For welfare recipients, the road to self-sufficiency involves getting and keeping a job. During the past four years, many states have experimented with work incentives and requirements for welfare recipients, under waivers from the federal government. The new welfare law, signed by President Clinton on August 22, 1996, involves significant changes to the welfare program. The most dramatic change ends Aid to Families with Dependent Children (AFDC) and replaces it with the Temporary Assistance to Needy Families (TANF) program. Under the new law, most able-bodied welfare recipients must find some type of work within two years after they start collecting welfare or lose benefits. The law also limits welfare receipt during an adult’s lifetime to five years.
As the new law is implemented, many low-skilled welfare recipients will enter the labor market. It is unclear how long these individuals will hold their jobs. Previous studies of welfare dynamics have found that more than half of those who leave welfare for work lose their jobs within a short time and return to welfare. These studies, however, were conducted when individuals who lost their jobs could go back on welfare for an indefinite period of time. This option is less viable under the time limits imposed by the new law. Time limits might motivate many individuals to hold onto their jobs who might have otherwise returned to welfare.
On the other hand, many of the individuals who will be entering the labor market in the months ahead will be less well prepared for the challenges of employment. The social consequences of job loss for these individuals are going to be much greater under the new system, which provides little or no support after a limited period.