U.S. GOVERNMENT PRINTING OFFICE

60–578 WASHINGTON : 1999

WELFARE TO WORK:

WHAT IS WORKING, WHAT IS NEXT?

HEARING

BEFORE THE

SUBCOMMITTEE ON EMPOWERMENT

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

WASHINGTON, DC, MAY 25, 1999

Serial No. 106–14

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

MICHAEL P. FORBES, New York

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELA ́ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBE ́N HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON EMPOWERMENT

JOSEPH R. PITTS, Pennsylvania, Chairman

PHIL ENGLISH, Pennsylvania

JIM DEMINT, South Carolina

FRANK A. LOBIONDO, New Jersey

EDWARD PEASE, Indiana

JUANITA MILLENDER-MCDONALD,

California

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

TOM UDALL, New Mexico

STEPHANIE O’DONNELL, Legislative Assistant

(III)

C O N T E N T S

Page

Hearing held on May 25, 1999 ............................................................................... 1

WITNESSES

Ballard, Charles Augustus, Founder and CEO, Institute for Responsible

Fatherhood and Family Revitalization .................................................................. 2

Powelson, Robert F., President, Chester County (PA) Chamber ......................... 4

Cove, Peter, Founder, America Works ................................................................... 7

Yergan, Eric, Owner, The Yergan Agency ............................................................. 9

APPENDIX

Opening statement: Pitts, Hon. Joseph R. ............................................................. 27

Prepared statements:

Ballard, Charles Augustus ............................................................................... 30

Powelson, Robert F. .......................................................................................... 64

Cove, Peter ........................................................................................................ 83

Yergan, Eric ...................................................................................................... 89

(1)

WELFARE TO WORK: WHAT IS WORKING,

WHAT IS NEXT?

TUESDAY, MAY 25, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON EMPOWERMENT, COMMITTEE ON SMALL BUSINESS, Washington, DC.

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room

2360, Rayburn House Office Building, Hon. Joseph R. Pitts (chairman of the Subcommittee) presiding.

Chairman PITTS. Ladies and gentlemen, the time of 10:00 having

arrived, I think we will go ahead and start. Some of the other

Members are on their way. But we will go ahead and start if that

is all right.

Thank you for joining me and the other members of the Subcommittee on Empowerment today for this hearing to discuss the

important issue of welfare-to-work. We are privileged to have with

us today several experts on this subject. During this hearing, we

will examine several welfare-to-work programs in order to discover

what strategies are successful in moving people from dependency

on public assistance to gainful employment and, ultimately, selfsufficiency.

We all have something to gain from breaking the cycle of welfare

dependency and empowering people to end their reliance on cash

payments by the government. By providing education, training, job

placement to welfare recipients, welfare-to-work programs

strengthen our Nation’s work force and, ultimately, our economy.

A recent study conducted by the Economic and Social Research

Institute surveyed 500 small businesses and found that small employers are seeking reliable, motivated workers with positive attitudes, and are less concerned with the limited education and job

training of many welfare recipients. Additionally, 62 percent of the

employers surveyed had hired someone who was on welfare, and of

this percentage, 94 percent were willing to hire a welfare recipient

again.

These findings suggest that since there is no shortage of employers to hire welfare recipients, perhaps welfare-to-work programs

are part of the solution to facilitating the job search for welfare recipients. These programs provide training that will help welfare recipients portray themselves as successful candidates to prospective

employers.

Indeed, the past few years have been a transitional period for

welfare reform following the passage of the Personal Responsibility

and Work Opportunity Reconciliation Act in 1996. This law estabVerDate 11-MAY-2000 13:22 Aug 30, 2000 Jkt 062233 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HEARINGS\60578 pfrm01 PsN: 60578
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lished the Temporary Assistance for Needy Families (TANF) program which mandates that after 2 years of receiving welfare assistance, recipients must have a job or be participating in some type

of work activity or job training.

