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.S.welfareprograms. 166 King and MueserThe Trade-Off between Caseload Reduction and EmploymentFrom the inception of the latest round of debate on welfare reformin the early 1990s, one of the central questions has revolved around thepotential trade-off between the goal of reducing caseloads and that of in-creasing recipient employment and assuring economic self-sufficiency.Those expressing caution argued that time limits and other restrictionswould merely exacerbate the already-desperate conditions of the poor-est single parents, while reform supporters argued that such restrictionswould create incentives to push and pull recipients into the labor marketand find their own paths to independence.When welfare reform is de-fined broadly, including the substantial expansions of EITC, Medicaid,and child care in the early part of the 1990s, we find strong support forthe latter view.In our examination of specific programs, however, we do see evi-dence of trade-offs between case reduction and movement into employ-ment.This is clear for Atlanta, where regulations requiring recipientsto sign self-sufficiency pacts in 1998 led to both increases in exit ratesand, very likely, declines in employment rates.Similarly, in Fort Lau-derdale, when the two-year time limit began to bind, there were de-clines in employment rates for leavers, along with continuing high exitrates.Finally, in Houston, although we cannot identify a specific policythat is responsible, the very large caseload declines are associated withunchanging employment rates among leavers, in contrast to the upwardtrend at other sites.These patterns confirm that ever-more-stringent welfare policieswill not automatically lead to higher levels of employment.Despite theoverall positive record, some state policies have had the effect of reduc-ing caseloads at the cost of recipient employment.In contemplatingfurther policy changes, all states will need to recognize that the remain-ing recipients may be limited in their ability to adapt to the labor marketand the new welfare regime.Time limits, or other reforms that makewelfare receipt less attractive, may leave an increasing number of poorsingle parents with options that are dramatically worse.Of course, reforms providing services and continued support to re-cipients, allowing them to expand or enhance their job skills or subsidiz-ing their job search and work activities, provide an alternative approachto reducing caseloads over the longer term.We turn next to a discussion Conclusions and Implications for Welfare and Beyond 167of how our results bear on the question of what kinds of programs andstrategies support successful transitions from welfare to work.Work-First versus Human Capital DevelopmentAt each of our sites, recipients are required to participate in pro-grams designed to provide skills to aid in obtaining employment thatwill ultimately allow them to leave welfare and obtain economic self-sufficiency.The underlying philosophy of these programs varies fromthose that are focused on merely getting people into any job ( work-first ) as soon as possible to those that attempt to first augment their jobskills through training.Although there are differences in focus acrossour sites, none of the programs provide long-term job skills training toa substantial share of welfare recipients.A recent review of evaluationsof training programs for welfare recipients and others argues that seri-ous efforts to improve human capital through training have not reallybeen attempted: participants in HCD programs evaluated as part of theNational Evaluation of Welfare-to-Work Strategies (NEWWS) weremainly provided basic and adult education services (40 percent), rath-er than occupational skill training (28 percent) (King 2004).Further,NEWWS sites were only able to boost participation in vocational train-ing by 5 percentage points, while adult education increased by fully 20percentage points.Supporters argue that skill development programsare essential to improving the long-term labor market prospects of cur-rent welfare recipients (for example, in addition to King 2004, see Hotz,Imbens, and Klerman 2000; Krueger 2004; and Martinson and Strawn2002).Our results provide some evidence in support of this claim.We findthat the jobs obtained by welfare recipients are appreciably less stable andprovide lower pay than jobs obtained at the same time by others with thesame employer.Of course, such differences reflect the fact that welfarerecipients may differ on average from other employees on a variety ofpersonal characteristics, including education, gender, and family struc-ture.However, we find that even when we compare welfare recipientswith one another, after controlling for characteristics we can observe,unmeasured personal characteristics have a large effect on job stabilityand earnings.Two welfare recipients with the same external character- 168 King and Mueseristics who obtain a job with the same employer may differ dramaticallyin their expected success on the job.These results suggest that there is substantial room for benefits fromany program that can succeed in building individual job skills
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