WELFARE REFORM: ISSUES TO BE ADDRESSED

H. C. Covington (ach1@sprynet.com)
Sat, 18 Apr 1998 12:10:44 -0500


WELFARE REFORM: ISSUES TO BE ADDRESSED
Marianne Hill


The issues taking on new urgency under welfare reform in 1998 are not
themselves new. Poor single mothers with young children have long faced
seemingly insurmountable problems to escaping poverty. Anti-poverty
programs that have been available to them in the past did not provide the
support that most needed to get and keep a steady job with above
poverty-level wages. The new TANF (Temporary Assistance for Needy Families)
program recognizes that these women require assistance with childcare and
transportation if they are to avail themselves of their best option for
escaping poverty: employment. In fact, the program's work requirements are
revolutionizing the welfare system in the U.S., with more legislation
expected as revisions and additions are made to the new policies.

The emphasis on employment is a change that is long overdue. However, there
is major disagreement, reflected in public debate, as to whether welfare
mothers should be coerced into working, through use of penalties and denial
of benefits, or whether they should be encouraged to work by making work
more rewarding. According to Christopher Jencks, coercive measures will
"leave a lot of welfare recipients homeless and force a lot of mothers to
abandon their children," and, he warns, "without that ultimate sanction,
coercion cannot succeed" (American Prospect, Fall 1992). On the other hand,
he argues, to encourage work, it is necessary to make it possible to
support a family on a minimum wage job, and that requires a much larger
investment in childcare, transportation and housing assistance than has
been politically acceptable.

TANF Program Combines Targeted Incentives with Penalties

The TANF program combines the use of penalties and targeted subsidies for
low-income working mothers. It has been criticized more for the inadequacy
of its subsidies than for the use of sanctions.1 Although funding for
children's health care, childcare and transportation has increased markedly
under the new welfare package, the cost of providing these services for all
TANF families is simply not covered by current appropriations. Given that
the annual pay to a full-time worker at the minimum wage is only $10,712,
(below the poverty line for a family of two), there is little disagreement
that additional funding in this area will be needed as more adults on TANF
find employment.

The supports provided under TANF have, nonetheless, made employment
possible for many TANF mothers who otherwise would have been unemployed. As
would be expected with such a major policy shift, however, several problems
have been reported. Many find that childcare is simply not offered during
the hours needed, or that the 20 cents a mile subsidy offered by the
program may be inadequate for the only transportation available. Also,
those with problems related to domestic violence or substance abuse may
require more assistance than is currently available.

Perhaps most importantly, the quantity and quality of jobs available for
TANF recipients is of concern. So far, the number of jobs available has not
been a problem in most areas. While record low unemployment rates have been
helpful in this, more important is the fact that relatively few recipients
have been completing Job Readiness Training (JRT)--less than 20 percent of
the 4,882 recipients subject to work requirements in ten sample counties
have finished the JRT program. However, the Implementation Process Study of
Mississippi's TANF program, mandated by the Legislature and conducted by
the Center for Applied Research of Millsaps College for the Department of
Human Services, shows that 55 percent of clients who did complete their JRT
training in these counties, or 459 persons, were placed in private sector
employment. Of these, 72 percent were placed in unsubsidized jobs.2 While
this appears to be good news, 55 percent of clients referred to JRT in this
period did not complete their training, so that overall, a smaller 25
percent of those referred to JRT were placed. Those not completing training
were sanctioned, unless there was an acceptable reason, and their situation
is discussed in the next section.

As more women enter JRT training, it will become more difficult to find
jobs for recipients, especially in those counties where unemployment rates
are in the double-digits for black women. The overall unemployment rate for
black women is projected to be 11.3 percent in FY1998 by the Employment
Security Commission.

The quality of jobs in which TANF recipients are placed is also of
importance. The jobs available are generally near minimum wage, and while
for some recipients a satisfactory employment record at a minimum wage job
will help their employability, others, who are regularly in and out of
low-wage employment, may see no change in their long-term employment
prospects. In fact, data show that in 1990 close to 30 percent of welfare
recipients in Mississippi had worked sometime during the year. See Table 1.

It is not clear from the Implementation Process study what percentage of
TANF recipients getting jobs are highly employable in any case at minimum
wage jobs. For example, the study does not indicate what percentage had
worked within the last year, nor does the study report what percentage of
those placed had high school or post-secondary education. According to the
study, however, 14 percent of recipients have had some post-secondary
education. Figures from the Work First welfare reform program in 1995-96
show that 22 percent of welfare recipients can be expected to obtain
employment without any intervention from TANF, based on employment rates
among recipients who were not in the then-experimental Work First counties.