This welfare-to-work initiative ensures that welfare recipients

have the opportunity to make a long-term life improvement, by sustaining a job, in hopes that eventually they will become independent of government assistance. This is especially important

since participation in the TANF program is not infinite. In fact,

current law limits the receipt of welfare benefits, in most cases, to

no more than 60 months in one’s lifetime.

The transition from dependency to gainful employment is a lifechanging experience involving education, job training, and timemanagement skills. All of these factors must be taken into account

in order to ensure that a welfare recipient will be able to sustain

employment for an extended period of time and not regress to relying solely on a welfare check. Many organizations offer comprehensive programs designed specifically to move people from welfare

rolls into the labor market. These welfare-to-work programs attract, train, and assist in placing welfare recipients in jobs.

We are fortunate to have with us today a diverse panel of experts

in this area who will be able to provide us with insight into welfare-to-work issue. We will hear from Mr. Charles A. Ballard,

Founder and CEO of the Institute for Responsible Fatherhood and

Family Revitalization who will testify about his welfare-to-work

program for fathers. Mr. Robert Powelson is President of the Chester County Chamber of Commerce and Industry in my district, the

16th Congressional District of Pennsylvania. He will discuss his

program which provides mentors to those entering or reentering

the work force. Mr. Peter Cove, the founder of America Works will

discuss his New York City based welfare-to-work program. And finally, Mr. Eric Yergan, an Allstate insurance franchisee will share

his experiences hiring employees from the welfare roles.

[Mr. Pitts’ statement may be found in the appendix.]

Chairman PITTS. We will now hear from our panel. And I would

like to ask Mr. Charles Ballard, founder and CEO of the Institute

for Responsible Fatherhood and Family Revitalization of Washington D.C. to make the first statement, if you would please.

STATEMENT OF MR. CHARLES A. BALLARD, FOUNDER AND

CEO, THE INSTITUTE FOR RESPONSIBLE FATHERHOOD AND

FAMILY REVITALIZATION, WASHINGTON, DC

Mr. BALLARD. Thank you, Congressman Pitts, for inviting us to

be a part of this, I think, history-breaking event of welfare-to-work.

And it is really interesting to know that small businesses are concerned about this area. I think it is one thing to hire someone, but

it is another thing for that person to be able to have a thinking or

mind-set to not only have a job, but to go beyond that even to starting a business.

I was before Nancy Johnson’s committee, the Health—the Ways

and Means Subcommittee, that as a fatherhood counts bill that she

is looking at that would help men—fathers, to become better fathers, better husbands, and better men. So I thank you for the opportunity to be a part of this hearing today.

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Last night, over 23 million children went to bed in a home where

there were no fathers. I look back on that experience, and I had

that same experience. Many of these children grow up, dropping

out of school; so did I. Some will have drug problems; so did I.

Some of these young men and girls, we have in prison; so did I.

When I was 31⁄2, my father became mentally ill and was moved

from the home. When I was 8 years of age, he died in a mental

institution. So I grew up a very angry young man, angry with the

world, and in gang membership, got a girl pregnant, ran away,

joined the Army, ended up in prison and undesirable discharge

from the Services. Got out of prison, but I came back home with

a new thinking, with a new mind to be a good father to my son

and be a good man to the community.

Now, if you note, I said I didn’t finish high school, had a drug

problem, had an alcohol problem, had been in prison, and I had

been undesirably discharged. That was in 1959 before integration,

where things were still tough for African males, but one who had

a prison record it was almost impossible to find a job. But kind of

like the bumblebee—the bumblebee really should not be flying, but

no one has been able to convince him of that so he continues to fly.

So no one convinced me that being in prison, dropping out of

school, undesirably discharged from the Services made a difference.

So I went on to adopt my son. I took dishwashing jobs, floor-scrubbing jobs. I got my GED, went on to get a BA degree, and got a

masters degree. And my son today is a grown man, and he has his

own masters. He is 42 years of age.

