Improving TANF Program Outcomes for Families With Barriers to Employment

A significant number of current and former TANF recipients have various barriers to finding and maintaining employment. Among the most common barriers are physical and mental health problems, domestic violence, low skill levels, lack of adequate or affordable housing, and limited proficiency in English. Research has shown that recipients with work barriers are less likely to find jobs, have lower earnings on average, and are more likely to lose assistance because of a sanction for program noncompliance than families without barriers. Poor outcomes are especially likely for families that experience more than one barrier to employment. Welfare reauthorization offers an opportunity to improve services and outcomes for these disadvantaged families.

After summarizing research on the prevalence and effects of various barriers to employment, this paper discusses changes that could be made to TANF to improve program outcomes for families with work barriers.

The Extent and Effects of Barriers to Employment

A number of studies documenting the extent of various barriers to employment among current and former TANF recipients have been conducted since the passage of the 1996 welfare law. The precise estimates of the prevalence of a particular barrier, the population studied, and the way in which barriers are measured vary; however, when these studies are taken together, the following conclusions emerge:

• Physical and mental health conditions and low education levels are the most prevalent barriers documented among TANF recipients. Other common barriers include domestic violence and limited English proficiency.
• Recipients with such barriers are less likely to secure employment than other recipients.
• A large number of families experience more than one barrier to employment. The likelihood of a recipient finding employment falls as the number of barriers she experiences increases.
• Recipients that lose cash assistance because they were sanctioned off the program for noncompliance with program requirements are more likely to experience barriers to employment than those who have left welfare for other reasons.

Research Findings on the Prevalence of Barriers

Various studies have measured the prevalence of an array of barriers. These studies find particularly high rates of barriers related to the health both of parents and children receiving TANF.

• Physical and Mental Health Problems: TANF recipients are more likely to suffer from physical or mental health problems that limit employability than the general population. The Manpower Demonstration Research Corporation (MDRC) found that nearly one-third of the non-working recipients studied reported having fair or poor health. (This study measured barriers among recipients in four urban areas.) Nationally, only eight percent of similarly aged women report having fair or poor health status. Similarly, while 44 percent of non-working TANF recipients reported having a physical condition that limited moderate activity - such as pushing a vacuum cleaner - less than 10 percent of similar women nationally reported having such limitations. ^[2] In a national study of TANF recipients, the General Accounting Office found that 44 percent of TANF recipients nationally had at least one physical or mental health impairment, three times higher than the rate of such impairments among adults not receiving TANF benefits. ^[3] Findings from these two studies and one other national study that documents the prevalence of health problems among TANF recipients are summarized in Table 1.^[4]
• Drug and Alcohol Problems: Accurate estimates of the number of welfare recipients that have alcohol or drug problems are difficult to obtain generally and vary considerably depending on the definitions used. In a survey of the existing research on the extent of these problems among welfare recipients, researchers at Mathematica Policy Research found that estimates of the welfare population nationally that abuse alcohol or other drugs range from 11 percent to 27 percent. More recent studies suggest similar results. ^[5] Mathematica also concluded that approximately five percent of welfare recipients were "dependent" on alcohol or other drugs.
• Children's Health : The MDRC study found that one-fourth of non-employed mothers receiving TANF had a child with an illness or disability that limited the mothers' ability to work or attend school.^[6] Similarly, in a study in conducted in an urban county in Michigan, 22 percent of respondents had a child with a health, learning, or emotional problem. ^[7] A child with a health problem can inhibit a parent's ability to work. Some children require frequent trips to medical professionals and it is often difficult to find appropriate child care for such children.
• Domestic Violence: Domestic violence can affect recipients' physical health and safety as well as their mental health. A review of the research on the prevalence of domestic violence among low-income women generally also reviewed studies of welfare recipients. These studies showed that between 15 and 30 percent of welfare recipients have been recent victims of domestic violence. Between 50 and 65 percent of recipients were victims of domestic abuse at some point in their lives.^[8]

In addition to health-related barriers to employment, low education levels, limited English proficiency and learning disabilities can all affect TANF recipients' labor market prospects. Recent research has documented the extent of many such barriers among TANF recipients.

