Work Requirements and Work Supports for Recipients of Means-Tested Benefits

In this report, the Congressional Budget Office analyzes the effects of work requirements and work supports on employment and income of participants in Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and Medicaid. The agency also assesses how changing work requirements and work supports in those programs would affect the federal budget. In many cases, the size of those effects is highly uncertain.

Effects of Work Requirements on Employment, Income, and the Federal Budget

• Making the receipt of benefits contingent on working or preparing to work has substantially increased the employment rate of the targeted recipients in TANF during the year after they enter the program and by a smaller amount in later years. Work requirements in SNAP have increased employment less; in Medicaid, they appear to have had little effect on employment.
• Although some people have higher income because they work more to meet the programs’ requirements, other people do not meet the work requirements and are left with little income from in-kind benefits, cash payments, earnings, or other sources. Overall, the increase in total earnings from TANF’s work requirements is about equal to the reduction in benefits. In contrast, work requirements in SNAP and Medicaid have reduced benefits more than they have increased people’s earnings.
• In general, tightening work requirements would reduce federal spending by decreasing the amount of benefits provided; the extent of the budgetary savings would depend on the details of the policy. If lawmakers used the savings from tightening work requirements to increase work supports that helped recipients meet those requirements, the federal budget would change little (or perhaps not at all).

Effects of Work Supports on Employment, Income, and the Federal Budget

• Subsidized child care, job-search assistance, and subsidized employment have increased the employment of recipients, whereas job training has had mixed results.
• In addition to boosting recipients’ earnings, federal funding for work supports has freed up income that recipients would have spent on those supports to instead be spent on other goods and services.
• If policymakers chose to expand work supports, they would need to provide additional funding. Child care subsidies can cost several thousand dollars per recipient, whereas less intensive services (such as assisting people who are searching for a job by providing access to literature and online tools) generally cost less.