LTC Challenges and Opportunities for Employee Recruitment and Retention


Michael D. Van Stine


 All rights reserved

Revised 05/2001




Introduction and Scope

Brief Statement of the LTC Problem

Identifying Supply Markets

National Workforce Resource Development Opportunities

The Federal Government System

Welfare Reform: An Underused Opportunity

Summary of TANF Expenditures

Summary of Welfare to Work Grants

Allowable Work Activities That Can Be Funded Under TANF and wt.

Welfare Myths Dispelled and Needs Understood

Low Wage vs. No Wage

Education and Training: Upgrading

Employer Incentives

Challenges to Welfare Reform

Lessons Learned So Far

H-1B Visa Program


Select Web Employment/Training and TANF/WtW Research Resources

References and Footnote Annotations

Appendicies A-H


Introduction and Scope

This guide has been prepared for employers in the Long Term Care (LTC) industry, both proprietary and non-proprietary. On the demand side, it has many generic aspects applicable to any U.S. industry seeking large numbers of trained or trainable entry-level personnel, especially those industries who experience high turnover problems. It also has substantial relevance to sub-acute care providers, home health, and assisted living and related support medical applications. On the demand side, it has connectiveness to issues surrounding Licensed Practical Nurses (LPN's), Registered Nurses (RN's) as well as the full range of entry-level occupations in the industry.

What we have tried to offer in one place is a clear definition of the challenges for recruitment and retention of frontline and support nursing staff, as well as select opportunities for solutions to obstacles. This is based on data and best practices experience. It should offer you a snapshot resource of where are the key resources, what works and where to go for more information to develop successful programs of your own.

No matter what is included or excluded here, a full range of extended analysis and resource tabulation is available at our website at: Other web-based resources are also tabulated at the end of this guide.


Brief Statement of the LTC Problem

According to the US Bureau of Labor Statistics (BLS), health care is one of the few sectors of the economy with significant projected and sustained job growth. BLS reports that "health services, which accounted for 7% of total wage and salary worker employment in 1975 and 8% in 1990, will approach 9% of total employment in 2005. Expenditures for health care, one of the fastest growing components of GNP, will increase significantly as several factors increase the demand for health services."1

BLS estimates that among 20 occupations that will see the greatest percentage growth from 1998 to 2008, three are related to health care2:

(NOTE: These statistics do NOT include job openings based on replacement needs. When these numbers are factored in to the entire top 20 list, interestingly these ranks change to 9, 14 and 17 respectively. However, this becomes in large part due to even worse turnover among retail sales, food service and other entry level employment such as janitorial and security jobs that in some cases pay more and are less demanding in other ways than are direct care occupations. So these other jobs, even with their equally high turnover, act to also feed the turnover of entry level care staff. See Appendix A.)

The need for net replacements thus increases the total labor force number needs by 2008 to: RN's: 794,000; Personal/HHA's: 567,000 and NA's: 515,000.3 (A number of other health care occupations that used to be on the top 20 list, such as Physical and Occupational Therapists and Assistants, diminished in demand as a function of the PPS system, but most likely will return to this list after 2003.) LPN needs over the same time are projected 136,000 with a growth rate of 20%; with net replacements the total need is 284,000.

The number of entry-level jobs in Long Term Care and home health care specifically is increasing faster than the number of both high-wage and other entry-level wage jobs in almost any other industry. By pure percent increase, at 58%, Home Health Aides and Medical Assistants are tied as the number one growth entry-level occupations in the US.4 Combined with Nursing Assistants to create a class now more frequently called "direct care" paraprofessionals, they number more than 2.1 million workers nationally and account for eight out of every ten hours of paid care received by a long term care client.5

According to BLS, Nursing Assistants held about 1.4 million jobs in 1998. About one-half of all Nursing Assistants work in nursing homes, and about one-fourth work in hospitals. Others work in residential care facilities, such as halfway houses and homes for the aged or disabled, or in private households. Between 1998 and 2008, employment of Nursing Assistants is actually expected to increase between 21% to 35%.6 Coupled to chronic industry turnover estimated at between 40% and 100% in forty states, the demand for new hires coupled to the need to find and train replacement employees makes the demand almost the highest single demand entry-level occupational category when compounded with certification training in most states in the US.7 Certainly, they represent the highest single occupational demand category in LTC.

This entry-level equation gets even more challenging on the supply side. "Of the more than 2.1 million paraprofessional care workers, 86 percent are women, 30 percent are women of color, and most are between the ages of 25 and 54-more than 28 percent return from work to a family living in poverty. Direct-care positions cannot be replaced by technology, nor moved offshore. The pool of likely entry-level workers - women in the civilian workforce within the age range of 25 to 44 - is projected to decline by 1.4 percent during the next six years. This new decline follows three decades of significant expansion of the equivalent labor pool-nearly tripling from 1968 through 1998. We thus face a labor supply that is profoundly different from what our long-term care system has presumed over the past 30 years."8

Registered Nurses are equally problematic. They are the singly largest health care occupation, with over 2.1 million jobs in 1998 and by any standard (with or without net replacements factored in) they are one of the 10 occupations in the US projected to have the largest number of new jobs over time.9 While less than 10% work in LTC, the industry competes with every other employer of for RN's: hospitals, offices and clinics of physicians and other health practitioners, home health care agencies, temporary help agencies, schools, government agencies, residential care facilities, social service agencies, religious organizations, research facilities, management and public relations firms, insurance agencies, and private households.10 1 in 4 work only part time.11 Further, enrollments in undergraduate nursing programs have declined by 17% since 1995 and 40% of all RN's will be retiring in 10 years.12 Because of stiff competition, sharply increasing demand over supply and because of the relative allure of other job applications over LTC, it is hard to recruit new RN's into the industry.

The LTC labor demand is staggering because of increases in the number of people in their eighties and nineties, many of whom will require long-term care. The acute care demand that fuels the labor need is typical in most states with a rising elder population. At the same time the number of individuals who can deliver care is decreasing, those requiring LTC and home care is increasing even faster. Between 1990 and 2020, the number of people over the age of 50 is expected to increase by 74%; those under the age of 50, by only 1%. In addition, the financial pressure on hospitals to release patients as soon as possible should produce more nursing home admissions. Growth in units to provide specialized long-term rehabilitation for stroke and head injury patients or to treat Alzheimer’s victims will also increase employment.13

But again, in terms of sheer quantity in LTC, the highest demand occupation is of course those of Certified Nursing Assistants. This shortage has been caused as a combination of factors. These include: mandated certification requirements, the ready availability of more desirable jobs at higher wages elsewhere in the economy of the 1990's and 2000+, the lack of needed support services to stem turnover, the failure to adequately fund support services with LTC provider resources and the failure of assessment systems to accurately match caregivers to CNA jobs, especially when the hiring atmosphere is always at a crisis point. Turnover is extreme. Factors contributing to high turnover and vacancy rates include: low wages and poor benefits: irregular, and/or inadequate hours with 2nd and 3rd shift complications; inadequate child care and transportation options; inadequate job preparation; treatment by nursing and management supervision and little advancement potential.


