The Challenge of Achieving High Work Participation Rates in Welfare Programs

In this policy brief, I examine work participation
under TANF; the reauthorization
proposals on work Congress is considering;
the implications of those proposals for state
and local welfare offices; and the factors that
may have led to lower-than-expected work
participation rates and what might be done to
raise them.
Critical decisions that continue to generate
widespread controversy include: How deep
into the caseload should work requirements
extend; what level of effort should be
expected of individual recipients; in what
types of activities should recipients be
required to participate; what penalties should
be imposed for non-compliance; and what
measures should be put into place to hold
states accountable for engaging recipients in
work activities?
WORK PARTICIPATION UNDER
TANF
Work requirements under TANF have been
defined by a combination of federal mandates
and state choices (table 1). These requirements
were phased in over approximately six
years, providing states with time to shift the
emphasis of their welfare programs from
providing ongoing income maintenance to
The
Brookings
Institution
1775 Massachusetts Ave., N.W.
Washington, DC 20036
All Policy Briefs are available on the Brookings website at www.brookings.edu.
Related Brookings
Resources
POLICY BRIEF
The Brookings Institution
October 2004 Welfare Reform & Beyond #31
Efforts to reform the welfare system over the last two
decades have largely focused on reducing welfare
dependency by getting welfare recipients to work. By the
time the Temporary Assistance for Needy Families (TANF)
program was created by the welfare reform law of 1996, there was
widespread agreement in the states that welfare recipients should
be required to look for work and to do so shortly after (or even
before) they began receiving cash assistance. Once TANF was
implemented, work became a central focus of local welfare
offices. However, as shown by the recent debates on the reauthorization,
consensus on work requirements remains elusive.
LADONNA PAVETTI| Restoring Fiscal Sanity: How to
Balance the Budget
Alice M. Rivlin and Isabel V.
Sawhill, eds.
Brookings Institution Press
(2004)| One Percent for the Kids
Isabel V. Sawhill, ed.
Brookings Institution Press
(2003)| Welfare Reform and Beyond:
The Future of the Safety Net
Isabel V. Sawhill, R. Kent
Weaver, Ron Haskins, and
Andrea Kane, eds.
Brookings Institution Press
(2002)| The New World of Welfare
Rebecca Blank and
Ron Haskins, eds.
Brookings Institution Press
(2001)| Ending Welfare as We Know It
R. Kent Weaver
Brookings Institution Press
(2000)| For more information on the
Brookings Welfare Reform &
Beyond Initiative and a full
archive of the WR&B
Policy Brief series, go to
www.brookings.edu/wrb
The Challenge of Achieving High Work
Participation Rates in Welfare Programs
preparing welfare recipients to enter the paid
labor market and supporting them once they
make the transition.
Accountability Structure. To hold states
accountable for moving families from welfare
to work, the TANF legislation included work
participation rates that states were required to
achieve, or risk losing a portion of their state
TANF allocation. Issues encountered in
devising the work participation rate included
how to account for changes in the TANF
caseload that might result from a greater
emphasis on participation in work activities
and how to set reasonable expectations for
states. To address these issues, states were
required to meet gradually increasing work
participation rates and were provided with a
“caseload reduction credit” of one percentage
point for every percentage point reduction in
their TANF caseload after 1995. The credit
was designed to reward states that helped
welfare recipients leave the rolls.
In the first year after TANF was passed,
states were required to have 25 percent of
their caseload participating in countable
activities. By 2002, states were expected to
meet work participation rates of 50 percent.
Taking into account the caseload reduction
credit, all states met their work participation
requirements for every year between 1996
and 2002. In 2002, the caseload reduction
credit completely offset the work participation
requirement for 21 states and only 11
states had to meet a work participation rate
greater than 10 percent. On average, after
accounting for the caseload reduction credit,
states only had to meet a work participation
rate of six percent.
