TANF Improvements Needed to Help Parents Find Better Work and Benefit From an Equitable Recovery

The COVID-19 pandemic and recession have underscored how the economy fails workers in jobs that pay the least and provide little stability and few benefits. Black and Latina women are overrepresented in these jobs and have been among the hardest hit by the pandemic.^[1] When families with children hit hard times like these, Temporary Assistance for Needy Families (TANF) can provide cash assistance to families with children who are not eligible for unemployment insurance and have limited assets to draw upon. TANF’s emphasis on work also gives it a role to play in helping families emerge from the pandemic more financially secure than at its start, but significant policy changes and additional targeted funding are needed for the program to realize its potential.

TANF programs require recipients to work, look for work, or participate in approved work activities as a condition of eligibility. For the nearly 25 years since TANF was created, its work programs have focused on getting recipients employed as quickly as possible; the result is that TANF recipients that leave TANF for work end up in unstable jobs that pay low wages that leave them with earnings far below the federal poverty line.^[3]

Yet, recent rigorous evaluations show that well-designed and well-implemented subsidized employment, education, or training programs that focus on building skills and providing adequate support to ensure success can increase the employment and earnings of individuals with limited education and skills, including TANF recipients. The recovery provides an opportunity to make investments in programs that will present better employment opportunities for TANF recipients and reverse policies built on racist stereotypes that have defined TANF recipients as lazy and undeserving of opportunities to provide a better future for their children.^[4]

To shift the focus of TANF work programs toward greater effectiveness, policymakers must adopt changes that support recipients’ participation in effective education and training and subsidized employment programs and that hold states accountable for helping TANF recipients move into better-quality jobs. They should also provide additional funding to expand effective education and training and subsidized employment programs. Without these improvements, TANF recipients — the majority of whom are Black or Latina — will continue to face limited employment prospects and will be forced back into the unstable jobs that pay low wages, put them in harm’s way, and that left them economically vulnerable during the pandemic.

Crisis Poses Challenges to Building an Equitable Recovery That Benefits TANF Recipients

The pandemic has substantially changed the labor market, disproportionately harming Black and Latino workers, especially those with the least education. Because necessary public health measures have forced the starkest changes in the service industry, unemployment has hit workers in service jobs that cannot be done remotely especially hard, a disproportionate share of whom are workers of color.^[5] Many TANF recipients work in such industries: research on TANF recipients in Maryland and Georgia who left the program found that they most commonly worked in the administrative services and food service or restaurant industries, where they were paid some of the lowest wages of those surveyed.^[6] Impacts on these industries may be lasting — for example, a long-term shift from front-of-store retail positions to roles more focused on packing and shipping.^[7]

Even in boom times, unemployment is higher for people of color than for white workers.^[8] And after recessions, employment rates for white workers recover faster than those for workers of color.^[9] While the official unemployment rate has improved since the COVID-19 shock in spring 2020, some of that improvement is the result of millions of workers leaving the workforce altogether, including many women with children and workers with less education and fewer skills.^[10] Many people who were expecting to go back to their old jobs won’t be able to because a growing number of temporary job losses due to the pandemic have become permanent, as businesses change operations or shutter altogether.^[11] This means unemployment spells are likely to be longer. The effects of long-term unemployment on economic stability and mental health can reverberate for a decade or longer.^[12] TANF recipients, many of whom already faced significant labor market barriers prior to the pandemic, are likely to be among those who face some of the greatest obstacles in returning to work.

The disruption to the child care system and widespread school closures are further complicating the recovery for parents and will make the return to work even harder for TANF recipients. Public health measures that have reduced capacity and lowered revenues have pushed the already strained child care industry to the brink, resulting in job losses, high costs, and provider closures.^[13] Without child care, parents, especially mothers, have been forced to sacrifice their work to care.^[14] In September, according to one estimate, 1.6 million fewer women were in the workforce than would be expected based on pre-pandemic levels and trends, a signal that higher caregiving burdens due to unavailable child care and closed schools have forced families to rely on women’s unpaid labor.^[15] With these complications seeming likely to persist for some time, parents may be kept out of the labor market for an extended period, which will then make it that much harder to re-enter it.

