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VI. Employment-Based Experience

To help individuals make the transition to unsubsidized employment, approaches in this category focus on providing direct work experience with wage subsidies and additional personal supports. These approaches are sometimes targeted to persons with a range of barriers to employment, who could benefit from working in a supportive environment where they learn both job skills and work behaviors. We focus on two employment-based experience approaches: (1) subsidized employment approaches provide at least partial reimbursement for wages with public, nonprofit, and for-profit employers, usually with public funds. Participants work in a position where they receive a paycheck as well as a range of other supports and assistance, and (2) temporary employment where job-brokering services are provided for placement in temporary jobs, sometimes with additional supports such as job coaching and support services.

1. Subsidized Employment

A subsidized employment approach entails subsidizing the wages paid to participants by employers with public funds. Participants work in a position where they receive a paycheck, pay taxes, and qualify for the EITC. Employers are typically from the public or nonprofit sectors, but can include for-profit businesses as well. Subsidized jobs are typically time limited (e.g., six or nine months), and also provide a range of services that are designed to support individuals in their jobs and provide additional training, above and beyond what is typically available to employees in unsubsidized jobs. In contrast to the temporary job approach discussed below, this strategy is often targeted to hard-to-employ individuals with barriers to employment, including TANF recipients.

This approach has been referred to by a variety of terms over the years. When used in the TANF system, subsidized employment is often referred to as “transitional” employment or subsidized jobs, especially in the nonprofit or public sector. On-the-job training is another common term that is used more in the workforce development system, referring to activities where a wage subsidy is provided to reimburse the employer (usually, but not always, in the private sector) for providing training.

Past research shows that subsidized employment approaches have potential for improving outcomes for low-skilled individuals. While disadvantaged groups tend to earn much less than others and have not made substantial gains in most previous welfare-to-work studies (Brown 2001; Michalopoulos 2004), an exception is the 1970s Supported Work demonstration project which provided transitional work experience along with some training and supports to the “hard- to-employ.” Post-program earnings of welfare recipients increased quite substantially for participants relative to those in the control group. Since this evaluation, there have been few random assignment evaluations of subsidized employment programs, although a random assignment study of one such program is currently under way.8 A number of nonexperimental studies have found positive effects on employment rates and income gains over time for those who complete subsidized employment programs (Burchfield 2002; Kirby et al. 2002). Studies of workforce development strategies have also found more positive effects from on-the-job training than other strategies such as job search (Orr et al. 1996).

Because of its potential to improve the job skills of low-income individuals, particularly those with employment barriers and strong but limited past research results, we include subsidized employment as an innovative approach. Based on the discussions with experts and program managers for this project, there appears to be a growing interest in expanding subsidized employment across the country for TANF recipients, particularly in light of the new TANF requirements that emphasize participation in work-based activities, but also for other hard-to-employ populations like ex-offenders. The National Transitional Job Network, a coalition of transitional jobs programs, policy organizations, and other sponsoring organizations helps develop and expand transitional jobs programs nationwide.

Experts have identified several key features that are important components of a subsidized employment model. These include (Baider and Frank 2006):

• Paid, time-limited employment. Workers earn a wage in exchange for the work performed, and the work placement is limited.

• Life-skills and job-readiness programs. Workers sometime participate in short classes that focus on skills needed to succeed in the workforce and resolution of challenges at work, such as drug treatment, compliance with parole and probation requirements, and family services interventions. Classes may also include guidance on continuing job-search activities.

• Support and supervision. Workers typically receive some type of support and supervision before, during, and possibly after the placement, by job coaches and on-site mentors, including case management and job-search assistance.

• Skill-building component. Transitional jobs programs often include a skill-building component, offering classes and training in areas such as GED preparation, vocational English, and computer training.

• Range of jobs available. Programs generally offer a variety of job placements in government agencies, nonprofits, and the private sector, to accommodate a range of skills and interests.

• Post-placement support. Some programs continue to offer support for up to a year after a participant obtains permanent employment.

