Factors associated with employment status of parents receiving Temporary Assistance for Needy Families

Abstract

Since Temporary Assistance for Needy Families (TANF) became mandatory as of July 1, 1997, many concerned researchers and policymakers have been anxious to know how work-based welfare reform has affected families with children. This study examined the employment patterns of parents receiving public assistance under TANF and factors associated with their employment status. In addition to individual and family characteristics, the study examined the effects of state-level variables on employment status of recipients. The study found that the length of time a state had prepared for welfare reform prior to TANF was important in predicting the probability of employment for parents on welfare. A state's unemployment rate, the degree of education, disability, and the number of children were all found to be significant factors for determining employment status. Also, this study found that Hispanics on TANF were more disadvantaged in job opportunities than other ethnic groups. Key words: employment; states; Temporary Assistance for Needy Families; welfare recipients In 1996 Congress made profound changes in the U.S. welfare system by passing the Personal Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193). This comprehensive legislative package ended the entitlement of impoverished families and their children to Aid to Families with Dependent Children (AFDC), which had provided a public safety net for six decades. Temporary Assistance for Needy Families (TANF), a new program established under P.L. 104-193 is a federal block grant for state welfare programs in which state discretion has been expanded greatly in designing and operating its own programs. As states' latitude increased, national standards of public assistance for poor children ceased to exist. To provide cash assistance through TANF, states are required to impose a five-year lifetime limit and are allowed to choose a shorter lifetime limit (P.L. 104-193). Also, states must require parents to work within two years (or less) of receiving assistance from TANF. Another work provision under TANF requires all able-bodied adults to begin to work for their benefits through community services within two months of receiving aid; however, states may opt out of this provision. P.L. 104-193 calls for gradual increases in the proportion of the caseload engaged in work activities, from 25 percent of single parents in 1997 to 50 percent by 2002. The proportion of the caseload for two-parent families is set much higher--90 percent of such families must have at least one parent at work by 1999. The act also requires states to increase the number of hours that parents on welfare must work, from 20 hours per week in ! 997 to 30 hours in 2002. Unlike Job Opportunities and Basic Skills Training (JOBS), the Personal Responsibility Act defines work activities very narrowly, excluding most forms of training and educational activities from the work activities that can be counted toward the federal work requirement. Finally, the act strengthens sanction measures for noncompliance and restricts exemptions from work requirements, in that states are only allowed to exempt parents with children younger than one-year-old from work requirements. TANF became mandatory on July 1,1997, although many states introduced reform initiatives under federal waivers of AFDC and started the TANF program earlier than this date. Since the new work-based reform has replaced the AFDC program, concerned scholars as well as policymakers have been anxious to know the actual effect of TANF on families with children. Because TANF has been implemented for a relatively short time, little empirical evidence on the nationwide effect is currently available, although some state-level evidence has been published. This article analyzes the labor force participation of parents on welfare after TANF became effective. The analysis is based on a nationally representative data set using the 1998 annual demographic file of the Current Population Survey (CPS). …