New Evidence Provides a Path Forward for More Effective TANF Work Programs

In the 25 years since TANF was created, we have learned more about how to effectively prepare individuals with limited employment prospects for better jobs. Subsidized employment, sectoral training, career pathway programs, work-based learning, and comprehensive education programs^[16] have all resulted in significant increases in earnings, evaluations have found.

Yet states have not updated TANF programs based on this knowledge. While no one approach will work for all recipients, these studies have identified some common elements of programs that work. Successful programs typically combine education, training, and support services while standalone skills instruction or job search programs fail to produce long-term improvements in participants’ earnings.^[17] Further, the quality of a program’s implementation can impact effectiveness, research suggests.^[18] By expanding access to evidence-based employment programs, TANF can improve participants’ employment and earnings, shoring up their economic stability and preventing their return to the program. These programs should be a part of any economic recovery plan so people with low incomes can quickly and safely get back to work. Below, we describe evidence-based programs that states could implement as part of a recovery effort to improve TANF recipients’ employment outcomes.

Subsidized Employment

Subsidized employment has successfully served the needs of workers and employers for decades by subsidizing wages for temporary jobs. Subsidized employment, in which public funds temporarily pay some or all of workers’ wages, played a critical role during the recovery from the Great Recession, and with additional funding could play a similarly important role as we recover from the pandemic. During recessionary periods, subsidized employment programs can boost the economy by increasing wages and employment levels. Even in expansionary periods, they can improve the employment opportunities and outcomes for individuals with more significant employment barriers who may need more support and supervision.^[19]

Subsidized employment significantly increases both wages and employment in the short term, evaluations consistently find.^[20] In addition, recent evaluations have found that some programs improve employment and earnings in the mid- and long term after the subsidized period ends.^[21] A recent evaluation of 13 programs found that 12 of the 13 programs increased employment rates in the year after the subsidized period ended, and that four of the programs improved participants’ employment outcomes for at least two years.^[22] Programs with interventions that lasted longer than 14 weeks most consistently improve employment and earnings, suggesting that longer durations result in better outcomes.^[23] And subsidized employment can have impacts outside of wages and employment, reducing recidivism for individuals returning from jail or prison and increasing child support payment rates.^[24]

One program in San Francisco has shown some of the most significant and longest-lasting benefits. The STEP Forward Program provided job-readiness services and partially subsidized jobs at private companies for up to five months. The program targeted low-income recipients of public assistance (including TANF recipients), individuals who had exhausted available benefits, and other families in need. During the subsidy period, the program resulted in greater levels of employment, higher average earnings, and a higher likelihood for participants to be employed in higher-quality jobs.^[25] The program resulted in some of the largest long-term earnings impacts among all subsidized employment programs evaluated. (See Figure 1.) The program successfully partnered with high-wage worksites, which may have contributed to its long-term benefits for the participants with the most recent work experience before joining STEP Forward.^[26]

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Sectoral Employment Programs

Sectoral employment programs meet the needs of both job seekers and employers by supporting participants’ education and training for specific high-growth, high-wage sectors with local demand. Most programs offer participants job-readiness training, occupational skills training, and support services; many programs also provide job search and placement support; and some provide post-placement services as well. Many programs design training programs to help participants achieve credentials or certifications for targeted industries. Sectoral programs are bolstered by strong government-employer relationships.

The approach gained prominence after an evaluation of three mature sectoral programs in 2010 found significant earnings gains in the two years after participants entered the program.^[27] Such programs received a boost from a federal investment through the Workforce Innovation and Opportunity Act of 2014, which emphasized the sectoral strategy, and the Health Profession Opportunity Grants (HPOG) program, which expanded opportunities for TANF recipients and others facing limited employment prospects to pursue health careers.^[28] Key positive impacts include the following:

