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Summer 1993
   
America Works
Sol Stern, Jan Rosenberg
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In February 1993, the New York Times carried a front-page story recounting the many frustrations suffered by a middle-aged woman trying to get off the welfare rolls and back into the labor market. The article appeared just two weeks after the inauguration of a new president who had pledged to “end the welfare system as we know it” by requiring stringent back-to-work programs for able-bodied recipients. But what really raised eyebrows was that the “welfare client” profiled in the article was actually Barbara Sabol, commissioner of the city’s Human Resources Administration (HRA).

The normally press-shy Sabol gave the Times an exclusive account of how she had posed as a poor person and applied for welfare in order to learn how her agency treats its clients-not very well, she discovered. She described long waits in filthy, cockroach-infested offices. She said she had been “depersonalized” by the system, and was particularly critical of caseworkers in the city’s BEGIN (Begin Employment Gain Independence Now) program, which was created to get recipients into the labor market. They seemed indifferent to her expressed desire to move from an unsatisfying mandatory work assignment with the city to a full-time job. “I mean, nobody saw my spark,” Sabol said. She concluded that HRA should become more focused on helping welfare clients search for jobs as soon as they enter the system.

Did Sabol’s experiment signal the beginning of a serious, long-overdue effort to apply David Osborne’s concept of “entrepreneurial government”—making government social services more accountable and competitive-to the huge HRA bureaucracy? It appears not. Sabol has once again become largely “unavailable” to the press. From all indications, not much has been done to improve HRA’s dismal record of helping welfare recipients break the cycle of dependency.

Indeed, a recent study by the Public Policy Institute concluded that the percentage of New York State’s welfare recipients (of whom HRA’s clients are the overwhelming majority) who move into paying jobs has actually dropped over the past several years. This happened despite new federal mandates imposed by the 1988 Family Support Act, which aimed to get welfare clients back to work. “Most states leapt at the opportunity” to put the Family Support Act’s requirements into effect, wrote the legislation’s principal author, Senator Daniel Patrick Moynihan, in the report’s introduction. “Not New York.” The study faulted New York’s “questionable decision to emphasize schooling to the exclusion of job experience.”

In New York City, it was none other than Barbara Sabol who shifted the BEGIN program’s emphasis away from securing immediate employment for welfare recipients. Instead, clients assigned to BEGIN are allowed to choose among various training and education options. “In some ultimate sense HRA still believes in the employment goal,” says Lawrence Mead, a welfare researcher at New York University. “But so much priority is now given to reducing ’barriers’ around recipients that few face any real pressure to go to work. BEGIN is inducting 2,500 new clients a month, but so many drop out and so few look for jobs that no impact on the caseload is discernible. HRA simply has not confronted the ethos of entitlement that surrounds welfare in New York.”

Road to Success
Yet even in New York City, there are model programs that successfully match long-term welfare clients with private-sector jobs. During her underground stint as a welfare client, Sabol might have asked her caseworker to refer her to a privately owned employment service called America Works. Or she might have called the company herself, as some welfare recipients do. Had she made that connection, Sabol’s “spark” would certainly have been noticed. In fact, it is likely that she would have been quickly placed in an entry-level clerical job in a publishing firm, law office, or insurance company.

For the past five years, America Works has placed thousands of welfare clients, with an average of between five and six years on the rolls, in private-sector jobs with an average starting salary of $15,000 plus benefits. Employers have been overwhelmingly satisfied; America Works has a long list of companies that keep coming back, asking for more referrals from the welfare rolls. America Works has staked its survival as a profitable business on the proposition that welfare clients, properly motivated and helped with a limited amount of technical assistance, can be successful at getting and holding jobs.

Consider the case of 35-year-old Lenore Green. Other than two short-term jobs, she had been on public assistance all her adult life. Like Sabol, Green had a disappointing experience with HRA’s BEGIN program. “They basically give you the yellow pages and tell you to start calling to find a job,” she says. “They also do something they call ’networking,’ where someone comes in and says that some company is hiring. And they tell you to read the New York Times. Well, I was doing that anyway.”

When Green heard about America Works, she asked her caseworker to refer her to the firm, even though its offices are in lower Manhattan and she lives in the Bronx. When she made the trip, she found a businesslike facility, in contrast with the grim welfare offices she was used to visiting. A polite receptionist directed clients and visitors to the business lab, the pre-employment classroom, a small meeting room, and staff offices. America Works was humming with activity, and no one was waiting in line.

Green signed up, and after a week of pre-employment screening and “job readiness” training, she landed a two-week data-entry job. Immediately thereafter, she was sent on two interviews, each of which led to a job offer. She currently works in the claims department of the Amalgamated Life Insurance Company.

