Most recent changes in welfare policy over the last decade have been premised on the idea that work is generally beneficial for those who use it as a means of support and welfare is generally not. These changes have subsequently led to a sharpened research focus on the validity of this premise.
The benefits and drawbacks of work.
Authors who have examined the contrast between work and welfare have often found ways that the former improves the lives of those involved. Employment does usually provide higher income than most types of welfare. Employment also potentially extends the range of a person's interpersonal network and often includes people with higher status and resources. It usually expands the availability of credit and the type of housing available. The "intangibles" of work as a normatively acceptable life may be beneficial as well (Mead 1992; Wilson 1996; Wilson 1987). Finally, those who are employed may reasonably expect to have greater resources in the future, as better employment opportunities arise Corcoran and Loeb 1999).
The contrast between welfare and work does not favor work unequivocally, however. This is evident from recent research measuring costs and benefits of employment using new and different indicators of well-being. For example, child development indicators have shown that poverty, family structure and other factors interact to produce different outcomes in different situations (Clark 1983; Guo Brooks-Gunn and Harris 1996; McLanahan and Sandefur 1994). Work by Edin and Lein used indicators of material well-being to show how poor mothers use time, work, and resources from friends, relatives and others to balance a family budget (1997a, b; Edin 1991). Taken together, these studies have helped overturn the assumption that increased income and family well-being move together unproblematically when comparing families on welfare with families that work, and opened the door to understanding other mechanisms that are important to the healthy functioning of households and families.
That single mothers in the workforce may have lower material well-being despite higher income is a potentially interesting finding. However, the evidence on this point is mixed. Research by Beverly (2000, Forthcoming) shows a negative relationship. Other research has found household well being to increase with labor force participation (Bauman 1998). Identifying how work is related to well-being requires taking a closer look at effects of employment, and examining how other indicators of well-being vary with work and income.
The hidden costs of employment.
If work decreases household hardship, it is because there are costs to working. In fact, much of welfare policy prior to the 1980s was aimed at understanding these costs and looking for ways to reduce barriers for those moving from welfare into work. The primary focus of these policy (and research) concerns was loss of welfare income and loss of benefits from other support programs such as medicare and food stamps. However, work has other costs, and these have been getting increasing attention. To begin with, there are direct financial costs of working paying for child care, transportation and related expenses that have not been adequately accounted for in current measures of poverty (Citro and Michael 1995; Short et al. 1998; Fisher 1999). While it is possible to measure some of these costs, this subject remains controversial. Some authors argue that although they can sometimes be large, these expenses don't usually represent a serious burden or disincentive to work for households (Mead 1992).
Another cost experienced by working households might be the loss of time available to take care of household needs. Work takes up time otherwise available to produce other income or to reduce expenditures. For single parents, the time constraints involved in entering the labor force are especially severe. The presence of younger children, for example, significantly decreases work and increases welfare use among single women (Danziger et al. 1999; Harris 1991, 1996). Households with more than one adult present may be able to reap the benefits of employment while suffering fewer costs.
Finally, there is the possibility that working households experience less stability and predictability of living circumstances. Income is subject to fluctuation when working hours change, when daycare is unreliable, or when sickness or other problems arise. In some cases, program rules such as those forbidding collection of benefits while also earning income may create unpredicted fluctuations.
It may be possible to clarify the roles of these different mechanisms by examining well-being among working and non-working households of different types. For example, if day-care costs are a major component of the unmeasured cost of working, then the presence of children in low-income households should help explain lower levels of well-being associated with work. Most other direct costs (commuting, uniforms, cost of prepared foods) would be shared approximately equally across different types of households. If time constraints were a key factor affecting well-being, then single-parent households might be expected to find their well-being more adversely affected by work than other types of households.
Material hardship and household well-being.
A number of indicators could be used to measure household well-being. For this paper, income (and poverty status, which is closely related to income) cannot serve as a measure, because income needs to serve as a control variable when comparing well being of working and non-working households. A common alternative has been to operationalize well-being in terms of long-term outcomes such as respondent's career growth, children's behavioral problems or children's academic success. While these measures are ideal in certain respects, the linkages between these and current conditions of welfare use or employment have not been clearly established. There is some profit, therefore, in focusing on more immediate aspects of material well-being, which is the approach taken here.
Recently there have been attempts to systematize knowledge about immediate material hardships, such as inability to pay bills or lack of material possessions (Mayer and Jencks 1989; Mayer 1995; Bauman 1998; Meyers, Weissman and Garfinkel 2000; Beverly Forthcoming). Measures of material hardship often include indicators of problems that are serious in their own right, such as insufficient food or failure to go to the doctor or dentist when needed. Other indicators included along with these, such as failure to pay utility bills, seem on their face to have greater association with behavioral choices than with simple material need. However, Bauman (1998) has shown that indicators typically used to measure material hardship are related to household economic and social conditions in nearly identical ways. This implies that they tap into a the same underlying set of processes, despite apparent differences.
