CSAT Publications -- TAP 25, The Impact of Substance Abuse Treatment on Employment Outcomes Among AFDC Clients in Washington State

Chapter III - Results: The Impact of Substance Abuse Treatment on Employment Outcomes Among AFDC Clients

This chapter presents findings from the descriptive and statistical analysis regarding the effects of substance abuse treatment on employment outcomes for 5,664 AFDC clients who were admitted to publicly funded substance abuse treatment in Washington State.

a. AFDC Clients' Earnings and Welfare Payments Before and After Substance Abuse Treatment

b. Statistical Analysis

c. Descriptive Analysis

A. AFDC Clients' Earnings and Welfare Payments Before and After Substance Abuse Treatment:

Trends and patterns in earnings and welfare payments for the study's 5,664 AFDC clients over time are noted below. Because the data are not adjusted to account for differences in age, gender, education, or other factors that may affect treatment outcomes, conclusions about the effects of substance abuse treatment on AFDC clients' earnings and welfare payments should not be made on the basis of this information alone. Results of the multivariate statistical analysis, controlling for independent variables, are presented in the section that follows.

1. Profile of AFDC Clients' Earnings Before and After Substance Abuse Treatment

As shown in Figure III-1, quarterly earnings for the AFDC clients in the study population were modest both before and after substance abuse treatment. Average quarterly earnings for all 5,664 clients as well as for the 3,884 clients who had any earnings, initially declined before substance abuse treatment and then rose after treatment.

The bottom line in Figure III-1 indicates that average quarterly earnings for the population of all 5,664 AFDC clients rose every quarter after substance abuse treatment. Even at their maximum, however, average quarterly earnings for the 5,664 clients were only $800, or just $267 per month.

Among the 3,884 AFDC clients with any earnings whatsoever (earnings > $0) in the tracking period, average quarterly earnings increased by approximately 30 to 40 percent after treatment, as shown by the upper line in Figure III-1. Even for this subgroup of AFDC clients, though, average quarterly earnings were still very modest 8 quarters after substance abuse treatment-on the order of $1,200, or $400 per month.

Average quarterly earnings among the 5,664 AFDC clients varied by education level, as illustrated in Figure III-2. Before substance abuse treatment, the clients with a high school degree or post-high school training earned more than clients without a high school degree. The differential grew

after substance abuse treatment. By 8 quarters after treatment, AFDC clients with a high school degree earned 35 percent more than the clients without a high school degree. Earnings also varied by racial/ethnic group. Both before and after substance abuse treatment, average quarterly earnings were higher for some racial/ethnic groups than for others. As shown in Figure III-3, Asian and other clients (including a small percentage of Hispanics) had the highest average quarterly earnings; white clients had the second highest average quarterly earnings; and black and Native American clients had the lowest average quarterly earnings. 

The distribution of aggregate income levels among the 5,664 AFDC clients over the 8-quarter period following substance abuse treatment is shown in Table III-1. Forty-two percent of the clients had no earned income; 14 percent earned between $1 and $1,000; and another 11 percent earned between $1,001 and $3,000. Only 11 percent of the 5,664 AFDC clients had aggregate earned income exceeding $15,000 during the 8-quarter period following treatment.

 

Table III-1. Distribution of Aggregate Income Levels Among AFDC Clients in the 8 Quarters Following Substance Abuse Treatment (N = 5,664)
Income Levels	Percent of AFDC Clients
$0 (no earnings)	42%
$1 to $1,000	14%
$1,001 to $3,000	11%
$3,001 to $8,000	13%
$8,000 to $15,000	9%
$15,001 +	11%

Aggregate earnings among the AFDC clients obtaining at least part-time employment were substantially greater for treatment group clients than for comparison group clients (Figure III-4b). For example, the average aggregate income for clients in the outpatient treatment group was $10,718, compared with $6,954 for clients in the outpatient comparison group.

2. Profile of Welfare Payments to AFDC Clients Before and After Substance Abuse Treatment

Average Quarterly Welfare Payment Amounts to AFDC Clients. Figure III-5 shows the actual welfare payment amounts per quarter over the 10-quarter tracking period for the 4,320 AFDC clients. Quarterly welfare payments to these clients increased from $848 to $976 during the 4-quarter period before substance abuse treatment, reached $1,079 in the first quarter after treatment, then gradually declined to $762 in the 6 quarters after treatment.

At the time of this study, the average AFDC payment in Washington State was $349 per month for a two-person family (one parent and one child) and $440 per month for a three-person family. Beneficiaries could earn up to double their monthly welfare payment and still remain eligible for cash grants, food stamps, and medical assistance, but their cash payment would be reduced, depending upon the level of income they reported.

