Ideas: The Path from Welfare to Work

"It is no harder to succeed in hiring and retaining someone on welfare than to succeed with someone who is not."

BY RAND ANDERSON, MBA '85

THE UNEMPLOYMENT RATE in the United States is at a historic low, while employment is at a historic high. The splendid job market--splendid for job seekers, that is--has bedeviled many businesses with labor shortages.
      In 1989 my company needed reliable entry-level workers and they were hard to find then, too. The problem had stared back at me for more than a year, since I had become COO of an electronics manufacturing company in California. We had a candidate pool from which to hire, but no one could predict which candidates would be reliable employees. At entry level, typically, there is little or no work history by which to judge. We found, too, that we were choosing among people who lived on a narrow economic ledge, only a paycheck or two from destitution. Many were clinging to the edge.
       Hiring and firing until we found the right candidate was not the right way. We lost days or weeks of training; we absorbed labor inefficiencies of workers with substandard job skills; the work life of regular employees was disrupted; and the sense of well-being in the workplace was undermined. We had to get better at developing workers through on-the-job training that also made good business sense. Before undertaking this project, I contacted California's employment development department for assistance. They sent brochures that described uninteresting tax incentives for hiring disadvantaged workers and an offer to post my job listings in the state database. In effect, there was no help.
       Through trial and error we learned to help ourselves. During the next five years my company employed and trained about 125 workers. Most of the employees who came through our informal program were disadvantaged; some were disabled; many were recent immigrants. Usually more than five different languages were spoken on the company premises.
       Here are some of the reasons why our program worked:
       * We prepared the company for the workers by developing supervisors and lead workers first.
       * We welcomed and strongly supported diversity by hiring sufficient numbers so that ethnicity, culture, and language did not stigmatize.
       * We trained our new employees for social workplace skills as well as job skills.
       * We defined successful outcomes in several different, but consistent, ways. For example, if any employees took the initiative to obtain technical training outside the company, we provided work that led them to tester or technician positions. We cross-trained promising employees in different functional areas and in supervisorial practices to prepare them for lead worker positions. We accepted that we could not offer a lifelong career to people; sooner or later, employees would leave us. We took their hiring by bigger companies as a sign of our success at training and development, and we celebrated their good fortune with them. We did not follow an up-or-out policy. We made long-term employment with cross training in different product assembly areas available. Finally, we kept consistent expectations and held regular performance reviews to discuss the expectations of the company and of the employee.
       We discovered that it is no harder to succeed in hiring and retaining someone on welfare than to succeed with someone who is not. We looked for good employees in both groups and we found good employees in both groups. Learning how to train and retain these new hires led our management team to improve policies and procedures in ways that were beneficial to the whole company and all of its employees, including the entry-level workers. In short, we became a better company.
       A few months ago, I learned from Virginia Hamilton, executive director of the California Workforce Association (CWA), that companies have a great deal more help in hiring and retaining employees now. Her organization is a statewide association of Private Industry Councils (PICs), local organizations that manage employment training programs and related services in most communities of California. There are 640 PICs in the United States, serving communities across the country.
       Hamilton works at the intersection of business, government, education, and community. She joined CWA two years ago from a state employment development department, where she oversaw worker-training programs. Under her leadership, CWA and its members have organized with local elected officials, economic development groups, colleges, and government and community-based organizations to solve workforce problems as defined by the business community.
       Hamilton explained to me that the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, federal legislation, has replaced Aid to Families with Dependent Children with a new program, Temporary Assistance to Needy Families (TANF). Along with TANF, workforce development programs have been funded that give states and counties greater latitude and responsibility in helping welfare recipients, and unemployed people generally, to find work. These are the so-called welfare-to-work programs that we read about in the headlines.
       These changes have inscribed into law that a job, not a dole, should be the first refuge of the indigent. If the adult TANF recipient (more than 80 percent of whom are single mothers) does not meet the job requirements of the program within 24 months, then her federal benefit can be cut off. (The states can exempt up to 20 percent of their hardest-to-serve clients from this requirement.) Moreover, welfare-to-work limits the federal welfare benefit of an adult to 60 months during a lifetime. Thereafter, if aid is needed, either counties or private charities will have to supply it.
       If recipients where you live do not become self-supporting, then your county will bear the cost, probably through its locally funded general assistance program. The potential cost is huge. In California, for example, there are about 650,000 households with adults at risk of losing federal benefits. So, it is very important that every person who can work does. Able-bodied adult applicants for TANF assistance are directed first to an organized job search program aptly called Work First. This approach seems to be effective. Nationwide, the number of welfare recipients has fallen from 12.6 million in 1996 to 8.4 million in 1998.
       In order to test the extent of the changes that Hamilton and civic entrepreneurs like her have made, I asked the PIC in my community how it would help me fill entry-level positions. I was directed to a neighborhood One Stop Career Center, the gateway to employment services for employers and prospective employees, which outlined a plan for me.
       They would define my company's job requirements and assemble a pool of applicants whom they would screen and then test for the required skills. They would arrange interviews at my facility or at the career center and then help the successful applicants arrange and pay for child care and transportation. The center will also help small businesses file for substantial federal tax credits. Depending on the new hire's welfare-to-work target group category, tax credits ranged from $2,400 (40 percent of first-year wages up to $6,000) to $8,500 (35 percent of first-year wages up to $10,000, plus 50 percent in the second year).
       In my community these services are delivered at no charge. I can work with the One Stop Career Center in any neighborhood or receive referrals from all career centers. If I need employees with specific technical training, I can work through a career center located at a community college.
       Here is how you can start to explore this opportunity: Contact the Private Industry Council in your area. Many local PICs have Web sites. If your business is located in California, visit http://www.calworkforce.org, the California Workforce Web site, and use the service delivery area database to learn how to contact the PIC in your county. If your business is outside California and you cannot find the local PIC, then visit http://www.work-web.com/napic, the Web site of the National Association of PICs.
       Speak to the career center supervisor or the job developer at your local PIC. Confirm that they offer the services that you want. Be prepared to shop. The service offerings of career centers are not the same at every site.
       In closing, let me give you three reasons Business School alums should invest time in helping welfare recipients return to the workforce. First, we manage businesses that need productive workers. Finding them is important to the future success of our companies. Second, this issue will affect the quality of our lives. We live in the counties upon which welfare-to-work legislation will have an enormous impact. If welfare recipients are employed, then our counties don't pay the cost of assisting them. That money becomes available for schools, parks, and the arts. Finally, even if we have enough money to insulate our families from the immediate, direct impact of this legislation, our communities have a claim on our support. We have a moral obligation to support the well-being of our community.
       Do you remember when you wanted to change the world? You can. Change the world of a TANF family by hiring and retaining a TANF adult. Start today.