Social-justice news: There is life after welfare

Social justice news
February 2001

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There is life after welfare—it just costs more
A recently concluded pilot program in Minnesota shows that with strong financial support, people leaving welfare can improve their lives. Unfortunately, the state of Minnesota has deployed a significantly watered-down version of the pilot as it attempts to revamp its welfare program statewide.

The Minnesota Family Investment Program (MFIP), a trial program conducted in a handful of Minnesota counties, allowed parents receiving welfare to continue to collect benefits of cash assistance, tax credits, health insurance, and child care after they began working until their earnings were 140 percent of the U.S. poverty line. Participants in the program also had access to job training and continuing education opportunities.

As a result, according to a study by the Manpower Demonstration Research Corporation (MDRC), the program brought substantial, far-ranging improvements in the lives of single parents who were long-term welfare recipients. In comparison to Aid to Families with Dependent Children recipients—the dread "unreformed" welfare program of the recent past—MFIP participants after three years were more likely to be working, to have incomes above the poverty line, and to be married. They were less likely to have experienced domestic violence, and their children had fewer behavior problems in the home and better school performance than AFDC children.

Referring to the Manpower study, Kathy Tomlin, the public policy manager the the Archdiocese of St. Paul-Minneapolis' Office of Social Justice, said, "I think it's a fair representation of the pilot program. The problem is it's being discussed in the media as a national model for welfare reform, and it is not what the state is currently doing."

She explained that although the study remarks on the beneficial effects of MFIP, the program Minnesota eventually ran statewide in 1998 was markedly different from the pilot program. "We call it MFIP-light.'"

"MFIP-light" cuts off aid at 120 percent of the poverty line and does not maintain the same availability of continuing education and job training

It's not hard to understand why the state decided on the watered-down version of MFIP, according to Tomlin. MFIP's attention to the complex of problems involved with moving people permanently from welfare to work meant a much higher public aid price-tag for Minnesota. Though the report suggests that MFIP had much more success improving the lives of public aid recipients than the previous welfare regime, it cost the state an additional $1,900 and $3,800 per family over a five-year period. Commenting tongue-in-cheek on the battery of financial and social service mechanisms built into this particular variant on welfare reform, Tomlin said the MFIP experience suggests that the best way to lift people out of poverty is "give them enough to lift them out of poverty."

Tomlin said the study's ultimate usefulness to advocates like her is that it demonstrates that with the right support net, people can be moved off welfare rolls in a manner that improves their standard of living and family life. "I think the study shows that we know how to do it. The question is do we have the political will to do it."

Noting the stingier MFIP-light was instituted during a period of unprecedented prosperity in Minnesota, Tomlin is not confident that Minnesota's poltical leadership will ever be willing to properly fund meaningful welfare reform. The state, recently troubled by a looming $3 billion surplus, responded with a $1 billion "tax rebate" and plans for future tax cuts instead of new commitments to social services.

MFIP's designers set out to increase employment, reduce poverty, and reduce dependence, a set of goals rarely achieved by any previous program. For single parents who were long-term recipients—the key group for many policymakers—MFIP succeeded in achieving the first two of these goals, and, by some measures, the third. Long-term recipients have historically had difficulty finding jobs and leaving welfare, raising concerns that they may be left with little income when welfare time limits are implemented.

The report found that improvements in families' financial status held up for the two and a quarter years that families were tracked. On average, quarterly employment went up by 35 percent (49.9 percent of the MFIP group worked vs. 36.9 percent of the AFDC group), and quarterly earnings increased by 23 percent ($955 vs. $779) throughout the follow-up period. Moreover, the increase in employment was in full-time, stable jobs.

Because of MFIP's financial incentives, families in MFIP averaged a 15 percent higher quarterly income from earnings and welfare combined ($2,700 vs. $2,348). Correspondingly, the percentage of families with above-poverty income rose by 68 percent (from 14.7 percent for the AFDC group to 24.6 percent for the MFIP group). While the incentives resulted in more families continuing to receive welfare while working, 21 percent fewer families in the MFIP group (42.9 percent) than in the AFDC group (54.5 percent) relied on welfare with no earnings, a step toward self-sufficiency.

These changes in financial outcomes led to remarkable changes in family life: Domestic abuse of mothers decreased 18 percent (49.1 percent of the MFIP group vs. 59.6 percent of the AFDC group); marriage rates increased from 7 percent for the AFDC group to 10.6 percent for the MFIP group); and children's behavior and school performance improved.

"The positive effects on seemingly intractable problems like domestic abuse make more sense if you consider that the program didn't just give families more income," said Virginia Knox, Project Director of the MFIP evaluation at MDRC and lead author of the summary report. "The extra income from the incentives was available only if you worked; the program was presented as a very positive opportunity; and the program's staff encouraged people to use that opportunity to move ahead. All of this may have helped people change their lives in multiple ways."

More info:
Welfare Law Center
Archdiocese of St. Paul-Minneapolis' Office of Social Justice
Welfare reform in Minnesota
Manpower Demonstration Research Corporation
The Manpower report online

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