• Completion of training or receipt of credentials or certifications: One evaluation of several education-based programs found significant positive impacts on education and training enrollment, with three of the programs evaluated improving enrollment in education and training by more than 20 percent.^[29] Per Scholas, a national program for information technology (IT) training and employment, increased completion of IT training and credential receipt by 46 percentage points in its New York City program.^[30] HPOG programs increased training duration and completion, including a 13 percentage-point increase in training completion.^[31] And the improvements in educational progress from HPOG programs were stronger for those with lower levels of education and barriers to employment.^[32]
• Employment in targeted sectors: Programs most commonly targeted the health care, manufacturing, and IT sectors. An evaluation of several sectoral programs found significant increases in employment in sectors related to the training they received.^[33] For example, in the Year Up program, which operates 34 campuses in 20 cities across the country and provides six months of full-time training in IT and financial services, followed by a six-month internship at a major firm, half of participants found jobs in financial operations or IT, compared with 17 percent of control group members.^[34] Per Scholas improved employment in targeted sectors by 41 percentage points.^[35] HPOG programs increased health care employment by 12 percentage points.^[36]
• Improved earnings: Improving employment in high-wage, high-demand sectors results in higher earnings for participants, largely by moving participants into jobs with higher wages.^[37] Year Up improved participants’ earnings in the year after they participated in the program by nearly $5,200, a 39 percent increase over the control group.^[38] Per Scholas increased participants’ hourly wages and weekly earnings, improved job satisfaction, and reduced material hardship.^[39] It increased earnings by over $3,700, or 26 percent, above the control group in the year following the program.^[40]
• Connection to support services: Many programs provide employment, financial, and other support services to participants, to help them complete the program goals. An HPOG evaluation found that access to services such as tuition and financial assistance, child care, transportation, employment supports, and emergency assistance was associated with greater educational progress.^[41] Further, access to employment supports and social services are associated with securing employment in targeted sectors.^[42]

One of the most successful sectoral programs is Project Quality Employment Through Skills Training (QUEST), a longstanding workforce agency located in San Antonio, Texas that provides significant services and support for participants to complete training for health careers, including financial assistance.^[43] The program serves individuals with incomes below 50 percent of the city’s median wage; most participants are women, Latino, or parents of young children.^[44]

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Researchers found the QUEST program significantly boosted wages and employment, despite the short-term decrease in wages due to the program’s school portion. Notably, this evaluation followed study participants for nine years and found that QUEST participants earned substantially more in the third through ninth years after beginning the program, with an increase of more than $5,000 in annual earnings in the ninth year.^[45] (See Figure 2.) The positive effect on wages resulted in participants earning an average of nearly $20,000 more than control group members across the nine years.^[46] Participants were more likely to be consistently employed and to work in higher-skilled health care jobs.^[47] The key to the program’s success was its reliable and significant financial support, which participants could use flexibly to meet their needs and cover tuition costs, evaluators determined.^[48]

The Valley Initiative for Development and Advancement (VIDA), modeled off Project QUEST, achieved significant educational improvements for participants. VIDA supported low-income participants, typically with some postsecondary education, in full-time enrollment in health occupation educational programs in the Lower Rio Grande Valley in Texas. As with Project QUEST, VIDA participants received intensive supportive services, including financial aid. The program improved enrollment in education and training and receipt of career counseling. And VIDA achieved its goal of improving educational outcomes: participants earned, on average, 33 credits, an improvement of six credits over the control group.^[49]

Other Successful Programs for Individuals With Significant Barriers to Employment

Meeting the education and training needs of TANF participants will require a variety of approaches, considering the variety of needs within the population. A diverse array of education and training programs have successfully helped participants with various needs stay enrolled, achieve degrees or certifications, and improve their earnings and employment. Several programs have had success for working people with various education, training, and support needs:

• The Work Advancement and Support Center demonstration project was designed to increase the incomes of workers with low wages by offering participants career coaching and skills training, along with easier access to work supports. The programs, implemented in Bridgeport, Connecticut; Dayton, Ohio; and San Diego, California, improved receipt of work supports (like SNAP and child care subsidies) and education and training activities. Increased education and training participation was associated with increased earnings following the program.^[50]
• CareerAdvance serves children and their parents in Tulsa, Oklahoma, pairing employment services and training in health care occupations with early care and education for participants’ children. Sixty-one percent of program participants achieved a career certificate after one year, compared to 4 percent of parents not in the program. And the program improved employment in health care by 24 percentage points.^[51]
• The Accelerated Study in Associate Program (ASAP) provided services to address barriers to student success at community colleges in New York. The program required full-time attendance and provided dedicated advisors and enhanced career services and tutoring, along with financial assistance to fully cover tuition. The program significantly improved educational outcomes: participants earned nine more credits than the control group, and the program nearly doubled graduation rates.^[52]