Identifying Supply Markets

There is much discussion at present surrounding direct allocations to the LTC industry for recruitment and retention initiatives. This includes H-1B immigration visas for foreign nurses.

Remember&ldots;all the funding in the world won't help where people to recruit and train don't exist! Your current entry-level workforce overwhelmingly comes from the current low-income population in the U.S. To wit, according to BLS data, the median national wage paid to Nursing Assistants was $8.00/hr.; the mean was $8.49/hr. As a group, all service occupations averaged $7.85/hr. and were in the lowest compensation class of all workers. See Figure 1.

At $8.49/hr., working full time, a Nursing Assistant will earn a maximum of $17,660 annually with no overtime.

Figure 1


Source: BLS Earnings by Occupation, National Compensation Survey 1998, published October 25, 2000

There are two standard measurements of income thresholds at the lower levels -- the BLS Lower Living Standard Income Level (LLISL) for a family of four persons, and the Federal HHS Poverty Guidelines. The former is used to determine a most basic existence; the latter true poverty and used to determine eligibility for many Federal and state programs.

In 1998, the LLISL was $23,520 in the non-metro south to $28,210 in the metro northeast.

In 1998, The HHS Poverty Guideline for the continental U.S. was $16,450 for a family of four.

(The current 2001 LLISL ranges from a low of $25,300 in the non-metro south to $30,360 in the metro northeast. The 2001 HHS Poverty Guideline for the continental U.S. is $17,650 for a family of four. So they have only changed by $1,780, $2,150 and $1,200 respectively or 7.7%, 7.6% and 7.3% respectively over three years. Over three years it is reasonable to assume that the mean NA wage has also increased by 7% to 8%, or to $9.13 or $18,990 annually if computed at a 7.5% increase.) See Appendices B and C.

What this clearly means (although measurements of a "typical welfare family are frequently made as a family of three -- conversion data for the LLISL and HHS guidelines is not available), in 1998, a Nursing Assistant earned $8,070 or 31.4% less than the mean LLISL standard and only $1,210 or only 7.4% more than the poverty standard. In 2001, these numbers are most likely about $8,840 or 31.5% less than the mean LLISL and only $1,340 or 7.6% more than the poverty standard.

Clearly, with some minor adjustment, those in poverty and on welfare are the primary labor market source for these occupations.

Nationally, 12.6% of the U.S. population lives in poverty. This translates into 34 million based on current census data and a maximum number of 16 million adults. 7 million are still on welfare in the U.S. But the 7 million have distinct recruitment disadvantages. They represent the population with the most barriers to successful employment. But they also represent the largest single source of available labor, and they can come with many supports to become successful employees.

Indeed, as noted in Figure 2, Nursing Assistants are the Number 2 national demand occupation for welfare recipients.

Figure 2. Top Ten Occupations/Industries of Welfare Recipients


Percentage of Sample



Nursing Assistants












Child Care Workers


Household Cleaners





National Workforce Resource Development Opportunities

The Federal government currently (FY 2001) invests approximately $44 billion into workforce development programs as noted in Figure 3.

 Figure 3: Summary of Major Federal Employment and Training Programs

Federal Workforce Development Programs Funding (in billions)

FY 01 Enacted

FY02 Proposed

WIA State Formula Grants



WIA Federal Programs



Senior Community Service Jobs



Unemployment Compensation



Employment Service/One Stop



Trade Act Adjustment Aid



Veterans Employment and Training



Vocational Education



Adult Education and Literacy



Vocational Rehab State Grants



Other Workforce Investments*



* These include



Pell Grants to Students



TANF Welfare Reform State Grants



Child Care



In FY 2001, the Federal government allocated approximately $44 billion for workforce development programs. For FY 2002, the proposed budget would increase the amount to over $45 billion.


The Federal Government System

The Workforce Investment Act (WIA) was enacted in October 1998. It approved the reorganization of a significant portion of federal government support for workforce development. This was the fourth time since 1960 that the Federal government tried to design a system to improve worker skills. WIA is the successor to JTPA (Job Training Partnership Act) which succeeded CETA (Comprehensive Employment and Training Act) which followed MDTA (Manpower Development & Training Act) and other so called "categorical programs. Although WIA has many similarities to past attempts at workforce system reform the overriding theme of this new legislation was employer involvement and customer choice. WIA mandated a state and local system of Workforce Investment Boards (WIB's) with broad employer representation and oversight. Much of the country would be included in a Local Workforce Investment Area covered by one of these local boards and, it was assumed, employers would insure that there was a strategy in place for wisely investing WIA dollars. However, WIA covers only a portion of Federal funding for workforce development. Financial support for workforce development is spread over many departments including the Departments of Labor, Education, Housing and Urban Development, Health and Human Services, and Defense. Figure 2 is essentially a listing of many of these Federal workforce programs.

TANF. A significant portion of Federal dollars for workforce training and job readiness for low income people comes to the states under the welfare reform legislation of 1996 – the Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA) – better known as the TANF (Transitional Assistance to Needy Families) legislation. Because of the significant decline in the welfare rolls in many states, "surplus" TANF dollars are being used for a wide variety of work readiness, work opportunities, and job training programs. These will be discussed in some detail below.

WtW. The U.S. Department of Labor (DoL) also appropriated about $3 billion under a program called the Welfare-to-Work (WtW) program. This provided transitional training and support opportunities to assist in the implementation of TANF.

H-1B Visa Skill Training Program. This program relies on fees paid by companies who hire immigrants requiring an H-1B visa status. Congress recently increased the fee from $500 to $1,000 and increased the quota on these visas to 195,000 annually.


Welfare Reform: An Underused Opportunity

Welfare reform (as well as other public workforce programs) is a MAJOR OPPORTUNITY and a simultaneous MAJOR CHALLENGE to LTC employers. It represents the largest single source of available job applicants in most urban and rural markets (and suburban markets in many cases can only import available urban workers with inadequate transportation and childcare resources). It also represents without question the largest single concentration of Federal and state resources for recruitment, screening and assessment, training and support services geared at retention. Yet it requires a substantial employer understanding and investment to make it properly work. For both the Welfare-to-Work (WtW) employee and the LTC employer.

To first understand both the opportunities and the challenges, it is first necessary to understand what happened with national welfare policy.

