From Welfare to Work

By Ann Pomeroy February 1, 2008

HR Magazine, February 2008 In 1996, legislators sought to 'end welfare as we know it.' More than a decade after reform, the program serves as a conduit to employment.

"If you're on welfare, we think we know all about you," says Julie Kirksick, executive director of the New Hope Project in Milwaukee, a nonprofit organization that helps welfare-to-work participants and other hard-to-place workers find jobs.

Welfare myths tend to have a long life. In the 1980s, President Reagan told a story about a "welfare queen driving her welfare Cadillac." According to the president, she was a Chicago woman who had ripped off $150,000 from the government using 80 aliases, 30 addresses, a dozen Social Security cards and four fictional dead husbands. When reporters tried to find the woman, however, they discovered that the story was apocryphal.

Decades later, this 1980s image still haunts the public mind, says Deborah Schlick, executive director of the Affirmative Options Coalition, a Minnesota policy advocacy organization that promotes state and federal welfare policies to help low-wage Minnesota workers.

Yet the U.S. welfare system has undergone significant changes since President Reagan's time. The most dramatic changes went into effect on Aug. 22, 1996, when President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, the first major overhaul of the welfare system since the New Deal era of the 1930s. The lofty goal of bipartisan welfare reform was to "end welfare as we know it" by requiring work in exchange for time-limited assistance.

Moving off welfare proves to be a complex, erratic process, but an increasing number of employers have discovered business advantages in providing training, flexible work arrangements and other assistance to such employees. Companies of all sizes now work with federal, state and local employee placement groups to identify and develop highly motivated workers. Here are their stories.

Falling on Hard Times

Julia Doyle says she "fell on hard times" after overwhelming life events. In 1990, her mother was killed by a drunk driver. Doyle, who had two children at the time, was working at Marquette University in Milwaukee. Determined to bring the driver to trial, Doyle began missing work. Eventually, she lost the job she had held for 10 years.

(View chart, Recipients of Federal Cash Assistance.)

In 1991-92, Doyle gave birth to two more children. Her last child was born prematurely on the day the driver who killed her mother came to trial. With little financial help from the children's fathers, Doyle wound up on welfare.

Doyle admits that she used drugs during this period. Then, one day when she was buying "my week's stash," she discovered that her son had witnessed the transaction. "I realized then that children are videotaping your life," she says. It was the wake-up call she needed to begin turning her life around. A neighbor told Doyle about the New Hope Project's welfare-to-work research program, and she applied. "I won the lottery," she says, when she was randomly selected as a participant.

Kirksick says the goal of the three-year program was to help low-wage workers get out of poverty through work." 'If you work, you should not be poor' was our guiding principle," she says.

The New Hope Project was open to adults 18 or older in Milwaukee's poorest neighborhoods. Following the program model that continues today, participants were required to work 30 or more hours each week; New Hope subsidized temporary community-service jobs for those unable to find work on their own after eight weeks. They received cash supplements that raised their incomes above the poverty level while they continued to search for permanent employment. New Hope also subsidized child and health care. Doyle credits the program with making it possible for her to "get back on track." Today, she is a full-time administrator and has worked for the same employer since 1997. She also served on the New Hope board for several years. With her youngest children doing well in private school and her daughter a freshman at Marquette University, Doyle's back in school, too, working toward a degree in leadership and development at Marquette.

The 'Long-Term Detached'

Although Doyle went through some hard times, she was able to care for her children and rejoin the workforce with help. For some long-unemployed people, however, the situation can be more intractable, says Toby Herr, founder and director of Project Match in Chicago.

The nonprofit organization matches employers and employees and has helped many of Chicago's poorest people find jobs since 1985. Project Match began operations in the notorious Cabrini-Green neighborhood, a public housing complex where drugs and gangs flourished. In 2003, the Chicago Housing Authority began tearing down the neighborhood's Henry Horner Homes and building mixed-income housing.

Herr's clients include the "long-term detached." She says "the work ethic is missing" for many. Some may have grown up on welfare; others are unable to work because of serious disabilities, including psychological problems. Project Match operates today on Chicago's Near West Side in West Haven,and continues to act as an intermediary between employers and clients attempting to make the often-difficult transition into the full-time workforce.

