Minnesota welfare program cost more but improved lives, study finds

Posted: Wednesday, May 31, 2000

BLAINE, Minn. (AP) - People in a welfare reform program that pushed recipients to find work but preserved many of their benefits wound up with more stable lives as well as more money, according to a nonpartisan report released Wednesday.

The Minnesota Family Investment Program's participants found and held jobs in greater numbers, had more stable marriages and saw their children do better in school than people who were on traditional welfare, the report from the New York nonprofit Manpower Demonstration Research Corp. found.

Experts said the report, commissioned by Minnesota and federal agencies, helped address one of the biggest concerns about welfare reform: whether people leaving the rolls are really better off.

``This is the first study that has shown (positive) impacts on family composition, on domestic violence and on children,'' said Ron Haskins, staff director of the U.S. House Ways and Means Committee panel that rewrote welfare laws.

The Minnesota program, which ran in seven counties from 1994 to 1998 before being adopted statewide, was unusual because it aimed to simultaneously encourage work, reduce dependence on public assistance and reduce poverty.

Over that time, 14,000 welfare cases were randomly split into two groups, one that received traditional assistance and the other that was switched to the new program.

The reform increased employment by 35 percent, increased earnings by 23 percent and reduced poverty by 68 percent.

Nonfinancial factors improved as well. By the end of the third year, 10.6 percent of reform recipients had gotten married, compared with 7 percent of parents still in the traditional program. Twenty percent more of those already married stayed wed, and domestic abuse of mothers was 18 percent lower among reform participants.

More than 40 states now have incorporated variations of Minnesota's ``make work pay'' approach into their welfare programs.

The state's caseload has dropped from 64,400 families at its high in 1994 to 41,000 today.

The reform program cost taxpayers substantially more per family than the old system, at least in the short run: an additional $1,900 to $3,800 a year over five years. The study did not estimate government savings that may accrue in the long run because of things like reduced child poverty or domestic violence.

The incentives had the greatest effect on single-parent families, most of whom moved into full-time employment and brought home significantly bigger paychecks.

For example, a single mother of two in the reform program who chose not to work would receive a grant of $789 per month. Working full time at $6 an hour, she would make $1,032. Combining her earnings with a $228 Minnesota Family Investment Program grant, her total income would be $1,260 - $471 more than if she didn't work.

Minnesota is among the most generous states in maintaining benefits for welfare recipients who go to work. A welfare recipient in Minnesota can earn up to $1,400 a month before benefits are curtailed; only Alaska and California have higher monthly earnings cutoffs. Under traditional welfare programs, benefits are cut off once recipients earn a certain amount of money.

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