America Works functions as a kind of “old girls’ network.” (Most of its clients are women.) Staff members build relationships with employers and provide the connections to the job market that women on welfare usually lack. “After screening to make sure there’s a fit with what the employer is looking for, they go out and represent you to the employer,” Green says. “They help you get that interview.’

America Works makes its money by contracting with state welfare agencies to place clients in jobs. The contract is performance-based: the company is paid (about $4,000 per client in Connecticut and $5,300 in New York) only after the client has completed a four-month probationary period with an employer. The state comes out ahead as well. For its fee of $5,300, America Works estimates that it saves taxpayers $22,000 a year, the cost of keeping a mother and two children on the welfare rolls in New York.

America Works is the brainchild of a husband-and-wife team, Peter Cove and Lee Bowes. Cove is a community activist, a veteran of the 1960s War on Poverty and various non-profit employment training projects; Bowes is a sociologist. They launched America Works in the mid-1980s with $1 million in start-up capital and the belief, based on their own experiences in the job-training field, that the primary obstacles preventing welfare clients from finding and retaining jobs are a lack of connections and gaps in interpersonal skills. Extended education and training programs are unnecessary, time-consuming diversions, Cove and Bowes argue. Further, they contend, clients with shaky self-confidence are best served by an early success in getting a job. not by long periods of preparation.

America Works’ week-long training sessions are narrowly focused on the skills needed to land an entry-level job. A counselor works with clients on such basics as maintaining a businesslike personal appearance, speaking properly, preparing a resume, showing up on time, and arranging child care. Attendance is strictly enforced: if a client is late to class, even by five minutes, she is dropped from the program, though she may enroll again at a later date. After completing the class, clients spend half their day in the company’s business lab, working on typing, word processing, and other office skills while they wait for job interviews. During the remainder of their day, they can seek employment on their own.

Paula Phillips, an energetic former schoolteacher who leads the training sessions, stresses that clients’ success depends on their own motivation and effort. “How many of you were referred by BEGIN?” she asks a larger-than-average class of 46 crowded into the classroom one spring morning. Eight or nine women raise their hands. “Did they say that America Works will definitely find you a job?” Only a couple say yes, but she uses the occasion to nail home her point: “There are no guarantees.... If you want something to happen, you’ve got to make it happen.” “But,” she continues, “if we don’t find people a job, we can’t stay in business. We want to find jobs for as many people as possible.”

The company’s entrepreneurial ethos is catching. We spoke with numerous women and men in America Works classes who defied the stereotypes of long-term welfare clients steeped in a permanent culture of dependency. After waiting several months to be admitted to the program, they understood that they had to compete for jobs, were working very hard at improving their skills in the business lab, and were confident that they would succeed.

Employers are impressed with the workers’ enthusiasm. “Their candidates really want to work,” says the personnel director of a catalog company who, since 1989, has relied exclusively on America Works for filling entry-level positions. “They have people who have been out of work and so they’re willing to stay with a job for quite some time,” says the manager of a law office. “They’re willing to stay longer than other people who haven’t been on public assistance. We’re willing to take a chance on them; we get a dedicated and loyal employee. It’s a win-win situation.”

During the four-month probationary period, the employer pays an agreed-upon wage to America Works, which pays the employee minimum wage. (Employees’ welfare grants are gradually reduced during their transition to permanent work.) The trial period allows the employer to evaluate the new employee’s work habits and adaptability to the company culture. At the same time, America Works offers the employee services to ease the transition from dependency to the job market. America Works job counselors visit the worker on the job every week and meet with the employee’s supervisor every other week to “troubleshoot.” If there are problems with punctuality or attendance, or if the client needs help with child care or housing, the counselor will intervene. “Most problems new employees have show up quickly, in the first few months on the job. That’s why the ’reps’ are so useful,” says one employer, singling out the baby-sitting problems that trip up even the most eager working mothers.

After the probationary period, the employee is paid a standard wage. The support America Works provides during the transition period is clearly effective; an estimated 85 to 90 percent of its clients are still in their jobs at the end of the first year.

Going Against the Grain
Despite America Works’ success, New York’s social-service bureaucracy remains indifferent to its promise. The company is under contract with New York State to find jobs for 250 workers a year, but many more welfare clients are trying to get into America Works than it can accommodate under its contract. And the firm does not have a single contract with New York City. Indeed, it has been rejected four consecutive times for welfare-to-work contracts let by city agencies. Critics and city officials offer several explanations for the city’s reluctance to embrace the firm’s approach.