Many subsidized employment programs are developed and operated at the local level, but there are a growing number of state programs. Appendix table A.2 profiles six subsidized programs identified for this project that serve TANF recipients or other low-income workers. While all are noteworthy for their strong content, they vary in terms of their scale and target population. Two are statewide initiatives that have been operating in Georgia and Washington (see box 3) since the mid-1990s and are established strategies in each state’s TANF program for addressing the needs of a significant number of hard-to-employ recipients. Two are local initiatives—a program in Philadelphia operated by the Transitional Work Corporation that has one of the most developed and largest transitional jobs programs in the country, and another in San Francisco that is operated by Goodwill Industries, an organization with significant experience operating these types of programs.

Box 3 Subsidized Employment: Washington's Community Jobs Program Since 1997, Washington State has offered statewide paid transitional employment program for hard-to-serve TANF recipients. The program is operated by 18 service providers across the state that are primarily community-based organizations. After being referred to a provider by the TANF agency, participants develop an employment plan and work 20 hours per week in a temporary, paid job for up to six months (with extensions available to nine months). Most job placements are in nonprofit agencies. An additional 20 hours per week are spent on individualized barrier management, which can include soft-skills training, mental health or substance abuse counseling, and basic-skills training. Individuals receive support services, such as transportation subsidies, work clothing, and child care assistance. Program staff maintain close relationships with participants and their supervisors and conduct monthly workplace visits. Participants receive some job-search assistance and receive support services for up to 60 days after obtaining unsubsidized employment. The Community Jobs program serves approximately 2,100 participants per year.

Finally, two are social enterprise initiatives—defined as an activity that advances a social mission through entrepreneurial revenue-generating strategies. At Rubicon, Inc., and the Enterprising Kitchen, low-income individuals are hired for transitional jobs in a nonprofit enterprise that creates or sells quality products—bakery and landscaping services in the case of Rubicon, and soaps and beauty products at the Enterprising Kitchen. These endeavors are financed by the revenues from the sales of their products, but also receive public and private contributions.

2. Temporary Jobs

One innovative approach for potentially improving low-income workers’ access to better quality jobs involves using third-party intermediaries in the labor market—such as temporary help (“temp”) or staffing agencies. The temporary sector is a growing part of the labor market in the United States. A wide range of for-profit companies and nonprofit organizations provide temporary staffing services for companies, with some placements intended to be purely temporary and others likely to result in a permanent hire. Many companies use temporary employees as a way of screening (or trying out) workers or reducing the costs or risks associated with making a permanent hire. For the low-wage worker, using a temp agency can potentially provide a route to higher-wage jobs that low-wage workers might otherwise not gain access to due to discrimination, “spatial mismatch,” transportation, and limited information or contacts in the labor market (Holzer 2001).

The specific approach to temporary employment that we highlight in this report shares many of the same characteristics associated with a traditional temporary employment agency model but differs in important respects. Conventional temporary agencies connect workers and jobs from a wide range of income and skill levels and are typically operated by for-profit agencies. There are, however, some temporary employment agencies, sometimes called “alternative” or “social purpose” staffing agencies (Carre et al.; 2003; Eisenberg 2003) that specialize in placing workers who have a range of barriers or obstacles to employment. Unlike typical staffing agencies, they are primarily nonprofit, community-based organizations that engage in temporary and temporary-to-permanent job brokering specifically for disadvantaged workers, often in conjunction with other supports such career counseling and transportation assistance. Also, unlike sectoral initiatives (described later in this report), temporary or “temp-to-perm” strategies do not involve partnerships related to industry practices or supervisor training, but instead emphasize placement into existing, competitive jobs.

The underlying structure of this approach involves using intermediary organizations to place workers in temporary jobs, typically with the employer paying an hourly amount to the agency, and the agency, in turn, paying the worker. When used explicitly as a strategy to help the employment prospects of low-skilled individuals, including TANF recipients, the temporary agencies sometimes provide workers with a range of supports such as transportation, job-readiness classes, or job coaching.

