Service Needs Pose Major Challenge in Moving Welfare Applicants to Work:
Study Shows States May Struggle with New Federal Law

Chicago, IL, May 17, 2006 - A new study of one of the country's pioneering welfare reform efforts suggests that states may encounter significant difficulty meeting the more stringent work requirements of the federal welfare reform legislation signed into law earlier this year. In addition, those seeking assistance moving into the labor market may need a very different range of services in order to succeed than the framers of this legislation originally envisioned.

The study, the first major long-term investigation of a representative sample of welfare applicants since the 1996 overhaul of the federal welfare program, shows that people who seek public assistance now that many states' welfare rolls are at historic lows are likely to struggle in their efforts to maintain steady employment, achieve economic self-sufficiency, and care adequately for their children.

Conducted by researchers from Chapin Hall Center for Children at the University of Chicago and the Institute for Research on Poverty at the University of Wisconsin, the study followed nearly 1,100 welfare applicants in Milwaukee from 1999 through 2003. Wisconsin, which used a series of federal "waivers" to experiment with welfare reform well before the 1996 legislation promised to "end welfare as we know it," had reduced its welfare rolls by 80 percent between 1993 and 1999 when the study began - far more than the national caseload reduction of 56 percent.

Despite the state's "work first" approach to welfare reform, the percentage of welfare applicants who were employed in any year declined steadily after peaking in 1999. Analysis of state employment records showed that by 2003, only three of the five welfare applicants followed since 1999 had worked in at least one quarter. Even those who were employed were not employed consistently, according to the study. On average, only one-third of applicants were employed in all four quarters of a given year.

Few had sufficient income to lift their families out of poverty four years after applying for assistance. The vast majority remained in poverty, although the percentage of applicants whose combined earnings from employment and cash assistance from Wisconsin's "W-2" welfare program exceeded the poverty threshold increased during the course of the study. Even when income included earnings, welfare payments, other governmental cash benefits, spouse or partner earnings, and the Earned Income Tax Credit, three out of four applicant families were poor, with a median income of $8,658 in 2003.

According to the study, more than four out of five family heads that sought state assistance in 1999 faced substantial, and in many cases, multiple barriers to employment. Parents who faced any of these barriers - which included health and mental health problems, disabilities, substance abuse, and failure to earn a high school diploma or equivalent - were less likely to be employed than those who did not. The more barriers a parent faced, the less likely he or she was to be employed.

Although barriers to employment decreased somewhat during the course of the study, four years after applying for welfare, 75 percent of study participants reported at least one barrier to employment. Many study participants - 40 percent - still reported two or more barriers and more than 20 percent reported three. Over half lacked a high school diploma or GED and almost 40 percent continued to report mental health problems.

The Chapin Hall study also suggests that those barriers that are interfering with welfare applicants' employment are also compromising their ability parent their children effectively. According to the study, nearly two out of five experienced at least one child protective services investigation between 1999 and 2005. Those that were investigated at all were investigated on average more than five times and 16 percent actually had a child removed from their home during the study.

"Our findings suggest that the welfare caseload these days may be much more service needy than the old AFDC caseload," said Mark E. Courtney, director of Chapin Hall and the lead researcher on the study. "Most parents applying for government assistance may need a variety of services that are not in the standard bag of tricks of welfare-to-work programs and may need them for quite some time if they are to be expected to meet the competing demands of work and parenting."

The Chapin Hall study was conducted with support from the Chicago-based Joyce Foundation. Earlier phases of the study were conducted with support from the Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, ASPE Grant No. 98ASPE310A.

Copies of all Chapin Hall studies can be found on the Chapin Hall web site at www.chapinhall.org.

Chapin Hall Center for Children is a nonpartisan policy research center dedicated to bringing rigorous research and innovative ideas to policymakers, service providers, and funders working to improve the well-being of children. Located at the University of Chicago, Chapin Hall now celebrates twenty years as a leading source of research and expertise about the needs of children and the service systems designed to meet those needs.