The Personal Responsibility and Work Opportunity Reconciliation Act of August 1996 ended the Aid to Families with Dependent Children (AFDC) program, the nation's largest cash welfare program. Among its provisions, the law replaced AFDC with block grants to states, called Temporary Assistance for Needy Families (TANF), and created financial incentives for states to run mandatory, work-focused, welfare-to-work programs. The law also placed a five-year limit on the amount of time most families can receive federally funded welfare, and it required states to place increasingly high percentages of welfare recipients into jobs and employment-related activities.

In meeting the new challenges of the federal welfare legislation, state and local administrators and policymakers can benefit from reliable information on the types of welfare-to-work program approaches that can quickly move substantial numbers of people into work and off welfare. This is especially true for programs that operate in large cities, where the remaining caseload, following large declines nationwide, is concentrated. Many of the nation’s major urban areas have unemployment rates above the national average, little or no public transportation to connect inner-city residents to available jobs in the suburbs, and large bureaucracies that can be hard to change. Further, Hispanics, African-Americans, and other minority groups make up most of the nation’s welfare caseload. Minorities are leaving assistance more slowly than recipients who are white and will likely make up an even larger portion of the welfare population in the coming years. Thus, the success of welfare reform nationally will depend increasingly on how well large, urban welfare-to-work programs help predominantly minority welfare populations find employment and leave assistance.

This report presents first-year participation and impact findings from the evaluation of the Los Angeles Jobs-First GAIN (Greater Avenues for Independence) program, the largest county welfare-to-work program in the nation. Consistent with the philosophy and goals of the 1996 federal welfare reform legislation that created TANF, Los Angeles Jobs-First GAIN emphasizes job search assistance and imparts a strong pro-work message in attempting to move thousands of AFDC/TANF recipients quickly into jobs and, as soon as feasible, off the welfare rolls. This message and emphasis place Jobs-First GAIN in the category of Work First programs, the approach followed by most current state and local welfare-to-work programs. Most of the features of Jobs-First GAIN continue under CalWORKs, California’s program under the TANF provisions. Los Angeles inaugurated its CalWORKs program in April 1998, after the follow-up period for this report.

The findings on Jobs-First GAIN have broad significance for welfare reform. Los Angeles County, with a total population of 9.6 million people, has the largest welfare population of any county in the United States (about 700,000 people, in about a quarter of a million cases) — roughly one-twelfth of the nation’s welfare caseload and larger than that of any state except New York and California. Hispanics and African-Americans make up about 80 percent of the county’s welfare population. If Los Angeles County’s Work First program succeeds in moving significant numbers of people from welfare to work, the program can serve as a model for many other large urban areas.

The Jobs-First GAIN Evaluation began in 1996 and will continue through December 1999. It is jointly funded by the Los Angeles Department of Public Social Services (DPSS), the U.S. Department of Health and Human Services (HHS), and the Ford Foundation. This report is the latest from the evaluation. The first report, Changing to a Work First Strategy: Lessons from Los Angeles County’s GAIN Program for Welfare Recipients (1997), described how DPSS restructured its GAIN program services model from a "human capital" development (primarily basic education) approach to a Work First model. The report concluded that it is possible to change a large, urban, education-focused welfare-to-work program to a Work First program.

This report explores whether these changes made a difference. It describes patterns of participation in Jobs-First GAIN and presents estimates of the program’s effects on employment, earnings, and welfare receipt during the first year following the date on which people enrolled in Jobs-First GAIN and attended a program orientation.

Central to the evaluation is an experimental design based on random assignment. Nearly 21,000 single parents (AFDC-FGs, or Family Group) and members of two-parent households (AFDC-Us, or Unemployed Parents) who attended a Job-First GAIN orientation from April 1 through September 11, 1996, were randomly assigned to one of two groups: the experimental and control groups. Experimental group members had access to Jobs-First GAIN’s program services and Work First message. They were subject to the program’s mandatory participation requirements and could incur a sanction (a reduction in their welfare grant) for noncompliance. Control group members were precluded from receiving Jobs-First GAIN services until October 1998, the end of the follow-up period for the evaluation. They remained eligible to receive welfare and Food Stamp payments, however. Control group members could also seek other services in the community and receive child care assistance from DPSS for employment-related programs in which they enrolled on their own initiative.

Finally, both experimental and control group members were eligible for California’s rules for calculating welfare grants, called "Work Pays" (described in Section II). Work Pays allowed most welfare recipients who found a job to continue receiving welfare benefits and retain eligibility for Medicaid. Control group members may have been motivated by these rules to look for work on their own initiative or to increase their hours of work. As discussed in Section II, it is likely that fewer control than experimental group members knew about Work Pays.