Herr has tracked Project Match's efforts with hard data (see the online sidebar "A Welfare-to-Work Track Record"). Dedicated to her work, she says helping people progress toward full-time employment requires "starting where they are and building gradually," and measuring progress "by the distance traveled" rather than by the final outcome.

Warrine Pace, director of services at the West Haven center, is equally passionate about the value of this work and serenely competent as she prepares clients for job interviews. In addition to helping each candidate with resume preparation, interview practice, and advice about appropriate clothing and behavior, Pace and her staff conduct a complete background check, including criminal convictions, on each participant.

'Do You Want to Change Your Life?'

Joyce Bailey, one of Project Match's first participants, was an early success. She spotted a sign one day at her neighborhood health center. The sign offered a question: "Do you want to change your life?"

At the time--the mid-1980s--Bailey was on welfare. She had dropped out of high school in 1976 when her first child was born and then had a second child. Her husband was unable to provide much financial support. Bailey went to the Project Match service center to learn more. "Toby and Warrine have been my friends ever since," she says.

Pace takes a step-by-step, "crawl before you walk" approach that breaks seemingly insurmountable tasks into manageable chunks. "It's a process," she told Bailey as she guided her through moving off welfare. First, finish high school, either by going back to her old school or by passing the high-school equivalency exam.

Bailey chose the exam, but was dismayed when she failed. She tried again, though, and passed on the second try. That hurdle cleared, she began volunteering at the health center, and that led to part-time paid work. Ultimately, she moved into a full-time job as a school health aide and case manager. By then, Bailey had four children. With Pace's encouragement, however, she went back to school part time while working and caring for the children. "It was so hard," she says. "I kept saying, 'I can't do this,' but Warrine and Toby kept saying, 'Yes. You can do it.' "

And she did--first earning an associate's degree and then a bachelor's degree in sociology and criminal justice. Bailey says the women at Project Match were so encouraging that she didn't want to let them down. She's thinking about going back to school for a master's degree.

Regina Allen came to Project Match in 2000. Her job history was erratic. Like Bailey, Allen had dropped out of high school. She gave birth to her first child at 19, followed quickly by four more, and spent seven years on welfare before taking a series of low-wage temporary jobs.

With help from Project Match, Allen became interested in security work and completed a 20-hour security training course. In October 2007, she was hired as a security officer. Now she's looking ahead to weapons training that would prepare her for more-lucrative positions as an armed security officer.

Employers Count on Pace

Pace has developed strong relationships with Chicago area employers, including Silverhawk Security where Elaine Crossman handles human resource functions.

"Warrine sends me all good people," says Crossman, who hires about a dozen Project Match clients each year. Many of these employees receive some government assistance. Crossman knows that Project Match-trained candidates have passed criminal background checks--essential for security jobs. She knows, too, that they will have up-to-date resumes and be well-prepared for their interviews.

Crossman understands the difficulties faced by single mothers with few job skills and little money, because she was in that situation. Crossman had two children while still in her teens and received food stamps when they were young. Like Allen, she started as a security officer at Silverhawk; she points out that Silverhawk's beginning security officers have the same opportunities to advance as she did.

Nathan Thomas, a branch manager at Andy Services, tells a similar story. His company is one of an increasing number of security firms in Chicago since the Sept. 11, 2001, terrorist attacks. Like Crossman, Thomas began as a security officer and relies on Project Match for qualified candidates. Today, he mulls the possibility of starting his own business.

The End of Welfare as We Know It?

Schlick assesses the results of welfare reform this way: "We did not really end welfare as we know it. We took the basic architecture of the program and redecorated it." She points out that the federal Temporary Assistance to Needy Families (TANF) program of cash assistance for very poor mothers with children-- the replacement for Aid to Families with Dependent Children (AFDC)--is still delivered through county or state welfare offices. As a result, "All the stigma the public associate with the AFDC program, it continued to associate with the welfare-to-work programs that replaced it."