• Low education levels: A report by the Urban Institute found that 44 percent of adults receiving TANF cash assistance in 1999 lacked a high school diploma or GED.^[10] Census data show that nationally, only 12.7 percent of women between the ages of 18 and 54 lack a high school diploma or GED. ^[11] The lack of a high school diploma can make it difficult for individuals to find jobs either because a diploma itself is a job requirement or because individuals without the skills of a high school graduate cannot perform the duties associated with many jobs.
• Limited English Proficiency: Persons with limited proficiency in English constitute a significant share of the TANF caseload in some urban areas. For example, in Los Angeles County, 41 percent of the TANF caseload has limited proficiency in English. ^[12] While an accurate national estimate of the percentage of TANF recipients with limited proficiency in English is not available, approximately 17 percent of the national TANF caseload is foreign-born and it seems likely that a significant share of these families have limited proficiency in English. ^[13] Individuals with limited proficiency in English often can have difficulty securing employment as many jobs require employees to communicate with customers, co-workers, or suppliers in English.
• Learning Disabilities: Studies in Kansas, Washington State and Utah suggest that between one-fifth and one-third of parents receiving TANF have learning disabilities — neurologically-based problems that make it difficult for individuals to process information. The problems may involve language, motor activity, reading, writing, math, organization, or other tasks that are important to functioning in a work setting. ^[14]

An intensive study conducted in an urban county in Michigan provides the most complete analysis of the range of work barriers among TANF recipients. This study measured the prevalence of barriers among a sample of women receiving welfare in February 1997. Its findings are summarized in Table 2.

Multiple Barriers to Employment

A number of studies have shown that many TANF recipients experience more than one barrier to employment. In an Urban Institute study of TANF recipients from across the country that measured a range of different work barriers — including six physical or mental health measures, two measures related to skill or work experience, and four other barriers related to transportation problems, language barriers, barriers associated with children's health and age. The study found that 44 percent of TANF recipients had two or more of these barriers. ^[17] In the Michigan study, almost two-thirds of the women surveyed had two or more of the 14 barriers measured and more than four in ten had at least three. ^[18] (See Table 2 for a list of the barriers studied.) Finally, the MDRC study found that many current and former recipients with health-related barriers to employment had additional non-health-related barriers, including limited education and work experience, limited proficiency in English, and having more than three children. When both health and non-health barriers were considered, more than 85 percent of non-working TANF recipients surveyed experienced at least two of the barriers, and 44 percent experienced at least four barriers.^[19]

Work Barriers and Employment Outcomes

TANF recipients with barriers to employment have lower rates of employment than recipients without barriers. The Michigan study analyzed how work barriers limit employment. The study examined the relationships between certain barriers and the likelihood of employment among a group of women who received welfare in February of 1997. Some barriers had a particularly pronounced effect on employment. For example, only 39 percent of women without a high school degree were working at least 20 hours per week when interviewed in late-1997 compared to 66 percent of women with a high school degree. Similarly, among recipients who had poor physical health that limited their ability to perform moderate activities, only 39 percent were working when interviewed in late 1997. Among those without such physical health problems, 62 percent were employed. Other barriers that had a significant impact on employment were depression, low work experience, few job skills, perceived discrimination, transportation, and child health problems.^[20]

The study also found that the likelihood of employment decreases sharply and significantly as the number of barriers increases. Women with only one barrier were significantly less likely to work compared to women with no barriers (71 percent versus 82 percent). Women with two or three barriers had a 62 percent chance of working; women with three or more barriers had only a 40 percent chance of working. ^[21]

The Urban Institute study measured the likelihood that a recipient was working, in school, or looking for work. The study found that 86 percent of TANF recipients with no barriers were participating in a work activity compared to 60 percent of those with one barrier. In addition, recipients who experienced a barrier to employment were more likely to be engaged in a job search activity — rather than working or participating in education — than recipients without barriers. Since job search programs generally entail fewer services related to barriers than other work-related activities, this finding is troubling. Most recipients with multiple barriers were not participating in any work activity. Some 57 percent of those with two barriers and 73 percent of those with three or more barriers reported that they were not currently participating in a work-related program.

While these studies demonstrate that barriers reduce the likelihood that a recipient will find employment, they also show that many recipients with barriers do work. It is likely, however, that more such recipients could secure employment if they received services designed to help them overcome their barriers and prepare for work. There is evidence that many recipients do not receive such services. A recent GAO study of TANF cash assistance programs in 600 counties examined the way in which these programs identified recipients who had various barriers to employment who might need specialized services. The study found that while most counties did some screening of recipients, many barriers that are more difficult to detect - such as mental illness or learning disabilities - were not identified. More than three-quarters of welfare offices in the study relied on recipients' self-disclosure of barriers instead of using screening and assessment tools. These tools generally are able to identify more people with certain barriers then a simple question which requires individuals to "self-identify" themselves as having a particular problem.

