High-Level Engagement: the New York Example

Former New York City Mayor Rudolph Giuliani set a goal of engaging the largest feasible proportion of welfare recipients in constructive activities leading to employment. In order to maximize the involvement of welfare recipients in these activities, Mayor Giuliani took the following steps:

1. All applicants for welfare were enrolled in New York's welfare-to-work program immediately, even while their applications were pending, and were required to look for work.
2. If a recipient did not obtain employment within a relatively short time, ongoing efforts to find employment were combined with other self-sufficiency activities such as working for government agencies in exchange for benefits (work experience) or engaging in training, education, or substance abuse treatment.
3. Tracking of recipient attendance in scheduled activities was made a very high management priority, as were efforts to follow up with participants who dropped out of their assignments.
4. Job-placement vendors were paid only for successful job placement and retention, rather than on a "process" basis.

The results of New York's "high engagement" program are shown in Chart 1.² In December 2001, fully 67 percent of recipients were engaged in welfare-to-work activities, another 14 percent were scheduled to start activities within six weeks, and only 20 percent were unengaged.

More detailed figures are shown in Table 1, which provides a breakdown of the exact activities undertaken by the New York City TANF caseload.

• Total Engaged Cases (line 2)
  Engaged cases, comprising 67 percent of the caseload, were made up of the following:

--23.9 percent of recipients were in private employment (line 3), either in regular or subsidized private jobs.

--12.5 percent were in a work experience program (line 4), usually for three days a week and combined with other constructive activities such as job search, education, or training. "Work experience" as used here means working as an assistant in a government agency or nonprofit organization in exchange for welfare benefits.

--10.6 percent were engaged through other participation (line 5), which means constructive activity such as education and training, without concurrent work experience activity.

--19.6 percent were engaged with sanction (line 6). These individuals had an assignment but were not currently attending. Consequently, some had their benefits reduced, while others were under review by the welfare agency.³

• Scheduled to Start Activity Within Six Weeks (line 7)
  These cases, which made up 13.6 percent of the adult TANF caseload, included new applicants or individuals who needed a medical assessment to determine their capabilities before they were given an assignment.
• Total Cases Not Engaged (line 8)
  These cases, representing 19.7 percent of the caseload, are made up of the following:

--15.5 percent were temporarily inactive for health reasons, the presence of a newborn, or because they were needed at home to care for a relative.

--4.3 percent were long term inactive for reasons such as acute AIDS or old age.

The experience from Mayor Giuliani's New York City welfare reform program demonstrates the feasibility of achieving high participation rates among TANF recipients. As Chart 1 shows, in December 2001, fully two-thirds of all welfare cases in which an adult parent was present were engaged in the program. Only 20 percent were inactive.

Outcomes of New York's "High Engagement" Policy

New York City's "high engagement" policy resulted in a steep decline in the welfare dependency rate. Between August 1996 and February 2003, the caseload declined by 57 percent.⁴ This downward trend continued even after the 9/11 disaster. The most recent data show that there has been an 11 percent drop in the caseload over the 14-month period ending in February 2003.

Moreover, as New York's "high engagement" efforts reached ever greater numbers of previously idle recipients, employment rates jumped. Near the beginning of the Giuliani reforms in 1996, 42 percent of single mothers in New York City were employed. As the Giuliani work-based reforms took effect, by 2001, the employment rate had soared to 61 percent.

The impact of reform was even more dramatic among the group most likely to be on welfare--single mothers without a high school degree. Employment in this group jumped from 16 percent in 1996 to 42 percent in 2001.⁵ Overall, compared against all U.S. central city areas, Census Bureau information shows that, between 1995-96 and 2000-01, New York City increased its employment of single mothers at twice the national rate.⁶

As would be expected, when employment goes up by this much, poverty comes down. New York City's poverty rate was cut by one-fourth during this period, from 27 percent in 1995-96 to 20 percent in 2000-01. The decline in poverty among children was even steeper, dropping from 42 percent in 1995-96 to 30 percent in 2000-01.⁷

Low Participation Rates in the States

The successful 1996 federal welfare reform law was based on the principle that welfare should not be a one-way handout. Recipients should not remain idle on the rolls but should be required to obtain jobs. If a job is not immediately available, recipients should engage in constructive activities leading toward employment such as supervised job search, work experience, or training.

