Welfare Reform in the United States and Wisconsin: Experience and Key Lessons

1
Welfare Reform in the United States (and
Wisconsin)Experience and Key Lessons

• Mark Greenberg, Director of Policy
• Center for Law and Social Policy, Washington, DC
• Presentation for The Wisconsin Program Past,
  Present and Future?
• Sponsored by SHATIL, The New Israel Fund and the
  Van Leer Jerusalem Institute
• January 22, 2006

2
Scope of Presentation

• Background on poverty and income support in US
• Key aspects of US welfare reform, national
  experience
• Wisconsin similarities to and differences from
  the nation story
• Lessons and cautions

3
Measuring poverty in the US

• Many nations measure poverty in relative terms,
  i.e., comparing income to median income. US uses
  an absolute measure, set in 1965, only adjusted
  for inflation since then.
• Federal poverty threshold for 2004
• 19,223 for four 15,219 for three.

Source for threshold U.S. Census
Bureau, http//www.census.gov/hhes/poverty/threshl
d/thresh04.html
4
In your view, about how much per year does a
person living in your area need to earn to
support a family of four at a decent level?
Corporate Voices for Working Families Survey,
July-Aug 2004
5
U.S. Poverty Rate, 1959-2004
Source U.S. Census Bureau, Historical Poverty
Tables, http//www.census.gov/hhes/www/poverty/his
tpov/hstpov3.html
6
Poverty rates (40 of median income) for
countries in Luxembourg Income Study
U.S.
Israel
Source Relative Poverty Rates for Total
Population, Children, and Elderly, Luxembourg
Income Study, available at http//www.lisproject.
org/keyfigures/povertytable.htm
7
Income support for the unemployed in the US

• No general program of support for all unemployed.
• Social Security (insurance-based) and
  Supplemental Security Income (means-tested) for
  elderly and disabled.
• Unemployment insurance (UI) usually not more than
  26 weeks for workers who lose jobs, meet other
  qualifications.
• Cash assistance for families with children and
  very low incomes from Temporary Assistance for
  Needy Families.
• Some states and localities have small general
  assistance programs, others do not, for
  non-disabled individuals that do not qualify for
  UI or TANF.

8
Welfare reform in US has often mainly focused on
single parent families with children

• In welfare reform debate, much of national focus
  was on cash assistance program for families with
  children
• Until 1996, Aid to Families with Dependent
  Children
• Since 1996, TANF
• W-2 is Wisconsin is states TANF Program.
• Vast majority of families receiving assistance in
  AFDC/TANF have been single-parent families.
• Multiple reasons for single parent focus
• In the benefit system
• Most poor children are in single-parent families
• In mid-1990s, employment levels for single
  mothers lower than for married mothers
• Concerns about out of wedlock parenting, family
  structure.

9
The System Until 1996

• AFDC provided very low levels of income support
  to very low income families with children,
• Complex mix of federal requirements and state
  options
• Limited work-related requirements and services
• Liberal criticism benefits inadequate, sharp
  work penalties, little/no help for two-parent
  families.
• Conservative criticism program discouraged work,
  encouraged out of wedlock births/family break-up.
• Ongoing dispute how to promote work?
• Services vs. requirements
• Education vs. labor force attachment
• Work goal vs. safety net goal
• 1989-94 large caseload increase led to
  perception that system was out of control.

10
Temporary Assistance for Needy Families (TANF)

• Enacted in 1996 to replace AFDC with block grants
  to states.
• Flat federal funding (at levels from mid-1990s),
  states required to maintain 75 or 80 of prior
  spending levels.
• Broad state discretion in use of funds.
• No individual entitlements to assistance.
• Federal time limit states cannot use federal
  funds to assist families beyond 60 months
  (subject to exceptions).
• Work participation rates can be satisfied by
  engaging more families in work-related activities
  and/or by caseload reduction.
• Emphasis on reducing out-of-wedlock pregnancies,
  promoting two-parent families.

