A major goal of the federal welfare reform legislation that was enacted in 1996 was to end welfare dependence by moving cash assistance recipients and potential recipients into the paid labor force. In theory, state Temporary Assistance for Needy Families (TANF) programs would provide low-income parents with the services they needed to become and remain employed, which would then lead to increased self-sufficiency.
Nearly 10 years later, with state cash assistance caseloads at historic lows, it seems reasonable to ask about the extent to which this has occurred. What has happened to the families that came to their state TANF programs looking for assistance? How many are employed? Are they finding stable jobs? How much are they earning? Is it enough for their families to escape poverty? And are they moving towards greater economic self sufficiency?
Answering these questions is critical not only for understanding the well-being of families in the wake of welfare reform, but also for measuring of the success of state and federal welfare reforms. It is also particularly timely, given recent federal legislation that will require a much higher percentage of each state’s TANF recipients to be engaged in work activities This paper draws upon findings from the Milwaukee TANF Applicant Study (see box for a description of the study) to provide some answers.
This paper examines the labor market outcomes of study participants in the years 1997 through 2003. It focuses on the percentage of study participants who were employed in each of those years as well as the earnings of those who were employed. All of the findings are based on data from Wisconsin’s wage reporting system, which tracks quarterly earnings from employment covered under the state’s unemployment insurance laws. Despite the emphasis that both state and federal welfare policies place on increasing labor force participation, we find that many of the TANF applicants in our sample experienced one or more quarters in which they were not employed, and the percentage who were employed in any year actually declined over time. Moreover, although the median earnings of those who were employed more than doubled between 1997 and 2003, most of those who worked did not earn enough to escape poverty. The paper concludes with policy recommendations based on these results. (author abstract)