Indicator: 62 - Leaving Welfare to Jobs That Pay a Living Wage
Why This Is Important
Federal welfare reform (launched in the mid-1990’s under the Temporary Assistance to
Needy Families program, or TANF) greatly changed public welfare systems across the
nation, requiring recipients to find work or enter training programs in order to receive
assistance, and setting time limits for such assistance. Many families in fact left welfare rolls
across the country as a result of TANF; Maine’s caseload dropped by more than half
between 1996 and 2002, as did the nation’s (see Maine Mark 61 for more detail). Quite a
few studies have examined whether households that leave welfare earn wages sufficient to
meet their basic household needs. If income is insufficient, children and families suffer.
Communities capable of meeting the needs of children and families need to be able to help
families in their transition from welfare to work that pays a livable wage.
Where We Stand
As noted under Maine Mark 42, achieving a livable wage is a problem for many Maine
families even if they have not received TANF assistance; over the past decade, about
two-thirds of the jobs in Maine have paid what the Maine Economic Growth Council
considers a livable wage (185% of the federal poverty level for a family of two). To achieve
that definition of a livable wage, a two-person family with full-time employment would need
an hourly wage of about $10.60.
However, several studies have noted that Maine households leaving welfare typically remain
at or near the poverty level. For example, a 2002 report from the Maine Center for Economic
Policy (“Welfare Reform: The Maine Lesson,” June 24, 2002) summarized the results of a
survey of current and former Maine welfare recipients. It found that half of those who had
succeeded in leaving welfare for work earned less than $8.00 per hour, and that the median
annual income for single-parent households who left TANF was just 13% above the federal
poverty level. Moreover, few of those families received key benefits from employers (for
example, health insurance or paid sick leave), nearly half fell behind in paying for their housing,
17% had their utilities shut off, and over 20% skipped meals for at least a day because they
could not afford food.
These findings are typical of a larger body of studies done nationally. A summary of this
research (“Recent Welfare Reform Research Findings,” Center on Budget and Policy
Priorities, January 30, 2004) revealed that across the nation 50% to 75% of families that leave
welfare remain in poverty for two to three years thereafter; nearly all (90%) have incomes
below 185% of poverty level, and those incomes rise only slowly over time. Similarly, a 2001
report from the Urban Institute (“Initial Synthesis Report of the Findings from ASPE’s ‘Leavers’ Grants”) found that about 60% of those leaving welfare were working at any given time after
exiting TANF; they usually worked full-time earning $7.00 to $8.00 an hour, with their income
staying near the poverty line.
Data Sources and Context
The Maine Economic Growth Council’s data on jobs providing a living wage is found in its
Measures of Growth 2004, available at http://www.mdf.org/megc/measures/MOG2004.html.
The Maine Center for Economic Policy study can be found on-line at http://www.mecep.org/MEChoices02/ch_024.htm. The Center on Budget and Policy Priorities research is at http://www.cbpp.org/1-30-04wel.htm, and the Urban Institute report is viewable
at http://aspe.hhs.gov/hsp/leavers99/synthesis01/index.htm.