Transform TANF From Focusing on Compliance to Creating Work Opportunity

TANF work programs primarily focus on rapid job placement and monitoring compliance with work requirements. That means staff spend most of their time processing paperwork to document that recipients have participated in activities that meet the federal requirements to be counted in the state’s Work Participation Rate (WPR) calculation rather than helping recipients set and achieve goals that will increase their employment and earnings prospects. Despite this focus on compliance, states need to do very little to meet the federal WPR. This focus also discourages states from serving recipients with the most significant employment barriers, who could most benefit from the additional support that TANF could provide.

States are required to meet the WPR or face a penalty. To count towards meeting the rate, work-eligible recipients must participate in work activities as defined in federal law for a specified number of hours per week and they must document every hour of participation. However, because states can get credit toward meeting those rates if their cash assistance caseload has fallen since 2005, most states have a target WPR far below the required rate of 50 percent for all families and 90 percent for two-parent families, giving them substantial flexibility to operate programs that provide meaningful work opportunities for recipients. In 2019, 27 states had an adjusted work participation rate of 0 percent, giving them complete flexibility over the design and implementation of their work programs.^[53]

Even though states have the flexibility to redesign work programs building on evidence of how to prepare recipients for good-quality jobs, most cling to the rigid “work-first” framework laid out in federal law that encourages quick placement in low-wage, unstable jobs and maintains racial disparities in labor market outcomes. This suggests that additional resources and federal policy changes are needed to improve the chances that TANF recipients benefit from an equitable post-COVID recovery. Provisions that could make a difference include:

• Provide funding to replicate effective training and education programs that lead to better jobs. Funding for education and training programs was woefully inadequate before the pandemic. Any serious effort to create an equitable recovery will need to increase funding to help prepare individuals who have lost their jobs for better jobs, including TANF recipients. Throughout history, Black and Latina women, who make up the majority of the TANF caseload, have been concentrated in jobs that pay low wages. We will not change that outcome without making significant and targeted investments in programs that have a track record of expanding opportunities and increasing long-term earnings.
• Provide funding for subsidized jobs. Decades of evidence show that subsidized employment works, improving participants’ employment and wages while meeting employers’ needs for workers, with some programs improving employment outcomes for years.^[54] It is especially valuable to people of color, who have faced the harshest impacts of the current recession and make slower gains than white workers in economic recoveries. Subsidized employment worked during the recovery from the Great Recession to help accelerate recovery and prevent long-term joblessness, when the TANF Emergency Fund funded 260,000 subsidized jobs.^[55] Subsidized employment should be used again to prevent hardship and lay the groundwork for an equitable recovery.
• Make the Health Program Opportunity Grants program permanent and boost its funding. For ten years, the HPOG program has funded dozens of programs that provide TANF recipients and other people with low incomes with education and training for well-paying and in-demand health care jobs. Evidence shows that it lengthens participants’ duration in training and improves training completion rates, with even stronger results for those with less education and with barriers to employment, and it results in increased health care employment for participants. The country faces dual public health and employment crises, and the HPOG program can help reconnect people with work while reinforcing the public health workforce. But because HPOG funds only demonstration projects, it serves just a small share of people with low incomes. With ten years of positive evidence and a challenging economic recovery ahead, Congress should increase funding for HPOG and make the program permanent.
• Shift the focus of TANF work programs from compliance with work requirements to improving recipients’ employment opportunities and outcomes. Although states have flexibility to place more recipients in education and training programs, the design and structure of the WPR send a signal that immediate job placement is the preferred employment strategy for TANF recipients. The additional funding for replication of effective education and training programs should be paired with changes in TANF activity and hours requirements to prioritize participation in education and training programs and other programs with a proven track record of increasing participants’ employment and earnings.^[56] “Full-family sanctions” that terminate an entire family’s benefits if a parent does not meet work requirements should be banned as a part of this shift.^[57] States also should be held accountable for improving TANF recipients’ employment and earnings outcomes by replacing the WPR with employment and earnings measures that build on existing measures under the Workforce Innovation and Opportunity Act.