ACF OPRE: Innovative Employment Strategies

Executive Summary

The Innovative Employment Strategies project, conceived and funded by the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Planning, Research and Evaluation (HHS/ACF/OPRE), is designed to provide information on innovative strategies for promoting stable employment and wage growth among low-income populations. The project seeks to identify directions for future programmatic and evaluation development by building on key lessons from research to date in this area and from the experiences of operational programs.

Over the past three decades, a substantial amount of research has been undertaken on how to move low-income individuals and those on welfare or at risk of dependency into the labor market, how to help them remain employed, and how to assist them in career advancement and wage growth. This cumulative body of research has resulted in a knowledge base about programmatic strategies that are effective in achieving these goals and those that are not. This research also suggests future directions for policies and programs that warrant additional examination but remain untested. At the same time, program innovation has outpaced research efforts to identify effective employment strategies, resulting in a range of new approaches and programs that are potentially effective but have not yet been formally evaluated.

Based on past research and continuing innovations, this project identifies approaches and programs that could potentially improve the employment prospects for low-income individuals. For this project, we define approach as a type of intervention. By program, we mean a specific initiative that is an example of a particular approach. We examine approaches and programs that target low-income individuals, including those who are employed but at low wages, as well as individuals who receive cash assistance under the Temporary Assistance for Needy Families (TANF) program, who are likely to have greater barriers to employment. Because of the wide range of approaches and programs that exist, criteria were developed to select those highlighted as “innovative.”

The project is designed to assist states and localities by identifying and describing innovative approaches and programs that could potentially improve employment outcomes for low-income populations. Because many of the approaches and programs identified in this project have not been rigorously evaluated, the information is intended only as guide for program administrators and operators as they consider supporting or sponsoring strategies to improve outcomes for workers and their families.

Study Context: The Employment and Economic Status of Low-Income Families

In the past decade, overall, the employment rates among low-income parents have risen dramatically. This is particularly true for single mothers, especially those who had previously been on welfare. However, employment rates for most groups of less-educated men have declined in this same period. Further, despite increases in employment rates, the annual earnings and income of many individuals remain quite low. Several factors appear to limit the earnings of low-income adults, including (1) a lack of basic skills and credentials; (2) a lack of access to quality jobs that provide opportunities for advancement; (3) limited access to key work supports such as child care and transportation; and (4) severe or multiple barriers to employment, including physical or mental health problems, domestic violence, substance abuse, criminal history, or other crises that cause individuals to be unable to find or keep jobs.

A range of employment strategies have been undertaken to influence the employment and earnings patterns of low-income parents, and particularly those of welfare recipients. Key findings from this past work are discussed throughout this report, particularly as they relate to identifying innovative yet untested employment approaches. However, this program and policy evaluation literature indicates that there are no “magic bullets.” While a number of programs have shown success in improving employment and earning levels for welfare recipients, some have had limited effects. Moreover, few programs have had effects on improving longer-term employment retention and advancement for low-income populations or on improving the economic status of those individuals with multiple barriers to employment.

Given past successes and challenges, there is strong interest across a range of service delivery systems in developing new approaches to assist low-income individuals in succeeding in the labor market. Agencies operating the TANF program at the state and local levels have increasingly recognized that welfare reform must encompass helping poor parents not just find work but keep work and remain financially stable and avoid dependency. This has broadened the focus of TANF agencies to think beyond cash assistance and explore ways to more generally help both welfare and nonwelfare poor families improve their economic well-being. In addition, the 2005 Deficit Reduction Act (DRA), which effectively established significantly higher TANF participation rate requirements for states, means there will be an interest in developing new strategies and approaches for engaging TANF recipients in employment-related activities. One-Stop Career Centers established by the Workforce Investment Act (WIA) are increasingly involved in efforts to move TANF recipients and other low-income workers up the career ladder, while also meeting employer demands for skilled workers. Community colleges and other community-based organizations in many states and localities are also looking for new and innovative approaches for serving low-income populations.

Finally, it bears noting that much of the research for this project occurred before the enactment of DRA. Therefore, although it is likely that some of the programs identified in this report would help states meet DRA participation requirements, this paper does not focus primarily on identifying or highlighting programs that could lead to higher TANF participation rates. Overall, this report provides information on some approaches and programs that may be useful in developing strategies to meet the new TANF participation rules, but the primary goal of the project is to identify programs that could prevent or reduce dependency and improve the economic status of low-income individuals generally, including not only current TANF recipients but others as well.

