Mr. Chairman and members of the Subcommittee, thank you for the opportunity to appear
before you to discuss welfare reform and the progress being made to transform the welfare
system into one that focuses on work and responsibility. I want to thank this Subcommittee
for its leadership and support for work and training.
As you know, on August 22, 1996, President Clinton signed the bipartisan welfare reform
legislation that is dramatically changing the nation's
welfare system. The Personal Responsibility and Work Opportunity Reconciliation Act of
1996 (PRWORA) replaced the old welfare system -- Aid to Families with Dependent Children
(AFDC) -- with the Temporary Assistance for Needy Families (TANF) block grant program. The
focus of the new program is on work and responsibility and on providing States with the
flexibility to be innovative in addressing the pressing issues unique to each State. Prior
to joining HHS, I had the opportunity to witness this firsthand as I experienced the
challenge of leading Maryland's innovative new welfare reform efforts as the state's Secretary of the Department of Human Resources.
Much progress has been made
Clearly the strategy of requiring work and responsibility and rewarding families who
have gone to work has begun to pay off. Three years after the enactment of the welfare
reform law, all 50 states have met the law's
overall work requirements in 1998, nearly four times more of those on welfare are working
than in 1992 and record numbers of people are leaving welfare for work.
As you know, PRWORA set important new work requirements for states. In FY 1997 states
were statutorily required to have 25% of their overall caseload and 75% of their
two-parent welfare families engaged in specified work activities. By FY 1998, the
requirements for the overall caseload rose to 30% and remained at 75% for two-parent
families. In FY 1999, states will have to ensure that 35% of their overall caseload and
90% of their two-parent families engage in work activities.
As the President announced on August 3, every state and the District of Columbia met
the welfare law's overall work requirement for
1998. Nationally, 35 percent of all welfare recipients met these work requirements in
1998. This is the first full year of work data available under the welfare reform law (not
all states had to report in 1997 and those that did only had to report data for the last
quarter). Twenty-eight states also met the two-parent work rate for FY 1998. (The two
parent rate applied to only 41 states.)
Data also confirm that the employment rate of current welfare recipients has
increased significantly. For FY 1998, the percentage of employed recipients reached an
all-time high at 23 percent, compared to less than 7 percent in 1992 and 13 percent in
1997. Thus, almost one in four recipients were employed in a typical month, the highest
level ever recorded. Similarly, the proportion of recipients who were engaged in
employment, work experience or community service reached 27 percent in FY 1998, a nearly
fourfold increase over the 7 percent recorded in 1992. In addition, the Census Bureau's Current Population Survey reports that, between
1992 and 1998, the employment rate of previous year TANF recipients increased by 70
percent.
Moreover, a variety of state research studies show that most adults have worked since
leaving the welfare rolls. Studies summarized by a recent General Accounting Office report
found that between 63 and 87 percent of adults have worked since leaving the welfare
rolls. Preliminary findings from six HHS funded studies of families leaving welfare
indicate that between one-half and three-fifths of former TANF recipients found work in
jobs which were covered by their States'
Unemployment Insurance reporting system. When measured as the percentage of those who were
ever employed within the first 12 months, employment rates were even higher - between 75 to 82 percent.
Another key work measurement is whether current and former TANF recipients are actually
earning more. Welfare reform is having a positive effect on the earnings of some
categories of recipients, although early preliminary data provides a story somewhat more
complicated than that of employment.
For example, an examination of welfare reform waiver demonstrations suggests that those
programs which were strongly oriented toward increasing employment activities and
mandatory participation achieved annual earnings gains in the range of $600-$700 for at
least one primary target group of applicants or recipients. One employment and training
program in Portland, which combined a strong employment focus, an emphasis on moving
recipients into higher paying jobs with benefits, and the provision of necessary child
care, produced even larger effects with average earnings gains of over $900 per year.
A recent GAO review of state studies found annual earnings of $9,512 to $15,144 among
those who had left welfare. Many working families are better off financially than they
were on welfare, especially when earnings are combined with other supports for working
families, such as EITC, food stamps, and child care. Moreover, state administrative data
indicate that average monthly earnings for those who are combining both work and cash
assistance increased substantially, from $506 in the first three quarters of FY 1997 to
$592 in the last quarter.
Along with the employment gains described above, Current Population Survey data
suggests average earnings for all female-headed families with children have increased
substantially between 1993 and 1997 from $14,668 to $17,646 (1997 dollars). However, the
early CPS analysis suggests preliminarily that while employment gains for the bottom fifth
of female-headed families with children were stronger from 1995 to 1997, the average
earnings of this group increased from 1993 to 1995 but did not increase from 1995 to 1997.
