Welfare program reentry among postreform leavers.

• Author: Bruce, Donald

1. Introduction

   It is well known that the U.S. welfare system underwent a dramatic transformation in 1996. Time limits were placed on benefit receipt, work requirements were instituted, and an array of supportive services was made available to program participants. With these changes in policy, it becomes even more important that we understand the dynamics of welfare participation. Welfare reentry, defined here as a return to public assistance rolls after leaving the program for at least two months, is of continuing concern to policymakers and researchers alike. Although the occurrence of reentry is certainly not new, the implementation of stricter policy requirements in the 1996 law have once again put it at the forefront of welfare research.

   Reentry occurs for many different reasons, typically depending on the circumstances of each individual case. Possible causes of reentry include changes in household composition, marital status, or employment status. The addition of a child, through either birth or adoption, might require higher support levels that may be accessible only through a return to the welfare program. A divorce, separation, or death of a spouse can also make it difficult for the surviving spouse to maintain self-sufficiency, thereby causing a return to welfare. Changes in earnings resulting from a loss of a job or a reduction in hours can also increase the attractiveness of returning to welfare. These are just a few of the possible causes of reentry. The possibilities are as numerous as the incidences of reentry.

   Reentry is frequently viewed negatively by policymakers and researchers. This is evidenced by the popular use of the word "recidivism" to denote a return to program rolls. As this term typically refers to repeat criminal offenders, we opt for the more optimistic "reentry." With this, it is important to consider both the negative and the positive aspects of reentry.

   A return to welfare is often perceived as a signal of instability, suggesting that the recipient is unable to maintain self-sufficiency for any lengthy period of time. Families who are more reliant on public assistance have a much more difficult time trying to leave the program permanently. A return to the welfare program may result from the inability of the household head, or caretaker, to keep a steady job. This unemployment can be detrimental to the well-being of the family because of lost earnings, valuable work experience, and on-the-job-training. A loss of experience and job skills while unemployed also makes future employment more difficult for the caretaker to obtain. Reentry is also viewed negatively by program officials because the process of closing and subsequently reopening cases (after reestablishing eligibility) places a burden on case workers. This is an especially important issue in light of recent state budget shortfalls.

   Despite its negative perceptions to date, reentry may not necessarily be a bad event. Viewed in a more positive light, continual reentry shows that a recipient is making a good-faith effort to leave the program. The family may just need a bit more support before it can become completely self-sufficient. A temporary return to the welfare program might provide the needed help to attain permanent self-sufficiency. Finally, reentry may represent only a brief reliance on public assistance. If a household were to experience a temporary job loss or a reduction in earned income or hours worked, it may become necessary to return to the welfare program. The return spell may not last very long and may play an important role in helping the family regain self-sufficiency.

   Additional empirical analysis of welfare reentry is warranted for a number of reasons. First, it is useful for researchers and policymakers to understand the changing patterns of welfare use, especially since the 1996 reforms might have influenced welfare spell length and frequency. Second, if one goal of the changing policies is to reduce welfare dependency and promote self-sufficiency, it is critical to understand the forces behind welfare reentry. Empirical analysis can identify not only when reentry is most likely to occur but also which types of former recipients are most likely to return to the rolls. With this information in hand, policymakers can direct postprogram transition services more efficiently toward those with the greatest risk of reentry. Third, there is continuing interest among researchers and policymakers in examining the postprogram experiences of former welfare participants, especially after the dramatic 1996 reforms. While the earlier literature has focused on such things as employment and earnings, we view reentry as a relatively understudied but equally important outcome.

   Our analysis is one of the first to focus on reentry after the 1996 reforms and one of a limited number that use administrative data. We proceed with a discussion of the potential effects of welfare reform on reentry rates and then move to a brief summary of prior studies of welfare reentry. Following a thorough description of the monthly administrative data from the state of Tennessee that is employed in our analysis, we present an in-depth discussion of various characteristics of welfare leavers and offer a comparison with the general caseload. This is important in enabling us to generalize our results to broader populations either within Tennessee or in other states. Detailed analyses of the characteristics of reentrants, overall reentry rates, and reentry rates for various demographic groups are provided in the section that follows. All this serves to motivate our multivariate analysis of the effects of a number of factors on reentry using a survival-time econometric model. The paper concludes with a summary and directions for future research.

2. Possible Effects of the 1996 Reforms on Reentry Rates

   The implementation of time limits and other program requirements can certainly affect the rates of welfare exit and reentry. Recognition of time limits by participants will increase the frequency of welfare exit and reentry--as individuals attempt to maximize their current and future well-being. In order to improve their own welfare, individuals may choose to use benefits only when they are needed the most, which may imply cycling on and off the welfare program. (1)

   Another important effect of the 1996 reforms on reentry involves the induced change in the general makeup of the welfare caseload. Lifetime time limits and work requirements might remove many of the long-term recipients from the rolls, thereby leading to an observed increase in reentry rates if the remaining participants are more likely to cycle on and off the program. Alternatively, these new elements of welfare policy might remove mainly short-term recipients, leaving many of the long-term participants on the rolls. As such, reentry rates might fall as a result simply because of the changing nature of the caseload. The net effect of the changing caseload on reentry is ambiguous.

   It is important to keep in mind that the American economy performed remarkably well during the early years of the new welfare regime. The late 1990s were times of great prosperity for most families, and the observed reduction in welfare rolls is at least partially the result of a strong economy. (2) With that, caution should be exercised in attributing changes in reentry rates solely to policy changes.

3. Previous Studies of Welfare Reentry

   To gain a perspective on the changes in reentry rates over time, it is useful to examine previous research on the topic. Of the existing studies of welfare reentry, few have used post-welfare reform data. This is likely a result of difficulties in obtaining good data and the relatively short time period that the new laws have been in place. Nonetheless, the available studies are instructive and are summarized here.

   As shown in Table 1, the earlier literature on reentry reports that between 20% and 81% of individuals who end a spell on welfare return to the rolls at some point during their lifetime (or, more typically, during the period of analysis). Table 1 also provides a summary of one-year reentry rates found in the literature, along with a brief description of the sample used in each study. Despite the wide dispersion of eventual reentry rates, one area of consensus in the literature is that reentry occurs rapidly: 11-33% return within the first year alone. This suggests that the first few months off the program seem to be the most critical in determining which individuals will return to the rolls.

   The wide variation in the percentage of individuals who return can be explained almost entirely by the different sources of data used by various authors. Data that cover short time intervals tend to produce reentry rates that are lower than those that cover longer periods of time because of their inability to observe individuals for a sufficient period of time following their welfare experience. Yearly data (e.g., Ellwood 1986) also tend to understate reentry because of a loss of variation in the month-to-month program status of individuals within a single year. The upper-end estimates of reentry rates are found using samples of divorced women (Meyer 1993) or inner-city teenage mothers (Gleason, Rangarajan, and Schochet 1998), both of which could be expected to exhibit higher reentry rates.

   The reentry analysis by Spera and Born (1998) most closely resembles our current analysis in that it employs post-welfare reform administrative data. The one-year reentry rate of this study, which was able to use only 12 months of data, is at the low end of the range offered by other studies. However, we should not conclude from this that welfare reform has significantly reduced the occurrence of reentry without further research. Our analysis contributes to this research, as it extends the period of postreform observation to 54 months.

   Many of the earlier studies have...