New Welfare Law Will Harm Alarming Number of Families

Within eight years, 41 percent of the current caseload of AFDC recipients will reach the 60-month cutoff for lifetime receipt of welfare, according to a new study that examined monthly patterns of AFDC receipt during the 1980s and early 1990s. And within two years, the 24-month work requirements will force states to seek employment or some form of allowable work activity for 52 percent of their current caseloads.

"The percentage of recipients that is likely to be affected by the 60-month limit on welfare receipt is twice as high as the percentage of exemptions allowed in the new legislation," said Greg Duncan, a co-investigator of the study and a faculty affiliate at the new Northwestern/University of Chicago Joint Center for Poverty Research. Given block grants to offer time-limited assistance under the new welfare block grant program, states are permitted to exempt up to 20 percent of their caseloads from the 60-month lifetime limit for reasons of hardship.

"Unless behavior changes drastically in response to the 1996 provisions, our estimates suggest that even when applying the most optimistic assumptions, an alarming number of low-income families will be affected by the new time limits," said Duncan, who also is a professor of education and social policy and a faculty fellow at Northwestern's Institute for Policy research. "The number of children who ultimately will be affected will run into the millions."

The researchers used data on monthly patterns of AFDC receipt and employment between 1983 and 1995 to estimate how many families will be affected by the new welfare legislation and the length of time it will take for recipients to reach work and benefit cutoff deadlines. Drawing upon existing research regarding welfare dynamics, the study makes distinctions between first-time and current caseload welfare recipients in its predictions, and it offers a risk index of characteristics that identifies who is most likely to reach the 60-month time limit.

Those most at risk are recipients who have never been married; who got on welfare when they were young; who lack a high school diploma; and who had preschool children when they first received welfare.

Even before benefits begin to be cut off, states are required to impose work requirements after 24 months of receipt. The analysis concludes that only 15 percent of recipients who received 24 months of welfare payments were employed at that point, and 25 percent are employed in the six-month window surrounding that point -- leaving 75 to 85 percent subject to work requirements.

"While states will have some options to exempt or reduce the work requirements, they will be penalized if they do not meet specific work participation rates mandated by the legislation," said Duncan. States are expected to choose activities satisfying the state work requirement from a list of allowable work activities contained in the federal legislation, including unsubsidized employment, subsidized private-sector or public-sector employment, on-the-job-training and job-search and job-readiness assistance for up to six weeks.

Among the findings:

The distinction between current caseload recipients and first-time recipients is crucial in estimating how many families are likely to be effected by time limits, said Duncan. A 60-month limit applied to families first starting to receive benefits will affect only a minority of them, since most will never reach the limit. That is not the case, however, for the current caseload, which is over represented by long term recipients.

Although the study concentrates on 60-month federal provisions on time limits, it also presents estimates of affected fractions of the caseload in states with shorter time limits for total receipt.

The researchers caution that estimates may overstate the percentage of recipients affected by the new time limits, because some families may change behavior in anticipation of the time limits. "Still, even very optimistic assumptions about behavior leave more than one-third of recipients facing benefit cutoff," said Duncan.