While better understanding of these trends will require both longer term follow up and
analysis of other national data sets as they become available, these findings underscore
the need for additional welfare to work efforts, especially for those who may face the
greatest challenges of getting a job and succeeding in the workforce.
In keeping with welfare reform's increased
emphasis on moving families toward self-sufficiency and into the workforce, welfare
caseloads continue to decline dramatically. Caseloads are at their lowest level since
1969, and the welfare rolls have fallen by nearly half since the beginning of this
Administration. The number of recipients fell from 14.1 million in January 1993 to 7.3
million in March 1999, a decline of nearly 6.8 million people. In addition, the rolls have
declined by 4.9 million people, or 40 percent, since enactment of the welfare law in
August 1996.
A report released last month by the Council of Economic Advisers (CEA) finds that the
implementation of welfare reform is the single most important factor contributing to the
widespread and continuous caseload declines from 1996 to 1998. CEA estimates that the
federal and state program and policy changes implemented as a result of welfare reform
account for approximately one-third of the caseload reduction from 1996 to 1998. The
strong economy has also played an important role, accounting for approximately ten percent
of the decline between 1996 and 1998.
Significant gains in employment and earnings are a reflection not only of welfare
reform and a strong economy, but also a number of important steps we have undertaken
together with Congress to help families make work pay, including:
- increasing the Earned Income Tax Credit;
- increasing the minimum wage to make work pay;
- establishing the Department of Labor's Welfare-to-Work grant program for long term recipients and non-custodial parents in high
poverty areas;
- implementing a new tax credit to encourage the hiring and retention of long term
welfare recipients;
- funding welfare-to-work transportation assistance ($75 million in FY 1999); and
- supporting welfare-to-work housing vouchers (50,000 enacted to date).
Additional steps taken by the Administration include:
-
launching the Welfare-to-Work Partnership, which now includes over 12,000 businesses
that have hired over 410,000 welfare recipients;
- issuing an Executive
order to ensure that the Federal government hires its share of
welfare recipients - over 14,000 have been hired
to date, with HHS hiring 377 to date;
- launching of Vice President's
Welfare-to-Work Coalition to Sustain Success, a coalition of national civic, service and
faith-based groups working to help these new workers with the transition to self
sufficiency; and
- publishing final welfare reform rules that make it easier for States to use TANF
funds to provide supports for working families, such as child care, transportation, and
job retention services.
More needs to be accomplished.
We are encouraged by the strong focus that has been placed on work under the new
welfare reform law and the initial employment and earnings gains among needy families.
There are, however, areas of concern and much more needs to be done in the months and
years ahead to support State efforts to assist participants to obtain employment, remain
employed and increase their earnings. We must also work closely with States to address the
needs of the hardest to serve recipients -- those with fewer skills, poor work history and
challenges associated with mental health, substance abuse and domestic violence.
Reliable, safe and affordable child care is critical to help parents find -- and keep
-- jobs. A recent GAO study found that parents who receive child care assistance more
often complete training and/or get jobs, and early results from a Florida study suggest
that the provision of child care subsidies increases the earnings of current and former
welfare recipients. With more parents leaving welfare for work, the need for child care
has grown dramatically. Current funding under the Child Care and Development Block Grant
allowed assistance to only 1.25 million children in FY 1997, yet more than 10 million
children are eligible for this assistance.
To address this growing challenge, in FY 2000 the President's budget proposed a $17
billion child care initiative that will increase child care subsidies to States, expand
tax credits for low-income families and create an Early Learning Fund so that States and
communities will have a dedicated source of funding for activities that improve early
childhood education and the quality and safety of child care and, in so doing, help more
children enter school ready to learn. A body of research shows that the quality of care
young children receive has significant impact on their development. For example, a recent
NICHD study found that children who attend child care centers that meet quality standards
set by professional organizations (pediatricians and public health professionals) score
higher on school readiness and language tests. We are pleased that new investments in
child care have gained bipartisan Congressional support.
Health care also is an essential support for working families and this Administration
has a long-standing commitment to reducing the number of uninsured and providing health
care for more low income children and families. With the new Children's Health Insurance
Program (CHIP) and improved Medicaid options, States have more opportunities than ever
before to provide health insurance to low-income children and families. We are working
closely with States to ensure that children and families moving from welfare to work
receive the Medicaid assistance to which they are entitled. Recently, HHS issued a new
guidebook for States outlining strategies and procedures to ensure that families are
informed about Medicaid and CHIP and are enrolled whenever eligible. We also are extending
the availability of funds for Medicaid outreach and eligibility systems changes and
conducting a national review of Medicaid eligibility and enrollment to eliminate barriers
to enrollment.