Study Methodology

A set of criteria was established to help us define and identify the kinds of approaches and programs included in this report. Based on guidance from HHS, we purposively developed criteria designed to ensure that the review did not result in an uncritical “laundry list” of approaches and programs, but also was not so rigid that potentially innovative approaches or programs were ruled out due to overly prescriptive criteria.

To identify innovative approaches, we determined that the approach must meet one or more of four criteria: (1) address at least one (and preferably more than one) of the causes of low earnings among low-wage workers; (2) provide an untested intervention, but one that is grounded in research to date; (3) address the specific policy interests of federal or state policymakers and/or program operators; or (4) have some potential for being adapted in other states and localities.

To identify innovative programs within each of the approaches, we relied on a more operational set of criteria. Again, to ensure that a relatively broad set of programs was identified, we include those that met one or more of four established criteria: (1) strong program design and services; (2) relatively mature programs that are operating at “steady state” implementation or for relatively long periods of time; (3) programs that operate on at least a moderate scale; or (4) evidence of positive results or outcomes, particularly economic outcomes.

Once the criteria were established, the Urban Institute research team reviewed past and current research on employment programs and used a multi-pronged approach to identify new and untested approaches and programs. An extensive consultative process with a wide range of experts that included federal, state, and local public officials and program administrators, researchers, advocacy groups, and academics was conducted. The expertise of more than 35 individuals from 27 organizations was tapped through this consultative process. Through the reviews and consultations, a range of approaches and programs were identified, which we then explored further through additional phone interviews, Internet searches, and reviews of research reports and program documents. For the vast majority of the programs identified, we also conducted phone interviews with a program manager to gain a more in-depth understanding of the program design and services to determine if the programs met the established criteria.

Innovative Approaches and Programs Identified in This Study

Through the application of the criteria, we developed a typology that groups the innovative approaches and strategies we uncovered into four overarching categories. Overall, we identified 12 innovative approaches and 51 programs that are illustrative of the approaches. The typology includes:

Service-focused employment preparation. Targeted at the “hard-to-employ” population with significant barriers to employment, the service-focused employment preparation approach focuses on strategies to improve the employability of individuals through addressing special needs and providing special targeted interventions (i.e., substance abuse treatment, mental health services, etc.) in combination with employment services.
Employment-based experience. Approaches in this category focus on providing short-term subsidized jobs, usually with additional personal supports or wage subsidies. We examine the following approaches: (1) subsidized employment programs that subsidize wages with employers for a specified period of time, usually using public funds; participants work in a position where they receive a paycheck and receive a range of other supports and assistance, and (2) temporary employment programs that provide job-brokering services through temporary agencies to place individuals into temporary jobs, sometimes with additional supports such as job coaching and support services.
Skill development. Aimed at both TANF recipients and low-wage workers, this model includes a set of strategies designed to increase individuals’ human capital and skill levels. We examine individual-based strategies, including instructional and curricula changes for basic skills and postsecondary education and financial aid. We also examine employer-based strategies: (1) sectoral or industry-based initiatives and two subsets of these initiatives, career ladders and credentialing programs; and (2) employer-provided job training for incumbent workers.
Income and work supports. We broadly define income and work supports as a model that includes a number of approaches that provide assistance in helping working families maintain employment and make ends meet. In particular, we examine three income and work support approaches: (1) post-employment assistance programs that assist workers in accessing publicly funded financial supports such the earned income tax credit and child care assistance, and personal supports such as career and financial counseling provided to individuals when they are working; (2) financial incentives that encourage and improve the rewards of work; and (3) asset-building strategies that help individuals build financial reserves to support their career goals and family needs.

The full report provides details of each approach, including why the approach is innovative, particularly based on a review of past research in the area, and a description of the key components of each approach. Then, it provides examples of several programs illustrative of each approach. This includes a description of the key components of each program, including the program design and services, key organizational partners, target group, funding sources, and contact information.

Conclusions

This study finds that a range of employment approaches have the potential to improve the economic success of low-income individuals and that there are multiple areas that warrant further research and study. In documenting these innovative approaches and learning about creative programs across the country, we observed several trends that should be considered as federal, state, and local policymakers and program administrators move forward in supporting and evaluating these kinds of efforts.

