Mediating Impact of Social Capital and Human Capital on Employment Outcome among Single Women Who Use Welfare: A Structural Equation Model

With the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996, Congress ended “welfare as we know it” and formally adopted a workfare approach. However, families continue to be trapped in the “low-wage ghetto”. Therefore, research is needed that investigates effective routes out of poverty. Studies have found that welfare recipients with higher educational attainment work more and earn significantly higher income than those with lower educational attainment. However, very little research exists around the relationship between social capital and labor force participation. Four research questions guided this study: (1) How do demographic variables affect social capital and human capital among single women who use welfare? (2) How do social capital and human capital affect employment outcome? (3) Do social capital and human capital act as mediators between demographic variables and employment outcome? (4) How do macro-level variables (i.e., city unemployment rate and state TANF policy) affect employment outcome? This study analyzed Wave 2 (2005-2007) data from the Making Connections Cross-Site Survey database. 1,428 women with no spouse/partner present in the household who indicated use of a TANF/welfare office in the last 12 months were selected for inclusion in the study sample. An exploratory factor analysis was conducted to extract factors that underlie the social capital construct and to identify the indicators that were associated with each of those factors. Five social capital factors emerged: support giving social capital, bonding social capital, bridging social capital, value sharing social capital, and support receiving social capital. Structural equation modeling was used to answer the major research questions in this study. This study found that older participants had a lower level of human capital, support giving social capital, and support receiving social capital than their younger counterparts. Additionally, older recipients had a worse employment outcome. Human capital and support giving social capital were positively associated with employment outcome, meaning that a higher level of human capital and giving support to family and friends were associated with a better employment outcome. In contrast, receiving support from family and friends was associated with a worse employment outcome. Human capital, support giving social capital, and support receiving social capital were found to mediate the relationship between age and employment outcome. Furthermore, more generous state TANF policy was associated with a worse employment outcome. Finally, there was sufficient evidence that factor loadings differed across race/ethnicity, presence of child under the age of 6, and ownership of a vehicle. This study has implications for policy, practice, and research. First, federal TANF policy should be amended to encourage the accumulation of human capital. Second, community participatory interventions are needed to increase social capital. Third, research is needed that will develop a measurement tool that can be tailored to measure social capital among low-income families. Longitudinal research is needed to examine the impact of social capital on employment in the long-term.