Bolstered by a strong economy, low unemployment rates, and “moderate” welfare reform policies, Illinois has seen “a significant decrease in welfare receipt without an accompanying rise in material hardship,” according to the latest findings from the Illinois Families Study (IFS).

The study concludes that work does “pay” for the poor — largely because of several strong work supports available in Illinois.
“That’s the good news,” said Dan A. Lewis, IFS director and IPR faculty fellow. “But, as the report makes clear, Illinois’ poor, even in what was a good economy, still face considerable hardships, often entering jobs with low wages and few benefits.”
The project is following the welfare reforms Illinois put in place in 1997 by tracking 1,183 of the state’s poorest families over six years.

Those who were working in 1999-00 were less likely to experience hardship in 2001 than those who were not working in 1999-00. Overall, the well-being of families surveyed in 2001 appeared to be “slightly improved” over 1999-00, according to the new IFS report, “Welfare Reform in Illinois: Is the Moderate Approach Working?”

Published in May, the report shows significant gains in wages, employer-sponsored benefits, and child health care coverage. Though many families experienced instability or hardship, many of the most severe hardships, including homelessness and food insecurity, decreased slightly over the two-year study period.

In its Temporary Assistance to Needy Families (TANF) program, Illinois adopted a middle-of-the-road approach, which includes “earnings disregards,” child care subsidies, and a “stopped-clock option” in which the 60-month federally mandated lifetime limit for welfare payments is suspended during periods of employment. The federal welfare reform act of 1996 gave states leeway to fashion their own reforms within the federal guidelines.

Because Illinois welfare reform policies are considered moderate, or even generous in comparison to other states, the state illustrates the “middle-of-the-road” approach to reform under good economic conditions.

The researchers conclude that strong work supports are key to a successful transition off welfare. Even among those who were working and off welfare, 46% experienced some hardship in 2001. Median hourly wages remained fairly low at $8 per hour, and most workers did not receive benefits from their employers.

The large declines in use of cash assistance were not matched by comparable increases in work. Nearly half the IFS sample was still not employed in 2001. And the researchers report a “troubling increase” in the proportion of families who were neither working nor receiving welfare, accounting for more than 25% of the respondents in the 2001 survey.

Poor health and low levels of education appear to be the major obstacles to leaving welfare and getting and keeping a job. Nearly 25% of respondents in 2001 said their health was poor or fair, and nearly a fifth reported depression. Yet health insurance declined among adults. A quarter of respondents had no health insurance in 2001 and 30% experienced a gap in coverage during the previous year.

Though more Illinois respondents were aware of work supports, many did not take advantage of them, the study found. With the exception of child care subsidies and the Earned Income Tax Credit, the use of food stamps, Medicaid, housing assistance, and job training appeared to decrease over the two-year study period.

The work supports that appear to be most critical in Illinois are child care subsidies, the “stopped clock” option for employed TANF recipients and Medicaid and KidCare (S-CHIP). The study found, for example, that material hardship decreased among longer term “stopped clock” users. Use of this option — along with receipt of a child care subsidy — appeared to promote and support employment.

With the TANF program up for reauthorization this summer, the researchers offer a number of recommendations to federal as well as Illinois policymakers. Among their recommendations to federal lawmakers:

• Extend Illinois’ “stopped clock” option nationally
  

• Increase federal support for child care, reward states with high take-up rates for their child care subsidies, and tie eligibility to income rather than TANF status.
  

• Make Medicaid more accessible to parents once they leave welfare.
  

• Require states to include secondary and postsecondary education as a legitimate work activity and maintain the current requirement of a 30-35 hour work week.
  Among their recommendations to Illinois lawmakers to overcome the most severe obstacles to self-sufficiency:
  

• Restore child care funding in fiscal year 2003, maintain child care subsidies as a high spending priority, and encourage take-up of the subsidy.
  

• Expand income eligibility cutoffs for Medicaid coverage for adults and extend provision of Transitional Medicaid Assistance to at least 12 months for TANF leavers.
  

• Raise the TANF monthly cash grant, and ensure that both TANF and non-TANF working poor families have access to emergency assistance funds.
  

The researchers now are conducting the third wave of the study, which will show the effects of the slowing economy. “As the unemployment rate climbs and time limits begin to hit, the number of most vulnerable families will probably continue to grow, which requires greater attention from policymakers and service providers,” Lewis said.

Lewis and his IFS colleagues at four other local universities are surveying residents of Cook and eight downstate counties, which account for about 75% of the state’s TANF caseload. Other members of this University Consortium on Welfare Reform include Northern Illinois University, Roosevelt University, the University of Illinois at Chicago, and the University of Chicago. Nine private foundations and government agencies are funding the study.

Copies of the summary and technical report are available online at www.northwestern.edu/ipr/research/IFS.html or may be ordered from IPR’s publications department.