The GAO study also found that once barriers were identified, recipients often did not receive services designed to address those barriers and help them secure employment. Some 63 percent of the counties studied exempted TANF recipients with physical or mental impairments from participation requirements entirely. While exemptions are appropriate for some recipients who are unable to work, the study noted that in counties where TANF recipients with barriers were exempted from work requirements, they were much less likely to receive any services to assist them to address these impairments and take steps toward employment.^[22]

The Relationship Between Barriers and Sanctions

Research has demonstrated that a large proportion of families that are sanctioned for failing to comply with program activities experienced barriers to employment. In many states, families in which an adult does not comply with program requirements is terminated entirely from the cash assistance program.

• The MDRC study found that recipients with a larger number of health problems were more likely to be sanctioned than healthier recipients. One-third of the women with three or more barriers, compared with about one-fourth of those who had no barriers, reported having been sanctioned by the welfare agency. The health barriers most strongly associated with reports of being sanctioned were physical abuse, being at risk of depression and having a child with a health problem. ^[26]
• A study conducted by the Minnesota Department of Human Services as part of a welfare reform demonstration project begun prior to the enactment of the 1996 welfare law found that sanctioned families were four times as likely as the caseload as a whole to have a substance abuse problem, three times as likely to have a family health problem, twice as likely to have a mental health problem, and twice as likely to have been a recent victim of domestic violence.^[27]
• A South Carolina study compared families that were sanctioned with families that left welfare due to earnings during the first six months of TANF implementation in the state. The study found that sanction rates were substantially higher among recipients with low education levels than among those with more education. Some 36 percent of recipients with nine to 11 years of education were sanctioned, compared with 24 percent of high school graduates and 18 percent recipients with education beyond high school. ^[28]
• In a Utah study, 55 percent of sanctioned families cited transportation as a barrier to employment, and almost a quarter of respondents said lack of transportation was the primary reason they were unable to comply. ^[29]

These findings suggest that work barriers can impede a recipient's ability to meet program requirements. This may be because the particular work activities that a recipient has been assigned to are inappropriate based on her individual circumstances or that appropriate supportive services to help the recipient overcome the barrier are not in place. Placement in an inappropriate activity could arise because the state failed to identify the recipient as having a barrier. A state also may not have appropriate activities available for individuals it does identify as having particular barriers.

Families with Barriers and TANF: Where Do We Go From Here?

As the preceding discussion shows, a significant number of current TANF recipients as well as those who have been sanctioned off the program have various barriers to finding and maintaining employment. Families with work barriers have lower employment levels and are more likely to be sanctioned for program noncompliance than families without work barriers. Welfare reauthorization offers an opportunity to improve services and outcomes for these disadvantaged recipients and their families.

Allowing States to Count Individuals Placed in "Barrier-Removal" Activities Toward the Federal Work Participation Rates

Under current law, adults must participate in a narrow set of work activities for a specified number of hours in order to count toward a state's work participation rate. In general, to be counted toward the work rates, adults must participate in job search programs, work in subsidized or unsubsidized jobs, participate in work experience or community service, or participate in vocational education (though the number of adults who can participate in education activities is subject to special limitations). The poor labor market outcomes of recipients with barriers documented by research in this area suggest that they may need to participate in activities designed to address their barriers, such as mental health counseling, substance abuse treatment, or English-as-a-Second Language classes, rather than exclusively participating in the limited set of countable work activities set out in current law. Without access to such activities, recipients may be forced into inappropriate activities that do not help them move toward employment and may result in a sanction if the recipient is unable to meet program expectations.

States should be given broad flexibility to place recipients in barrier-removal activities and federal law should allow states to count recipients participating in such activities toward federal work participation rates.

Some may argue that states do not need additional flexibility in this area because federal law does not prohibit them from engaging families in a broader array of activities. This objection stems from the fact that over the past five years, states have had little difficulty meeting federal work participation requirements due to provisions in the law that lower required work rates for each state based on past caseload decline. ^[30] While states have had flexibility to place recipients in an array of activities to address barriers without jeopardizing their ability to meet the federal work participation requirements, it is unclear whether this will be the case in the future. TANF reauthorization may alter the way in which work participation rates are set and states may no longer face very low "effective" work participation rates. If this occurs, broader flexibility will be needed or states will be unable to place large numbers of recipients in barrier-removal activities and still meet the work participation requirements.

