Five Things To Know About the TANF Work Rules

The House will vote Thursday on a bill to block the Administration from allowing states to test new ways to help recipients of Temporary Assistance for Needy Families (TANF) move from welfare to work.  While this issue has received lots of attention, there’s been little discussion of how TANF’s current work requirements actually operate.  Here are five facts that lawmakers should consider as they decide whether to give states this greater flexibility:

1. Under current rules, a state can meet its work requirement even if no recipient finds a job. The federal government judges states’ performance by whether recipients participate in a specified set of activities for the requisite number of hours and whether states’ caseloads have shrunk since 2005—not by whether recipients find jobs.  In addition, the cheapest and surest way for a state to meet its work requirement is to serve as few families in need as possible, while screening out the families who need the most help.
2. States spend very little of their TANF funds on work activities.  They spend substantial resources monitoring participation in activities. In fiscal year 2011, states spent only about 8 percent of their state and federal TANF funds on work activities and expenses.   Meanwhile, a Minnesota study found that employment services staff there spend 52 percent of their time tracking participation in TANF work activities.
3. The current rules discourage people from getting a high school diploma or GED, even though they’d be likelier to find work with one. People without a high school credential have a very hard time finding jobs — their unemployment rate in August was 12.0 percent, 3.2 percentage points above the rate for people with a high school diploma or GED.   Yet under current rules, participation in a GED or high school completion program can’t count as a person’s main work activity for anyone over age 20.
4. The current rules discourage participation in certain vocational education programs. The surest path out of poverty for the long-term unemployed is to get the skills needed to qualify for higher-paying jobs.  People with an associate’s degree or some college gained 1.6 million jobs between January 2010 and February 2012, while people with a high school diploma or less lost 230,000 jobs, according to a Georgetown University study. But, under current TANF rules, participation in vocational education can count as a person’s main work activity for just 12 months, even though many vocational programs—especially those that lead to higher-paying jobs—last longer.  As a result, many TANF agencies don’t permit TANF recipients to participate in longer programs, closing doors to programs that could significantly increase their earning potential.
5. Under the current rules, people working in a subsidized job don’t count toward the state’s work rate unless they also receive a welfare check. Using the TANF Emergency Fund, states placed 260,000 TANF recipients in subsidized jobs in the private, public, and non-profit sectors in 2009-2011.  For example, Oregon, which has operated a subsidized employment program for TANF recipients since 1996, placed 1,115 individuals in subsidized jobs in the private sector in 2009, 65 percent of whom went on to get unsubsidized jobs.  However, not one of those individuals counted toward Oregon’s work rate because they didn’t receive a welfare check along with a paycheck.

The labor market and the TANF caseload have changed dramatically in the 16 years since TANF’s creation.  It’s time to give states flexibility to develop new ideas about how to improve TANF as a work program while maintaining it as a safety net for parents who cannot find work.