Despite this low work requirement, states
achieved an average work participation rate of
33 percent, 27 percentage points above the
required participation target. There was,
however, considerable variation among the
states. Kansas achieved the highest rate, 85
Welfare Reform & Beyond #31 October 2004
POLICY BRIEF
2
LaDonna Pavetti is a
senior fellow at
Mathematica Policy
Research, Inc.
State
Accountability
Structure
Coverage
Expected Level
of Effort
Countable
Activites
Penalties for
Noncompliance
50 percent of the caseload participating in countable work
activities with a one-for-one percentage point reduction for any
net reduction in the caseload since 1995.
States and localities decide who is required to participate in
program activities, but all families enrolled in TANF with a
child over age 1 are counted in the state’s work participation
rate; participation is mandatory for recipients once they have
received assistance for 24 months.
30 hours for a parent with a child over age 6; 20 hours for those
with a child 6 or younger.
Participation in primary work activities for the first 20 hours
and participation in primary or secondary activities for any
additional required hours. Primary work activities include: (1)
paid or unpaid work; (2) vocational training; (3) job search; and
(4) providing child care for other participants. Secondary activities
include job skills training and education related to
employment.
Pro rata reduction in the TANF grant; elimination of full grant
permitted.
Table 1. Work Requirements Under TANF
3
percent, and Georgia, with just 8 percent,
achieved the lowest. Twelve states achieved
work participation rates of at least 50 percent
and ten achieved participation rates of 25
percent or less. The participation rates for the
five states with the largest TANF caseloads
ranged from a low of 10 percent to a high of 56
percent, with only one of the five achieving a
rate above 50 percent.
Coverage. The TANF debate over who
should be expected to work focused primarily
on expectations for two groups of recipients:
families with young children and families
facing significant personal or family
challenges. Liberals and some state officials
were concerned that sufficient resources
would not be available to provide child care
to all families that needed it, especially
families with infants. They also were
concerned that families facing personal and
family challenges such as mental or physical
health problems or domestic violence would
have to meet unrealistic work expectations.
In the end, specific decisions about who
should be required to participate in work
activities were left to the states.
Even though federal law defines which
families are included in the work participation
rate, there is considerable variation among the
states in the proportion of their families
included in the work participation calculation.
This variation comes primarily from state
decisions regarding whether to require
families with a child younger than age one to
participate in work activities and waivers that
had been approved before 1996 that were still
in place in eleven states in 2002. For example,
because of a waiver for Massachusetts that
excludes families from work requirements
until they have received assistance for 24
months, only 23 percent of the single-parent
caseload is included in the state’s work participation
calculation. At the other extreme, all
families are included in the participation rate
calculation in Oregon and 95 percent or more
are included in Maine, Utah, and Montana.
Level of Effort and Acceptable Activities.
The 1995-96 congressional debate over what
level of effort should be expected of welfare
recipients and in which activities they
should be permitted to participate was
contentious. Liberals argued strongly for
allowing recipients to participate in educational
activities that would prepare them for
better-paying jobs, and said that since most
mothers work part-time, any reform should
expect only part-time work from welfare
recipients. Conservatives felt strongly that
allowable activities should be narrowly
defined to focus primarily on work and that
recipients should be expected to work close
to full-time. The final legislation was quite
prescriptive, defining both the hours and the
activities in which recipients were expected
to participate (table 1).
By 2002, almost two-thirds of TANF
recipients who met their work requirements
did so by working in unsubsidized
employment. Participation in all other activities
was low, with substantial variation across
the states in the mix of activities. For example,
the fraction of recipients participating in job
search was only 14 percent; for work
experience and vocational education
programs, it was only 10 percent. Few states
made substantial use of either work
experience or education and training
programs. Only about a third of the states had
as many as 20 percent of recipients participating
in a vocational education program.
Welfare Reform & Beyond #31 October 2004
POLICY BRIEF
“By 2002, almost
two-thirds of TANF
recipients who met
their work requirements
did so by working
in unsubsidized
employment.
