The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

The promising findings of these demonstration welfare-to-work programs have played a key role in shaping welfare reform policy, yet, to justify their efforts, public agencies cannot always use research showing net effects for individuals. Rather, public administrators are held accountable for achieving aggregate program results, which are measured by the number of cases closed or the number of welfare recipients who enter employment. Despite limited funding,²² work-welfare programs have been criticized for not serving enough people, not placing enough people in jobs, not helping people move out of poverty, and not reducing welfare dependency.¹ What, then, can be done to improve overall program performance? Three important ways in which the performance and outcomes of work-welfare programs can be improved are: by increasing participation rates, by strengthening implementation, and by building ties to the labor market.

While several work-welfare demonstrations increased the earnings of those in the.programs, most programs have not engaged substantial portions of the welfare caseload. In many of the programs included in Table 1, participation mandates extended only to women with no children under age six, including less than 40% of the families who received AFDC (typically, women with younger children could volunteer for the programs, but were not required to participate).²³ Most of the work-welfare programs and demonstrations of the 1980s served no more than 5% to 15% of all AFDC adults in the sites where they operated.¹⁷

A number of work-welfare programs in the 1990s have served substantially higher proportions of the AFDC caseload. For example, in Iowa about 50% of the AFDC adults now participate in JOBS activities, and about 90% of Utah's AFDC adults are in activities designed to increase self-sufficiency.²⁴ Most of these programs include specific efforts to increase participation, initiating clear policies that obligate welfare recipients to cooperate and participate in activities to promote employment. Among other strategies, states have expanded participation mandates to a larger fraction of the AFDC caseload, have introduced stronger sanctions for nonparticipation and imposed time limits on benefits, and have redefined the meaning of participation to include a range of "desirable activities" in addition to work. Some states have also increased child care, case management, and other services to remove barriers to participation.

Participation Mandates

The 1988 Family Support Act emphasized participation by setting goals for the proportion of nonexempt welfare recipients states should serve in work-welfare programs funded by JOBS. By 1995, states were to serve 20% of clients who had children older than three.²⁵ Several states have gone further to increase participation by reducing exemptions from participation mandates for women with even young children and involving a larger fraction of mandatory participants than is required by the JOBS program. For instance, the San Diego SWIM program, begun in the mid-1980s, engaged 64% of the recipients who were mandated to participate or suffer financial sanctions (those with no children less than six years old).¹⁹ More recently, Florida's Project Independence achieved a similar participation rate of 64% over a two-year period, even though women with children aged three to six were also included in the mandatory population.²⁶ The Teenage Parent Demonstration Program required teenage mothers assigned to the program group to participate in school, training, or employment as a condition of receiving welfare, and 60% participated in at least one major activity.¹³

Sanctions

States have also strengthened the sanctions imposed on clients for not participating. Since 1968, states have had the authority to reduce a family's welfare payment if the adult who was required to participate in a work program did not comply. Before the 1990s, though, fewer than 5% of welfare households nationwide had their grants reduced. Local welfare workers faced with many volunteers but limited funds for work-welfare activities may have thought it was not worthwhile to spend much time on those who were not interested in participating.

Policies that impose sanctions can actually serve many purposes for welfare program staff. Participation requirements backed up by reasonable but tough sanctions can purge the caseload of recipients who have alternative means of support or who are not interested in receiving welfare if it means they must work. Sanctions also provide a concrete message that the welfare system has changed—that the agency will reduce or eliminate grants when new expectations imposed on recipients are not met. A credible threat of sanctions also gives case managers a valuable tool for motivating clients who might not otherwise participate in activities to promote self-sufficiency.^13,27

A related policy is that of limiting the amount of time a family can receive benefits without working. A five-year time limit on the receipt of federal cash assistance is included in the new federal welfare law, but several states, including Virginia, Massachusetts, Florida, and Iowa, have begun experimenting with limits of two years or less. While it is still too soon to know what effect time limits will have on employment, earnings, and family well-being, welfare staff in some states have said that they believe that time limits, serious participation requirements, and sanctions increase participation in work-related activities.²⁴ The new message of welfare is, "We will help you, but only if you are serious about getting a job, and only for a short period of time."

Facilitating Participation

Taking a different approach, some states have redefined the meaning of participation to include productive activities other than job search, training, or education. In Utah, for instance, involvement in needed substance-abuse treatment, mental health counseling, and parent training classes can satisfy participation requirements. However, the new federal welfare law narrowly defines the activities that can count as participation for the purpose of meeting federal requirements, and this restriction may dissuade states from following in Utah's footsteps.

Some welfare agencies seek to address barriers to participation in welfare-to-work activities. Often, these are the same difficulties that will also impede the ability of welfare recipients to work and become self-sufficient. In order to work, many recipients need child care, case management, job counseling, job training, and remedial education, all of which require staff time and additional resources. Some states such as Wisconsin and Iowa, for instance, have stated a commitment that they will make needed help available to enable welfare recipients to work. Other states may find that they, too, must increase services if they are to raise the levels of participation in welfare-to-work activities as well as the levels of successful transition to employment.

In 1987, the voluntary Massachusetts Employment and Training Choices Program (ET) for AFDC recipients, which operated during very good economic times, achieved participation rates of 50% through aggressive marketing and public information campaigns aimed at both clients and employers.³

These experiences suggest, then, that the keys to successful mandatory programs are to make the expectations clear and to carry through on both the services that the agency says it can provide and the penalties that will be imposed. Successful voluntary programs must assure that there are real jobs or training opportunities available, then actively market the program to employers and clients, and publicize the availability of those opportunities.

