Table of Contents | Previous | Next |
Chapter 2
The Low-Wage Workforce: Background and Policy Context
This chapter provides background information and a policy context for understanding the promising practices and the principles described in the remainder of the report. Specifically, the chapter examines:
- The social gains that accrue from making low-wage workers a priority
- The characteristics of low-income families as a population
- An overview of work supports and of employment retention and career
advancement services
- A discussion of the opportunities and limitations of federal policies
affecting welfare and workforce development
- Some specific challenges that low-income families face in accessing
work supports and job retention and career advancement services
- The challenges of delivering services to low-income working families during a period of political uncertainty and fiscal crisis
Why Should Low-Wage Workers Be a Public Priority?
In the current economy, increasing numbers of low-income adults are working, but often for wages that are insufficient to provide their family with long-term economic stability.1 Welfare and workforce development reforms in the 1990s, which emphasized quick placement into jobs (often referred to as a “work-first” strategy), resulted in unprecedented numbers of welfare recipients and others joining the workforce. However, these individuals have frequently secured employment in low-skill, low-wage jobs that offer little opportunity for wage growth or career advancement.
Federal, state, and local governments and other key stakeholders (for example, employers, community-based organizations) have realized that there are major societal gains to be earned from helping low-income working families move out of poverty and achieve long-term self-sufficiency. Helping these families achieve economic stability may boost their children’s educational, health, and behavioral outcomes and may break the familial cycle of welfare dependence. Focusing public and private interventions to bring low-income working families closer to self-sufficiency can also have real economic benefits for employers, by reducing the costs of high turnover in the low-wage labor market and stabilizing the workforce and by improving low-wage workers’ employability through job experience and other skill development activities.
Although interest in assisting low-income working families is growing, a fundamental problem remains: Very few, if any, systems, institutions, or agencies serve low-wage workers as part of their core mission. Most employment-related public agencies focus on the unemployed and do not aggressively market or provide postemployment or work support services to the low-wage working population.
Who Are Low-Income Working Families?
While there is no standard definition for “low-income working family,” one recommended definition includes families whose income falls below 200 percent of the federal poverty level with each adult in the family working an annual average of at least 1,000 hours.2 This income level — 200 percent of the poverty level — is considered by many experts as the minimum income level necessary for a family to meet basic needs, such as paying market-rate rents, meeting utility bills, having adequate food, and covering such work-related expenses as transportation and child care. Additionally, at 200 percent of poverty — which translates into an income of $30,520 for a family of three — families are no longer eligible for most work supports: food stamps, child care, Medicaid, and the Earned Income Tax Credit (EITC).3 Under this definition, 16.7 percent of nonelderly persons nationwide are living in low-income working families.4
On a number of fronts, low-income working families face significant disadvantages in the labor market, particularly when compared with higher-income families (those earning over 200 percent of the poverty level):
- Characteristics of low-wage jobs. Jobs
in the low-wage labor market provide few benefits such as health insurance
and paid leave; thus individuals in these jobs are more apt to miss
work and to have reduced earnings or to lose their job due to family
emergencies, disruptions in child care, and transportation problems.5
- Lack of job security. In an economic
downturn, low-skilled, low-wage workers who are new to the labor force
are particularly vulnerable to layoffs, reduced work hours, and periods
of unemployment.
- The gap in skills and income. Job growth between 2000 and 2010 will continue to be fastest for occupations that require a postsecondary credential (a vocational certificate or an associate’s degree or higher), although the greatest number of new jobs will require only work-related training.6 The income gap is expected to continue to grow between those who have postsecondary education and those who do not — meaning that low-skilled workers will continue to have difficulty supporting their families.7
In addition, data from the 1997 National Survey of America’s Families reveal the following about low-wage workers themselves:8
- For 71 percent of low-income families, the highest level of educational
attainment by the head of household was a high school diploma or General
Educational Development (GED) certificate. For higher-income working
families, the proportion was 39 percent.