In Mississippi, 34 percent of families headed by an African-American woman
working full-time, year-round are living below the poverty line, according
to 1990 Census data. At the median, black women workers did not earn enough
at full-time, year-round jobs to bring a family of four above the poverty
line in 1990. This means that for many welfare recipients, who are in and
out of low wage employment as the demands of job and family conflict, the
very limited support for education and training, even for GED certificates,
is a major drawback of the TANF program. Since a full-time female worker
with a college degree earns on average less than a male high school
graduate, a high school diploma is often not enough education for woman
trying to support a family. The vulnerability of children dependent on
women heads of household is the crux of the welfare problem, and the
solution therefore cannot be separated from the job market situation facing
women, and especially black women. Nationwide, 45 percent of divorced women
with young children receive welfare at some point, according to Professor
G. Dunkel of the University of Michigan.

The Millsaps Implementation Study as yet has offered no recommendations for
the state TANF program, although House Bill 766 of 1997 does request such
input. In part, the lack of recommendations is doubtless because some
information is not yet available. It is critical to know, for example,
which recipient families have seen their circumstances improve as a result
of the TANF program and what has made this improvement possible. It is also
critical to understand which recipient families have not been helped by
TANF and why. Basic to answering these questions is information on who has
obtained employment, and on why some recipients have not met program
requirements. As mentioned before, it is not known how many of those
obtaining employment are women who are highly employable, for whom the
subsidized childcare and transportation under TANF are particularly
helpful. Nor is it known how many persons have received full or partial
subsidies for childcare or transportation, which makes it difficult to
assess the benefits of these subsidies. With regard to the children in TANF
families where the mother works, it is not known what kind of care is being
provided the children, nor is it known what has happened to their school
attendance. Also lacking is information on sanctions for noncompliance; it
is likely, for example, that childcare and transportation problems
contributed to the difficulties clients experienced in meeting program
requirements.

Transition Period Brings Challenges

As these extensive administrative changes take place in the welfare
program, the Department of Human Services is adapting rapidly to new
programs, complicated new sets of eligibility requirements and rules, new
computer systems and more. Among the difficulties associated with the
period of transition, sanctions adversely affecting the short-term
well-being of clients have received particular public attention. While they
are doubtedly a minority among those sanctioned, it is inevitable that some
recipients will be penalized incorrectly during this period of adjustment,
and there have been cases in which the consequences of such errors have
been severe for the families involved, with subsequent impact on the
community. The appeals process, under these circumstances, takes on added
importance, and advocacy groups have voiced interest in modifications to
current procedures that would encourage community involvement, not only in
this process but also in the broader TANF program. In the second half of
1997, only 132 persons, or about 3 percent of persons sanctioned, appealed
those sanctions; and of cases heard, less than 10 percent were found in
favor of the client. In addition, however, some persons sanctioned had
penalties removed without going through the formal appeals procedure, when
administrative error was clearly involved. The TANF Implementation Council,
the state advisory and review council composed of thirteen public members
and a chair appointed by the Governor, is empowered to make recommendations
in this area.

There is reason to be concerned about those sanctioned. The state's welfare
caseload has fallen a surprisingly sharp 39 percent between September 1995
and September of this year. The number of families receiving benefits under
TANF/AFDC dropped from 51,107 to 30,934 over this period. The dramatic
decline in numbers is due both to a drop in applications and to an even
greater rise in the percentage of cases discontinued, with most
discontinuances due to failure to follow rules.

The Millsaps study of Mississippi's TANF program provides details on case
closures between July and September 1997.3 Fifty-five percent of closures
were due to noncompliance, of which 41 percent involved failure to comply
with reporting requirements, such as disclosure of paternity (up to 16
percent of cases), while the other 15 percent involved work program
sanctions (almost entirely no-show or poor attendance in orientation and
training programs). The remaining 45 percent involved either loss of
eligibility (4 percent reported incomes above the limit permitted) or
voluntary withdrawal (16 percent). In some cases, those sanctioned may have
been skeptical of the benefits of the JRT program and preferred to initiate
their own job searches. In any case, if those sanctioned find that their
alternatives do not succeed, they are likely to reapply for benefits in the
future. This is supported by the Millsaps study which reports that 30
percent of those sanctioned in four sample counties have reapplied for TANF
benefits.4

Economic Impact of Sanctions

It is not clear what has happened to the income and economic circumstances
of those whose cases were closed for noncompliance. Preliminary results
from the on-going Millsaps study, reported before the Joint Oversight
Committee January 5, show that it may be the case that a sizable minority
have been forced to move in with friends and relatives, and some have
suffered hunger. This is in agreement with national studies that show many
sanctioned have turned to families, friends, and charities. In Iowa, for
example, those terminated due to noncompliance for the most part had a
decrease in earnings, although 40 percent reported an increase. These
people turned largely to friends and relatives for assistance, according to
a Mathematica Policy Research study. At a national level, the U.S.
Conference of Mayors in November reported that a survey of 34 cities found
requests for food assistance had increased by an average of 17 percent in
the first half of 1997, with 44 percent attributing this increase to
welfare reform.

