Study Details Daunting Task of Welfare Reform

More than 400,000 families in California depend almost exclusively on welfare for their livelihood, making them extremely vulnerable to the new penalties that will be imposed on recipients who fail to find work within a two-year time limit, according to a report by a nonprofit research group released Tuesday.

At the same time, the high number of heavily dependent families means that the state faces the daunting task of having to move hundreds of thousands of recipients who have little or no work experience into jobs in the next few years to avoid substantial losses in federal funds, the study said.

“The big message here is that there are nearly half a million families in which the issue is not just supplementing income but replacing it,” said Thomas MaCurdy, a Stanford University economics professor and senior fellow at the Hoover Institution. “They are starting from ground zero; about 70% of their income is going to have to be replaced in some way.”

The report, financed by the nonprofit, nonpartisan Public Policy Institute of California, identifies for the first time how many recipients will be the most seriously affected by a new federal law that overhauls the nation’s welfare system and gives states broad independence to design their own programs.

Senate President Pro Tem Bill Lockyer (D-Hayward) immediately asked the policy institute to use the findings to draw up proposed guidelines for California’s new welfare system.

While the findings show that nearly one in three California families receive some form of government aid, it also concludes that welfare is not a way of life for most families. The vast majority of those on welfare, it notes, receive most of their income from other sources, including a substantial amount from earnings.

It suggests that for years the government has underestimated the work experience of welfare families, especially those who received Aid to Families with Dependent Children. Although recent government statistics have found that only 10% to 15% of AFDC recipients worked while receiving aid, MaCurdy said the census data indicates that welfare families worked 31% of the months they were on assistance. One possible explanation, he said, is that some recipients did not report all income to the state. Another, he said, is differences in the way various government agencies track welfare payments.

Bruce Wagstaff, deputy director of the welfare division of the Department of Social Services, said the findings suggest that for large numbers of welfare recipients the work requirements of the new federal law can be fulfilled without great difficulty. The law requires that a family cannot receive aid for more than 24 months without working.

But, he said, while the 432,000 seriously dependent families make up only 3% of all families in California, they represent a huge problem for government officials because it will be extremely hard for that many people to find jobs, particularly the unskilled.

Written by MaCurdy and Margaret O’Brien-Strain, a fellow at the policy institute, the study analyzes data gathered by the U.S. Bureau of the Census on 5,000 California families over a 21-month period in 1993 and 1994.

Unlike many government reports, it looks at the periods families are off welfare as well as the times they are on it and examines all the forms of aid that may be received by a family, including general assistance, the local program that provides benefits for the poor.

To identify those considered highly dependent, MaCurdy said he took into consideration not only the length of time they were on welfare but the amount of their income derived from government assistance. He said that for a recipient to be considered highly dependent, more than 50% of the recipient’s income had to come from welfare.

He said he had been surprised at the large number of recipients who fit into this category.

The study also found that only about 20,000 recent legal immigrants are likely to be severely affected by the new law--but the study did not take into account the impact of the reforms on older immigrants who were disabled or those who were institutionalized.

Recent immigrants, he said, are most likely to be affected by the new welfare law. Immigrants who have worked in the United States for 10 years or served in the armed forces are exempt from provisions in the law that make legal immigrants no longer eligible for food stamps and Supplemental Security Income. Most longtime immigrants are eligible to become naturalized citizens and hence eligible for welfare.

While recent immigrant families participated in welfare more than twice as often as citizen families, MaCurdy said 86% of those immigrant families showed earnings. Those family earnings, he said, appeared generally to be higher than the earnings reported by citizen families.

The study’s findings also questioned the long-held conception that teenage mothers are more likely to end up on assistance than others in the population.

MaCurdy said his analysis showed that only 20% of teenage mothers--those who gave birth to their first child while in their teens--ended up on welfare.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Welfare Study

Here are some key findings from a study of which Californians are most dependent on welfare payments:

Number of Families in California: 13.1 million

Families Receiving Welfare: 2.75 million (21%)

Highly Dependent on Welfare*: 445,000 (3%)

Most Likely to Be Highly Dependent: Women who were teenage mothers (almost 50%)

Teenage Mothers Who Become Highly Dependent: 1 in 10

High School Dropouts Who Receive Welfare: 17%

Proportion of That 17% Who Become Highly Dependent: Less than half

Highly Dependent Families With Married Parents: 1 in 4

* Dependent on welfare for more than 50% of their income.

Source: Public Policy Institute of California