But Schlick says valuable lessons were learned from reform. First, the general economic climate has a major impact on welfare reform's success. People will work if jobs are available. If the jobs don't pay well, however, work won't get them out of poverty, she says. For example, the parent of a family of three working 37 hours a week for the minimum wage earns well below the Minnesota poverty level of $16,000 each year; nevertheless, that parent loses all cash welfare assistance.

The size of welfare cash grants matters, Schlick continues. That same family of three receives $532 a month as a TANF payment in Minnesota, an amount that has not increased since 1986. That's well below the rent for a two-bedroom apartment in a metropolitan area, she adds, thereby refuting the myth of living high on welfare.

Discouragingly, "We have not figured out how to help those who most inspired welfare reform--the relatively few families who use welfare for long periods of time," Schlick adds. "We thought we were dealing with character and motivation issues. Instead, we are dealing primarily with disabilities [often psychological ones]."

Ellen S. Alberding, president of the nonprofit Joyce Foundation, a funding source for research by groups in the Great Lakes area such as Project Match and the New Hope Project, says Congress' reauthorization of the welfare reform law in 2006 "largely sidesteps" these concerns. Nevertheless, says Douglas Besharov, a professor at the University of Maryland's School of Public Policy, "it's great news that a lot of people have left welfare since 1996. The big surprise of the last 10 or 15 years is how many low-skilled, low-income women have been able to enter the workforce." Besharov directs the Welfare Reform Academy, helping managers and planners decipher the intricacies of the federal block grant system for states.

In fact, the welfare rolls have been cut in half since the reform act went into effect. In its TANF Seventh Annual Report to Congress in December 2006, the U.S. Department of Health and Human Services' Office of Family Assistance reported a decrease of 54.4 percentage points in families receiving AFDC or TANF aid from August 1996 to September 2003 (see line graph, and table).

However, many former TANF recipients have moved off welfare and into the ranks of the working poor whose incomes remain below the poverty level. According to the U.S. Census Bureau, 12.2 percent of all U.S. families were living below the poverty level in 1996; by 2002, the latest year for which figures are available, that percentage had decreased by less than 2 percentage points, to 10.4 percent.

(View chart, Recipients of Temporary Assistance to Needy Families.)

The percentages are much higher for families headed by single females. In 1996, 35.8 percent of these families lived in poverty; in 2002, the figure was 28.8 percent. Elizabeth Lower-Basch, a senior policy analyst at the Center for Law and Social Policy in Washington, D.C., agrees that there has been a "huge increase" in single moms working now that cash assistance is less available. But "about 40 percent of low-wage workers have no sick leave or family leave," she points out. "The question we should be asking now is what do [these workers] need to succeed?"

She maintains that health insurance, education, training and child care remain most pressing. Recent changes to the Deficit Reduction Act of 2005 that make the requirements for receiving cash assistance increasingly restrictive are "a step in the wrong direction," she says. For example, as of Oct. 1, 2006, state welfare-to-work programs are required to meet a minimum of 50 percent work participation by single-parent TANF families. That creates a "vicious cycle" that puts even greater pressure on single parents to participate in welfare-to-work programs without providing them with the basic tools to make success possible, says Lower-Basch. "The middle class has work/life problems, too, but their situations are usually not as fragile as those of low-wage workers."

A Step in the Right Direction

There are "two worldviews" about what causes people to stay on welfare, says Kirksick: Some blame the person, while others blame structural problems within the welfare system. "I think it's some of both," she says.

Kirksick agrees with Schlick that the lack of affordable health care and child care represent stumbling blocks for many, who "cycle in and out of jobs without finding traction." She also agrees that the Deficit Reduction Act's stringent requirements push single parents to participate in welfare-to-work programs, while the low-wage jobs they qualify for seldom provide the essential benefits that would allow them to succeed. But she has high praise for the earned income tax credit (EITC) that reduces tax payments for low-wage workers. "It's the U.S government's greatest single anti-poverty program," according to Kirksick.

That sentiment was echoed recently by members of the American Economic Association. In a survey released in July 2007, 70 percent of these labor economists responded that expanding the EITC would be the most effective tool for fighting poverty; 64 percent said it would lead to gains in employment. Overall, many sources agree with Herr's assessment of the 1996 overhaul as "one of the government's most successful public welfare programs."

