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March 12, 1999 Press Contact: William Harms
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Scholars address effectiveness of welfare program

Researchers with the Northwestern/University of Chicago Joint Center for Poverty Research discuss how economic changes will affect welfare recipients

WASHINGTON, D.C., - March 12, 1999 - The current decline in welfare caseloads has been very rapid, especially since the 1996 welfare reform act, yet other problems such as continued poverty and economic insecurity are still common among former welfare recipients and are likely to increase, according to experts associated with the Northwestern University/University of Chicago Joint Center for Poverty Research. Researchers said that these problems will become more pronounced during a recession.

“In order to assess the effectiveness of the 1996 welfare reforms, we must first determine whether the decline in welfare rolls is attributable to the change in policy or the sustained strong economy,” said Susan Mayer, Director of the Joint Center for Poverty Research and Associate Professor in the Harris Graduate School of Public Policy Studies at the University of Chicago. Mayer noted that research commissioned by the Joint Center will be used to help policymakers evaluate the Temporary Assistance for Needy Families (TANF) program when it is scheduled for reauthorization in 2001.

Speaking today at a congressional briefing organized by the Consortium of Social Science Associations (COSSA) and the Joint Center for Poverty Research, scholars noted that welfare caseloads have fallen by more than 44 percent since January 1993. Scholars, whose work was commissioned by the Joint Center, noted that many more recipients have left the welfare roles than are getting jobs.

“We should not assume that reductions in caseloads automatically mean that recipients are earning enough to support their families,” said Sheldon H. Danziger, the Henry J. Meyer Collegiate Professor of Social Work and Public Policy at the University of Michigan. Danziger and his colleagues, who presented findings from several studies before more than 130 policymakers and social service agency representatives, noted that one-third of those that have left welfare programs are not working.

“A recession will significantly reduce employer demand for less-skilled workers, especially welfare recipients, and more importantly, employees with little prior labor force experience are historically the first to be fired,” said Danziger. “Because recipients earn relatively low wages--between $6.50 and $7.50 per hour-- states will need to continue income supplements and/or assistance from non-cash programs such as childcare assistance and transportation assistance in order to keep a family above the poverty line.”

There have been disagreements among analysts over how much of the decline in welfare caseloads can be attributed to the robust U.S. economy and the associated strength in the labor market.

“The latest research indicates that roughly half of the welfare caseload declines between 1993-1996 were the result of falling unemployment rates, and 15 percent of the declines were the result of welfare reform. The research credits such popular post-tax assistance programs as financial waivers, the Earned Income Tax Credit and Medicaid with the remaining reductions,” according to Robert A. Moffitt, a Professor at Johns Hopkins University and Senior Affiliate of the Joint Center for Poverty Research.

Scholars assert that the current welfare strategies that states have adopted will not be as effective during a recession.

“The strong economy and tight labor market have enabled states to move many welfare recipients into jobs through a relatively low-cost, job search assistance. To support recipients' transition to employment, many states have invested additional resources in work supports such as child care and transportation,” said LaDonna Pavetti, a Senior Researcher with Mathamatica Policy Research, Inc. “If the economic tide turns, states may need to invest in multiple work-based strategies such as community work experience or subsidized employment programs which are far more costly to operate.”

Among the other findings reported today:
A recession would reduce the number of employment opportunities by 25 to 40 percent, according to “Employer Demand for Welfare Recipients and the Business Cycle: Evidence from Recent Employer Surveys,” a paper by Harry Holzer of Michigan State University.

Most people who leave welfare remain in poverty, with annual earnings averaging between $8,000 and $9,500. Most of the women who leave AFDC do not work full time or for a full year, according to “Work, Earnings, and Well-Being after Welfare: What Do We Know?” by Maria Cancian, Robert Haveman, Thomas Kaplan, Daniel Meyer, and Barbara Wolfe of the Institute for Research on Poverty, University of Wisconsin-Madison.

Welfare recipients will be most effected by worsening economic conditions. For example during the last recession unemployment increased by 2 to 3 percent and if there is a similar increase during the next recession, welfare rolls will increase by as much as 8 percent, according to “What Goes Up Must Come Down? Explaining Recent Changes in Public Assistance Caseloads,” a paper by Geoffrey Wallace of Northwestern University and Rebecca M. Blank of Northwestern University and the Council of Economic Advisers.

“Clearly this topic is important to decision makers at all levels of government, and we hope that through briefings such as this, policymakers will be able to craft effective programs based on sound social science research,” said Howard Silver, Executive Director, of the Consortium of Social Science Associations, a social science advocacy group that co-sponsored the briefing.

Established in 1996, the Joint Center for Poverty Research seeks to advance the understanding of the causes and consequences of poverty and identify the effect of policies designed to reduce poverty. The Office of the Assistant Secretary for Planning and Evaluation in the U.S. Department of Health and Human Services provides major funding for the Joint Center for Poverty Research. The Center is affiliated with the Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago and with the Institute for Policy Research at Northwestern University.

The Irving B. Harris Graduate School of Public Policy Studies
Last modified at 03:51 PM CST on Wednesday, June 14, 2000.

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