We also must work together to ensure access to the Food Stamp, transportation and
housing supports that are so important to successfully move families from welfare to work.
The President recently announced steps to ensure that working families who need them have
access to Food Stamps. The President's budget request for welfare to work housing vouchers
will help families move closer to a job, reduce a long commute, or secure more stable
housing that will help them get or keep a job. Job access grants will provide funds for
communities to provide innovative transportation solutions so welfare recipients and other
low income workers can get to work.
Last, but certainly not least, DOL's
Welfare-to-Work program is an absolutely vital component of our efforts to ensure that
those facing the most difficult challenges also can attain -- and retain -- a job and to
help low-income fathers work and fulfill their responsibilities to their children. We urge
you to join with your colleagues in reauthorizing the Welfare-to-Work program this year.
Partnerships are critical to success
The success of welfare reform requires a seamless system of supports as families move
from welfare to work. Getting all key players to the table (at the federal, state, and
community level) is essential to ensuring that the many dimensions of self-sufficiency are
addressed.
At the federal level, we have expanded our network of partners to improve the
coordination of programs and to make it easier for state and local program Administrators
to leverage the resources they need. HHS has developed a strong working partnership with
the Department of Labor (DOL) to foster the successful implementation of welfare reform
and welfare to work efforts. Together we have convened a series of conferences to share
with other welfare reform stakeholders an informational "road map" on how to
succeed in moving welfare families to self-sufficiency. These conferences highlighted
models of promising practices for moving families from welfare to work, and were designed
to help participants:
- gain insight on how agency practitioners and the private sector have responded to
challenges of moving welfare recipients to work;
- learn from practitioners how to prepare for the difficult task of moving welfare
clients with multiple barriers to work;
- interact with peer practitioners from a broad cross-section of Federal, State and
local agencies, community-based organizations, employers, and other disciplines; and
- gather practical information, helpful practices, and names of professional contacts
to help structure programs to move families to self-sufficiency
In addition to these "best practices" conferences, HHS and DOL staff regularly work in
close coordination to develop consistent policies and resolve outstanding program
implementation issues as they arise. Staff at both the central and regional offices have
established communication links in order to better assist our client population in
accessing services critical to their obtaining and maintaining employment. Our cooperative
efforts have included:
- participating in a major DOL technical assistance partnership project with ten urban
communities to promote innovation and excellence in urban welfare-to-work systems;
- participating in an inter-agency workgroup dealing with the implementation of the
unified State plan, an innovation introduced by the Workforce Investment Act (WIA). Our
headquarters and regional staff have worked with our colleagues from the Departments of
Labor, Education, Agriculture, and HUD in the review of plans and the development of
unified planning guidance. Together with our DOL partner we are encouraging States to take
advantage of the opportunity afforded by the unified planning process to deliver quality
services to our clients;
- collaborating on an initiative to coordinate programs and
services among welfare reform stakeholders as it relates to the Workforce Investment Act.
HHS and DOL have contracted with the National Governors'
Association to conduct three regional meetings around the issues, opportunities, and
limitations created by the new Workforce Investment Act and the impact this law may have
on serving welfare recipients with multiple barriers to employment;
- reviewing State Welfare to Work plans. Our focus supported provisions that encouraged
active collaboration between State TANF and workforce systems;
- working with our partners at the Departments of Labor and Transportation to develop
guidance on the use of TANF, WtW, and Access to Jobs funds in order to provide needed
transportation; and
- planning to develop guidance that will improve the referral and service process
between State TANF and workforce systems.
We will continue to work closely with our federal partners to further these initiatives
and to meet new challenges as they arise.
Conclusion
When President Clinton signed the new welfare reform law in 1996, the Administration
and Congress charted a new course for welfare to require work, promote personal
responsibility and give states the flexibility to operate programs that will help families
turn welfare checks into paychecks. Three years later, the results have been very
promising. More parents on welfare are now working than ever before, and caseloads are at
their lowest in thirty-two years. Yet challenges remain.
We will continue to assist States in their efforts to help people become employed,
retain employment, and increase their earnings.
We are committed to ensuring eligible families receive essential work supports
including child care, Medicaid, food stamps, EITC, housing and transportation.
Finally, we will continue to collect more comprehensive information about the results
of welfare reform, particularly information on outcomes as they relate to child and family
well being.
We are looking forward to working together with Congress and the states to continue to
help families achieve success and self-sufficiency.
Thank you. I will be happy to answer your questions.