In Mississippi, some preliminary numbers are available from charities in
the Jackson area are in line with the finding of increased need among many
sanctioned. For example, Stewpot Community Services reports that it used to
supply about 800 families per month with a four-day supply of food, and
that this number has increased to 1200 to 1300 per month, with the largest
increase starting in June; also the number fed daily has gone up from 130
per day to 200 per day approximately, and the increase has been almost
entirely women and children. Similarly, Matt's Shelter House for the
homeless reports an increase in requests--from about 24 per month to about
40, and they attribute this to increased requests from women with children,
with several women mentioning being sanctioned under the TANF program. It
is likely that some of these women come from areas outside of Jackson,
drawn to the city by the services available.

A drop in enrollment in several childcare centers serving the working poor
has been another outcome of recent changes, as funds previously available
to low-income families under the Childcare Block Grant have been shifted to
support the TANF program. Voices for Children, which represents over 300
childcare providers, reports that over half of their members have seen a
decrease in the number of children enrolled. Efforts are currently underway
to secure alternate sources of support for the low-income, working families
that have been adversely affected by recent changes.

Welfare Recipients As Workers

Poverty levels for female-headed families with dependent children in
Mississippi are high: according to data from the 1990 Census, while 29
percent of children live in such families, they account for 60 percent of
the 246,000 poor children in the state. [There are about 72,000 children
receiving TANF benefits (data as of June 1997)]. The poverty of these
families, in many cases, is due to the low wages paid in many of the jobs
available to women.

The labor force characteristics of women welfare recipients put them
especially at risk of low wages and unemployment. Many welfare recipients
(47 percent in 1995) lack a high school degree. Most are African-American,
for whom average unemployment rates are over twice as high as for whites:
eighty-two percent of welfare parents are black. In addition, as detailed
below, many had a disability, and an even higher percentage lacked
transportation and telephone service. Nonetheless, almost half had worked
within the past two years. In the case of many of these workers, it is
likely that changed circumstances in terms of childcare arrangements, work
hours or the availability of transportation resulted in a loss of
employment that prompted their decision to apply for welfare.

Table 2 provides some basic information on welfare recipients in FY1996.
Seventy-two percent of these families had one or two children, and most had
been receiving AFDC benefits for less than three years. Table 1, above,
shows that even without the work requirements of the new TANF program, a
sizeable percentage of welfare recipients worked. Thirty percent of public
assistance recipients who were heads of household worked during the survey
year, and 26 percent of recipients who were not household heads also worked
during that year. [Note: These figures also include recipients of
Supplemental Security Income (SSI) if they are women under 65 years of age
below the poverty line who are household heads with a child in the
household, or who are not household heads but are mothers of a child in a
subfamily unit.]

However, there were several work-related problems affecting these women.
Welfare recipients are not permitted to own motor vehicles exceeding $1500
in value. Table 3, which is based on Census data regarding household
ownership of vehicles of both SSI and AFDC recipients, show that 57 percent
of these household heads had no car, 48 percent had no telephone and 22
percent had a disability limiting the kind or amount of work she could do.
The figures for those who were not household heads, but rather were mothers
of a child in a subfamily, were noticeably better: only 33 percent were in
households lacking a car, 31 percent were in households lacking telephones,
and 15 percent had a disability limiting work. The age of these mothers in
subfamilies was 26 at the median, compared to an median age of 35 for heads
of household.

The work incentives provided under work encouragement programs similar to
TANF have been found to be most effective, not for those for whom welfare
acts as a relatively short-term unemployment benefit nor for long-term
recipients, but rather for those in an intermediate category of recipients
with no recent employment experience including young mothers recently out
of school. Studies have shown that twenty-hours or so spent in job
readiness training, followed by supervised job search efforts, can have
positive impact for this group.5 Preliminary reports do not indicate that
Mississippi is departing from this norm: it is to be expected that job
placement rates will generally be highest among those with the most recent
work experience, whose placement rates are high with or without
intervention, and lowest among those who have been out of the work force
for ten or more years.

