The Extended TANF Application Period and Applicant Outcomes: Evidence from Wisconsin

Abstract

This article examines the characteristics and income patterns associated with welfare entry and nonentry in the context of an extended application period for a sample of 1,664 women who applied for Temporary Assistance for Needy Families services in Wisconsin in the fall of 2006. The study uses data derived from the systematic review of caseworker notes as well as administrative data on welfare participation, earnings, child support, the Supplemental Nutrition Assistance Program, Earned Income Tax Credit estimates, and Supplemental Security Income receipt. It finds that about one-half of those who applied for services did not enter the welfare program within a 60-day time frame. Results indicate that those with consistent employment prior to applying for services, those with very young children, and pregnant applicants are less likely to drop out. In examining differences in economic well-being in the year following an application, the study finds that those who applied for and entered welfare (participants) and those who applied for but did not enter (dropouts) generally had similarly high levels of poverty. However, dropouts had higher rates of deep poverty, with some subgroups--such as those who had declined services--fating better than others. KEY WORDS: poverty; TANF; welfare; welfare application ********** The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-110) ushered in a new era of work-based welfare. Benefits are time limited and are no longer an entitlement; work activities are generally mandatory in exchange for cash assistance. These components of postreform Temporary Assistance for Needy Families (TANF) programs were designed to move low-income families off the welfare rolls and into the labor market, reducing caseloads and reliance on welfare. An expansive literature on welfare leavers has documented the dramatic decline in TANF caseloads and increased employment among single mothers, although findings point to poverty-level earnings and future spells of welfare receipt for many (for a review of welfare leaver outcomes, see Acs & Loprest, 2004; Cancian, Haveman, Meyer, & Wolfe, 2002; Cancian & Meyer, 2004; Danziger, Heflin, Corcoran, Oltmans, & Wang, 2002; Grogger & Karoly, 2005; Wu, Cancian, & Meyer, 2008). Although scholars continue to debate the impact of welfare reform policies relative to the economy on postreform caseload decline (see Danielson & Klerman, 2008), the strong work-first approach of modern welfare programs, which generally offer lower cash benefits than those earned through unsubsidized employment, shares some credit for the sharp reduction in caseloads and the increase in low-income women's employment (Blank & Schmidt, 2001; Grogger & Karoly, 2005; Moffit, 2002). There is another contributor to reduced welfare caseloads: TANF policies that redirect applicants before they enroll, often referred to as (Besharov & Germanis, 2007; Danielson & Klerman, 2008; Meyers & Lurie, 2005; Ridzi & London, 2006). Two popular diversion tools are (1) one-time cash payments offered in lieu of TANF participation and (2) extended application periods during which applicants participate in mandatory job-search activities over a prescribed number of days prior to eligibility determination. Diversion procedures are intended to attach unemployed applicants to the labor market or maintain employment for the working poor prior to TANF enrollment, thereby promoting self-sufficiency among target groups. There are, however, concerns regarding the effectiveness of diversion tools in moving applicants into employment and targeting the appropriate groups. For example, scholarship on lump-sum cash payments suggests that those who are both the best and least equipped for the labor market are targeted, and a substantial number of recipients cycle onto TANF soon after receipt of the payment (Hetling, Ovwigho, & Born, 2007; Helting, Tracy, & Born, 2006; London, 2003). …