- Primary wage-earners in low-income working families were less likely
to hold jobs that provided daytime work hours and were much less likely
to have been at their job for more than one year. Fewer low-income working
families received employer-sponsored health insurance than higher-income
families (54 percent versus 89 percent).
- On average, workers in low-income families were less likely to be
married than their higher-income counterparts, more likely to be younger,
more likely to have children, and typically had more children. Low-income
working families were more likely to be headed by a single female than
were higher-income families.
- Like their higher-wage counterparts, the majority of primary workers
in low-income working families worked full time and year-round. However,
the median hourly wage for the primary wage-earner in a two-parent low-income
family was $7.55, compared with $16.67 in higher-income families. For
families with only one adult, the median hourly wage was $6.73, compared
with $14.42 for workers in higher-income families.9
- Further, some segments of the low-wage working population — such as welfare recipients and other new entrants to the labor force — experience significant rates of job loss and turnover. For example, among former welfare recipients who have left the rolls for work, one-quarter lose their job within the first three months, and less than half are employed after one year.10
Clearly, many families remain poor despite having a significant attachment to the labor force: More than half of nonelderly individuals living in families with an income below 200 percent of the federal poverty level are in families who work.11
The Value of Work Supports
Work support programs boost overall family income when earnings are insufficient, helping to “make work pay” by assisting families in meeting such basic needs as food, health care, and child care. Table 2.1 describes key work supports available for low-wage workers and their families, including the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), the Food Stamp Program, Temporary Assistance for Needy Families (TANF) earnings disregards, Medicaid, the State Children’s Health Insurance Program (SCHIP), and subsidized child care. Some states and localities also offer supports that cover work-related expenses such as transportation, uniforms and work-appropriate clothing, union dues, and emergency expenses. Work supports come in both cash and noncash forms, adding directly to income (like the EITC) or providing an offset to costs (like child care subsidies). Many programs were expanded throughout the 1990s and now provide sizable benefits not just for welfare recipients and the unemployed but also for low-wage workers and their families.
| Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) | Refundable federal tax credits intended to help offset Social Security taxes and to supplement earnings for individuals and families earning less than $34,692 per year. The maximum EITC benefit is $4,140 for a family of three earning up to $13,550 annually. The CTC could add up to $600 per qualifying child in 2002, depending on family size and marital status. The IRS administers the federal EITC and CTC. Some states also offer an additional state-level EITC, and many states and localities actively engage in outreach and provide free tax-filing assistance. |
|---|---|
| Food Stamp Program | A nutrition program designed to help low-income families, individuals, and seniors purchase food. Eligibility is set by the federal government at 130 percent of the poverty level. The federal government covers 100 percent of benefits, while states share 50 percent of administrative costs. The program is state- or county-administered, and the delivery mechanism is largely through Electronic Benefit Transfer (EBT). States have some flexibility to set asset limits and recertification periods. |
| TANF earnings disregards | TANF policy that “disregards” a portion of recipients’ earnings when calculating monthly welfare benefits. Working families continue to receive a portion of their welfare grant as well as supportive services and such work supports as Medicaid and food stamps. Earnings disregard policies and amounts vary widely by state. |
| Medicaid | Health care for parents and children that is subsidized by a combination of state and federal funds. States set income limits but at a minimum are required to cover children under age 6 up to 133 percent of the federal poverty level and children under age 19 up to 100 percent of the poverty level. States typically cover parents at lower income levels than children. The program is state- or county-administered. |
| State Children’s Health Insurance Program (SCHIP) | Health care for children that is also subsidized by a combination of state and federal funds. States set income requirements, which typically pick up where Medi-caid phases out; some states cover children in families with incomes up to 250 percent of the federal poverty level. Like Medicaid, this program may be state- or county-administered. |
| Subsidized child care | Typically funded through a combination of federal, state, and local resources, including the federal Child Care Development Fund and TANF. Most states use a sliding-scale payment structure in which a family’s costs increase with earnings. Policies are set and programs are administered by the state or county. |
