Expert Commentary

Improving employment and earnings for TANF recipients

2012 paper from the Urban Institute summarizing the latest research on programs that assist poor families and the strategies that have proved most effective.

Approximately 4.05 million Americans received Temporary Assistance for Needy Families (TANF) benefits in any given month in 2012, according to the U.S. Department of Health and Human Services. TANF, which replaced a suite of traditional federal welfare programs with state-based grants in 1997, requires that all able participants hold jobs in order to receive benefits. TANF benefits vary from state to state, typically consisting of employment incentives such as job training and employment placement that have become hallmarks of welfare reforms over the past two decades.

Critics of these initial “welfare to work” reforms, passed under President Clinton — who had famously promised to “end welfare as we know it” — acknowledged that those who already had some skills were indeed able to get jobs, but the persons who represented the truly hard cases were not given adequate training to make the transition. The number of people receiving welfare declined by 58% between 1996 and 2002. However, many of the types of persons and families formerly eligible now receive Supplemental Security Income (SSI.) Other ongoing critiques of TANF contend that the social safety net has now essentially disintegrated for many poor families, and that the benefits and scope of the program are inadequate to deal with the trap of deep poverty in rough economic times. Children of poor single mothers are hurt by the program’s structural shortcomings, which lead to problems such as “food insecurity,” some research has found.

In any case, which strategies employed under TANF have been most successful? A 2012 research paper from the Urban Institute, “Improving Employment and Earnings for TANF Recipients,” examines different state and federal strategies to increase employment and earnings among welfare recipients. The author synthesizes evidence from several welfare-related studies in the United States and Europe that address four major concerns: job search, education, subsidized work and specialized training.

The study’s findings include:

  • Subsidized employment programs — programs that use public funds to create or support temporary work opportunities — raised employment rates in the short term, although they rarely improved employment or earnings in the longer term. Programs that linked these positions with regular employment were more successful in the long term. Transitional programs combining temporary work, training and job placement services indirectly reduced welfare payments but raised unemployment and did not improve longer-term employment options.
  • A strategy that assigned some recipients to immediate job searches and others to educational programs first was more effective than either strategy alone or no strategy. The author notes, however, that “the [job-search-first] program got people into jobs sooner … the education-or-training-first programs did not ultimately increase the likelihood of holding a ‘good’ job (as of the fifth year of follow-up), get a higher proportion of people into jobs, or boost earnings growth (up to 15 years later).” A third strategy, quality vocational training, was seen as the most promising.
  • A single study investigating sector training — matching workers with industry sectors short on labor — was limited in scope but found that the programs under consideration increased employment and earnings after two years.
  • Multiple studies have shown that financial incentives that provide a bonus or stipend to workers for finding a job have been most successful when combined with job search strategy training. Incentives for enrolling and  completing vocational coursework has also been found to be effective.
  • While most TANF recipients go on to find unsubsidized work, many have trouble holding on to jobs. The study recommends a combination of most strategies — job coaching, job search assistance, additional training, financial incentives and ‘work supports’ such as food stamps and child care.
  •  “Statistics show that, among adult TANF recipients, about a quarter hold an unsubsidized job while receiving TANF. Over time, many current or former TANF recipients — as many as 88% of one group followed for five years — hold unsubsidized jobs, but employment loss is frequent as well. Finally, while employment is common, earnings increases are not: an examination of more than 27,000 single parents who were current or recent TANF recipients during the period 2001 through 2004 indicated that only one in four experienced a sizeable increase in earnings over a three-year follow-up period.”

The author concludes that while some strategies have increased employment and earnings, the increases were “rarely what might be considered transformational. This is largely because many approaches have effectively placed people into jobs but have not pre vented interruptions in employment or fostered wage progression. Thus, a continued search for new, potentially more effective strategies — and rigorous testing of their feasibility and effectiveness — seems warranted.”

Tags: inequality, poverty