11
State policy changes under TANF

• Expanded work-related requirements (though most
  states used no or little work experience)
• Reduced access to education and training
• Stronger sanction policies
• Time limits
• More supports for working poor families
• Liberalized asset policies
• Expanded two-parent eligibility
• Emphasis on diverting families from assistance.

12
Making Work Pay Other policies to promote work

• Amidst an exceptionally strong economy in 1990s,
  there was
• Large expansion of federal earned income tax
  credit for working families
• Increase in federal minimum wage
• Tripling of child care spending
• Broadened health care eligibility for low-income
  children
• Stronger child support enforcement

13
Employment Rates of Mothers With Children Under
6, 1988-2004
Source Estimates based on analysis of March 1988
to 2004 Current Population Survey (CPS) data.
14
Number of Families Receiving AFDC/TANF, 1950-2004
15
Source U.S Department of Health and Human
Services, Indicators of Welfare Dependence, 2005
16
Source HHS, Indicators of Welfare Dependence,
2005. Calculation based on comparing number of
children receiving TANF assistance to number in
poverty.
17
Status of TANF Leavers, 1999 and 2002

• 1999 2002
• Working 49.9 42.2
• Recently Worked 6.5 7.1
• Spouse working 9.9 7.5
• Disconnected 9.8 13.8
• Return to TANF 20.4 25.5
• Receiving SSI 3.5 3.8

Source Loprest, Urban Institute Fewer Welfare
Leavers Employed in Weak Economy
18
Sanctioned families

• Many have significant employment barriers
• More likely to have problems of chemical
  dependency, mental health, family violence
• Less recent work experience, less education
• More likely to be previously known to child
  welfare
• Infants/toddlers in terminated or sanctioned
  families
• 30 higher risk of previous hospitalizations
• 90 higher risk of being hospitalized in
  emergency room visit
• 50 higher risk of food insecurity

19
Source Acs, Loprest, Roberts, Final Synthesis
Report of Findings from ASPEs Leavers Grants
(2001)
20
Source Acs, Loprest, Roberts, Final Synthesis
Report of Findings from ASPEs Leavers Grants
(2001)
21
Source MDRC, http//www.mdrc.org/area_fact_18.htm
l Gayle Hamilton, Moving People from Welfare to
Work Lessons from the National Evaluation of
Welfare-to-Work Strategies (New York MDRC,
2002).
22
(No Transcript)
23
Transitions Out of Low Wage Employment by TANF
Recipients Employed in 1999
Source Andersson et al, Successful
Transitions out of Low-Wage Work for Temporary
Assistance for Needy Families (TANF) Recipients
The Role of Employers, Coworkers, and Location,
(2004).
24
Work Experience

• Careful evaluations of work experience programs
  revealed that recipients thought the requirement
  was fair and supervisors thought the work
  accomplished was valuable, but there was no
  evidence that workfare led to increases in
  unsubsidized private sector employment, and
  little support for the notion that recipients
  learned new skills.
• MDRC (a key evaluator of US programs), 2002

Source http//www.mdrc.org/Reports2002/TANF/TANF-
Implications4.htm
25
Wisconsins Program

• Wisconsin was recognized as one of the states
  with the boldest (and most controversial)
  initiatives during the early 1990s.
• Its TANF program W-2, or Wisconsin Works is
  similar to other states in some ways, different
  in others.
• Some key differences
• Flat benefit level not varied by family size.
• Very specific and limited set of prescribed
  activities, heavy reliance on work experience
  without wages.
• Low-earning parents, non-parent relatives, teen
  parents, families with disabled parent receiving
  SSI not eligible for W-2 cash assistance.
• Implementing sanctions through pay for
  performance structure.
• Extensive privatization in Milwaukee (with
  majority of caseload).
• W-2 implemented amidst other changes expanded
  child care, health care, state earned income tax
  credit.