Work support programs assist low-income families in a number of ways. Given that former welfare leavers report returning to the rolls primarily because of problems with child care, transportation, and medical coverage, work supports often help promote job retention.12 Work supports make it easier for some to pursue advancement opportunities by addressing the barriers to skills training that are commonly cited by low-wage workers, such as limited child care and transportation resources.13 Additionally, recent research has shown that work supports combined with employment services can improve schooling and behavioral outcomes for elementary- and school-age children and, in some cases, can reduce domestic violence, decrease poverty, and have positive effects on marriage and marital stability.14
Figure 2.1 illustrates the potential impact that work supports can have on income for a single mother of two in Maryland, a state that falls in the broad middle range of the size of welfare payments nationally. In addition to wages from work, the figure shows the dollar value for cash supports that add directly to income (the EITC, CTC, and food stamps) and estimates the value of child care subsidies minus the parent’s copayment — a benefit that is experienced not as an actual increase in income but as an offset to costs that this family would otherwise incur if paying market rates for child care services.15 Subsidized health care is not included in this analysis because such a support is used “as needed” and therefore cannot easily be assigned a fixed value per family.
As Figure 2.1 shows, working full time, full year at $6 per hour, this single mother’s annual income from earnings alone would total $12,480, which is well below the federal poverty level of $15,260. However, simply taking advantage of the EITC, CTC, and Maryland’s state EITC — a total of $6,458 for this family — raises the mother’s income to $18,938 and moves her above the federal poverty level. Receipt of food stamps and a child care subsidy in addition to the EITC and CTC would effectively raise her income to over $30,000. In short, work supports are worth more than $21,000 for this family. Along with earnings, these supports can fundamentally change the income calculus for low-wage work.
|
[D] |
Promoting Employment Retention and Career Advancement
Low-wage workers experience a number of challenges in the workplace that affect their ability to retain long-term employment and move into higher-paying positions. Studies that have tracked welfare recipients who left the rolls for work, for example, have found that they are more likely to find employment in jobs that are temporary, that require nontraditional hours (for example, evenings and weekends), and that have little or no opportunities for wage growth and advancement. Once such workers have secured employment, job loss — particularly during the first three to six months — and frequent periods of unemployment between jobs are not uncommon.16 Finally, with lower skill levels than their higher-wage counterparts, low-wage workers often cannot compete for jobs that offer benefits and opportunities for growth, since such jobs increasingly demand workers who have higher levels of education and training.17
Employment retention and career advancement services can help address these issues of job instability and can improve access to higher-paying jobs for the low-skilled, low-wage workforce. Skills training can be particularly important, given that unemployment rates among workers without a high school diploma are more than double the rates among workers with higher levels of education.18 Job retention services can also benefit businesses that employ low-wage workers — especially those in retail and service industries, which often report high labor costs associated with employee turnover.19
The Policy Context for Meeting the Needs of Low-Income Working Families
Since the late 1990s, changes in welfare reform and workforce development policies have increased their potential for meeting the needs of low-income working families. Two key federal programs in these areas are Temporary Assistance for Needy Families (TANF) block grants and the Workforce Investment Act (WIA). As described below, these two major reforms created new opportunities for agencies and organizations seeking to improve service delivery, but there are significant limitations in relying solely on welfare or workforce development funding streams to serve low-wage workers.
Welfare Reform: Temporary Assistance for Needy Families (TANF)
With the historic passage of welfare reform legislation in 1996, Congress effectively shifted responsibility for public assistance programs to states through the Temporary Assistance for Needy Families (TANF) block grant, which provides funding for temporary cash assistance and related employment and support services. Under TANF, most individuals receiving cash assistance must engage in work activities, and states must meet work participation rates. Overall, states have broad flexibility to design their own welfare programs in accordance with the broad purposes of the legislation. TANF funds are very flexible and can be used for noncash assistance for a broader low-income population beyond welfare recipients (for example, to provide kinship care or services for low-wage workers and at-risk youth).