In August 1996, PRWORA reformed the nation's welfare laws. A new system of block grants to the states for TANF was created, changing the nature and provision of welfare benefits in America. TANF dollars are appropriated by the Federal government and are required to be matched by state governments who participate in the Federal program. (This is done through what is called "Maintenance of Effort" or "MOE" matching dollars.) The next section outlines what was spent and for what in total nationally. It also shows what has NOT been spent and what is available for new programs.


Summary of TANF Expenditures

Just to provide a snapshot of what the government spends on national welfare benefits, including training and support services and including what is matched by the various states, the following is a summary through the fourth quarter, FY 1999. Follow this carefully -- in becomes important when employers see how much unobligated funding is available and for what purposes.

Overall Spending. The total TANF expenditures (combined Federal funds and State MOE funds) for FY 99 were $22.6 billion, the same as last year. This level spending seems to indicate that States are making significant new investments in the TANF program, since welfare caseloads were declining over the same period and the associated spending on cash assistance was also going down. In FY 99 the total spending on cash assistance was $13.4 billion compared to $14.6 billion in FY 98. Total spending on work activities increased 17 % over the $1.5 billion spent in FY 98. [The cash assistance category also includes "work-based" assistance: money earned by TANF recipients in return for community service jobs or work experience.]

Maintenance of Effort (MOE). The welfare reform law requires States to continue to spend state funds at a level equal to at least 80 % of their FY 1994 level or 75 % if they meet the minimum work participation rates. In FY 1999, States expended a total of $11.3 billion in State funds to meet their annual MOE requirements, an amount that's above the mandatory MOE spending level for the year. (The mandatory MOE level will be somewhere between $10.4 billion and $11.1 billion, depending on how many states are eligible for the lower MOE rate based on their work participation rates for FY 1999.)

Child Care. Childcare is a critical support for families moving from welfare to work. In FY 1999 States increased their investments in childcare significantly. They transferred a cumulative total of $2.43 billion of Federal funds from the TANF program to the Child Care Development Fund (CCDF), which is more than twice the $914 million transferred in all of FY 98. In addition, State spending through the TANF program on childcare services totaled $1.99 billion, comprised of $1.38 billion of their own maintenance of effort funds and $604 million of Federal funds. The combined amount from both transfers to CCDF and direct TANF program spending on childcare was $4.43 billion.

Work Activities. One of the goals of the TANF program is to move welfare parents into work. Many states have changed their welfare programs to help parents get into jobs immediately, prioritizing work over other activities. In FY 1999, States spent $1.8 billion in combined Federal and State funds on work activities, an amount equal to 8% of total program expenditures in FY 99, and an increase over FY 1998.

Transferring TANF Funds. States may transfer portions of their TANF grant to either the Child Care and Development Block Grant or the Social Services Block Grant. Forty-seven states reported transferring fiscal year 1999 funds in amounts ranging from less than 1 % to 30 % of their total. In total, $1.76 billion or 11 % of fiscal year 1999 TANF funds were transferred to the child care block grant, and $1 billion or 6 % were transferred to the Social Services Block Grant. As mentioned above, States also made transfers from their unobligated Federal TANF funds that were carried over from prior fiscal years (as permitted prior to the effective date of the final TANF rules). Therefore, the total amount transferred in FY 99 was $3.7 billion, including $2.44 billion in transfers to CCDF and $1.26 billion in transfers to SSBG.

Administrative Costs. States are also investing more in, and expecting more from, those who administer their welfare programs. States are transforming their welfare offices into employment centers, and eligibility workers are being trained as job counselors. Total expenditures of both Federal and State funds on administrative costs amounted to $1.8 billion, or 8% of total expenditures in FY 1999.

Separate State Programs. Twenty-three states chose to fund programs with separate state funds in FY 99. Among those 21 States, expenditures on separate programs ranged from $96 thousand to $289 million. As a percentage of a given State's total State spending, the amounts spent in separate state programs ranged from 0.1% to 60%. States with separate programs spent most of their separate state program funds -- 50 % -- on cash assistance. Most of the remaining funds were spent on childcare and non-direct services categorized as other expenditures.

Other Expenditures. States reported spending $3.1 billion in combined Federal TANF funds and state maintenance of effort funds on other expenditures, which included fraud control programs, emergency assistance (e.g. one-time benefits to divert families from having to rely on welfare), domestic violence services, and child welfare programs.

How States Used Federal Funds. States can carry forward unobligated TANF funds for use in future years. Cumulative unobligated balances for fiscal years 1997, 1998 and 1999 equal $2.85 billion, or approximately 6% of the total $46.8 billion in Federal funds awarded to them since implementation of the TANF program. The $2.85 billion in unobligated funds remain in the federal treasury until states have an immediate need to draw them down. Thirteen states have spent or obligated all of the federal funds they had available through the end of FY 99.


Figure 4: Cumulative Federal Spending in FY 97, FY 98 and FY 99

As reported by States: ($ in billions):

As Reported by States

($ in billions)




Transferred to CCDF



Transferred to SSBG






Obligated, but not expended









Of perhaps greatest significance is the opportunity figure contained in the $2.8 Billion unobligated balance.

(NOTE: This data was updated at the conclusion of FY 2000. Updated charts reflecting total of unspent TANF funds by state; the increase in unspent TANF funds from FY 1999 to FY 2000 and a breakdown of unliquidated obligations and unobligated funds by state are attached as Appendices D-F.) Total unspent TANF funds at end of FY 1999 was revised to $5.9 billion. At the end of FY 2000: $8.1 billion: an increase of $2.2 billion. FY 1999 unspent funds as a percentage of available TANF since FY97: 16%. Total Unliquidated Obligations (amount states have committed but not yet spent): $5.4 billion. Total Unobligated Funds (funds the states have neither spent nor committed to spend): $2.7 billion.

Source for all TANF data: US Department of Health and Human Services, Administration for Families and Children.


Summary of Welfare-to-Work Grants

Moving people from welfare-to-work is now one of the primary goals of national welfare policy. Most states enacted "work first" rules. As a companion to the new TANF law, Congress also passed the new Balanced Budget Act of 1997, designed to help achieve that goal by authorizing the U.S. Department of Labor to provide Welfare-to-Work Grants to States and local communities to create additional job opportunities for the hardest-to-employ recipients of TANF. These grants provide many welfare recipients with the job placement services, transitional employment, and other support services they need to make the successful progression into long-term unsubsidized employment.

Funding. The grants total $3 billion: $1.5 billion were awarded in fiscal year 1998 and $1.5 billion in fiscal year 1999. There were two kinds of grants: formula grants to states and competitive grants to local communities. A small amount of the total grant money was also set aside for special purposes: 1 percent for Indian tribes; 0.8 percent for evaluation; and $100 million for performance bonuses to successful states. Grantees had up to three years to spend the funds; an extension on that deadline is pending.