Many innovative initiatives combine elements from multiple models and are relatively comprehensive in the range of the services they provide. While there are some programs that clearly represent a singular approach, we observed numerous programs that mix multiple approaches such as combining skill development with subsidized jobs, linking access to work supports with skill development and asset-building strategies, and integrating curricula and instructional adaptations for low-skilled individuals into employer-driven training programs. From a programmatic perspective it makes sense to link these different elements and, indeed, efforts to connect different strategies in new combinations often represented the most innovative aspect of the programs we reviewed. From an evaluation standpoint, however, it is important to understand whether specific components are important for participants’ economic success or whether it is the packaging of service elements that is responsible for improved outcomes.

Many of the initiatives that represent innovative future directions for efforts to improve employment outcomes are more broadly focused on low-income individuals that include, but are not limited to, the TANF population. In part this is because TANF agencies are now more likely to focus on preventing welfare dependency and supporting working families than in the past, due to the flexibility allowed in spending TANF resources. But it also reflects the unmet needs of many low-income workers, many of whom remain entrenched in poorly paying jobs despite existing policies and programs to assist them. It should be noted that due to passage of the Deficit Reduction Act of 2006 (which occurred while this study was underway), many states are now required to involve a greater portion of their TANF caseload in work activities. This could result in an increased focus on developing employment strategies for the TANF population.

Many innovative programs involve partnerships of multiple public- and private-sector organizations, many of whom have not collaborated in the past. This generally includes some combination of workforce development agencies, community colleges, TANF agencies, unions, community-based organizations, and employers. While establishing these partnerships was no doubt difficult in some circumstances, the prevalence of interagency and private-public collaborations indicates that addressing the needs of the low-income populations may require the commitment of a range of partners that can provide expertise and support in different areas. Some of the partners involved in these efforts have not traditionally worked together—particularly community colleges, employers, and intermediary organizations—so there is much about the nature of the collaboration that is innovative.

Innovative programs are often financed through a number of public funding streams (such as workforce development, postsecondary education, and TANF). The multiple sources of funding occur in part because many of these programs involve collaboration across different service delivery systems and serve relatively broad target populations. Foundations and private contributions have also played a pivotal funding role, in terms of both seed money and ongoing support. Employers play an important financial role in some programs, particularly those involving employer-based skill development. Program administrators generally had to commit significant time and energy to develop the level of resources needed to operate the programs, particularly those that are more comprehensive.

Significant innovation and activity for low-income parents at the state and local levels focus on making skill-development programs more accessible to low-income workers and more tailored to employer needs. While other types of initiatives, particularly work supports and employment-based options such as subsidized or temporary employment, receive continued attention, skill-development approaches are a strong area of innovation at this time. Innovations in pre-employment training for low-income students has shifted from an individual-based approach—where training is typically more general and tries to give students a range of skills that can be used in different jobs—to one more focused on employer needs that sacrifices some of this generality to improve the fit of the skills to specific jobs. There is also increased attention to building career ladders, with a focus on providing training that current workers need for moving up to higher-quality jobs. These initiatives focus on making training more accessible to workers in terms of schedule, curriculum, and linking skill-upgrade programs directly to job advancement opportunities.

Compared with many of the past programs evaluated, many of the approaches and programs identified here include strong involvement from the private sector. There are a range of innovative initiatives that potentially benefit both individuals and businesses, particularly regarding approaches focused on skill development or work supports. Many of these initiatives take place at the worksite or strongly reflect employer training and skill needs. Many of these initiatives that involve private-sector employers, particularly sectoral training and work support programs, use third-party intermediaries to build in-depth knowledge of the industry, establish relationships with multiple employers, coordinate training options, and conduct research to monitor industry’s changing needs. While many of the innovative efforts identified here involve employers, further growth in this area may require attention to create incentives for employer participation in initiatives that address the needs of low-wage workers, particularly in tight labor markets.

Case management services appear to be an important component in the design and operation of innovative programs. While some past research efforts have focused exclusively on the role that case management services (individualized assistance to plan for future activities and address issues that arise in school, at home, or on the job) can play in improving outcomes for disadvantaged populations, this review indicates that case management services are ubiquitous across a range of different service models, including service-oriented interventions for the hard-to-employ, subsidized employment and temporary jobs, skill-development approaches at both educational institutions and employers, and work support programs.

This study cannot point to the effectiveness of any of the highlighted approaches or programs identified. Nor does this study address the operational strategies and attendant implementation challenges and lessons involved in administering the range of program approaches discussed here. However, this review documents some of the innovative efforts being undertaken by a number of states, localities, and organizations to build on past research and promote the economic success of low-income parents. These efforts warrant future attention by researchers and program evaluators, and also provide direction to those looking for innovative employment strategies for low-income populations.

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