Achieving a high rate of participation is just the first challenge of effective service delivery; attention to program implementation is equally important to a successful program. Evaluations of work-welfare demonstrations of the past 20 years clearly show that employment, training, education, and work requirement programs can be cost-effective, as long as they are well executed.²⁸ But not all evaluated demonstrations and programs have been found to have positive effects, and the effects of programs using similar strategies vary across sites and over time. One study compared high- and low-performing WIN programs in the late 1970s in order to understand why some programs succeed and others do not.²⁷ The high-performing programs shared certain characteristics not found in the low-performing programs.

First, in successful programs a consensus among administrators, managers, and staff about the program's goals and priorities focuses the program's efforts on key objectives. In a poorly managed program, staff members often have different perceptions of the program's goals and little understanding of their responsibilities in relation to the overall objectives. For instance, if official welfare reform policy makes work and employment the top priority, but local welfare offices emphasize procedures for documenting eligibility for cash assistance, little progress will be made toward employment. Changing the culture of public welfare offices to serve as employment centers will be a major managerial and organizational challenge in many cases.

Second, in high-performing programs a broad range of employment, training, counseling, and other supportive services is available to enable recipients to be placed in jobs of adequate quality (in terms of wages and prospects for job stability). Simply instituting job-search requirements may yield a large number of job placements, but they will not necessarily be jobs offering the stability or wages required for self-sufficiency.

Third, in the most effective programs the staff's attitudes and the delivery of services are client-oriented, even when the program includes strong mandatory obligations. Not all clients need individualized services and counseling, but some do. Analysts and program administrators informally suggest that as many as 10% to 15% of new applicants for welfare may be diverted by strong participation requirements, and another third may obtain jobs through a required job search. The remaining 50% or more of clients will most likely need the help of staff who can serve as job brokers or case managers, not just enforcers of welfare rules. Welfare workers who document eligibility for welfare assistance, often called "income maintenance workers," now have caseloads of 200 or more. They cannot be expected to serve as employment coaches unless their caseloads are reduced. Policymakers must be realistic about what programs can achieve without significant funding increases.

A final challenge for successful welfare-to-work programs is to understand and work with the labor market. The labor market is the dimension through which work-welfare programs expect to achieve success. Yet, the weakest part of the current programs administered by welfare agencies may be their poor understanding of the labor market. Few, if any, resources are devoted to cultivating relationships with firms and industries, to developing jobs for particular individuals, or to staying informed about occupational or technological changes that may dictate the skills required in the workplace. In contrast, some small-scale nonprofit training programs and institutions (such as Project Quest and CET, the voluntary programs with strong effects on earnings that were mentioned earlier) use detailed knowledge of the labor market to prepare participants for jobs that are in demand. These programs succeed in part because they are not responsible for the full welfare population and can select the few recipients who they can serve effectively, but their success also suggests that stronger ties to the labor market can be of benefit to a wide range of programs. To date, public welfare programs have focused on benefits, services, and—most recently—job search and participation requirements. There is now an urgent need to integrate into these public programs the knowledge of the labor market and business that strengthens successful private programs.

The labor market also defines the limits of the success welfare-to-work programs can achieve. If the objective is to move welfare recipients into jobs, common sense suggests that this transition will be more likely to occur when unemployment rates are low and employer demand for workers is high. In the study of high- and low-performing WIN programs mentioned earlier, between 30% and 50% of the variation in program performance was explained by labor market and demographic conditions, such as employment growth in the area, the proportion of local jobs requiring limited skills, the local poverty and unemployment rates, and the prevailing hourly wages.²⁷

There is growing recognition that poor labor market conditions, especially when combined with the low skills of the welfare population, place serious constraints on local programs that are trying to move families out of poverty and welfare. Recent analyses of the current and future labor market indicate that the nation is undergoing major structural changes in the economy,^29-30 and earnings prospects for individuals with low education and skills are bleak. (See the article by Burtless in this journal issue.) Concerns about the ability of the labor market to serve as the economic vehicle to move people out of poverty has spurred development of a variety of other approaches for welfare recipients in addition to traditional employment and training programs.

One example is the New Hope Project, currently being tested in two very-low-income neighborhoods in Milwaukee. New Hope is an alternative to welfare, not a work-welfare program, designed to help individuals work in the regular (but increasingly insecure) job market. New Hope participants are guaranteed that their income will be above poverty as long as they work, and the program provides subsidized community service jobs to workers who cannot find a full-time job in the regular labor market. Workers receive wage supplements in addition to their paid wages and can buy into a health care plan and child care, for fees based on their income.

It is still too soon to determine the effect of New Hope on work, poverty, and welfare, but the model is promising in that it does not simply assume that the regular labor market can provide a full answer to welfare dependency and family poverty, and it attempts to compensate for the weaknesses in the labor market. Welfare reform strategies that increase the amount of earned income that is "disregarded" when the welfare grant is calculated also represent efforts to make it worthwhile for welfare recipients to work in the regular job market, even in low-paying jobs. In New Hope, low wages are directly supplemented; in the welfare projects, low wages are indirectly supplemented by allowing workers to continue to receive some welfare payment.