Administrative Privatization and Employment Outcomes in the Implementation of Temporary Assistance to Needy Families

Abstract

Background: Welfare reform in the 1990s encouraged states and localities to contract out cash assistance services to for-profit and nonprofit firms operating within the private sector. Although privatized welfare delivery was heralded in the wake of Temporary Assistance to Needy Families (TANF), scant empirical research evaluates welfare privatization and its potential relationship with administrative quality and program outcomes. Objectives: This study examines the relationship between administrative privatization and TANF program outcomes, including work participation activities, unsubsidized employment, employment closure, and monthly earnings, across a large sample of individual welfare clients in the state of Florida. Results: The results of methodologically appropriate hierarchical linear models demonstrate that ownership variables seldom enhance the quality of TANF outcomes, suggesting that privatization alone is not an administrative panacea in human support services. Although direct privatization effects are often found to be substantively small and inconsistent in terms of service quality improvement, in closed-case models, there is evidence that nonprofit welfare delivery is associated with superior TANF employment closure outcomes.