States and localities have used the flexibility accorded to them under welfare reform to provide a host of new social services focused on overcoming welfare recipients’ barriers to employment and for providing supports after recipients leave welfare for work. While welfare reform has had a strong emphasis on moving recipients quickly into jobs, some state policies regarding work activities have permitted TANF cash assistance recipients to participate in education and training either as a stand-alone activity or in conjunction with work. States and localities have also used their TANF funds to provide a wide variety of services to facilitate the transition from welfare to work, such as:
- More generous earnings disregards when calculating cash assistance
for welfare recipients who find work
- Child care and transportation assistance for current and former recipients
- Substance abuse and mental health treatment to overcome these employment
barriers
- Short-term vocational training and adult education
- Postemployment case management to help address work-related and personal issues
As welfare recipients have transitioned into the low-wage labor market, policymakers have become more attuned to the needs of the working poor, realizing that low-wage employment alone is usually not enough to move a family out of poverty. To a limited degree, states have used TANF to fund services — particularly child care and diversion assistance — to a broader group of low-income working parents who may never have been on welfare.
The Limits of TANF Flexibility
Although TANF funds are available to provide services for low-income families other than welfare recipients, states have finite welfare funds and have typically focused on the cash assistance, work supports, and service needs of current and former welfare recipients before applying TANF funds to assist a broader low-income population. The system’s main focus is not on understanding and tailoring services to the larger low-wage working population — even though low-wage workers and their children may be eligible for such benefits as food stamps, Medicaid, and subsidized child care. Further, many noncash assistance supports and services were created using TANF “surplus” funds that resulted from large caseload reductions after welfare reform, and many surplus funds were flexible enough to reach a broader population of low-wage workers. Now that states face budget crises and the economy has experienced a downturn, caseloads are reportedly rising in some states, and prior surpluses are less likely to be available to support work or employment retention and career advancement services.
Workforce Development: The Workforce Investment Act (WIA)
The Workforce Investment Act was enacted in 1998 to facilitate greater coordination of a group of publicly funded employment and training programs, creating a nationwide (but locally administered) workforce investment system.20 Under WIA, the vast majority of funds for adult, youth, and dislocated worker programs are passed through to local Workforce Investment Boards (WIBs). Other categorical funding streams (for example, Wagner-Peyser, Adult Education and Literacy) go to state WIBs, along with small set-asides (15 percent) of the three WIA funding streams for adult, youth, and dislocated workers. These set-asides are commonly referred to as “governors’ discretionary funds” and can be used to support statewide activities as well as special initiatives.
Through the creation of the One-Stop workforce development service delivery model, WIA aims to provide at a single location access to “core” services (for example, self-directed job search) to anyone seeking assistance, regardless of income or program eligibility, and more intensive services (for example, assessments, case management) and training to those who need them. WIA requires that a number of publicly funded employment programs partner with the One-Stop, including Unemployment Insurance, veterans’ and seniors’ employment programs, and Job Corps, among others. Local WIBs oversee One-Stop Career Centers but generally are not directly involved with operating them.
WIA has the potential to become a universal service delivery system through which low-wage workers access work supports, job retention, and career advancement services. WIA stresses local private and public sector partnerships that can be used to improve outreach and service delivery to working families directly through their employers, community colleges, or community-based organizations. Indeed, many One-Stops have multiple partners located on-site, providing easy access to a range of services. Additionally, in many states and localities, the workforce system via the One-Stops has been the primary provider of employment services for welfare recipients. Finally, WIA provides flexible voucher-based funding for training or related career advancement services, through Individual Training Accounts (ITAs), which can be a valuable resource to low-income populations who may be ineligible for traditional financial aid and are seeking to build additional skills.
