ANN ARBOR—While research has shown that wages grow more slowly over time for women on welfare than for those who never receive such benefits, a University of Michigan study reveals that wages of both groups would rise at about the same rate—if welfare recipients could increase the number of hours they worked.

According to Mary E. Corcoran, U-M professor of public policy and social work, and Susanna Loeb, assistant professor of education at Stanford University, the new welfare reform policies assume that if recipients work regularly, this will eventually lead to higher wages and economic self-sufficiency.

However, past research on welfare mothers consistently finds that their wages grow very slowly over time. This slow growth, the researchers say, could be due to the fact that recipients’ wages do not grow even when they work on a regular basis or that welfare recipients spend fewer years working than non-recipients and often work part-time when they do work.

“Research on work experience and women’s wages consistently finds that wages grow with work experience, that prolonged periods of joblessness lower women’s wages, and that wage growth is lower when work experience is part time,” Corcoran says.

“Welfare mothers not only have less work experience than other women, but often work part time. These factors in themselves could lead to lower wage growth over time even if returns to experience are the same for recipients and non-recipients.

“This is an important distinction. If wages grow slowly with experience, then recipients may not be able to earn a living wage however long they work. But if the wage growth gap arises primarily from differences in experience or type of experience, then, if time limits and the new welfare programs encourage more work, many prior recipients may eventually earn their way out of poverty.”

In their study, Corcoran and Loeb tracked the wages of a national sample of nearly 4,000 women—welfare recipients and non-recipients alike—between the ages of 18 and 27.

They found that while beginning-year wages were only slightly higher for women who never received welfare ($6.80/hour average, in 1997 dollars) than for those who had ($6.32/hour average), the wage gap grew larger over time, with non-recipients averaging $12.34/hour and recipients only $7.86/hour by age 27.

This wage gap, they say, was due to the fact that welfare recipients worked fewer years and were more likely to work part-time. The wage growth per year worked was about the same for both women who were on welfare and for women who were not—about 6 percent per year.

“Our results suggest that full-time work experience will pay off for former welfare recipients,” Corcoran says. “State welfare-to-work programs provide both sticks and carrots to encourage more work among recipients. Time limits are the stick and work incentives and supports (subsidies and set-asides for child care and transportation costs, transitional health insurance for recipients, counseling and support services) are the carrots.

“If time limits and the new work incentives and supports lead recipients to work more, their chances of eventually earning a living wage will improve under a work-oriented welfare system.”

Mary E. Corcoran