Since passage of the Personal Responsibility and Work Opportunity Reconciliation Act (popularly known as welfare reform) in 1996, welfare caseloads have declined almost 50 percent nationally. Some claim this signals that welfare reform is a success; others argue that more information is necessary on what has happened to the families leaving welfare. In response, many studies have been conducted that examine outcomes for families that left welfare. Early results from these studies show that a majority of leavers are working, often full-time and at about the same wage rates as other, similar groups in the labor market.
There is much concern, however, that the outcomes for families that left welfare soon after reform do not necessarily reflect the outcomes of future groups of leavers, who may fare progressively worse in the labor market. This concern stems in part from the idea that the most "job-ready" people left welfare first, leaving behind recipients who have more personal barriers to work. The implications of this hypothesis, if it is true, for groups of leavers is not clear. On the one hand, more recipients with barriers to work could mean that fewer recipients are leaving but that there are no differences in the level of job readiness of those who leave. On the other hand, more recent leaver groups could be more disadvantaged because time limits and sanctions for failing to meet work requirements can compel exit, regardless of barriers to work.
This brief examines whether a more recent group of leavers—those who left welfare between 1997 and 1999—appears more disadvantaged or less job-ready than an early group of leavers—those who left between 1995 and 1997—by comparing barriers to work and economic outcomes between the two groups. The study uses data from the National Survey of America's Families—a large, nationally representative survey—conducted in 1997 and 1999. The term "leaver" includes former recipients who received cash benefits at some point between 1995 and 1997 (for the early group) or 1997 and 1999 (for the later group) and who were no longer receiving benefits at the time of the interview in 1997 or 1999, respectively. As time limits were being reached in some states during the 1997 to 1999 period and full family sanction use also increased during this period, it is possible that this more recent group of leavers is composed of fewer job-ready former recipients, on average.
Despite these concerns, this study finds relatively little evidence that recent leavers are more disadvantaged than earlier leavers. The characteristics of the two groups are similar, except that a larger percentage of the recent group are in poor health.
Labor market outcomes (including employment, wages, and earnings) and receipt of government benefits are also similar across both groups of leavers. In addition, there is a significant decline in the percentage of families with income below the poverty level in the more recent group. However, despite this evidence that the economic outcomes of recent leavers are the same or even better than those of earlier leavers, a greater percentage of recent leavers report experiencing economic hardships such as trouble paying rent. (Author abstract)