The Challenges of Balancing Constituents and Missions Under WIA
Like TANF’s potential, the One-Stop system’s ability to provide a broad range of services for low-wage workers has also yet to be fully realized, given WIA’s “dual-customer” focus and the disincentives to serving a broader population that result from the system’s policy and guidelines and resource limitations. WIA does include a provision requiring that, if resources are limited, the local WIBs must first provide intensive services and training to welfare recipients and other low-income individuals, including low-wage workers. At the same time, however, WIA funding is tied to specific performance measures that have consequences.21 Some of these measures — namely, newly entered employment levels and earnings gains — provide disincentives to serving individuals who are already working and instead favor the unemployed or other groups (such as youth and dislocated workers). For example, larger earnings gains will generally be realized for moving an unemployed client into a job than for moving a working client into a higher-wage job, thus providing an incentive to serve the unemployed over the working population. Additionally, there are limited dollars under WIA for training and other services that could benefit low-wage workers. Although states have some flexibility in allocating WIA funds, the costs of establishing the One-Stop system’s infrastructure have been a significant drain on those resources.
Finally, policymakers and practitioners view the workforce development system as serving two customers — individuals and employers — and some think that the main purpose of the system is to connect employers who are seeking workers with individuals who are seeking jobs. Some believe that expanding the mission of the One-Stop system to include access to work supports and other social services will result in its being viewed as a “social service agency,” which might discourage employers from participating.
The Challenges of Reaching Low-Income Working Families
Many public systems and programs are striving to serve low-wage workers and their families. However, many individuals who are eligible for work supports or for job retention and advancement services do not seek or obtain them. The following sections detail the challenges of accessing work supports and enrolling in employment retention and career advancement services, particularly in the context of the fiscal crisis affecting state budgets.
Work Support Programs: Factors Impeding Access
Despite being eligible for a range of work support programs, low-wage working families who are not associated with the TANF system and former TANF recipients have much lower rates of participation in work supports than do current TANF recipients.22 While participation in the EITC is estimated to be as high as 75 percent to 86 percent among some subgroups of the eligible population, participation in food stamps, Medicaid, and child care is much lower.23 It is widely acknowledged that a number of factors prevent eligible low-wage workers from accessing the full range of financial work supports.
Complex application, eligibility, and recertification procedures. Though a number of states have made progress in simplifying initial application processes for TANF recipients, some state and county programs have distinct applications and recertification processes that may be conducted in separate locations. Working parents may have to fill out more than one lengthy application and may have to return to one or more public agency offices several times throughout the year to maintain eligibility for various programs. Separate processes are also costly to low-wage workers in terms of transportation expenses and lost wages resulting from time away from the job.24
Lack of knowledge about available programs. Current TANF recipients and recent TANF leavers are generally aware of the supports for which they may be eligible, since caseworkers typically ensure that work support applications are processed along with TANF paperwork, and they monitor clients’ ongoing eligibility. Low-wage workers who have not been attached (or recently attached) to the public benefits system are less likely to know about these supports, how to apply for them, or how they can be combined with work to supplement family income.
Limited access points. Although the majority of those who are eligible for work supports are not welfare recipients, the welfare system continues to be primarily responsible for administering these programs; in most locations, low-wage workers must go to a welfare agency in order to apply for work supports. Some states and localities have attempted to increase access by colocating eligibility staff within One-Stops and other community-based organizations, though these staff are typically focused on assisting TANF recipients rather than non-TANF clients who are already working.
Stigma. Because of the administrative links between the welfare system and work support programs, the stigma that is often associated with public benefit programs appears to prevent some working families (including former welfare recipients) from applying.25 Some families may decide that the value of work supports may not offset the perceived stigma and “hassle” of obtaining them.
Though persistently low participation rates suggest that there is much room for improvement in addressing this issue, Chapter 3 highlights ways in which states and localities have improved access to work supports by using the flexibility of current laws governing eligibility, technological advances, and marketing campaigns.