Number of Quarters That AFDC Clients Spent on Welfare. The 4,320 AFDC clients varied with respect to the amount of time they spent on welfare, as shown in Figure III-6. During the 10-quarter tracking period (4 quarters before treatment and 6 quarters after treatment), about 14 percent of the clients received cash grants for only 1 or 2 quarters, 30 percent received payments for 3 to 6 quarters, nearly 30 percent received payments for 7 to 9 quarters; and 27 percent remained on welfare continuously.
 

Trends in Quarterly Welfare Payments to AFDC Clients in the 6 Quarters Following Substance Abuse Treatment. The three figures below show trends in quarterly welfare payments during the 6-quarter period after substance abuse treatment for AFDC clients in treatment and comparison groups for outpatient treatment (Figure III-7), intensive (non-hospital) inpatient treatment (Figure III-8), and methadone maintenance (Figure III-9).
 

Welfare payments to AFDC clients in the treatment groups declined by 25 to 35 percent in the 6 quarters following substance abuse treatment. For clients in the outpatient treatment group, quarterly welfare payments declined by 31 percent in the 6-quarter followup period, from $1,130 per quarter to $785 per quarter. For clients in the inpatient treatment and methadone groups, the respective reductions were 27 percent and 25 percent. The pattern of declining welfare payments was similar for comparison group clients.

This pattern of reduced welfare payments to AFDC clients in the 6-quarter post-treatment period is consistent with the pattern of increased post-treatment earnings shown in Figure III-1. Statistical analysis showed that post-treatment earnings and welfare payments were negatively correlated (r= -.24, p < .01). It is important to note however, that factors besides income affected clients' welfare payments. First, AFDC clients in Washington State were subject to certain work requirements during the study period; failure to meet these requirements could result in a sanction and suspension of welfare payments. Second, a change in AFDC clients' living arrangement or housing situation could also affect the clients' cash grants. Third, some AFDC clients may have moved out of the State or died.

Information on these conditions and changes was unavailable at the time of this study. Given their existence, however, readers should use caution in interpreting the welfare payment data presented in this report. It was not possible to control for these unmeasured factors, so assessing the effects of treatment on welfare payments through formal statistical analysis was viewed as inappropriate.

B. Statistical Analysis:

The Effects of Substance Abuse Treatment on AFDC Clients' Employment and Earnings

Statistical techniques (logistic and multiple linear regression) were used to determine the effects of substance abuse treatment on employment outcomes among the AFDC clients adjusting for various client characteristics identified previously. The major findings of the statistical analysis are presented below. More detailed results are presented in the technical appendix at the end of this document.

1. Effects of Substance Abuse Treatment on AFDC Clients' Employment Outcomes
 

Regression analysis, using two different measures of employment outcomes, indicated that substance abuse treatment had a positive effect on employment outcomes for AFDC clients in the study population.
In the first logistic regression analysis, employment was defined as any earned income whatsoever. Figure III-10 shows the results, presented as adjusted odds ratios that AFDC clients who received substance abuse treatment would have any earned income during the 8-quarter period following substance abuse treatment. By definition, a comparison group has an odds ratio of 1.00. Thus, an odds ratio of 1.64 for a treatment group indicates that the average client in the treatment group is 64 percent more likely than a counterpart in the comparison group to have earned income, other factors held constant. Although only one comparison group is illustrated in the figure, the odds ratios presented are based upon analyses of separate comparison groups corresponding to the three treatment groups (see Appendix).
 

As shown in Figure III-10, AFDC clients in each of three substance abuse treatment groups-intensive inpatient, outpatient, and methadone maintenance-were more likely than their counterparts in the comparison groups to have some earned income in the 8-quarter period following substance abuse treatment. Clients completing intensive inpatient treatment were 64 percent more likely to have earned income than their comparison group counterparts. Clients in the outpatient treatment group (clients staying in outpatient treatment for 90 days or more) were 26 percent more likely to have earned income than their comparison group counterparts (clients staying in outpatient treatment less than 21 days). Clients in the methadone treatment group (clients completing at least 120 days of methadone treatment) were 50 percent more likely to have earned income than their comparison group counterparts (clients staying in methadone treatment less than 60 days). Each of the odds ratios shown in the figure achieved statistical significance (p < .05).

Figure III-11 shows the results of a second logistic regression analysis, with employment defined as earnings of at least $1,500 in 1 of the 8 followup quarters. (An income of $1,500 in a quarter is roughly equivalent to working half time at an hourly rate of $6.) The magnitude of the substance abuse treatment effect is somewhat larger when this measure of employment is used.
 

AFDC clients in the three substance abuse treatment groups were 60 to 100 percent more likely than their counterparts in the comparison groups to have earned at least $1,500 in 1 or more quarters in the 8-quarter followup period. Clients in the inpatient and outpatient treatment groups were about 65 percent more likely than their counterparts in comparison groups to obtain work and earn at least $1,500 in 1 of the followup quarters (p < .05). Clients in the methadone treatment group were twice as likely as their counterparts in the comparison group to have earned $1,500 in a quarter (p < .05).