In the years since enactment of the 1996 reform, states have raised the activity level of welfare recipients. Nonetheless, activity rates in the TANF program remain far lower than they should be. In 2001, 43.2 percent of adults on TANF were engaged in constructive activities such as employment, job search, training, and work experience. The other 57 percent were unengaged and idle.

Moreover, of those recipients participating in activities, more than half were in private employment (mostly part-time) while receiving benefits. Though part-time employment is desirable, it usually does not require the active involvement of the welfare agency with the recipient. In fact, nationwide, welfare agencies were closely involved with only 17 percent of their adult TANF recipients in activities such as supervised job search, work experience, or training.

Participation rates appear even lower when compared to participation standards that incorporate minimum levels of activity in order to be counted for federal purposes. These standards require single mothers with children under age six to engage in work-related activities for 20 hours per week; for mothers with older children, the requirement is 30 hours per week.⁸ Nationwide, only 27 percent of the adult TANF caseload is intensively engaged at a level sufficient to meet these criteria (including private employment).

By any measure, the participation rate among TANF recipients nationwide is far lower than it should be. Large numbers of adults remain idle on the welfare rolls, receiving a welfare check while doing nothing to prepare for self-sufficiency.

Federal Reauthorization of Tanf

As part of TANF reauthorization, Congress has sought to mandate higher participation rates for the states. The House-passed welfare reform bill (H.R. 4) would require states to reach a nominal participation rate of 70 percent by 2008. However, the bill excludes approximately 25 percent of the adult caseload from the denominator of the participation count.⁹ Thus, the federal participation requirement would apply to only three-quarters of the adult caseload. This means that the real participation rate in 2008 would be around 50 percent of the full adult caseload (70 percent of 75 percent of the caseload).

H.R. 4 toughens participation standards, most notably by raising the required hours of participation from the current level of 20-30 hours per week to 40 hours per week. In general, however, in comparison to existing participant activity levels (including private employment while on welfare), the effect of H.R. 4 would be to intensify participation rather than greatly expand the portion of the caseload performing activities.

The Senate welfare reauthorization bill (S. 5), introduced by Senator Jim Talent (R-MO), would raise the required TANF participation rate to 56 percent by 2007.¹⁰ It also would increase the hours of participation in the same manner as H.R. 4.¹¹

The Democrat welfare reauthorization bill, entitled the Work Opportunity and Responsibility for Kids (WORK) Act, was introduced by Senator Max Baucus (D-MT) in June 2002. Although the bill purportedly sought "universal engagement" by adult TANF recipients, the participation rates required by the formula would not actually exceed 10 percent. Nor would the WORK Act significantly increase required hours of participation.¹²

Conclusion

The welfare reform of 1996 was founded on the premise that welfare dependence generated poverty and was harmful to families and children. The reform sought to reduce dependence and poverty by converting welfare from a one-way handout that rewarded chronic idleness to a new system of conditioned aid that required recipients to engage in constructive activities aimed at self-sufficiency. Under the reform, TANF recipients should be required to obtain jobs or prepare for work.

Obviously, the reform goal of moving recipients from dependence to employment will not be fulfilled if large numbers of adults remain idle on the welfare rolls. Thus, a core element of the 1996 reform law was the federal requirement mandating states to raise the activity rate of welfare recipients. However, in most states, actual participation rates of adult TANF recipients remain lower than anticipated, and controversy remains concerning what level of participation can realistically be expected.

The example of New York City shows that, at any point in time, roughly two-thirds of all adult TANF recipients can be engaged in constructive activities such as supervised job search, employment, work experience, training, or drug treatment. Regrettably, most states fall far short of that level.

As part of TANF reauthorization, legislators have sought to require states to gradually increase their TANF participation rates. S. 5, as introduced by Senator Talent, requires that participation be raised close to the New York City levels. S. 5 is thus the best option for fulfilling the original welfare reform goals of work and self-sufficiency.

Jason Turner is Weinberg Visiting Fellow in Welfare Policy at The Heritage Foundation. Between 1998 and 2001, he served as Mayor Rudolph Giuliani's welfare commissioner in New York City.