Formula Grants to States. After reserving the special purpose funds described above, 75 percent of the grant funds were allocated to States based on a formula that equally considers States' shares of the national number of poor individuals and adult recipients of assistance under TANF. States are required to pass through 85 percent of the money to local Workforce Development Boards (WIB's) in most areas, which oversee and guide job training programs in geographical jurisdictions called service delivery areas. A state is allowed to retain 15 percent of the money for welfare-to-work projects of its choice. States must provide one dollar of non-federal funding match for every two dollars of federal funding provided under the formula. Certain states also received performance bonuses based on job placement data, duration of placement and increases in earnings.

Substate Allocations. Half of the funds distributed by formula to local areas must be based on a service delivery area's residents who are poor, i.e., the number of poor individuals in excess of 7.5 percent of the total population. Not more than half may be distributed based on two additional factors: (1) the number of adults receiving TANF assistance for 30 months or more and (2) the number of unemployed in the service delivery area.

Competitive Grants. 25 percent of funds not allocated by formula were used for competitive grants awarded directly to local governments, WIB's, and private entities (such as community development corporations and community-based organizations, community action agencies, and other private organizations. Special consideration was given to cities with large concentrations of poverty as well as to rural areas. See Appendix G for a complete tabulation of total grants awarded by state. A summary of all programs funded by state and type of program is available at the DoL ETA website at:

Allowable Uses of Funds. Funds may be used to help move eligible individuals into long-term unsubsidized jobs using strategies like: job creation through short-term public or private sector wage subsidies; on-the-job training; contracts with public or private providers of job readiness, job placement, and post-employment services; job vouchers for similar services; community service or work experience; or job retention and supportive services (if such services are not otherwise available).

Targeted Participant Eligibility. Originally, at least 70% of grant funds were to be spent on individuals who face two of three specified labor market deficiencies and who are long-term welfare recipients, or who face termination from TANF within 12 months; or who are noncustodial parents of minors whose custodial parent meets these criteria. Labor market deficiencies included (1) lack of high school diploma or GED and low reading or math skills, (2) requiring a substance abuse treatment for employment, and (3) a poor work history. Up to 30% of grant funds were designated for individuals who were "recent" recipients of TANF assistance or noncustodial parents who have characteristics associated with long-term welfare dependence -- such as school dropout, teen pregnancy, or poor work history. However, grantees complained that program recruitment was difficult, and that many of the requirements were set incorrectly, e.g. many with an HS diploma had serious educational deficiencies. Employers complained that WtW programs did not work for them because eligibility requirements for participation screened out too many people, and also that recruitment for these programs was too difficult. Some WtW providers complained because the "work first" restrictions limited payment for pre-employment training, such as CNA certification. It is important to note that Congress responded to these concerns and passed legislation that contained the "Welfare to Work and Child Support Amendments of 1999". While these amendments are technical in nature, they substantially relaxed eligibility requirements and expanded pre-employment training opportunities. Among the changes was removal of the eligibility bar of an HS diploma and the decrease to only one barrier to employment. This was also important as it either led or paralleled the relaxation of eligibility restrictions in many states for access to TANF resources, particularly with state MOE money. WtW Competitive grantees were able to implement the new eligibility criteria on January 1, 2000. Formula grantees were able to implement the new eligibility and provide vocational education and job training as of July 1, 2000, except that federal formula funds were not to be expended for these purposes until after October 1, 2000. Competitive grantees were also able to provide vocational education and job training immediately upon enactment. Further, competitive grantees who were not PICs (changed to local WIA agencies) were immediately able provide job placement, job readiness and post-employment services directly to WtW participants.

Relationship to TANF Time Limits. Assistance can be provided to individuals who have reached the 60-month TANF time limit. Such assistance does not count toward the 60-month limit unless it is cash assistance provided directly or through wage subsidies. In those cases, the months do count toward the 60-month limit.

Source for all WtW Data: US Department of Labor, Employment and Training Administration.


Allowable Work Activities That Can Be Funded Under TANF and WtW

As noted in the study "Direct Care Workers: The Unnecessary Crisis in Long Term Care,"13 the documented needs for entry-level care employees that are currently inadequately addressed are:

In weighting these variables, The Welfare-to-Work Partnership, a voluntary association of about 15,000 businesses who have hired and trained welfare clients reports, based on their extensive member surveys, in order, the following services are the most in need for successful hire and retention of welfare clients14:

In August 1999, the WtW Partnership hosted their "One America" conference, with over 2,000 business leaders, service providers and government officials involved in WtW nationally. As a result of focus sessions at this conference, participant's placed the "top challenges for the future" into three tiers as follows15:

The tabulation of all focus session conclusions is attached as Appendix H.

However, few companies feel they are in a position to provide such benefits themselves. See Figure 5.


Figure 5: WtW Partnership Wirthlin Worldwide Survey Results

Business Offerings of Needed WtW Services


Directly addressing these needs, many/most states have reprogrammed TANF resources for use in employment retention related support services, such as child care and transportation assistance. The increase in state transfers to the Child Care Development Fund and the Child Care Development Block Grant have already been mentioned. But there have been substantial alternative uses for work supports, employment and retention incentives and incentives for the "working poor". Using PA again as an example, the state has created the following "non-assistance" related support services which don't count against TANF 60 month limit and for which working poor families may qualify based on income. There are 11 such supports:

Here are some other examples of what other states are doing:

For most welfare recipients, the transfer to self-sufficiency almost always involves obtaining employment. (Only a small percentage -- less than one percent -- of those transitioning from welfare who successfully start, let alone maintain, their own independent businesses.) Consequently, successful employment outcomes are at the core of successful transition from welfare dependency. Long term successful employment outcomes must help workers find and keep better jobs. They must also involve new strategies to integrate immediate employment with shorter-term skill building. These individuals represent a huge opportunity for employers whom increasingly need to find alternative pools of eligible entry-level job applicants. Employers can also benefit from hiring welfare to work employees in many other substantial ways.

There are many myths surrounding welfare dependency and a misperception of the needs these potential workers have to achieve self-sufficiency. In reality, note the following facts documented by the WtW Partnership16 and the Washington, D.C. based Urban Institute17:

The real challenge for most recipients is not getting a job; it is getting either the right job and keeping that job, or getting a starter job and keeping that job long enough to become the right job. Lack of proper education and training, childcare, health care and transportation make it tough for recipients to stay in the labor market.

In two recent studies, another one completed by the Welfare to Work Partnership, and one, a 1998 Business Work-Life study18, the following was collectively observed:

On the specific subject of transportation barriers, according to a study by the U.S. Department of Transportation's Volpe Institute19, only 6 percent of TANF households own a car. Moreover, the average value of these cars is only $620, meaning they must be presumed to be unreliable. They are frequently uninsured and unregistered. The study also concluded that only 43% of entry-level jobs are accessible by public transportation and that three-fourths of families receiving public assistance live in inner city neighborhoods or rural areas, while 66 percent of appropriate job openings are in the suburbs.