Experimental designs based on random assignment typically provide the most accurate and reliable findings on effects of welfare-to-work programs. Because people are assigned at random to the experimental or control group, the two groups do not differ systematically on both measured characteristics (such as length of time on welfare) and unmeasured characteristics (such as strength of motivation to get a job). Members of the two groups also face the same labor market conditions. The employment and welfare behavior of control group members represents what would have happened to welfare recipients in the absence of the program. Thus, any subsequent differences found between the two groups can be attributed with confidence to the combination of program services, messages, and participation mandates that only experimental group members experienced. These differences, known in the language of evaluations as program impacts, will be discussed later in this summary and are statistically significant unless otherwise noted (that is, they have greater than a 90 percent chance of resulting from the program rather than by chance).

Overview of the Findings

As expected for a Work First program, Jobs-First GAIN produced a substantial initial boost in employment and earnings. Jobs-First GAIN increased the proportion of single parents (AFDC-FGs) who worked for pay during the first year of follow-up by 11 percentage points above control group levels. This increase is large relative to results from earlier studies of welfare-to-work programs. The program raised first-year earnings for AFDC-FGs by an average of $750 (31 percent) relative to the control group. Jobs-First GAIN also boosted employment levels for members of two-parent families (AFDC-Us) by 12 percentage points and increased their first-year earnings by an average of $1,082, or 44 percent (compared to the control group’s earnings). The AFDC-U sample for this evaluation is nearly evenly divided between men and women. Jobs-First GAIN caused employment and earnings gains for both men and women, with the gains for AFDC-U men averaging $1,449 per experimental group member (compared to the average earnings for AFDC-U men in the control group). The gains for AFDC-U women were not as large.

Jobs-First GAIN produced small reductions in welfare and Food Stamp receipt, but larger decreases in expenditures for public assistance. At the end of year 1, the vast majority of experimental group members — 78 percent of single parents (AFDC-FGs) and 77 percent of members of two-parent families (AFDC-Us) — still received AFDC/TANF payments, but these proportions were 4 and 5 percentage points lower than control group levels. Jobs-First GAIN reduced welfare outlays in the first year of follow-up, with average savings (relative to the control group) of $432, or 7 percent, for single parents (AFDC-FGs) and $667, or 10 percent, for members of two-parent families (AFDC-Us). Jobs-First GAIN produced similar reductions in Food Stamp receipt and payments as in AFDC/TANF for both AFDC-FGs and AFDC-UsJobs-First GAIN helped welfare recipients replace welfare dollars with earnings, but their overall income remained about the same. Earnings gains for single parents (AFDC-FGs) and members of two-parent families (AFDC-Us) were matched by reductions in AFDC/TANF and Food Stamp payments. As a result, Jobs-First GAIN did not increase combined income from these sources during the first year of follow-up.

• Jobs-First GAIN achieved larger employment and earnings gains than the county’s previous, basic-education-focused program. Welfare administrators changed the program’s self-sufficiency approach from emphasizing skill-building to emphasizing rapid entry into jobs. First-year results demonstrate that the current program was more effective in helping welfare recipients find employment. Though successful, Jobs-First GAIN did not achieve as strong results as two previously evaluated Work First programs operated in neighboring Riverside County. The more positive results for the Riverside programs could have been caused by differences in the program environments, however.
• Jobs-First GAIN achieved positive effects for many different types of welfare recipients. The degree of consistency achieved by the program is unusual and impressive. The program increased employment and reduced welfare payments for recipients in the central city and outer regions of Los Angeles County, for different racial and ethnic groups, for recipients with the most serious barriers to employment (no high school diploma or GED — high school equivalency — certificate, no recent work experience, and lengthy prior welfare receipt) as well as for those facing fewer barriers to employment. The program also achieved earnings gains for most of these groups.
• Jobs-First GAIN also achieved positive results for welfare recipients who volunteered to enter the program early. Los Angeles County lacked funding to serve all welfare recipients required to participate. The agency developed a waiting list for services but also invited some welfare recipients to enter the program several months or more before their name reached the top of the list. Results of the Jobs-First GAIN Evaluation show that welfare-to-work programs can pay off for recipients who volunteer for services: In year 1, the program increased employment and earnings by 14 percentage points and over $1,000 respectively and reduced AFDC/TANF payments by 8 percent.