Even if the work participation rates states actually must meet are not increased substantially, language in the federal statute that makes clear that placing recipients in activities designed to address barriers to employment is consistent with TANF goals could encourage more states to engage recipients in such activities. The GAO study shows that, despite state flexibility in this area and low "effective" work participation rates over the past five years, many recipients who needed services to address barriers did not receive them. This may be due, in part, to the TANF law's strong signals recipients should be engaged in a narrowly defined set of work activities.

Finally, some also may feel that this additional flexibility will dilute the welfare law's strong focus on work. The experience of several states that had welfare waiver programs in place prior to the enactment of the 1996 welfare law suggests this is not the case. These states have been permitted to count recipients participating in barrier-removal activities toward the federal work participation rates. There is no evidence that the ability to count a broader range of activities diminished the overall emphasis on work in these states.

Developing Sanction Procedures that Address Barriers and Increase Compliance

As discussed earlier, barriers to employment are especially prevalent among families that have been sanctioned, suggesting that barriers may be impeding recipients' ability to comply fully with program requirements. Under TANF, many states have adopted full-family sanctions that terminate assistance to the entire family when an adult recipient does not meet work requirements. Between 1997 and 1999, 540,000 families lost assistance because of full-family sanctions.^[31] Many others had their benefits reduced because of partial sanctions.

To avoid inappropriately sanctioning vulnerable families, some states and counties have adopted pre-sanction review procedures that assess family circumstances, provide information about how to comply with program requirements to families, and offer, when needed, additional supports and services to families to facilitate compliance. These pre-sanction procedures have been found to reduce sanction rates and increase compliance with TANF work requirements. For example, in a pre-sanction review program in Tennessee, about one-third of the families that were slated to receive full-family sanctions in 1999 ultimately did not receive them as a result of this pre-sanction review process. In 70 percent of these cases, the parent came into compliance. In the remaining 30 percent, the reviewers found errors in caseworkers' application of the sanction policies. ^[32]

Similar procedures that meet the following criteria should be implemented in all state TANF programs:

• A comprehensive assessment should be conducted prior to a sanction being imposed to determine why the family did not meet program expectations, including whether the family has barriers that prevent full compliance.
• If barriers are found, states should determine whether a change in work activities is needed to ensure that the program expectations are appropriate based on the family's circumstances. The state also should ensure that the family has the services it needs to meet program expectations.

Some will object to imposing a requirement on states in this area. Substantial evidence demonstrates, however, that a properly designed pre-sanction review procedure will increase the number of recipients complying with program requirements, while ensuring that families have adequate notice of what is expected of them and the supports they need to comply. Moreover, the fact that some states have adopted effective pre-sanction procedures suggests that such procedures do not present significant administrative burdens. Finally, the very large number of families that have lost assistance due to sanctions coupled with the high prevalence of barriers among these sanctioned families indicate that this is an area in which the broad flexibility afforded states in the 1996 welfare law went too far. Based on this experience and the existence of successful program models that reduce sanction rates while increasing compliance with work requirements, additional protections for parents are warranted in this area.

To assist states in this area, HHS should be given resources to develop materials that both provide information on successful pre-sanction programs as well as model screening and assessment tools.

Finally, the goal of sanctions should be to encourage compliance with program rules so that families can ultimately move into employment. Currently, however, when a recipient comes into compliance with program rules, many states do not lift the sanction for several additional months. Some states impose minimum sanction durations that last as long as 12 months, or even 36 months in one state. Long sanction periods can provide a disincentive to an individual to comply since the family will not see its benefits restored despite compliance and can leave poor families in which a parent is willing to comply with program rules without basic assistance. Often sanction notices are not clear and a parent may not know when the sanction period is over and how to regain assistance because contact with the welfare office can be lost during that time. Restoring benefits upon compliance, by contrast, sends the message that compliance is the ultimate goal, helps the family move toward employment sooner, and alleviates family hardships that result when a family in which a parent is willing to comply with program rules is sanctioned. Federal law should prohibit states from continuing a family's full-family sanction after the adult comes into compliance and remains in compliance for a reasonable period of time.

Improving Service Delivery for Families with Barriers

In discussions about improving policies for individuals with barriers, program design and implementation changes often are identified as key to improving outcomes for families with barriers. States have a very difficult task at hand to meet the needs of families with barriers to employment. While some states and counties have taken steps to meet this challenge, research has identified numerous problems in the implementation of services for families with barriers in states and counties across the country. As discussed earlier, the GAO study found that screening for barriers to employment was inadequate in most counties. Half of the counties surveyed did not know how many recipients they served had physical or mental impairments. The report also showed that even when screening was performed, families often did not receive the services needed to address the barriers that had been identified.