One charge is that America Works “creams,” selecting the most job-ready clients, who would land jobs on their own anyway. A New York State welfare official disagrees. “That may have been true early on, when they were getting their clients from newspaper ads, but now more than half of their clients come after failing to find jobs through HRA’s programs.” And, indeed, why would people who could find work on their own sit through a week of job-readiness classes and then spend four months working at minimum wage? It seems more likely that America Works is successful with those public assistance recipients who are willing to work but lack the interpersonal skills, self-confidence, and connections necessary to find work.

Another concern is cost. Cathy Zall, deputy commissioner of HRA, argues that America Works is much more expensive than other welfare-to-work programs and that the $22,000 savings trumpeted by the company is exaggerated, because it assumes that none of the people placed in jobs by America Works would have found work on their own. Computing the exact savings from various welfare reform programs is complicated, but the Public Policy Institute report notes that America Works’ placement fee “compares favorably with the $8,259 per placement cost of the JOBS program,” a federal initiative offering education and placement services.

Our interviews with welfare officials and independent analysts suggest that much of the criticism of America Works is driven by an underlying suspicion of a for-profit company operating on the belief that welfare clients can and should compete in the market economy. This approach directly challenges the institutional biases of much of the nonprofit world and the government bureaucracy.

Some officials concede that such a bias exists. “It’s very difficult for us in the social work professions to accept individuals who make a profit,” says Audrey Rowe, Connecticut’s commissioner of income maintenance, who became a champion of America Works after evaluating its performance under a state con tract. “It’s difficult to work through staff biases.”

Michael Dowling, New York State’s commissioner of social services, adds that while America Works has done “exceptional work,” the state has come in for “criticism from the traditional employment and training agencies, from the nonprofit sector. They wanted to know why we were contracting with a for-profit agency.”

Compounding the problem is the bureaucratic procedure by which contract proposals are judged, a process that elevates form over substance. In the competition for a recent welfare-to-work contract with the city’s Department of Employment (which America Works lost), the final decision was made largely on the basis of the written “statement of purpose” in the contract proposal. The organization’s success rate in actually placing and keeping recipients in jobs was a secondary consideration. In a proposal for another Department of Employment contract, America Works earned just one-quarter of the possible points for “demonstrated effectiveness.” How, we asked our guide through the bureaucracy, could a company that was placing so many people in good, private-sector jobs be judged as lacking “demonstrated effectiveness”? The answer: “They just didn’t write a very good proposal.”

America Works recently found itself a new champion, Manhattan Borough President Ruth Messinger. Having seen the company’s good work for herself, Messinger tried to cut through the bureaucratic thicket by intervening directly with First Deputy Mayor Norman Steisel. Her letter to Steisel recommended that the city take a second look at how America Works could benefit New York’s welfare reform effort.

Steisel’s reply was, typically, more bureaucratese. He expressed regret that America Works had lost four straight competitions and explained that there just isn’t enough money to fund all the worthy proposals. He encouraged America Works to keep trying. Finally, the deputy mayor assured Messinger that the Department of Employment was “looking forward to receiving additional proposals from America Works in response to future RFP’s [requests for proposals].”

Beyond Left and Right
Tomes have been written about the difficulties of getting long-term welfare recipients into the job market. Liberal and conservative critics alike insist on the almost insurmountable odds against ending welfare dependency. Conservatives tend to argue that long-term welfare clients won’t work, because they have not developed the values and discipline-the “culture,” if you will-that push people into the labor market. Liberals counter by arguing that the jobless poor can’t work, pointing to a range of “structural barriers” that prevent minority and unskilled inner-city residents from succeeding in the private job market.

For many conservatives, the solution is something like economic shock therapy-reducing benefits
or even taking people off welfare altogether. For their liberal counterparts, welfare reform must await major governmental intervention in the economy to create “decent” jobs.

America Works confounds the shared pessimism of both liberals and conservatives about the possibility of getting welfare recipients into jobs quickly. It points beyond the familiar “won’t work” versus “can’t work” argument, toward pragmatic, intermediate solutions.

Peter Cove argues that success in welfare reform “must be measured by the obtaining of jobs, retention, and the resultant welfare cost reductions.” Government should not pay for classroom programs, he says, but for “the job acquisition and retention that result.... This will immediately guarantee government getting what it pays for. It will bring in creative entrepreneurs and maintain only the successful ones.”

These ideas, very much in keeping with President Clinton’s stated goal of making government social services more effective and accountable, are worthy of attention in the coming national welfare reform debate. In New York City, meanwhile, hundreds of welfare recipients on America Works’ waiting list deserve better. They too have “sparks” that ought to be recognized.

 

 

 
A Venture to End Dependency
City Journal Summer 1993.
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