Participation in all
other activities was
low, with substantial
variation across the
states in the mix of
activities.”
The federal definition of work activities
excludes some activities that states use. Thus,
under a broader definition of work activities,
states would have more recipients engaged in
some work-related activities than the federal
participation rates suggest. Examples of activities
that count as participation under state,
but not federal, rules include attending
physical or mental health treatment, locating
child care, pursuing disability income, and
participating in other supportive services.
Penalties for Noncompliance. Prior to the
passage of the 1996 welfare reform law and
the implementation of TANF, welfare offices
reduced welfare payments for recipients who
failed to participate in mandated work activities
by eliminating the payment for the
noncompliant adult in the grant (reducing the
payment by about $65 per month in the
average state). Believing that this penalty was
not sufficient to influence household heads’
participation decisions, many states began
applying for and receiving waivers in the early
1990s to impose more stringent sanctions for
noncompliance. Building on this early
experience, the TANF legislation required
states to impose a pro rata reduction on all
families not meeting their work requirement
and permitted them to eliminate all of a
family’s cash grant. Liberals worried that the
imposition of more stringent sanctions would
leave vulnerable families with no stable means
of support, potentially worsening their already
precarious situations. Conservatives argued
that tougher penalties were necessary to
encourage high levels of program compliance.
The majority of states have used the flexibility
provided under TANF to implement more
stringent sanctions. Eighteen states have
implemented a gradual full-family sanction in
which the grant is initially reduced and then
eliminated if noncompliance continues.
Seventeen states have implemented an
immediate full-family sanction in which the
entire grant is eliminated immediately. One
state, Wisconsin, uses a pay-for-performance
model in which the amount of a family’s
benefit is determined by the number of hours
that the household head participates in
required work activities. If the family head
does not work, the cash payment is zero.
Only fourteen states and the District of
Columbia have retained a partial sanction,
similar or identical to what was in place prior
to welfare reform.
THE TANF REAUTHORIZATION
DEBATE
The structure of work requirements has been
a central focus of the TANF reauthorization
debate. Because there is widespread
agreement that work should be a key element
of TANF, the debate primarily has been
focused on how the structure of the TANF
work requirements should be changed to
better support this goal.
The Bush administration’s proposal for
reauthorization and the bill that passed the
House in each of the last three years call for
increasing the work participation rate,
narrowing the caseload reduction credit,
increasing the required hours, narrowing
the list of countable activities, and requiring
more stringent sanctions. The participation
requirement would begin at 50 percent and
increase by 5 percentage points yearly until
reaching 70 percent. The caseload
reduction credit would be replaced by a
credit that is based on recent caseload
declines, substantially reducing the amount
of the credit. Families would be required to
participate in activities for 40 hours per
Welfare Reform & Beyond #31 October 2004 4
POLICY BRIEF
“Proponents of
President Bush’s
plan believe that the
proposed changes
are necessary to truly
transform the welfare
system into a
work-oriented assistance
system. . . .
Opponents of the
plan emphasize the
progress states have
made and what they
have accomplished
in helping mothers
leave welfare for
work.”
5
week, 24 of them in paid or unpaid work.
All states would be required to adopt full
grant sanctions for families that fail to
comply with work requirements.
Proponents of President Bush’s plan believe
that the proposed changes are necessary to
truly transform the welfare system into a workoriented
assistance system. They point to low
participation rates among current recipients
and the limited use of work experience and
community service programs as evidence that
states have not taken the work requirements
seriously enough. They also argue that if
mothers are to escape poverty, they must learn
to work full-time. Opponents of the plan
emphasize the progress states have made and
what they have accomplished in helping
mothers leave welfare for work. They believe
that the proposed plan reduces state flexibility,
sets unrealistic expectations for the recipients
who are left on the TANF rolls, and requires
additional services without providing
additional funding. As an alternative, they
have proposed a broader range of countable
activities, fewer hours of work, additional
funding for child care, and a caseload
reduction credit that focuses on work exits
from welfare.