26
W-2 Eligibility

• Program only available to families in which
• A child and parent are living together
• Parent is at least 18, a citizen or qualified
  alien, not receiving disability benefits
• Family income is below 115 percent of US poverty
  level, familys assets fall below limit
• Parent cooperates with child support requirements.

27
Activities Formal Structure

• Parents with child 12 weeks old or less can
  receive benefits without engaging in work
  activities
• For all others
• Transitional jobs
• Community service jobs
• Trial jobs
• Services, no cash for those in unsubsidized jobs

28
Most common services

• Employment Search 51
• Work Experience 51
• Adult Basic Education 32
• Motivational Training 21
• Employment Counseling 21
• Parenting and Life Skills 21

Source An Evaluation, Wisconsin Works (W-2)
Program, Wisconsin Legislative Audit Bureau
Report 05-6 April 2005.
29
Uncommon Services

• Job Skills Training 7
• General Educational Development 6
• Occupational Testing 5
• English as a Second Language 2
• Technical College Courses 2
• High School Equivalency 1
• Other Post-Secondary Education lt0.1
• Disability and Learning Assessment 4
• Alcohol and Other Drug Abuse Counseling 3
• Alcohol and Other Drug Abuse Assessment 2
• Domestic Violence Assessment and
• Support Services 1.5

Source An Evaluation, Wisconsin Works (W-2)
Program, Wisconsin Legislative Audit Bureau
Report 05-6 April 2005.
30
Management issues under earlier contracts

• In Milwaukee
• One provider stopped providing program services
  and discontinued its operations after the
  2000-2001 contract period, after Legislative
  Audit Bureau identified inappropriate
  expenditures in a 2001 report.
• In February 2005, another provider discontinued
  its operations during an ongoing criminal
  investigation of the agency and after audits that
  were critical of the agencys operations.
• Other Legislative Audit Bureau reports have
  focused on misexpenditures by W-2 providers.

31
Performance Standards have changed over time

• First contracts did not have measures directed at
  employment outcomes, contract structure resulted
  in strong incentive to reduce benefit costs,
  subject to much criticism.
• Since 2000-2001, state has required W-2 agencies
  to meet performance standards.
• Under 2004-05 contracts, seven standards measure
  the extent to which participants obtain and
  retain employment after leaving the program,
  receive and complete various types of program
  services, and receive assessments of their
  ability to perform employment tasks soon after
  entering the program.
• A W-2 agency meeting all performance standards
  may bid for the next W-2 contract without
  competition.
• For failing to meet requirements, state can
  impose a corrective action plan, and if not
  complied with, state can revoke its right of
  first selection for future contracts or cancel
  its W-2 contract.

32
New Contract Provisions for Providers (2006-09)

• Stronger financial controls
• Performance standards
• Entered employment rate
• Retention/Stabilization
• Wage at employment
• Success in job skills training
• Connecting those eligible to disability benefits
• Participation in basic education for those
  without diplomas
• Assessments
• Quality case management/customer satisfaction

Source http//www.dwd.state.wi.us/dws/w2/contract
s/20062009/default.htm
33
Advocates concerns include

• Broad discretion to deny cash to would-be
  applicants deemed job ready.
• Long delays before receiving cash benefit.
• Program placements that do not build skills,
  improve employment prospects.
• Extensive reliance on sanctions.
• Bureaucratic complexity, unresponsiveness.
• Misuse and/or misdirection of public monies.
• Lack of accountability.
• Lack of uniformity among the agencies.
• No income supports for those starting work, in
  seasonal, temporary part time work.
• Lack of adequate housing to help maintain family
  stability.
• Failure to develop adequate transportation
  alternatives.
• We have replaced one welfare system with
  another, same culture poor treatment - but
  fewer families benefit administrative costs are
  more

