Welfare-to-Work programs and the Dynamics of TANF Use

Background: For almost four decades, the U.S. government has been trying to reduce welfare use by moving welfare mothers into the labor market. To accomplish its goal, it has used two major Welfare-to-Work (WTW) strategies: Human Capital Development (HCD) strategy and Labor Force Attachment (LFA) strategy. Although the LFA strategy has won more popularity than the HCD strategy over the years, existing evidence on the effectiveness of these strategies is not yet conclusive. The main purpose of this research was to examine the net effects of the two WTW strategies on TANF recipients' welfare use, taking into account the effects of other factors such as state economy and most TANF policy rules including family cap, diversion, time limits, work requirements, sanction, etc, that may have also affected their welfare use.

Methods: Using discrete-time event history methods, data from the Survey of Program Dynamics and the Welfare Rules Database (1997 through 2001) were analyzed to examine how TANF recipients' participation in Human Capital Development (HCD) and Labor Force Attachment (LFA) programs affected the probabilities of their exits and reentries into welfare system, while holding the effects of state economy and various TANF rules constant.

Findings: The analyses found LFA programs were not associated with a higher probability of TANF exit, compared to HCD programs. Instead, employment status of TANF recipients and local labor market conditions were more important predictors of TANF exit. The analyses also hinted that severe poverty and economic insecurity of TANF leavers were significantly related to their welfare recidivism. Many TANF rules were also found to be significantly related to the dynamics of TANF use.

Implications: The findings of this study implied that work-first LFA programs that move TANF recipients into the labor market as quickly as possible cannot be a sustainable antipoverty solution. This study offered important insights into how the federal and state governments could best assist their TANF recipients in successfully making long-term WTW transitions. More implications of these findings for policy and future research were discussed.