Material hardship is only weakly correlated with income and poverty (Beverly 2000). This is both a cause for optimism and for concern, in terms of this analysis. If income and material hardship were the same thing, then it would be impossible to find lower material well-being for working than for non-working families with similar incomes. On the other hand, a significant portion of households with substantial income report material hardship, which raises basic questions about what, in fact, is being measured by hardship. Although the answer is still far from complete, there may be two basic processes taking place. First, hardship may reflect attitudes or competence on the part of household members, as when relatively well-to-do households neglect to pay some of their bills. Second, hardship may reflect the impact of unforseen events, as with major automobile repair expenses.1
By contrast to material hardship, there has been a long history of using other indicators such as housing and neighborhood conditions as a measure of well-being. Neighborhoods have been associated with a number of individual and household problems such as dropout, unwed childbearing and weak labor force attachment (Crane 1993; Wilson 1987; Massey and Denton 1992; Rosenbaum and Popkin 1991). Neighborhood conditions would tend to be associated with longer-term economic status rather than immediate work or welfare reliance. Unlike neighborhood conditions, hardship has been shown to be a relatively short-lived condition, more linked to temporary income fluctuations than to long-term income (Cook et al. 1986; Mayer and Jencks 1989).
Although neighborhood conditions and material hardship are not the same as poverty, households that are affected by them are plainly worse-off than those that are not.2 Beyond this, neighborhood conditions and hardship might discourage employment. If material hardship were higher for working-poor households than for those on welfare, or if working-poor households were forced to live in less desirable neighborhoods, there would be a clear incentive to leave work or remain on welfare. The extent to which hardship or neighborhood conditions have an impact on employment and welfare use is unclear. Although previous work supports the idea that neighborhood conditions do affect work (Rosenbaum and Popkin 1991), there has been little or no research on the hardship-employment linkage.3
Welfare use, work and well-being
Comparing work with welfare requires consideration of how welfare is used. Static comparisons of those on welfare and those not on welfare contain many who would be in a different state at another point in time (Duncan 1984; Ellwood 1989). Those who "emerge" from welfare often re-enter the welfare system a short time later (Harris 1996). Past research using longitudinal surveys has classified welfare users into three or four groups (Duncan 1984; Bane and Ellwood 1986; Spalter-Roth et al. 1992). One group uses welfare temporarily, returning to employment or other means of support over the long term. A second group, of particular concern to those involved in fashioning policy, consists of those who remain on welfare for extended periods. Finally, there are two residual groups, those who move back and forth between welfare and work, and those who combine welfare and work simultaneously.4 Recent research on welfare and well-being has not distinguished these groups clearly. It is important to attempt these distinctions in relating welfare, work and well-being because of the differences to be expected in how they are related when welfare use is short-term, long-term or sporadic.
People who use welfare differ in many ways from those who work. If there are differences in material well-being between welfare-using and working households, it is not immediately clear whether differences in the exigencies of work or differences between individuals are to blame. While working-poor and welfare-dependent households commonly trade places, it is clear from the previous discussion that only certain segments of the welfare population commonly move between welfare and work. In the end, therefore, it is not known whether differences in material well-being represent a barrier to work for most single parent families.
As with material well-being, most factors that affect the path from welfare to employment aren't easily categorized as characteristics of the path or of the individual. These factors include lack of job skills, transportation problems, perceptions of discrimination and depression (Danziger et al. 1999). It is unlikely that any of these operate independently of pre-welfare characteristics or of experience on welfare. Disentangling the cause-and-effect nature of these barriers opens up difficult empirical problems that may never be completely solved.
It is important to establish the time ordering of events even if this does not show causality in an ultimate sense. While it would not be surprising to find that losing a job decreases material well-being, it is important to know whether declines in well-being lead to job instability even if the linkage has more to do with respondent characteristics than to situational factors.
The research presented in this paper attempts to set the experience of material well-being in a broader context than that shown in previous research. In so doing it addresses the following questions:
- How are welfare reliance and work reliance associated with different types of households single parent households, married parent households and non-parent households?
- How does household well-being differ between households that rely on welfare and those that rely on work, with and without controls for income?
- What types of welfare use are associated with the lowest levels of household well-being long-term welfare use, one time use, or cycling on and off welfare?
- What effect does household well-being have on subsequent labor force decisions and welfare use?
The balance of this paper proceeds as follows: the next section discusses the data to be used to answer these questions. The following section examines patterns of welfare receipt and work. In the next section of the paper, these patterns become the basis for exploring the relationship between welfare, work and well-being among single parent households and other households. Subsequently, there is a test of whether the negative relationship between work and well-being becomes positive when control for income is added, and whether differences between single parent households and other households remain. The last empirical section focuses on the effects of material well-being on work and welfare transitions. This is done in two ways. First there is a global examination of the impact of material well-being on whether a transition was observed in the 12 to 18 months after well-being status was determined. Second, there is examination of a discrete-time hazard model for those at risk of welfare recidivism or terminating spells of work. Finally, there is a discussion of the implications of the findings made here.