There is limited research literature on the effects of temporary or social-purpose staffing agencies in improving the employment outcomes for the disadvantaged, but some evidence that these agencies may provide a valuable port of entry for low-skilled employees (Andersson et al. 2005; Giloth 2004; Holzer 2004). Other recent quasi-experimental evidence based on data from one TANF office in Michigan finds that the positive employment effects for those placed in temporary employment faded over time, and those achieved by individuals placed directly into jobs were more persistent (Autor and Houseman 2005). In general though, research in this area is less extensive than other types of employment strategies. Interest, particularly at the local level, has increased since the passage of welfare reform and there are a number of implementation and case studies in this area.9 However, these studies do not address the key question of whether these lead to improved outcomes—in terms of starting wages and benefits or growth potential—above and beyond what individuals might obtain on their own.

Because of their potential to increase access to quality jobs, we include temporary employment, arranged by alternative temp agencies or social purpose staffing agencies as an innovative approach for improving employment outcomes of low-wage workers. Key components of services offered through temporary agencies, particularly those that focus on low-income workers, include (Carré et al. 2003).

• Improving job access through a strong marketing approach with employers and through dedicating staff resources to identifying possible employment options for individuals. Significant upfront resources are dedicated to marketing the agencies services to employers (emphasizing the benefits they can provide, such as screening and work supports and the skills of applicants from certain stigmatized groups) and also making careful matches between individuals and jobs.

• Facilitating job transitions and job progression. Some temporary staffing agencies focus on temp-to-perm placements through developing an in-depth understanding of employer needs and preparing workers, perhaps by providing customized training or not charging a conversion fee when hired by a business (unlike other conventional temporary agencies).

• Focusing on quality permanent jobs. Staffing agencies generally look for businesses whose entry level permanent jobs pay a level above the minimum wage, and if possible provide advancement opportunities to upper-level jobs.

• Providing support services. One of the key features of alternative staffing agencies is their provision of pre- and post-employment supports to workers, which are seen by business customers as key to participation. These can include preplacement job readiness, assistance with child care and transportation, educational supports, and supervisory supports such as job coaching and mediation.

As described in appendix table A.3, we highlight two alternative staffing agencies that focus on providing temporary employment to low-skilled workers, many of whom have barriers to employment. Harborquest Staffing Services, located in Chicago, Illinois, provides an intensive job readiness workshop prior to a temporary placement, job coaching while in the temporary jobs, and permanent job placement services (see box 4). FirstSource Staffing, located in Brooklyn, New York, provides less intensive pre-employment services but includes a focus on offering retention services that help workers access support services such as child care and transportation, and address other issues that will facilitate their transition to permanent employment.

Box 4 Temporary Employment: Harborquest Staffing Services Harborquest Staffing Services, a nonprofit staffing agency, provides temporary placement services to disadvantaged individuals in the Chicago area. Participants are referred to the program from a variety of public and community groups, and many also learn about it through word-of-mouth. Participants first attend an orientation, which provides an overview of Harborquest’s services and expectations of its clients. Those who are still interested are interviewed by a Harborquest staff member and undergo math and reading assessments as well as drug testing. Participants then attend a structured two-week job-readiness and job-search workshop operated by STRIVE, a nonprofit employment agency that recently merged with Harborquest. This is followed by two months of paid work experience coupled with on-site job coaching. These jobs are generally in light manufacturing, hospitality, or the service sector and pay an average hourly wage of $6.50 to $8.00. During this time, Harborquest expects participants to work at least 200 hours over the two-month period, without any undocumented absences. Participants then return to Harborquest classrooms to work on their job application and interviewing skills for approximately one week. Harborquest job developers assist participants with setting up job interviews and locating permanent employment. In 2005, Harborquest placed about 1,000 people in temporary jobs with approximately 60 different employers.

 

 

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