INCREASING PARTICIPATION
Surprisingly, even though the reauthorization
debate has focused on the details of how work
requirements should be structured, there has
been limited attention paid to the factors that
might lead to lower-than-expected work
participation rates and what might be done to
address them. States’ policy and programmatic
choices have demonstrated their commitment
to engaging TANF recipients in activities
designed to prepare them for employment.
Even though they are not required to do so,
sixteen states impose work requirements on
families with children under the age of one. In
addition, even though states are not required
to engage TANF recipients in work activities
until they have been on assistance for 24
months, nearly every state requires participation
immediately. Finally, about a third of
the states already have adopted a universal
engagement philosophy and have developed
approaches for engaging their entire TANF
caseload in a broad range of work activities.
Given what states have already done, it is not
immediately obvious why more states have not
achieved higher work participation rates.
When TANF is finally reauthorized, it seems
likely that the work requirement will be
strengthened, although probably not as much
as recommended by the Bush administration.
States and local welfare offices will almost
certainly have to examine their current efforts
to engage TANF recipients in work activities
and identify strategies for improving their
performance. Several strategies to increase
work rates may prove useful to states.
Implement work-related policy changes.
Policies that might influence a state’s work
participation rates include policies that
disregard earned income, allowing families to
combine work and welfare; diversion
programs that aim to keep families off the
TANF rolls either by providing a lump sum
payment or by requiring families to participate
in a job search program as a condition of eligibility;
sanction policies that levy penalties on
non-compliant families and eventually remove
them from the caseload; and time limits that
discourage long-term welfare use. These
policies could influence a state’s participation
rate in various ways. For example, policies that
Welfare Reform & Beyond #31 October 2004
POLICY BRIEF
“States have led the way
in reforming the welfare
system and have
embraced the transition
to a work-oriented
system.”
allow more earned income have the potential
to boost participation rates because they keep
many working families on the caseload and,
therefore, in the participation rate calculation.
Diversion, full-family sanction, and time-limit
policies could contribute to higher participation
rates because they eliminate families
from the caseload that have not complied
with work requirements. If sanctions and
time limits motivate TANF recipients to
work, they would also boost participation
rates. It is important to note that these policy
changes may have other effects besides
increasing work participation rates. For
example, diversion policies may discourage
some families who need assistance from
applying for it. Policies that allow more
earned income may be costly and cause
families to reach their time limit sooner than
they would in the absence of such policies;
and sanctions may reduce the money
available to families, especially those who
face multiple barriers to employment.
Improve service delivery. As part of their
efforts to reform the welfare system, local
welfare offices expanded their capacity to
deliver employment services to TANF recipients,
often through contracts with a variety of
public and private agencies that provide job
search and other work-related activities. Even
with this expansion, local welfare offices may
still not have sufficient capacity to immediately
engage all TANF recipients in work
activities, resulting in extended periods of
inactivity, primarily for new applicants. It is
also possible that the referral process from one
agency to another may not operate smoothly,
resulting in gaps in participation at key
transition points. Further, if job search is the
only program option offered to recipients,
those who do not find employment quickly
may languish for extended periods because
there is nothing else available for them.
Identify the impacts and the costs and
benefits of work programs versus participation
in a broad array of activities.
Proposals regarding activities in which recipients
should be required or allowed to participate
are based largely on ideology. The
Department of Health and Human Services
should conduct demonstration projects in
several states to determine whether
mandatory work programs produce better
participation and employment outcomes and
are more cost-effective than universal
engagement programs like those in Utah and
Oregon, which place recipients in a broad
range of program activities. Such an experiment
is a logical next step in identifying
promising strategies for helping to move more
families from welfare to work.
Address client nonparticipation. In some
cases, program services may be available but
TANF recipients fail to take advantage of
them. Although recipients who are noncompliant
are subject to sanctions, it may take
considerable time to document the noncompliance
and to try to reengage the client
before sanctions are imposed. If personal
and family challenges contribute to the
participation problems, it may take
additional time to resolve those issues and
develop a plan that will eventually lead to
participation in countable activities.
