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Press Release · April 7, 1999

Job Prospects For Welfare Recipients Not Promising

Study Finds Many Lack Basic Skills Needed to Succeed in Labor Market

SAN FRANCISCO, California, April 7, 1999 — Sharp reductions in caseloads have led many to pronounce welfare reform a success. But can it last? A report released today by the Public Policy Institute of California (PPIC) estimates that 40 percent of California’s welfare recipients face an uphill battle finding work, and those who do find work may not earn enough to pull themselves out of poverty. This number is twice what the state can exempt from time limits under welfare legislation passed in 1996, raising concerns about the long-term success of reform efforts in California.

The study, authored by demographer Hans Johnson and research associate Sonya Tafoya, reveals that many people receiving assistance in California lack basic skills — such as the ability to read a bus schedule or complete an employment application. Analyzing data from the National Adult Literacy Survey — designed to measure people’s ability to deal with practical analytical problems encountered in daily life — Johnson and Tafoya found that almost 80 percent of welfare recipients have either low or very low basic skills, compared to 34 percent of full-time workers in the state. And California faces a greater challenge than most other states: The basic skills of welfare recipients here are lower than those in the rest of the nation, and the skills gap between workers and welfare recipients is greater than in the rest of the nation.

“Our results suggest that we ought to be very concerned about those who are unable to make the transition from welfare to work, even in boom times,” said Johnson. “Given their low level of skills, the job market prognosis for a substantial proportion of these welfare recipients is not good.”

Is lack of education the problem? In the past, researchers and policymakers have used years of education as a proxy for skills and employability because they had little data on the basic skills of welfare recipients. However, the study found that welfare recipients with the same levels of education as other adults tend to have substantially lower basic skills. Indeed, less than half of the difference in basic skills scores between welfare recipients and other adults can be attributed to lower educational attainment.

To assess the potential employment outcomes of welfare recipients, the authors compared them to a group of adults with similar basic skills and demographic characteristics who were not receiving assistance. They found that a majority (58 percent) of these welfare “counterparts” were working, but 23 percent were employed only part-time or semi-permanently. And, 42 percent were not employed at all.

In addition, when the counterparts did find work, their earnings were meager. Those who found work earned an annual income of $12,400. Those with very low basic skills averaged less than $10,000 per year; 70 percent did not earn enough to lift a family of three out of poverty.

“We are not simply concerned with welfare recipients getting jobs, but also with the quality of work they find,” said Johnson. “The jobs held by people with basic skills similar to the skills of welfare recipients are characterized by low wages, intermittent employment, and less than full- time hours. If our goal is to move people off welfare and out of poverty, these results indicate that we face a real challenge. But ultimately, we may have to accept that a large number of current welfare recipients will continue to need some form of income support after time limits have been reached.”

The authors point out that the low skills of welfare recipients will not be easy to change, and the costs of meaningful training programs will be high.

“The difficulty in improving the basic skills of welfare recipients does not mean that we should not try,” said Tafoya. “We need to focus our efforts on identifying and expanding training programs that integrate basic skills training into real job situations.”

A forthcoming PPIC report will assess how much a healthy economy has contributed to declining welfare caseloads in the state.

The Public Policy Institute of California is an independent, nonprofit organization dedicated to nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett. David Lyon is President and CEO of PPIC.