Retention and Advancement Services: Challenges to Participation
Simply offering job retention and advancement services to low-wage workers does not ensure that the services will be utilized. The manner in which programs are delivered is as important as which services are offered. For example, welfare agencies and preliminary findings by the evaluators of the national Employment Retention and Advancement (ERA) project report that it is an ongoing challenge to engage low-wage workers in postemployment services, particularly since most such services are not mandatory.26 Even when participation is mandated, many of these workers — who are often receiving small cash grants — will decline to participate and will forgo cash assistance if the services are not attractive and easily accessible.
Low-wage workers may find it difficult to participate in job retention and career advancement programs for a number of reasons, including:27
- Most One-Stops, welfare offices, and other organizations that offer
retention-related services such as case management, assistance with
benefit applications, and counseling are typically not open after traditional
work hours or on weekends.
- For working parents who want to pursue training, limited access to supportive services such as subsidized child care, transportation options, personal counseling, and tutoring contributes to low participation, as does the inaccessible location of many training programs.
In addition, most skills training and education classes continue to be offered during traditional work hours, and the long-term commitment and investment that are required by most degree- and credential-granting programs also preclude many working parents from participating. Finally, individuals may not be well informed about the economic benefits of additional training and education.
Service Delivery in a Period of Uncertainty
TANF and WIA face reauthorization in the 108th Congress — a process that could impact the mission and capacity of both systems to serve low-wage workers. A number of welfare reauthorization proposals include increases in required work hours and new limits on education or training activities as well as additional funding for child care through the Child Care Development Fund. Under several of these proposals, most education and training for welfare recipients will have to be delivered in combination with employment. As a result, the program innovations and policy options that are presented in this report for improving service delivery to working individuals become increasingly relevant to the welfare system. WIA reauthorization, for example, could present an opportunity to change the system’s performance measures to reflect career advancement goals and could encourage One-Stops to provide work supports and training and advancement services for low-wage workers.
Besides the complications of welfare reauthorization, states are in a severe fiscal crisis — the worst since World War II. After an annual growth rate of 6.5 percent in state spending between 1995 and 2001, state spending rose by only 1.3 percent and 0.3 percent in 2002 and 2003, respectively, and it is expected to decline by 0.1 percent in 2004.28 States have significantly reduced their spending as a result of declining revenues and accelerating health care rates, and they are not likely to have new resources to support program development or to launch initiatives. Some states are postponing or cutting back on planned job retention and advancement services. Recent budget cuts demonstrate that services for low-income working families may have a lower priority than services for more vulnerable populations. States may curtail or cut work supports or may require higher copayments for supports like child care and health insurance, which were made available under less restrictive budgets.
The fiscal situation does not lessen the need for improving service delivery to low-income working families. Instead, it becomes more critical to make the most efficient use of existing services and resources, to better coordinate service delivery across public systems and private organizations, and to improve outreach efforts to this especially vulnerable population.
Conclusion
Despite the many challenges identified in this chapter, site visits and exploratory work by MDRC and the NGA Center have uncovered a number of service delivery approaches that states, localities, agencies, and employers have adopted to help low-wage workers overcome their barriers to accessing work supports and to address the issue of their low participation in postemployment services. These existing practices can serve as the building blocks for providing a comprehensive range of supports and services for this population. Chapters 3 through 5 present promising practices in linking low-income working families with work supports and with employment retention and career advancement services.
