Did Metropolitan Areas Absorb Welfare Recipients without Displacing Other Workers?

1998, employment of never-married mothers rose by an astonishing 40 percent. Moving welfare recipients from welfare to work is the primary goal of current welfare policy. Four years after passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the nation is achieving considerable success in reaching this goal. During the 1990s, the public sector enhanced poor families’ financial gain from work and toughened sanctions against noncompliance with work requirements. The policy changes, together with a thriving economy, have generated unprecedented increases in employment among mothers heading families (single mothers), the group most likely to receive welfare. This brief analyzes changes in the job markets of 20 large metropolitan areas three years after the passage of PRWORA. Despite worries that the economy could not absorb the over 1 million recipients expected to enter the job market (Edelman 1997), enough jobs materialized to employ not only those single mothers who were entering the labor force but many who were previously unemployed as well.1 Between early 1996 and the middle of 1998, when about 741,000 additional never-married mothers entered the labor force,2 the employment of never-married mothers rose by an astonishing 40 percent.3 Notwithstanding this optimistic national picture, three serious concerns have emerged. First, single mothers in large metropolitan areas may not fare as well as those in the rest of the nation. A recent study published by the Brookings Institution (Allen and Kirby 2000) found that reductions in welfare cases were lower in counties with large central cities than in other counties in the same state. Second, the increase in jobs for welfare recipients could come at the expense of jobs for other less-skilled workers. Third, even if lowskill job seekers actually find employment, the enormous inflow of low-skill single mothers into the job market may depress the wages of all low-skill workers (Solow 1998). This brief builds on an earlier brief (Lerman, Loprest, and Ratcliffe 1999) that examined the potential of 20 large metropolitan areas to absorb the expected inflow of welfare recipients over the next five years.