2. Effects of Substance Abuse Treatment on Aggregate Earnings Among AFDC Clients Who Became Employed at Least Part Time

The 58 percent of AFDC clients in the study population who had at least some earnings in the 8 quarters following substance abuse treatment (see Table III-1 presented earlier) were included in the earnings analysis. (Data on the actual number of hours worked by these individuals were unavailable.)

An OLS regression analysis was performed to examine the impact of treatment on aggregate earnings for AFDC clients (see Appendix). The results are depicted in Figure III-12, which shows the adjusted aggregate earned income of the average AFDC client in treatment and comparison groups for each of the three treatment modalities. In this context, average means having characteristics representative of the majority of clients within a given treatment modality (i.e., being white, a woman, single, of average age and education, with a primary substance of abuse of alcohol, and having other representative characteristics).
 

Aggregate earned income was higher for the average AFDC client in each of the three substance abuse treatment groups than for the average AFDC client in the comparison groups. Differences in earnings for clients in treatment and comparison groups ranged from $1,723 for clients in intensive inpatient treatment to $3,280 for clients in outpatient treatment (p-value range, .001 to .05).

3. Effects of Time on Welfare on AFDC Clients' Post-Substance Abuse Treatment Earnings

The question of whether AFDC clients' time on welfare prior to receiving substance abuse treatment affected post-treatment employment and earnings was examined through a subanalysis of AFDC clients in outpatient treatment (there were too few clients in the other two modalities to permit analysis). Time on welfare was found to have an effect on post-treatment earnings.

AFDC clients in the study population were divided into two groups, depending on the number of quarters they received welfare cash grants in the 6-quarter period prior to receiving substance abuse treatment. The first group included AFDC clients who had received welfare payments in 4 or more of the 6 quarters (57 percent of clients); the second included clients who had received welfare payments for 3 or fewer of the 6 quarters (43 percent of clients). The analysis then compared aggregate earnings in the 2 years following treatment for clients in these two groups (see Appendix).

Figure III-13 shows that outpatient AFDC clients' time on welfare in the 6-quarter pre-treatment period had a substantial effect on their aggregate earnings. Individuals who had been on welfare for 4 or more quarters in the 6-quarter pretreatment period had lower aggregate earnings in the 2-year post-treatment period than individuals who had been on welfare for 1 to 3 quarters in the 6-quarter pretreatment period. Clients in the outpatient treatment group who had been on welfare 4 to 6 quarters prior to treatment had predicted aggregate earnings of $3,993 over the 2-year post-treatment period; their comparison group counterparts had predicted aggregate earnings of only $1,615 over the same period (p < .05).

Comparable and statistically significant differences were found for AFDC clients who had been on welfare for fewer than 4 quarters in the pretreatmentperiod. Clients in the treatment group who had been on welfare 1 to 3 quarters prior to treatment had predicted aggregate earnings of $6,192 over the 2 years following treatment; their comparison group counterparts had predicted aggregate earnings of $3,814 for the same period.

C. Descriptive Analysis:

AFDC Clients' Employment and Earnings in the First Year of TANF's Implementation.

TANF was implemented in Washington State in the third quarter of 1997. Data from State administrative databases were used to perform a preliminary analysis of the pattern of employment and earnings among welfare recipients during the first year following implementation. For this analysis, no treatment/control-group comparisons were made; the data were treated as purely observational.

Figure III-14 shows trends in the percentage of AFDC clients in the study population who became employed-using as the measure of employment earned income of at least $100 in a given quarter-over the period from 1993 to 1998. The percentage of AFDC clients with quarterly earned income of at least $100 increased over time, but this trend began well before Washington State's implementation of TANF in the third quarter of 1997. Nonetheless, the positive trend.

continued such that by the third quarter of 1998, 38 percent of the 5,664 AFDC clients in the study population had earned income of at least $100. Figure III-15 shows trends in average quarterly earnings among AFDC clients in the study population-all 5,664 clients and the 2,793 clients with quarterly earnings of at least $500-over a 5-year tracking period from 1995 to 1998.

For both groups of AFDC clients, there is a trend of increasing earnings, but again the trend began well before TANF's implementation in the third quarter of 1997. By the third quarter of 1998, the average quarterly earned income among all 5,664 AFDC clients (about 60 percent of whom hadno income) was $1,004. Even among the 2,793 clients who participated in the labor force, as indicated by having earnings of at least $500, the average quarterly earned income in the third quarter of 1998 was a very modest amount-$1,689, or $563 per month.
 

For further information, contact the CSAT staff at 240-276-2750.