In a study by Case Western Reserve University's Center on Urban Poverty and Social Change20, looking at transit patterns in Cleveland area neighborhoods, welfare recipients who commuted up to 40 minutes one way on public transit could reach only between 8 and 15 percent of jobs. Increasing one way commuting time to as high as 80 minutes reached only 44 percent of jobs. Over half of the jobs could not be reached within 80 minutes or even at all using public transportation.

In a companion study completed by Shirley M. Loveless21, a Transportation Consultant with the University of Pennsylvania, data was gathered surrounding Delaware Valley commuting. In her study, she plotted a total of 864 trips between three Philadelphia neighborhoods and 38 employment centers in Delaware and Montgomery Counties (not even touching the more difficult bi-state commuting odyssey and purposely choosing the two PA counties with the most developed SEPTA service). With this regional "stacked deck", she chose three Philadelphia neighborhoods as commute locations that were all central community locations and ones relatively well-served by transit. They were:

She also used SEPTA route maps and the most recent available schedules as of June 1999. In her study, she modeled the most time-efficient route for each commute* She correctly distinguished between "travel time" and "trip time" in her survey, in order to calculate both the gap between the latest possible arrival at work and the actual start of work and the "dwell time" if you will, the time spent between trip transfers and actual time spent in motion. Of the 864 modeled trips, 89 (slightly more than 10 percent) fail entirely because transit service is not available when needed for at least one trip link. This is extremely important because the failure of either the outbound or inbound trip means, in most cases, that the commute fails. It does no good to have one-way transit service. Of the remaining 775, total trip times ranged from 38 minutes to 240 minutes (4 hours). In many cases, the next earlier transit service for the inbound trip or the next later service for the outbound trip failed by as little as one minute. This necessitated a long wait for the next scheduled service in the case of the trip home or leaving home much earlier for the trip outbound. Other trips were unavoidably lengthened by long waits because of inefficient connections. The study's key conclusions were:

Of the feasible 775 trips, only 39 were less than 60 minutes, one way and only 61 trips were less than 75 minutes, one-way.

It is true that most new workers from welfare dependency face significant barriers to successful employment. Some indeed have no work history at all and/or spotty work histories at best. Many face the hardships of depression, substance abuse, domestic violence, the lack of a two-parent family collaborative, inadequate child care options, no access to independent transportation and inadequate skill development. However, there are substantial resources available to welfare recipients and employers to combat these obstacles and develop a productive and stable workforce with those transitioning from welfare to work.

(*Where this involved using the regional rail and would incur substantial expense, an alternative route was modeled, if one was feasible. In some cases, this was not possible-the alternative did not exist. Additional alternative routes were modeled for some commutes, if taking one route was most time efficient for the work trip, for example, but another route was more time-efficient for the return trip.)


Low Wage vs. No Wage

The national income support system makes work pay and is providing a realistic hope of recipients' move out of poverty. As noted in another Urban Institute study across 12 states22, by working full time at the minimum wage and supplementing her earnings with tax credits, food stamps and other public assistance programs, a mother with two children can bring her family's income to almost 20% above the poverty level. This is the upside of supplements that include TANF, food stamps, the Earned Income Tax Credit, housing, childcare, transportation and Medicaid. At the same time, the consequences of not working are potentially devastating, since families unwilling or unable to work may lose all of their welfare payments. Also, by not working and relying entirely on government benefits, the same family will fall 32% below the poverty level. Interestingly, low income single mothers are significantly better off working, even at minimum wage, than relying solely on welfare, but they gain little from raising their wage rate from $5.15 to $9.00 per hour. Thus, at least initially and for up to a minimum of one year, both the employer and welfare to work employee of an entry-level job benefit.

Expanding on this, the Women's Association for Women's Alternatives, Inc. (WAWA) completed an exhaustive analysis of the actual value of these supports in Pennsylvania23. What they found is that in Philadelphia (as a typical metropolitan area), the self-sufficiency standard wage required to pay for housing, child care, food, transportation, health care, taxes and miscellaneous expenses was $16.61/hr. for a single parent with one infant and one preschool age child. However, with external supports as supplements, that minimum wage for self-sufficiency dropped as follows:

      With these supports

      Effective self sufficient wage

Child Support


Child Care


Child Care, Health Care, Food Stamps

        $ 7.96

Child Care, Food Stamps


Child Care, Food Stamps, Housing

        $ 6.99

Child Care, Food Stamps, Child Support

        $ 7.05


Education and Training: Upgrading

Education and training for welfare recipients is essential for promoting self-sufficiency. In the current work-first environment, welfare recipients are obtaining jobs but not earning enough to support themselves without additional benefits. At $9.00 per hour (or about $19,000 annually), they will fall short of the needed approximate $14.00 minimum per hour in most markets (or about $30,000 annually) they will ultimately need for self- sufficiency without external supports. Remember&ldots;the supports won't last forever. This is why training investments are critical for these workers and why such investments ultimately benefit the employer as much as the worker.

Some initial WtW attempts at training (that were hampered by work-first limitations) have proved unsuccessful. The disappointing results of past skill-building programs has also been traced to an over-reliance on basic education as an end in itself, rather than to ineffectiveness of skill-building in general as a strategy. On the contrary, the research suggests that job training and postsecondary education offer significant potential for helping recipients earn more and obtain better jobs. A key to skill building as a welfare-to-work strategy, it appears, is that skill-building efforts must relate more closely to specific employment goals. In addition, occupational training services must be made more consistently effective and more accessible to those with low skills24.

In this regard, a number of successful CNA ladder programs have evolved. One, pioneered by the American Red Cross and Health Care Training Associates in NH, starts after CNA certification is obtained and creates a variated model of a number of directions and specialties, some of which interlock and can then lead to certifications and the ability to work in other settings and/or at higher compensation. Some of the "circuits" include:

CNA + 16 hrs. Nutrition + 24 hrs. Alzheimer's Care = GNAS (Geriatric Nurse Aide Specialist)

CNA + 20 hrs. Medical Terminology + 40 Hrs. Rehab. Skills = Rehab Aide

CNA + 40 hrs. EKG = EKG Technician

CNA + 60 hrs. Phlebotomy + 40 hrs. EKG + 30 hrs. Patient Care Tech Skills = Patient Care Associate

CNA + 30 hrs. Pedi Care + Modules on Child Health, Safety and Nutrition = Pediatric Nurse Aide Specialist (Home Care)

CNA + 40 hrs. Dialysis Tech skills = Dialysis Technician

CNA + 60 hrs. Phlebotomy = Phlebotomist

CNA + 24 hrs. Nutrition and Diet Therapy + 8hrs. Swallowing Disorders and Feeding Techniques = Dietitian Aide Feeding Specialist

CNA + 24 hrs. Altzheimers Care + 24 hrs. Recreational Therapy = Recreational Therapy Aide.

