Labor force participation, income packaging, and economic well-being before and after welfare reform: Does prior paid work experience matter?

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 eliminated a social safety net for families maintained by single mothers. The aim of this research was to understand how welfare reform affected income packaging and economic well-being among families headed by low-income single mothers and whether prior paid work experience mattered. A longitudinal analytic file was created for the same women by linking monthly demographic, income, and program participation data from the 1996 Survey of Income and Program Participation (SIPP) panel covering 1996 and 1999 with annual administrative earning records from the Master Earnings File (MEF) covering 1951 to 2004. This research addressed the following questions related to labor force participation, income packaging, and economic well-being among low-income single mothers before and after welfare reform: (1) How did welfare reform affect patterns of paid labor force participation among low-income single mothers? (2) How did welfare reform influence the use of income packaging strategies among low-income single mothers? (3) How did individual- and structural-level factors, which may inhibit or facilitate paid work, affect the income packaging strategies low-income single mothers used before and after welfare reform? The findings vary by type of long-term earning patterns before welfare reform. Generally, women with stronger outcomes were those with higher levels of paid labor force participation before welfare reform. The trend was true in terms of higher employment rates and earnings, lower TANF participation rates, lower other government social safety net program participation rates, and higher levels of economic well-being. While all women combined income from several sources, not all women had the same resources with which to replace no longer viable sources with new sources of commensurate value and stability. Women varied in terms of their disability status, highest level of educational attainment, and whether other adults contributed earnings to the family income package highlighting that policies need to address the full spectrum of barriers and challenges faced by these women, including those in the low-wage labor market, in providing for their families