34
Wisconsin Sanctions

• Nearly one-fifth of W-2 families are sanctioned
  each month, with large variations across
  providers.
• African-Americans sanctioned at higher rates than
  whites, though reasons remain unclear.
• State review of sanctioned cases approaching
  exhaustion found that in 76, no evidence of
  either a formal or informal assessment of work
  history, barriers etc no regular contact between
  the case manager and the participant in 67 of
  the cases.
• Survey showed case mangers opinions of when to
  impose sanctions varied tremendously
• when asked whether they would sanction a
  participant for missed hours and failure to
  provide a doctors excuse for a sick child, 50
  of case mangers outside of Milwaukee, 35 in
  Milwaukee, said they would have sanctioned the
  participant.

Sources Institute for Wisconsins Future,
Sanctioned by Design and Unfair Sanctions
Does W-2 Punish People of Color? State of
Wisconsin Department of Workforce Development,
Wisconsin Works (W-2) Sanction Study (2004)
35
Source An Evaluation, Wisconsin Works (W-2)
Program, Wisconsin Legislative Audit Bureau
Report 05-6 April 2005. Share not filing tax
returns grew from 18 for 2000 exiters to 24 for
2003.
36
Earnings Compared With Poverty Line Over Six Year
Period After Entering W-2
Source C. Wu, M. Cancian, D. Meyer, Standing
Still or Moving Up? Evidence from Wisconsin
(2005) DRAFT
37
Earnings six years after entering W-2
Source C. Wu, M. Cancian, D. Meyer, Standing
Still or Moving Up? Evidence from Wisconsin
(2005) DRAFT
38
W-2 Milwaukee Applicant Study

• Applicants who visited W-2 agencies in 1999
  followed up 16-24 months later 67 percent had
  participated in W-2 at some point.
• 12 percent were employed at time of application,
  77 percent sometime in the 4 quarters following
  initial interview.
• Median earnings among those employed in at least
  one of the four quarters were 4187 for W-2
  participants, 3975 for non-participants.
• Counting W-2 benefits, food stamps, and earnings,
  84 of sample members had earnings below poverty
  in 4 quarters prior to follow-up.
• Applicants who participated in W-2 were
• no more likely to have been employed in at least
  one of the four quarters before their follow-up
  interview than applicants who did not
  participate
• no less likely to experience hardships than
  applicants who did not.

Dworsky, et al, What Happens to Families Under
W-2 in Milwaukee County, Wisconsin? Chapin Hall
Center For Children, University of Chicago, 2003
39
Conditions reported by W-2 applicants
40
(No Transcript)
41
Lessons US

• Israel is proceeding after a decade or more of US
  experience. Can learn from it, neednt repeat
  mistakes.
• Different context
• Different economy
• Different affected groups
• US approach isnt just about penalties and
  requirements significant expansion of supports
  for work. Large child care expansion.
• US has raised employment rates, but with
  significant costs
• Families often entering unstable low-wage
  employment
• Families with most serious barriers have lost
  assistance
• Limited initial effect on poverty, poverty now
  has grown for four years
• System now provides less help to families in
  serious need, lacking income.

42
Lessons Wisconsin

• Possible to bring down caseload while families
  remain very deep in poverty for many years,
  suffer significant hardships.
• Agencies respond to incentive structures.
  Incentive for caseload reduction may generate
  large caseload reduction, at significant cost.
• Serious issues of how to assure accountability in
  a privatized system.
• With broader discretion, crucial to build in
  adequate safeguards.
• Little evidence to suggest good employment
  results from a rigid approach not based on
  realities of families lives, research on
  effective strategies for promoting sustainable
  employment.
• Program has changed over time, important to learn
  from its experiences.

43
Contact information

• Mark Greenberg
• Director of Policy
• Center for Law and Social Policy
• 1015 15th St., NW, Suite 400
• Washington, DC 20005
• ph 202-906-8004
• fax [phone]
• mgreenberg_at_clasp.org
• www.clasp.org