The Temporary Assistance for Needy Families (TANF) program has the unique potential to help people attain better jobs and break the cycle of poverty. The program provides cash assistance for families with children, and aims to have children cared for in their own homes and to reduce government benefit use by encouraging job preparation. But TANF work programs are currently failing to improve participants’ employment outcomes and long-term earnings.

Complicating matters, the COVID-19 pandemic laid bare many weaknesses in TANF and other social safety net programs, including racial disparities that can amplify inequalities if the programs continue unaltered. States can improve their TANF programs by investing in employment preparation tailored to community needs and responsive to labor market demands, and with these changes, they can generate opportunity and create meaningful, lasting improvements in participants’ lives.

TANF’s transitional work programs have fallen short

In part, TANF’s design creates problems in its work programs. TANF centers work by obligating participants to meet certain work requirements to receive supports, and failure to meet these requirements leads to people losing access to cash assistance and support services. Notably, the program doesn’t stipulate or encourage a higher quality of work (e.g., higher wages, more stability, transferrable skills). At a state level, failure to meet the federally set workforce participation rate (WPR) results in reductions in federal funding by increments of 5 percent of the total block grant each year.

The WPR has limited usefulness. Designed to capture the share of households in a state’s TANF caseload in which a family member is working or engaged in “welfare-to-work” activities, it doesn’t assess the efficacy of work programs or work activities; it does not collect adequate data on education, training, caregiving, and activities that remove barriers to employment; and it effectively forces caseworkers to focus on tracking participants’ compliance.

Additionally, federal policy requires that families participate in qualifying work activities for 20 to 55 hours per week, which changes based on the number of parents in a household, children’s ages, and other child care supports a family receives.

Although some work activities, including subsidized and unsubsidized employment, on-job training, and vocational education programs, qualify as “core activities,” and fulfill work requirements, others (e.g., job-skills training or education related to employment) are designated as “noncore activities” and only qualify as “work” once the household has met the required minimum hours for core work activities. This delineation, alongside extremely limited data collection requirements, complicates transitional work programs’ success measures and states’ abilities to redress programmatic issues.

The value of sectoral work programs

Short of changing federal law, states can take steps to improve their TANF programs and lessen obstacles that can hinder recipients’ success. One promising option for states is investment in sectoral work programs.

Sectoral work programs train participants for high-demand job sectors that pay well for people who don’t hold four-year degrees (e.g., health care, IT, manufacturing). These programs usually take six months or fewer to complete. They combine traditional workforce program elements (i.e., occupational skill and work-preparedness training) with wraparound support services, such as life skills training, job placement, and postprogram follow-ups. Research shows that people who successfully complete sectoral work programs are more likely to be employed, achieve consistent employment, obtain higher wages, and work in jobs that offer more benefits. These effects persist long-term too.

Because sectoral work programs prepare participants for higher-wage jobs in in-demand fields, rather than just increasing participant employment rates or hours worked, they show promise as tools to increase economic mobility and security for people of color, which could help break cyclical poverty.

An evaluation of Project QUEST (PDF), a sectoral work program in San Antonio, Texas, found that every program dollar generated $9.51 in increased income for program graduates, $6.04 in economic impact, and $3.77 in social savings. Sixty-one percent of Project QUEST’s graduates were Latinx and 12 percent were African American, demonstrating the potential of the sectoral work program model for families and communities of color.

Currently, states spend about 12 percent of TANF funds on work activities and work supports, while diverting funds away from income support for families and toward other, often unrelated, state budget areas. States interested in exploring sectoral work programs can redirect unused TANF funds toward promising opportunities. States can design the sectoral work programs to qualify as core activity vocational education training so TANF recipients can participate in these programs to meet their work requirements for up to 12 months.

Because local programs can be more tailored to community needs and opportunities, they tend to have more success supporting people who face multiple barriers to work. By using their unspent TANF funds to provide grants to promising sectoral work programs, states can ensure the programs are based in evidence and include data collection mechanisms to assess whether the program presents a good investment and leads to documented positive outcomes.

Pursuing this method of work investment can allow states to meet WPR requirements and improve the efficiency of public spending supporting the people most in need and combatting cyclical poverty. If successful, states could work toward shifting more TANF funds toward strong sectoral work programs so TANF funds demonstrably improve opportunity and help families out of poverty.