While these do not all lead automatically to higher compensation, all create yet more diverse career path possibilities and create job task and employer diversity which can alone lead to much greater job satisfaction.

In Massachusetts, the Benjamin Healthcare Center in Boston has a four step ladder program that culminates in an education as a professional nurse:

The model program also offers CNA's the opportunity to upgrade literacy, math skills and English language proficiency.

The primary reason why individuals leaving welfare need education and training from the employee side is that educational attainment is highly correlated with wages. The average annual wage for women in jobs requiring advanced or superior skills, equivalent to those of people who have bachelor’s degrees, is $32,000. Women with competent skills, the equivalent of having some post-secondary education short of a bachelor’s degree, earn an average of $23,000, and women with basic skills, the equivalent of high school graduates, earn $19,000 per year. Finally, women with minimal skills, similar to those of high school dropouts, earn $15,000 per year25.

Employment trends among former welfare recipients demonstrate the need for finding new training methods to promote skill advancement. Two thirds of welfare recipients have minimal or basic skills that allow them to make, on average, no more than $19,000 per year. The remaining one third have competent, advanced, or superior skills, but even among this group, individuals would need additional training to provide them with the formal credentials that are necessary for higher paying jobs. Because training is not provided, former welfare recipients' average wages are between $5.00 and $8.00 per hour, far below the self-sufficiency standard for women with children. The Educational Testing Service estimates that it would take 200 hours of training, or the equivalent of one semester at a community college, to bring somebody with basic skills to the competent level26.

"Moving Up" is a New York City program that utilizes a combined strategy for employee development and retention including on-going training. Sixty-three percent of Moving Up participants are still employed after two years (higher than for most training programs) and hourly wages rose from an average of $7.32 to $7.98 after twelve months and to $8.63 after two years. While these gains are modest, and they do not alleviate the need for external on-going support to produce self-sufficiency, they do demonstrate that training, if properly designed, can help welfare-recipients move toward self-sufficiency over time27.

Long-run success is also directly affected by short-run job retention. One study of a welfare-to-work program shows that employment status three months after completing the program is a good predictor of the net earnings effect during the entire two-and-a-half follow-up period28.

The short run matters so much because many welfare recipients face such direct problems with job retention. At one welfare to work program, "Project Match" in Chicago, researchers found that 46 percent of the program clients lost their first job by three months, 60 percent by six months, and 73 percent by twelve months29.

This poor job retention is not due primarily to inadequate technical or "hard" skills. Welfare recipients generally lose jobs because of absenteeism and punctuality, or because of conflicts with supervisors and co-workers. The one "hard skill" deficiency that is frequently mentioned is problems with running a cash register.

Job retention problems occur in part because many welfare recipients find the circumstances of low-wage jobs to be unfamiliar. The usual daily activities of an unemployed welfare recipient are comprised of child care and home care, with no supervisors or co-workers to accommodate, and with the welfare recipient controlling her own schedule.

Some types of jobs might lead to greater job retention for welfare recipients because occupations or industries differ in pressure for timely completion of tasks, the strictness of supervision, and interactions with co-workers or customers. Occupations or industries also differ in whether the skills required have much in common with childcare or home care. Some occupations and industries may better tolerate substandard performance while the new worker adjusts to the job. Finally, higher wages or benefits make an otherwise bad job easier to endure.


Employer Incentives

How can employers accomplish the goals of welfare to work workforce development? To start, Federal, state and local governments have long used tax incentives to encourage specific business practices. The Federal government offers six key incentives to businesses to encourage them to hire and train welfare recipients:

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit reauthorized and amended by the October 21 Tax and Trade Relief Extension Act of 1998. It encourages employers to hire eight targeted groups of job seekers who begin work any time after June 30, 1998, and before July 1, 1999. It is expected to be extended for another year, and employers are encouraged to continue processing vouchers for employees hired after July 1, 1999. If an employee qualifies as a member of a targeted group, the employer may claim income tax credits based upon the number of hours the employee works in the year. First, for employees who work at least 120 hours but less than 400 hours, employers may claim 25% of the employee's first-year wages, up to $6,000 for a maximum tax credit of $1,500. Second, for employees who work at least 400 hours, employers may claim 40% of the employees' first year wages, up to $6,000, for a maximum credit of $2,400. There is no credit allowable for employees who work less than 120 hours. For the twelve month period ending September 30, 1998, more than 285,000 WOTC certifications were issued as a result of employer requests compared to 126,000 certifications issued the previous year.

The Welfare-to-Work Tax Credit is a Federal income tax credit that encourages employers to hire long-term welfare recipients who begin work any time after December 31, 1997, and before June 30, 1999. It was also extended by the October 21 Tax and Trade Relief Extension Act of 1998, sections 1002 and 1003. Under this program, during the first year of employment, employers can claim 35% of employees' first-year wages up to $10,000 for a maximum credit of $3,500. During the second year, employers can claim 50% of employees' wages up to $10,000, for a maximum tax credit of $5,000. Thus, the maximum credit is $8,500 if the employees are retained two years. More than 46,000 certifications were issued as a result of employer requests during the tax credit's first nine months of existence ending September 30, 1998.

If employees qualify for both the WOTC and the Welfare to Work Tax Credits, employers must choose one or the other. They cannot claim both.

The new federal welfare law gives states the option to create a work supplementation program (also called wage subsidy and grant diversion). Currently, 22 states have enacted work supplementation programs. Work supplementation allows an employer to receive TANF and food stamp funds that would have otherwise gone to the family. The employer by law is required to pay at least the minimum wage to any welfare recipient hired, so the employer must add in additional funds necessary to bring the wage to the minimum.

On-the-Job Training (OJT) is a program funded in various state and local jurisdictions, either under local welfare to work strategies or as a part of a jurisdiction's workforce development plan under the Workforce Investment Act of 1998. Typically, OJT subsidies cover 50% of wages for up to six months.

Customized Job Training (CJT) is offered to employers in many states (especially those who operate in more than one county in a state) to permit development of vocational training and OJT programs using state funds from a variety of sources. These programs vary somewhat from state to state. In most cases that have to be coordinated on some level with the WIB's and are frequently developed through a local education agency (LEA) like a community college. These programs are attractive as they have less restrictive eligibility requirements, can be used for new hires and/or incumbent workers and employers can design the training programs and can select the workforce intermediaries and training providers themselves.

