Welfare Reform

Seventeen states have published information on the status of their families who have left welfare. However, only seven of the 17 states had enough information on a sample of families to generalize their findings. These seven studies found that most of the adults in families staying off the welfare rolls were employed at some point after leaving welfare. Significant numbers of families returned to welfare, however. The limited information on the economic status of the families being tracked indicated than many who leave welfare find jobs that are low-paying. The low wages of these jobs underscore the importance of income supports, such as subsidized medical and child care and the earned income credit. Federal and state policies and programs to assist low-income working families are likely to play a critical role in helping these families stay off welfare and become self-sufficient. GAO's attempts to describe the condition of former welfare families were constrained by the data now available from early state tracking studies. For example, the high nonresponse rates in many state studies limit the usefulness of the responses because generalizations cannot be made to all families of interest. Efforts are under way at both the federal and state levels to improve the usefulness of the data being collected to assess the status of former welfare families. Most states either are currently studying or plan to study former welfare families, and the Department of Health and Human Services has recently funded 14 projects to track and monitor families who have left welfare. This testimony was summarized in the April 1999 report, GAO/HEHS-99-48.

GAO noted that: (1) GAO's work shows that states are transforming the nation's welfare system into a work-focused, temporary assistance program for needy families; (2) many states are refocusing their programs on moving people into employment rather than signing them up for monthly cash assistance; (3) to better support this new work focus, many states are changing how their offices and workers do business, expanding the roles of welfare workers to include helping clients address and solve problems that interfere with employment; (4) these changes, made in times of strong economic growth, have been accompanied by a 45-percent decline in the number of families receiving welfare--from a peak of about 5 million families in 1994 to fewer than 3 million families as of December 1998; (5) caseload reductions serve as only one indication of progress in meeting the goals of welfare reform, however; (6) early indications from GAO's review of state-sponsored studies in seven states conducted at various periods from 1995 to 1998 are that most of the adults who left welfare were employed at some time after leaving the rolls, often at low-paying jobs; (7) there was little evidence of increased incidence of homelessness or of children entering foster care after families left welfare, in the few cases in which these studies addressed these issues; (8) however, much remains unknown about the economic status and well-being of most former welfare families nationwide; (9) many efforts are under way to provide more information on the families who have left welfare and the effects of welfare reform; and (10) as this information becomes available, it will permit a more comprehensive assessment of welfare reform, which will need to address the following key issues: (a) how do low-wage earners and their families fare after leaving welfare for work; (b) what is happening to eligible families seeking welfare who are provided other forms of aid, such as job search assistance, instead of welfare or other aid; (c) how effectively are states working with hard-to-serve welfare recipients who remain on the Temporary Assistance for Needy Families rolls; and (d) how would an economic downturn affect states' welfare reform programs.