Implementing strategies to address noncompliance
sooner or promote greater
compliance at the outset would eventually
cause participation rates to rise. Currently,
there is little incentive for states to invest in
strategies to address client nonparticipation.
Consequently, we know little about how to
Welfare Reform & Beyond #31 October 2004 6
POLICY BRIEF
ADDITIONAL READING
Besharov, Douglas J. and Peter
Germanis. March 2004.
“Toughening TANF: How Much?
And How Attainable?” College
Park, MD: University of Maryland
Welfare Academy.
Fagnoni, Cynthia. March 2001.
“Welfare Reform: Progress in
Meeting Work-Focused TANF
Goals.” Testimony before the
Subcommittee on Human
Resources, Committee on Ways
and Means, U.S. House of
Representatives. 107 Cong. 1
sess. GAO-01-522T.
Fremstad, Shawn, Sharon Parrott,
Mark Greenberg, Steve Savner,
Vicki Turetsky, and Jennifer
Mezey. August 2002. “One Step
Forward or Two Steps Back? Why
the Bipartisan Senate Finance Bill
Reflects a Better Approach to
TANF Reauthorization than the
House Bill.” Washington, D.C.:
Center on Budget and Policy
Priorities and Center for Law and
Social Policy.
Hamilton, Gayle and Susan
Scrivener. September 1999.
“Promoting Participation: How to
Increase Involvement in Welfareto-
Work Activities.” New York:
MDRC.
7
encourage high levels of participation in
program activities.
Improve access to child care and other work
supports. Often, recipients are not required to
participate in program activities until they
have arranged child care. Especially in rural
areas or smaller cities and towns where public
transportation is limited, recipients also may
not be required to participate until they have
located suitable transportation. The time lag in
arranging child care or finding transportation
can be considerable. For families that need
subsidized care, the process often involves
multiple steps including going through an
eligibility determination process, arranging for
a medical exam to certify that the child is free
from communicable diseases, and locating a
provider in a convenient location with space
available. Difficulties encountered during any
one of these steps could result in a considerable
lag from the time a self-sufficiency plan
is signed until someone is able to participate in
countable program activities. To address these
issues, states could consider offering on-site,
drop-in child care until a more permanent
arrangement can be put into place.
Alternatively, they could design program activities
such as independent job search that can
be done at home or during non-traditional
hours when family members may be able to
provide child care. In places where child care
providers or subsidies to cover the cost of child
care are limited, additional resources may
need to be devoted to increasing the supply of
child care available to families required to
participate in work activities.
Devote additional resources to case
management. There is considerable variation
in the range of tasks TANF workers are
required to perform and in the number of
cases they handle at any given time. In welfare
offices where workers carry high caseloads,
they may find it difficult to achieve high levels
of program participation. If sufficient time is
not available to monitor participation, some
families may be missed because there is not
sufficient time to obtain proper documentation.
For nonparticipating families, it takes
time to determine what factors may be
contributing to the nonparticipation and to
develop strategies to resolve them. When time
is limited, these families may simply fall
through the cracks and end up not participating
in program activities for extended
periods and may not be sanctioned for nonparticipation.
Welfare offices could provide
additional case management through existing
employment service contracts or by implementing
group case management models such
as Pathways, a program designed by staff from
Project Match in Chicago that is in use in
several counties in New York and California.
Improve data collection and program
monitoring. Monitoring participation in
work activities is a complicated task,
especially when multiple providers are
involved. If the system in place for
monitoring program activities does not
adequately capture all the program activities
in which recipients are engaged, the reported
work participation rate will underestimate
the number engaged in work-related activities.
Some recipients could be participating
in activities that they do not report to the
TANF office; or they may participate in activities
but do not provide sufficient documentation.