Reauthorization legislation could assist states to meet the challenges of serving families with barriers by providing them with funding to create a panel to review state TANF-funded programs. The panel would study how well these programs meet the needs of families with various barriers to employment and identify areas that need improvement. The panel should consist of state representatives, experts in service provision to various groups of individuals (such as those with physical or mental impairments or those with substance abuse problems), advocates who represent or work with low-income families, and recipients themselves. For example, a barrier review panel may examine the work activities in which recipients participate to determine whether the activities are appropriate for recipients with different characteristics. The panel could research best practices in this area from around the country and make recommendations about how employment services could be more responsive to the needs of, for example, parents with a learning disability.

Time Limits: Flexibility to Grant Extensions

States should be given broader flexibility to continue providing assistance to families that reach the federally mandated 60-month time limit. Federal law does not include the kinds of exemption and extension criteria that many states with time limits have already adopted. For example, in some states with time limits of shorter than five years, families in which a parent has a disability or is caring for a disabled child are not subject to time limits. Current federal law simply allows states to provide extensions to a certain number of recipients such that no more than 20 percent of the caseload can consist of families that have exhausted their 60 months of time-limited benefits. In the short run, the 20 percent limitation may pose few problems. Over the longer-term, however, as more families exhaust their time-limited benefits, states may need greater flexibility to provide extended assistance to those families the state believes require such aid.

Given states' demonstrated commitment to reducing caseloads and limiting the amount of time families receive assistance, the current 20 percent limitation on hardship extensions is unnecessary. It seems unlikely that granting broader state flexibility in this area would result in states reducing their efforts to move families from welfare to work; it would allow, however, states to adopt simpler extension rules without having to worry about exceeding an arbitrary limit.

While states can use state maintenance-of-effort (MOE) funds to provide benefits to families that exhaust their 60 months of federally-funded benefits, this does not provide sufficient flexibility for states. ^[34] Policymakers often are hesitant to use MOE in ways which may appear contrary to the broad direction of federal law, even when such spending is wholly legal. Under the current structures, many view using MOE funds in this way as contrary to the intent of the 1996 welfare law. Some states also are hesitant to use MOE funds in this manner because of the administrative complexity involved with ensuring that certain families receive MOE-funded benefits while other families receive TANF-funded benefits. Finally, MOE funds constitute a limited percentage of available TANF funding in some states. In 12 states, MOE funds comprise less than 30 percent of total TANF funding. These states should have the same ability to provide extensions when necessary as other states with more substantial MOE funds.

Funding Innovative Strategies to Improve Employment Outcomes For Recipients with Barriers

Reauthorization legislation also should include funds for demonstration projects that test new approaches to improving the employment outcomes of families with various barriers to employment. In the past, demonstration projects have provided important information to all states about how to structure effective employment programs, but little work has been done to test approaches designed to help families with particular barriers. For example, demonstration projects could test various approaches to helping recipients with very low skill levels, certain mental health problems, or housing barriers find and retain employment.

Federal funding also should be provided to expand transitional jobs programs, which already have shown considerable promise as a strategy for the most disadvantaged TANF recipients. These programs provide short-term, wage-paying subsidized jobs for parents who have not obtained or maintained employment in more traditional welfare-to-work programs. A survey of 30 transitional jobs programs across the country found that 50 to 75 percent of participants are placed in unsubsidized jobs within six to nine months of enrollment. ^[35] Research on the employment services provided to recipients in Washington State measured the effects various types of work activities on recipients' employment and earnings. The researchers found that the transitional jobs program increased employment rates of recipients by 33 percent and increased earnings by almost $800 per quarter as compared to the employment rates and earnings that would have been expected had they not participated in any program. The study also found that the transitional jobs program had larger effects on employment rates and earnings levels than most other work activities. ^[36] Federal funding both would encourage additional states to implement transitional jobs programs and would help sustain current programs, many of which had relied previously on funding from the expired Welfare-to-Work grants.

Conclusion

Research has demonstrated the high prevalence of various barriers to employment among TANF recipients and the effect these barriers have on recipients' ability to attain stable employment. TANF reauthorization legislation should build on the experience of the past five years to ensure that in the coming years, families with barriers get the help they need to secure employment.