The Implications of Paid Family Leave Policies for New Mother Welfare Participants: Evidence From Wisconsin

Background: Several states have Paid Family Leave (PFL) policies in place (California, New Jersey, and Washington) that provide short-term support after a recent birth. The potential for Paid Family Leave benefits to reduce welfare reliance is often mentioned as a reason to implement PFL programs in more states. Yet there is little evidence of the potential impact on family resources if PFL benefits are substituted for welfare. Wisconsin's welfare program, Wisconsin works (W-2), designed a placement for mothers with infants three months or younger, New Mother participants, to allow low-income single mothers to bond with their newborn infant without work requirements until their infant is 3 months. The duration of the New Mother placement was modeled after the 12- week unpaid benefit provided by the Family Medical Leave Act. A 2005 state report confirmed an increase of New Mothers on the W-2 caseload with speculation this was due to some low-income single working mothers utilizing W-2 as a short-term PFL program. The design and intent of W-2's New Mother placement allows for relevant comparisons with current PFL programs to investigate differences in resources provided by welfare relative to PFL benefits.

Methods

This paper draws on a sample of New Mothers who entered W-2 from September to December of 2006 at one of the four largest agencies (N=294). Data on welfare participation and individual characteristics are obtained from W-2 administrative data. Information on earnings is drawn from the Unemployment Insurance (UI) database. Benefit rules and requirements of three state-level PFL programs (California, New Jersey, and Washington) are simulated and compared to W-2 receipt.

I first describe the proportion of New Mothers who enter W-2 immediately following a spell of long-term employment (4 consecutive quarters prior to entry) and return to work immediately following expiration of the New Mother W-2 benefit. Logistic regression models are utilized to examine New Mother characteristics associated with returning to work and the same employer immediately after New Mother participation, all else equal. This paper then turns its attention to simulating and comparing PFL benefits to W-2 receipt of W-2.

Results 40 percent of W-2 New Mothers were employed across four consecutive quarters prior to enrollment in welfare (referred to as “workers”). 80 percent of “worker” New Mothers returned to work immediately following New Mother benefit expiration confirming a substantial minority (32 percent) utilize W-2 as a means-tested PFL program. Most New Mother participants would receive less from current state PFL designs than welfare in Wisconsin. However, this particular result may vary depending on the comparison state, given Wisconsin's generous welfare benefit.

Conclusion This presentation provides insight into the potential shift of New Mothers from welfare to PFL programs and how resources for single-low-income New Mothers would be affected across a diverse set of PFL benefit models. Thus, it will impart practical information regarding the effect of PFL implementation on the welfare caseload, resource allocations, and economic well-being among low-income single mothers with newborn children.