits (EITCs), but the programs did not increase income above the low levels of the control group.
  • The programs achieved their economic gains with few spillover effects on such family measures as marriage, fertility, and household composition. Notably, the adults’ gains in self-sufficiency (defined as increased employment and decreased welfare receipt) were achieved with few indications of harm or benefit to the well-being of their children. This was particularly true for mothers with young children, who in 1988 were newly mandated to participate in programs. Because the new mandate’s implications for children were of considerable concern at the time, these families were the subject of intense study in this evaluation.

Comparing Labor Force Attachment (LFA) and Human Capital Development (HCD) Programs

  • By rigorously comparing LFA and HCD programs — versions of employment-focused and education-focused programs designed to magnify the differences between the two types of strategies and operated side by side in three evaluation sites — it was found that the HCD approach did not produce added economic benefits relative to the LFA approach.
  • Moreover, the LFA approach moved welfare recipients into jobs more quickly than did the HCD approach ― a clear advantage when federally funded welfare months are time-limited.
  • Finally, the LFA approach was much cheaper to operate than the HCD approach and, at the same time, did not affect sample members’ overall financial well-being or their children’s well-being any differently than the HCD approach.
  • Surprisingly, these findings held true for program enrollees who lacked a high school diploma or a General Educational Development (GED) certificate as of study entry — the subgroup of welfare recipients who were expected to derive the greatest benefit from an initial investment in basic education — as well as for those who already possessed these education credentials.

Comparing Employment-Focused and Education-Focused Programs

  • Dividing all 11 programs into two broad categories ― employment-focused programs and education-focused programs ― programs in the former category generally had larger effects on employment, earnings, and welfare receipt than those in the latter category.
  • Given the large number of programs examined and their variety of served populations, implementation features, and labor markets, these results provide more support for the advantages of employment-focused programs than for education-focused ones.

These results should not be taken as an indictment of the benefits of education and training in general in welfare-to-work programs. Nonexperimental work done as part of the NEWWS Evaluation has suggested that obtaining a GED and, especially, obtaining a GED and then receiving some type of vocational training, can result in employment and earnings gains for those who achieve these milestones. However, in the context of mandatory welfare-to-work programs, few people make it this far, for many reasons, including: people leave welfare and therefore do not stay in welfare-to-work programs, and thus education or training classes, for very long; adults supporting families cannot afford an up-front deferment of employment and earnings that may or may not have a longer-run payoff; and only a small minority of welfare recipients report that, if given a choice, they prefer to go to school to study basic reading and math over going to school to learn a job skill or going to a program to get help looking for a job.  It should be noted as well that none of these programs made assignments to or emphasized college.

The Features of the Most Effective Program

  • One program ― the Portland (Oregon) one ― by far outperformed the other 10 programs in terms of employment and earnings gains as well as providing a return on every dollar the government invested in the program.
  • The Portland employment-focused program, unlike either the LFA or the HCD programs or the other education-focused programs, initially assigned some enrollees to very short-term education or training and others (the majority) to job search. Also, in another departure from the other programs, job search participants in Portland were counseled to wait for a good job, as opposed to taking the first job offered. While other aspects of the Portland program, such as its use of job developers and staff’s experience operating job search programs, were also noteworthy, these distinctive features, along with other past research, suggest that a “mixed” approach ― one that blends both employment search and education or training ― might be the most effective.

Findings for Children

  • Considering the six programs (three sites) in which children who were preschool age at random assignment were studied in depth, impacts were found on a small number of measures of child well-being ― predominantly in the area of the young children’s social skills and behavior. Overall, the young-child impacts differed more often by site than by welfare-to-work approach.
  • Program effects on child care ― one important way in which children might be affected by welfare-to-work programs ― diminished from the two-year follow-up point to the end of the five-year follow-up. As of this latter point, only the Portland program was still producing an increase in the use of child care.
  • In the seven programs (four sites) in which a limited number of measures were examined for children of all ages, few effects were evident. Some impacts, however, were found relating to young adolescents’ academic functioning (but in only two of the four sites for which data are available), and these impacts on adolescents were predominantly unfavorable. As was the case for young children, impacts on children of all ages did not differ by welfare-to-work program approach.

Comparisons Shedding Light on Other Welfare-to-Work Program Design Issues

  • Of the two programs with low enforcement of the participation mandate, one had no impact on employment and earnings, and the other had only small effects. It appears that a minimum level of enforcement by program staff is required to produce at least moderate employment impacts, likely because this extra “push” is needed in order to engage in program activities those who normally would not participate on their own initiative.
  • Two of the three programs that used “integrated,” as opposed to “traditional,” case management worked well for those who entered the study without a high school diploma or GED. In integrated case management, one worker fulfills the responsibilities related to the payment of welfare and other benefits, normally performed by income maintenance staff, as well as the responsibilities related to the provision of employment-related services, usually assigned to welfare-to-work program staff. In traditional case management, each welfare recipient has two different case managers. Two programs that implemented different versions of well-funded and well-supported integrated case management produced relatively large impacts for nongraduates; the third program, which also used an integrated case management model but one that was hampered by tight funding, had limited impacts.

The Limits of Pre-Employment Strategies

Average income levels among control group members over the five-year follow-up period were low. Despite the successes of these programs, no program, not even Portland’s, met the long-range goal of making enrollees substantially better off financially. Most program group members continued to have low incomes from various combinations of earnings, the EITC, welfare, and Food Stamps. In fact, among individuals who lacked a high school diploma or GED as of study entry, some programs had the five-year result of making them financially worse off. These findings suggest that the challenge of the future is to identify other types of programs or initiatives that can provide welfare recipients with better and more stable jobs, increase their income, and improve the well-being of their children.