1 Bernstein and Hartmann, 1999. (back)
2 Other possible definitions focus on total annual hours worked by all adults in the household; at least 1,000 hours is equal to a part-time job, or at least 2,000 hours is equal to a full-time job. However, using a definition based on average annual hours per adult in the household is preferable because it recognizes that two-parent families have twice as many potential workers as a single-parent family. See Acs, Phillips, and McKenzie, 2001. (back)
3 Acs, Phillips, and McKenzie, 2001. (back)
4 Acs, Phillips, and McKenzie, 2001. (back)
7 Carnevale and Desrochers, 2002. (back)
8 Acs, Phillips, and McKenzie, 2001. Data on low-income working families are not as readily available as they are for low-wage adult workers. While data on adult workers are illuminating in some respects, this group includes adults without dependents. Moreover, in two-parent families, it is increasingly the norm that both parents are working, so that the family's income is the sum of two adults' earnings. (back)
9 Acs, Phillips, and McKenzie, 2001. (back)
10 Hershey and Pavetti, 1997; Rangarajan, 1998; Fein et al., 1998; Rangarajan, Schochet, and Chu, 1998. (back)
11 Acs, Phillips, and McKenzie, 2000. (back)
12 Isaacs and Lyon, 2000. (back)
13 Matus-Grossman and Gooden, 2002. (back)
15 The data in Figure 2.1 are taken from the Center for Law and Social Policy's State Policy Documentation Project Website at www.spdp.org; the Children's Defense Fund estimates of child care rates ($3 per day per child) and copayments at http://www.childrensdefense.org/pdf/cc_statedev01_tb3.pdf; the U.S. Department of Agriculture's Food and Nutrition Service Website at http://www.fns.usda.gov/fns/; and the Center on Budget and Policy Priority's EITC Toolkit at http://www.cbpp.org/eic2003/index.html. (back)
16 Strawn and Martinson, 2000. (back)
17 Carnevale and Rose, 2001. (back)
18 Kaye and Nightingale, 1999. (back)
19 Turnover costs are estimated to be anywhere from 33 percent to 250 percent of an employee's annual income, with costs varying by industry (see Pille, 2002). Many management firms and industry associations cite similar numbers. For example, the American Hotel and Motels Association found that the average direct cost of turnover for workers earning $8 per hour is $2,500 per employee (see www.sashacorp.com/turncost.html). These expenses do not take into account indirect costs of lost productivity, increased workloads for employees who compensate for job vacancies, or the loss of group unity for jobs that require teamwork. Turnover also comes at a cost to low-wage workers, contributing to lost wages and diminishing job tenure (Lane, 1999). (back)
20 For an overview of WIA policy, see Jensen (1998) and Employment and Training Administration (1998). (back)
21 Failure to meet performance measures for two years can lead to sanctions of up to a 5 percent reduction in WIA funding to a state, while exceeding performance expectations can earn states incentive grants. State WIBs negotiate the target levels for each measure with the federal government, and, in turn, local WIBs negotiate their particular levels with their state WIB (Jensen, 1998). (back)
22 Fishman and Beebout, 2001. (back)
23 The EITC is the only work support program with overall participation rates near this level; as noted, studies estimate receipt by eligible families to be between 75 percent and 86 percent, with lower participation among some subgroups, including workers who have language barriers and very low-income families (General Accounting Office, 2001; Scholz, 1994). Participation rates in Medicaid and the Food Stamp Program are significantly lower. Of Medicaid-eligible adults, 51 percent are enrolled, and 27 percent are uninsured (Davidoff, Garrett, and Yemane, 2000). Just over one-third of eligible welfare leavers report having Medicaid coverage (Garrett and Holahan, 2000), and only 41 percent of low-wage workers who are eligible for food stamps receive them (Cunnyngham, 2002; Food and Nutrition Service, 2001). Further, many working families continue to be eligible for welfare benefits through TANF earnings supplements; yet estimates are that just 38 percent of these families actually receive them. Research also shows that a fraction of income-eligible families receive subsidized child care assistance, though the low rate of receipt reflects insufficient state and federal funding rather than lack of demand. While no current body of research examines participation rates from this perspective, experts in the field estimate that between 20 percent and 30 percent of low-income working families who are eligible for multiple programs receive all the benefits for which they qualify. (back)
24 A recent study (O'Brien et al., 2000) calculated the average cost to a working family of applying for food stamps to be $36.06. (back)
25 Dion and Pavetti, 2000. (back)
27 Matus-Grossman and Gooden, 2002. (back)
| Table of Contents | Previous | Next |