Empowerment Zones and Enterprise Communities (EZ/EC) contain initiatives designed to promote economic growth and physical revitalization of urban and rural communities plagued by chronic poverty and unemployment. Businesses in EZ/EC communities are entitled to targeted tax incentives designed to foster job creation, stimulate investment and attract new business development. Using the Wage Tax Credit of an EZ/EC, employers in an EZ/EC who hire residents who reside in an EZ/EC community can access credits equal to 20% of the first $15,000 of wages or training expenses paid.

Transportation Credits are contained within the Transportation Equity Act for the 21st Century (TEA-21) permits employers to receive tax benefits for providing certain types of employee transportation benefits called "Qualified Transportation Fringes". Under TEA-21, effective January 1, 1998, employers can let employees set aside up to $65 a month, $780 a year, of their salary before taxes to pay for transit and vanpool commuting, and qualified parking expenses up to $175 a month, or $2,100 a year. The transit allowance will increase to $100 a month effective January 1, 2002. Since the amount of the employee's salary used for this purpose is not taxed, a tax savings of over 30% over the cost of a similar take-home salary increase, incentive or bonus may be possible. This can result in monetary savings of over $200 a year if the maximum of $780 is set aside. In addition, the employer saves money by reducing payroll costs since the amount set aside is exempt from employer paid payroll taxes (at least 7.65%) and contributions into 401 (k) accounts, a combined savings of about 10% on average. Employers incur no cost in offering the pre-tax benefit, and often find this type of program very easy to set up and administer.

ChildCare Assistance provided by an employer is a tax-deductible expense. Amounts paid by an employer to provide child care services for employees may be deductible as ordinary business expenses under IRC Section 162 as the services reduce absenteeism and turnover; aid in recruitment and retention of employees and increase productivity for the employer. Amounts paid by an employer to a welfare benefit fund, such as the Volunteer Employees' Beneficiary Association (VEBA) 501(c)(9), may also be deductible. An employer may be entitled to a charitable contribution deduction for donating to a qualified tax-exempt childcare organization. Costs incurred for acquiring, constructing, and/or remodeling a building to be used as a child care center can be depreciated over a thirty-nine year period under the Modified Cost Recovery System described in IRC Section 168. Costs of equipping the building can be depreciated over varying periods. Start-up and investigatory expenses incurred in the development of a new child care center may be amortized over 60 months or more under IRC section 195. Eligible expenses may include costs for advertising, needs assessments, consultant services and staff training. The center itself may be established as tax-exempt 501(c)(3) organization.

State-Based Incentives exist in many states. In Pennsylvania, the state offers two programs; a state tax credit for hiring individuals among targeted groups and state tax credit programs for neighborhood initiatives under the Neighborhood Assistance Program. The former permits a declining percentage (30% to 10%) of an employees first $6,000 annual wages from years one to three and the latter permits up to 50% credits against state taxes where employers promote support services via state approved providers, including transportation and child care assistance.

Many states also offer Family Savings Account programs. When properly used, these can be excellent retention tools for businesses. Typically, families below 200%-235% of the poverty standard qualify and benefits involve a match of 50% to a maximum of $600 over two years. Families are encouraged to save at least $10/week. Programs are intended to assist in the purchase of a new home, higher education for family members, day care expenses or funding a microenterprise business. These uses are usually linked to other state programs, like first-time mortgage programs and low-interest to grant programs for education.

The critical advantage to employers is where such programs are in turn linked to an employer match that is in turn linked to retention goals. This is so much better than "one size" benefit programs or tuition reimbursement that only benefit the employee, or really any benefit not linked to retention and family stability.

There are also compelling indirect financial incentives and other indirect gains to motivate and help businesses to hire welfare recipients who are ready, willing and able to work:

Employers have also increasingly turned to workforce intermediaries, like WorkForce21 to help them navigate complex national, state and local policies and resources, as well as configure customized and localized responses to their needs. The have also trended to greater community partnerships and away from government agencies. See Figures 6 and 7.


Figure 6: WtW Partnership Member Survey Result

Employer Partnerships Formed



Figure 7:



Challenges to Welfare Reform

Returning to the challenges, political and economic factors have accelerated the rate at which employers have hired people off of welfare.


From employers, much has been learned. As noted, many employers are hiring welfare recipients. Members of the Welfare-to-Work partnership have hired almost 500,000 former welfare recipients to date. Larger firms in a few industries have dominated participation. However, two thirds of smaller firms that used local intermediary organizations to recruit candidates for employment reported hiring welfare recipients and small firms have a much higher ratio of welfare hires to total hires than do larger firms. There is potential for continued expansion of employer participation, particularly among smaller businesses even if there is a slowing of economic growth. Most employers focus primarily on recruitment and hiring, but strategies to improve retention are becoming more common -- and they are receiving support from public policy.

Most past efforts at training have had little effect on improving recipients’ skills. As noted, a new and effective method of training needs to be developed in order to provide welfare recipients with the necessary skills for advancement and success. Fewer than half of programs that emphasized basic education and GED receipt help participants find better jobs, and the majority of participants in these programs do not receive GEDs. Even among those who receive GEDs, studies suggest that there is no employment-related benefit unless they go on to receive further education, which most do not.

On the other hand, the quick-employment programs that are popular under work-first also do not promote self-sufficiency. These types of programs gained support because they were found to be cheaper and have greater short-term effects on employment than basic-skills education, but their effects are only short-term. Participants in the programs experience some earnings and employment increases for two to three years, but program impacts disappear after that point. In evaluations of Los Angeles GAIN, a quick-attachment job placement program for welfare recipients, participants’ incomes were found to be comprised of a larger proportion of earnings after involvement in the program, but their overall incomes did not rise. Quick-attachment programs help people become employed in the short run, but they do not help them to retain and advance in their jobs, which is essential for becoming self-sufficient33.

Therefore, if self-sufficiency is the goal of welfare and workforce development legislation, new mechanisms need to be developed to help welfare recipients not only find jobs, but also keep and advance in them. The disappointing outcomes from previous programs does not mean that training and education, in theory, is a flawed mechanism for promoting job advancement. It is still necessary to raise recipients’ marketable skills through training. The challenge is developing training and education programs that work.

In a study made undertaken by Jobs for the Future34, interviewing 19 leading companies about their welfare to work activities yielded the following conclusions:

On the public policy side, the JFF study highlighted five policy priorities in government policy and practice needed to expand and sustain welfare to work initiatives as follows:


H-1B Visa Program

A brief mention is worthy of the H-1B visa program. As mentioned earlier, Congress passed legislation in October 2000 to increase the number of H-1B visas from 115,000 to 195,000, as well as doubling fee size from $500 to $1,000.

