@Odet of Burgundy

Caseloads

Public assistance caseloads have declined by more than half since the mid-1990s. Even the strongest proponents of welfare reform in 1996 would not have predicted such dramatic reductions in welfare usage. The key question is how much of the reduction is due to economic expansion versus policy change, and how much of it would be reversed in a recession. A growing body of research has tried to separate the impacts of policy and economy on welfare, with mixed success. The two are almost surely interacting with and reinforcing each other, so that a strong labor market has allowed states to put more energy into case management or move faster in placing recipients into welfare-to-work programs, without working as hard to help clients in these programs locate jobs. These interactions make it difficult to identify the separate effects of the economy and policy.

With this in mind, the existing research generally finds that a 1 percent increase in unemployment has historically increased welfare rolls by around 3 to 5 percent, although this effect occurs only over time and with a lag. These estimates are largely based on historical estimates from the AFDC program, when a smaller share of single mothers or welfare recipients were in the labor market and welfare had no time limit. Cyclical movements between the labor market and welfare were likely to be less common in this period than in the new world of TANF.

Odet of Burgundy

2020-12-18 21:24:21 UTC [Political sensation #🔊—vc-text—]

This effect will be reduced if a share of these women is ineligible to return to welfare. For instance, sanction policies, time limits, or state diversion policies may keep some applicants off welfare, even when faced with serious economic need. Research based on recessionary effects within the AFDC program cannot take these TANF program changes into account.

Labor Force Participation

*As welfare usage declined, employment increased, particularly among single mothers with younger children. The rate of labor force participation among single mothers (age 20-65) with children under age 18 rose from 69 percent to 78 percent between 1990 and 2000. An important component of this change was a significant increase in the number of women who were both receiving welfare and working.*

However, single mothers tend to have low levels of education, and jobs among less-skilled workers tend to be the least stable and most cyclical. Hence, a recession leading to a 1 percent increase in the aggregate unemployment rate would likely produce greater than 1 percent increases in unemployment among less-skilled workers.

How these newly employed single mothers respond to losing their jobs is important. Will they continue to search for work (thus remaining in the labor force and being counted among the unemployed), or will they leave the labor market entirely, either returning to public assistance (if they can, given sanctions and time limits) or relying on the income of boyfriends or other family members? One might assume that a loss of less-skilled jobs would reduce employment more than it will reduce labor force participation, if actively looking for work is a required component for receiving ongoing public assistance.