While there are other federal programs for which these women are eligible
should they be unemployed when they leave TANF, even taken together, these
programs fall short of meeting a family's minimum needs. Table 4 compares
benefits under the four major income security programs: TANF, Medicaid,
Food Stamps, and the Earned Income Tax Credit (EITC). Food stamps and TANF
together provide an average of $1388 per family member annually, and the
EITC may add another $1558 per family. Other subsidies, including private
contributions, benefit only a minority of welfare recipients in the state.
For example, 28 percent benefit from housing assistance: 18.5 percent
received a rent subsidy and another 9.8 percent rented in public housing,
according to 1991-92 data from the U.S. Department of Human Services. A
total of 23 percent had some other form of unearned income, apart from
AFDC, averaging $95 per month. This included some child support that was
passed through (child support payments reduce the amount of TANF benefits),
received by 10.7 percent of recipients. Social Security payments were
received by 4.7 percent, and SSI or Workman's Compensation by 0.2 percent.

While the new TANF program is having a positive impact for some recipients,
studies by Manpower Demonstration Research Corporation and others have
shown that the amount by which the income levels of recipients increase
under workfare programs averages less than $1,000 annually--close to $500
in the early 1990s. By contrast, additional education has a significantly
greater impact--the average annual earnings of a full-time female worker
who is a high school graduate are over $5000 above those of a woman who has
not graduated (1995 data from the Census Bureau). The increase in earnings
for a woman with an associate or bachelor's degree compared to a woman with
a high school diploma is even greater. Thus, the impact of additional
education combined with employment can be expected to have a significantly
greater effect on reducing poverty than a program which relies on
employment and employment-related subsidies alone.

Adjustments in TANF Program Can Improve Success Rate

The large drop in TANF caseloads means that over $20 million that had been
budgeted for economic assistance payments to recipients in FY98will be
available for such alternatives as childcare, transportation,
training/education, increased benefits to those remaining in the program,
or assessment of the current TANF program. As currently structured, only
about 50 percent of the $89.2 million budgeted for assistance payments is
paid directly to recipients, and there is an additional $52.9 million
allotted for the JOBS program, childcare, and demonstration projects. This
indicates room for flexibility and a creative adaptability in TANF. The
Legislature's call for recommendations based on studies analyzing problems
and determining best practices in this complex area shows commendable
foresight.

Overall, the recent changes attempting to convert the welfare program to an
assistance program for low-income workers with children are provoking a
beneficial rethinking of how welfare is structured. If support is given to
welfare recipients which allows them to work while providing adequate
childcare and health care for their children, progress will have been made.
It must be questioned, however, whether assistance to these women can be
terminated after they become regular members of the workforce, if their
jobs, often part-time and minimum wage, leave their families considerably
below the poverty line.

With 34 percent of children in Mississippi living in poverty, efforts to
improve family incomes are critical to the future of the state. By the same
reasoning, the state should not hesitate to make cost-effective revisions
and corrections to current policies where such changes would improve the
ability of TANF recipients to gain long-term employment at above
poverty-level wages.


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Notes

1. In some cases, those originally against the widespread use of sanctions
have been won over. In one Florida county, for example, a citizen review
panel was established to ensure that recipients weren't unfairly eliminated
from the welfare rolls. The citizens, recruited as client advocates, after
hearing the cases, voted to eliminate cash benefits for all 45 welfare
recipients who hadn't complied with the rules of welfare reform as they hit
the two-year limit in Escambia County. "The volunteers say they try to
judge with empathy, but usually wind up getting depressed and disgusted."
The district administrator finds the panels give him some "public
credibility that we wouldn't have without them". From Wall Street Journal,
Rochelle Sharpe, "Reviewing Welfare Cases in a Florida County", 4/97.

2. B. Brister, J. Beeler, and S. Chambry, Implementation Process Study:
Mississippi's Temporary Assistance for Needy Families Program, Center for
Applied Research, Millsaps College, December 1997.

3. The number of applications fell 19 percent between the second quarter of
1993 and the second quarter of 1997. The percentage of cases discontinued
rose from 25 percent in the third quarter of 1993 to 44 percent in the
third quarter of this year.

4. If those reapplying are working part-time and are seeking assistance
with childcare and transportation problems that hinder them from working
more hours, they may find they are no longer eligible for the TANF program
if their earnings are more than the $368 monthly allowed (some deductions
permitted; figures for family of three). The ceiling on earnings permitted
applicants has not been lifted for several years, and is in need of
revision.

5. See J. Gueron, "Work and Welfare: Lessons from Employment Programs",
Journal of Economic Perspectives, Winter 1990, Vol. 4, No. 1, and also D.
Friedlander et al., GAIN: Two-Year Impacts in Six Counties, Manpower
Research Corporation, May 1993.


For a copy of the tables indicated in the above article, please call
Deborah Smith at (601) 982-6742.

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