In addition, if the data collection and
monitoring system is primarily designed to
meet federal requirements, participation in
noncountable work activities may not be
collected. States should develop improved
Welfare Reform & Beyond #31 October 2004
POLICY BRIEF
ADDITIONAL READING
(CONTINUED)
Riedl, Brian M. and Robert E.
Rector. July 2002. “Myths and Facts:
Why Successful Reform Must
Strengthen Work Requirements.”
Washington, D.C.: Heritage
Foundation.
Turner, Jason. May 2003. “Universal
Engagement of TANF Recipients:
The Lessons of New York City.”
Washington, D.C.: Heritage
Foundation.
U.S. Census Bureau. May 2002.
“Work and Work-Related Activities
of Mothers Receiving Temporary
Assistance to Needy Families: 1996,
1998 and 2000.”
U.S. General Accounting Office.
July 2002. “Welfare Reform: With
TANF Flexibility, States Vary in How
They Implement Work
Requirements and Time Limits.”
Zedlewski, Sheila R. and Jennifer
Holland. August 2003. “Work
Activities of Current Welfare
Recipients.” Washington, D.C.:
Urban Institute.
reporting systems and computer systems that
capture all countable activities.
CONCLUSION
The proposals now before Congress to
increase work participation rates imply that
states’ current efforts to engage TANF recipients
are inadequate. However, the debate has
largely focused on what the participation rates
should be and how many hours should be
devoted to work. Many states and members of
Congress are raising concerns both about
whether the work requirements are realistic
and whether there are too many loopholes that
would allow states to continue to do what they
are currently doing. What is missing from
these debates is a serious analysis of why
states have not already achieved higher participation
rates and what it will take for them to
do so. States led the way in reforming the
welfare system and have embraced the
transition to a work-oriented system.
Mandates for higher work participation rates
without guidance on how to achieve them are
not likely to result in greater employment
among TANF recipients, the ultimate goal of
such requirements. Current efforts to reform
the welfare system started as small demonstration
projects designed to identify how to
increase employment among welfare recipients.
In the long run, implementation of a
number of small demonstration projects
designed to test various strategies for
increasing participation in work activities and
employment may lead to higher participation
rates than broad mandates that may not be
achievable. A closer examination of policies
designed to promote work, service delivery,
and data collection and monitoring systems
would help states or local welfare offices
identify where they should target their limited
resources. Making any new investments
within a fixed budget may prove especially
difficult. Because of the budget shortages
many states and local governments are facing,
new investments to achieve higher work
participation rates will almost certainly need to
be offset by reductions in other program
investments, complicating the decisionmaking
process.
Welfare Reform & Beyond #31 October 2004 8
POLICY BRIEF
The Brookings Institution
1775 Massachusetts Ave., N.W.
Washington, DC 20036
NONPROFIT ORG.
U.S. POSTAGE
PAID
FREDERICK, MD
PERMIT NO. 225
Recent Welfare Reform
& Beyond Policy Briefs
“Encouraging Job Advancement
Among Low-Wage Workers:
A New Approach”
WR&B Brief #30
Harry J. Holzer
(May 2004)
“Waive of the Future?
Federalism and the Next Phase
of Welfare Reform”
WR&B Brief #29
Pietro Nivola, Jennifer Noyes,
and Isabel Sawhill
(March 2004)
“Work and Marriage: The Way to
End Poverty and Welfare”
WR&B Brief #28
Ron Haskins and Isabel Sawhill
(September 2003)
Editor
Elana Mintz
Production/Layout
Mary Techau
Vice President of
Communications
Stephen G. Smith
The Brookings Office
of Communications
202/797-6105
communications@brookings.edu
The views expressed in this
Policy Brief are those of the
author and are not necessarily
those of the trustees, officers,
or other staff members of the
Brookings Institution.
Copyright © 2004
The Brookings Institution
Tell us what you think of this Policy Brief.
E-mail your comments to yourview@brookings.edu.