A California welfare-to-work program has reaped some significant earnings gains and welfare savings but is not a panacea for lifting people out of poverty, a new study suggests.
The study, released last week by the Manpower Development Research Corporation, involved 33,000 welfare clients in six counties served by the state’s Greater Avenues for Independence program, known as GAIN.
Previous studies on GAIN have attracted attention because California has the country’s biggest welfare caseload and because the program is one of the most ambitious operating under the Job Opportunities and Basic Skills Training program established by the 1988 federal welfare-reform law.
The research group’s final evaluation of the California initiative offers the first cost-benefit data on a JOBS-style program. The study compared data gathered over three years on people who entered GAIN between 1988 and 1990 with findings for a control group.
Across the six counties, the average earnings gain for single parents was $636, or 25 percent, higher than for the control group in the third year, and $1,414, or 22 percent higher, over three years.
Program participants in the third year received an average of $331 less than the control group in welfare payments, an 8 percent reduction. Over three years, payments fell by $961, or 6 percent.
Riverside, a large county encompassing both urban and rural areas, posted the most impressive results. Over three years, the program group’s earnings in Riverside increased by $3,113, a 49 percent gain over the control group, while welfare payments fell by $1,983, or 15 percent.
The program was also most cost-effective in Riverside, returning $2.84 for every $1 invested.
Role of Education
Although program effects were progressively stronger over time in the areas studied, the results varied widely by county.
Alameda, Butte, and San Diego counties had more moderate earnings gains and welfare savings than did Riverside, while the program improved only welfare savings in Los Angeles County and only earnings gains in Tulare. Economic gains exceeded program costs only in Riverside and San Diego counties, and enabled the government to break even in Butte.
James Riccio, a senior research associate at the manpower-research group and a co-author of the report, said the “stakes are higher’’ for JOBS programs under welfare-reform plans such as the one proposed last week by President Clinton, who called for limiting benefits to two years for many recipients. (See story, page 1.)
“Any plan for time-limited welfare depends very much on programs like JOBS and GAIN to move people into the private sector’’ and avoid having to pay for large numbers of subsidized jobs, he said.
While program participants on average were better off financially in five of the six counties as a result of GAIN, even in Riverside almost half were still on welfare after two years. Substantial numbers in all the counties were still in poverty after three years.
The report attributes Riverside’s success to its “pervasive employment message’’ combined with increased use of both education and job-search activities.
While basic education may have contributed to the earnings gains, Mr. Riccio said, study findings over all suggest that increasing the number of people in basic education “will not in and of itself guarantee a payoff.’'
He also noted that in Alameda, increasing recipients’ access to vocational training and postsecondary education produced large earnings gains, but that the financial return fell short of the investment. Riverside and San Diego counties, which did not increase access to those services, still had large earnings gains and welfare savings.
Copies of the report, “GAIN: Benefits, Costs, and Three-Year Impacts of a Welfare-to-Work Program,’' are available for $12 each from the Manpower Development Research Corporation, 3 Park Ave., New York, N.Y. 10016-5936.