The U.S. DoL recently issued an open ended RFP for demonstration projects to provide technical skills training for professionals, including both employed and unemployed workers. IT and HC are focus. $135 Million is now available. 75% percent of the available grant funds will be awarded to Local WIB Boards. 25 percent of the available funds will be awarded to business partnerships that consist of at least two businesses or a business-related nonprofit organization that represents more than one business. The partnership may also include any educational, labor, community organization, or Local Board.

Generally, WorkForce21 has not recommended an aggressive pursuit of these opportunities for LTC clients. They are risky projects; have historically proved very problematic to LTC employers for various reasons; are highly competitive with employers seeking IT employees and ultimately they detract from the ladder opportunities to develop the domestic labor market. However, on a limited basis, it is possible to get a few good nurses from these sources and for certain employers they might be worth exploring.



There are many myths surrounding welfare recipients as potential workers and LTC and other employers have had much success in hiring employees from welfare populations. Most stereotypes surrounding welfare and other low-income clients are unfounded. Many of their real barriers to work are misunderstood. There are numerous incentives for employers to hire from welfare populations. In the short term (less than one year), both the employer and employee in an entry-level job benefit, with the employer getting an employee who is receiving benefit supplements making the job much closer to true self-sufficiency. However, it is critical that these supports exist, including on-going support for transportation and childcare. Employers have to participate is designing transportation solutions that can reasonably get workers to their places of employment with reasonable commutes. And they have to be concerned about how their employees integrate their family responsibilities into successfully managing their work responsibilities.

Despite the problems with past efforts at training, the goal of developing effective training strategies is beginning to be met. Helping welfare recipients improve their skills both before and after initial employment is still the best way to ensure that they receive higher-paying jobs AND to dramatically improve their retention with an employer or within an industry. A new model of training that combines basic skill education with job preparation, pre-employment, and post-employment support is an effective method to help welfare recipients retain jobs and advance in jobs in a way that past programs did not.

Retention based programs must emulate successful "best practices" models. They must include life skills training, case management and mentoring, while addressing support services. They will benefit if they include visionary components like FSA's and cross-cultural training.

Training programs that tie basic skill education to employment and provides comprehensive pre- and post- employment services have been found to produce very good retention and advancement results. Training in this model closely ties basic education to job skills, emphasizes businesslike standards within the program (timeliness, appropriate dress, etc.) in order to prepare students for the expectations they will encounter in the workplace, and provides career counseling and job placement services to students during the time that they are completing their basic education. It also provides post-employment support to participants to monitor their progress in their jobs, identify and resolve employment-related problems, provide immediate reemployment services if individuals lose their jobs, and help identify and promote further training and advancement opportunities.

The shortage of skilled workers in the nation as a whole, combined with the goal of helping welfare recipients and the working poor become self-sufficient, necessitates promoting skill attainment among low-income workers through effective training programs.

It is a win-win scenario with little cost to an employer when done properly. Indeed, the cost savings to an employer are enormous when recruitment, training and retention programs are properly designed and executed. And the costs to an employer for not making these investments are equally enormous. In the long run for most, disastrous. 


Select Web E & T Resources



Select Web E & T Research Resources

References and Footnote Annotations

Appendix A: Top 20 Projected Growth Occupations



Appendix B: Lower Living Standard Income Level (for a family of four persons) by Region1 


2001 Adjusted LLSIL

70 percent LLSIL

























1For ease of use, these figures have been rounded to the next highest ten dollars.

2Metropolitan area measures were calculated from the weighted average CPI-Us for city size classes A and B/C. Non-metropolitan area measures were calculated from the CPI-Us for city size class D.

3Nonmetropolitan area percent changes for the Northeast region are no longer available. The Non-metropolitan percent change was calculated using the U.S. average CPI-U for city size Class D.

4Non-metropolitan area percent changes for the West region are unpublished data.


 Appendix C : The 2001 Poverty Measure HHS Poverty Guidelines - One Version of the U.S. Federal

There are two slightly different versions of the federal poverty measure:

The poverty guidelines are the other version of the federal poverty measure. They are issued each year in the Federal Register by the Department of Health and Human Services (HHS). The guidelines are a simplification of the poverty thresholds for use for administrative purposes — for instance, determining financial eligibility for certain federal programs.

The poverty guidelines are sometimes loosely referred to as the "federal poverty level" (FPL), but that term is ambiguous and should be avoided, especially in situations (e.g., legislative or administrative) where precision is important. A more extensive discussion of poverty thresholds and poverty guidelines is available on the Institute for Research on Poverty's Web site.

2001 HHS Poverty Guidelines

Size of
Family Unit

48 Contiguous
States and D.C.




$ 8,590


$ 9,890





























For each additional
person, add




SOURCE: Federal Register, Vol. 66, No. 33, February 16, 2001, pp. 10695-10697.

NOTES: The separate poverty guidelines for Alaska and Hawaii reflect Office of Economic Opportunity administrative practice beginning in the 1966-1970 period. Note that the poverty thresholds — the original version of the poverty measure — have never had separate figures for Alaska and Hawaii.

The poverty guidelines apply to both aged and non-aged units. The guidelines have never had an aged/non-aged distinction; only the Census Bureau (statistical) poverty thresholds have separate figures for aged and non-aged one-person and two-person units.

Programs using the guidelines (or percentage multiples of the guidelines — for instance, 125 percent or 185 percent of the guidelines) in determining eligibility include Head Start, the Food Stamp Program, the National School Lunch Program, the Low-Income Home Energy Assistance Program, and the Children's Health Insurance Program. Note that in general, cash public assistance programs (Aid to Families with Dependent Children and its block grant successor Temporary Assistance for Needy Families, and Supplemental Security Income) do NOT use the poverty guidelines in determining eligibility. The Earned Income Tax Credit program also does NOT use the poverty guidelines to determine eligibility.

The poverty guidelines (unlike the poverty thresholds) are designated by the year in which they are issued. For instance, the guidelines issued in February 2001 are designated the 2001 poverty guidelines. However, the 2001 HHS poverty guidelines only reflect price changes through calendar year 2000; accordingly, they are approximately equal to the Census Bureau poverty thresholds for calendar year 2000. (The 2000 thresholds are expected to be issued in final form in September or October 2001; a preliminary version of the 2000 thresholds is now available from the Census Bureau.)

The computations for the 2001 poverty guidelines are available at the DHS website link through

Last updated 02/16/01


 Appendix D: Total Unspent TANF Funds by State (a/o 9/30/2000)


Appendix E: Increase in Unspent TANF Funds by State (FY 1999 - FY 2000) 



Appendix F: Unspent TANF Funds Explained



Appendix G: FY 1999 Final WtW/TANF Data by State - LTC Version



Appendix H