Writing in Beyond Barriers to Work: A Workforce Attachment Approach That Addresses Unpredictability, Halting Progress and Human Nature (Project Match-Families in Transition Association, February 2007), Herr notes that critics of the 1996 reform "have called the legislation a failure, since … many of the families that left welfare for work are still poor. But what were these families' earnings before welfare reform? For many, zero."

From a human-development perspective, the progress of clients like hers is dramatic, says Herr. "Considering where these families started and where they are now, their progress as workers is significant, and not just in terms of changes in earnings." The changes in "attitudes, behaviors, self-identity, relationships with friends and family, and status in the community" are even more impressive and heartening, she notes.

Steve Wing, director of government programs for retail drug company CVS/pharmacy, concurs. He regards the welfare-to-work participants CVS hires as a "pot of gold, a valuable untapped resource." (See "For CVS, a Recruiting Resource" on page 37.) Although the 1996 reform hasn't solved all problems, it's a step in the right direction, he says. "Welfare reform has made a major difference, and the story needs to get out."

Ann Pomeroy is senior writer for HR Magazine.

Web Extras

Online sidebars:
The Minimum-Wage Hike: Boon or Bust for Low-Wage Workers? 

A Welfare-to-Work Track Record 

SHRM articles: Ex-Offenders: A Hard Sell

CVS Gains by Outsourcing Its Workforce Tax-Credit Programs
(SHRM Online HR Outsourcing Focus Area)

SHRM videos:
Joyce Bailey says the staff at Project Match inspired her to keep attaining more and more education.

Regina Allen discusses the benefits she gained from participating in Project Match. 

Fact sheets:
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(U.S. Department of Health and Human Services)

The Work Opportunity Tax Credit
(U.S. Department of Labor) 

Welfare caseloads by state

Percent of People Below the Poverty Level in the Past 12 Months: 2006
(U.S. Census Bureau)

Temporary Assistance for Needy Families: Seventh Annual Report to Congress
(U.S. Department of Health and Human Services)

For CVS, A Recruiting Resource

In 1997, President Clinton created a public-private Welfare to Work Partnership to encourage employers to commit to hiring welfare-to-work participants. Several large corporations, including retail drug giant CVS/pharmacy, responded. According to Steve Wing, director of government programs, CVS has hired more than 60,000 low-wage and welfare-to-work participants since that time.

One of its early hires was Deb Autry, a part-time clerk at the Ohio pharmacy group Revco when it was acquired by CVS in 1996. Autry saw a sign in the store window one day about a training class for employees who wanted to become pharmacy technicians. With her supervisor's encouragement, she applied and was accepted, becoming one of six members of the first CVS welfare-to-work training class. Autry was a single mother of a daughter and twin sons. With no financial help from their father, she depended on welfare until her sons reached 14.

At CVS, Autry moved into a full-time job after she completed training. Today, she enjoys her work as a certified lead technician at a store in Akron, Ohio. She's one of four members of that class still working for CVS.

The twins are 22 and her daughter 30, but Autry still remembers the day she came home with her first paycheck. The children greeted her excitedly, eager to "go to the store with mom and watch her pay with cash."

Wing says these training programs have been highly successful for CVS. It partners with several agencies working directly with welfare-to-work clients. These organizations function "like an arm of the HR department," he says, and they recruit for 6,200 CVS stores in 38 states.

Wing and members of his department plan and administer employee training, including a two-year pharmacy apprenticeship that prepares employees to enter a college pharmacy program. Participants also qualify for tuition reimbursement. The "Pathways to Pharmacy" program is staffed by retired pharmacists who visit primary and secondary schools to encourage students to consider pharmacy as a career. More than 2,000 students completed internships in all kinds of jobs at CVS stores during summer 2007.

Programs that help employees advance are a boon for the company, says Wing. Along with other drug retailers, CVS faces stiff competition from "big box" stores such as Wal-Mart and Target for a dwindling supply of qualified pharmacists and technicians.

"For CVS, these programs are a good business decision," he says.

--Ann Pomeroy​


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