Now I am telling that story because it takes more than a job to

bring America up to where it should be. People must have a sense

of entrepreneurship. They must think that this job is my business.

It is not just an 8 to 5, but it may be a 7 to 6. I remember when

I was told to be in at 5:00 in the morning to wash dishes, I always

showed up at 4:00 in the morning. I was to get off at 3; I often got

off at 5. It was amazing because I only made $23 a week.

And all I had to look for in this country were those kinds of jobs.

But because of my entrepreneurship spirit and thinking I wanted

more than that, I wanted my son to have more than that, so I went

on, as I said before, to get my masters degree. In 1972, I decided

to do something about this problem of fathers not being around. So

I worked at a hospital and then later on I created the first program

to reach out to fathers.

And the model is really modeled after my own life. That if you

don’t convince people that they are fragile, that they are broken,

that they are poor, they won’t act that way. But it you treat people

as that they have worth, that they have something to observe, that

they have a contribution, my experience has been that men will

come through.

Last year we received a $4.5 million grant from the Department

of Labor to put 480 fathers back to work, and in some cases to

work for the first time. Men coming out of prison, men who have

drug problems, men who are abusive and so on and so on.

Well, we officially started the program last September; and since

that time, we have put to work over 230 fathers and mothers in

full-time unsubsidized jobs. And many of them by their employers

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are considered to be entrepreneurship-minded which is what we

teach these young men to be.

One corporation sent us a letter saying that send me more people

like this. I have this person. She has been on the job just about

6 months. Other employees look to her, look to him, for direction.

And so that person got a promotion. We have a 72 percent retention rate. I think the District only wants 25 percent. But we have

a 72 percent retention rate of our hard-to-place men and women,

especially fathers, over 2⁄3 fathers, keeping these jobs. So I think

if we are going to make the welfare-to-work program complete, we

must emphasize the mother and the children, but there is a man

some place who is in a prison, who is on drugs, who is homeless,

who we must find and return him back to the home, back to the

work place.

And I think our program is a model for that. And that we can

work together and create this entrepreneurship thinking, this spirit of entrepreneurship where people that don’t have a job to go to

but they are going to a business, and which they will show up before time and leave after time and in the middle time don’t take

breaks. I believe that this kind of attitude and spirit is what has

founded America. And I believe if we are going to bring America

back to be a strong country, each one of us must have that kind

of spirit. Thank you.

Chairman PITTS. Thank you very much, Mr. Ballard, for that. We

will hear all of the witness statements before beginning questions.

[Mr. Ballard’s statement may be found in the appendix.]

Chairman PITTS. Rob Powelson from my district, President of the

Chester County Chamber of Commerce and Industry.

STATEMENT OF MR. ROBERT POWELSON, PRESIDENT, CHESTER COUNTY CHAMBER OF COMMERCE AND INDUSTRY,

WEST CHESTER, PENNSYLVANIA

Mr. POWELSON. Thank you, Congressman Pitts and Members of

the Committee, for the invitation to share with you some exciting

developments that are taking place within our county on welfareto-work. The program that I would like to share with you this

morning is one that involves all levels of the community. And, in

my very humble opinion, I think that it is fair to say welfare reform is working in Pennsylvania. The facts, since 1997, 72,000 welfare recipients have found full- or part-time employment. From a

statistical analysis, this represents a 40 percent decline from 1993

levels.

In my position I think it is fair to say that we all realize that

there is still much work to be done in providing meaningful employment to welfare recipients. Back in 1997, I was asked to tour

our public assistance office with two of our State senators to discuss strategies on how we involve the business community in working with our department of welfare in providing outreach and job

placement opportunities.

Let me share with you that I have been president of the Chester

County Chamber for 5 years now. I could not tell you where the

welfare office was in our county. I knew a little bit about their activities, but really didn’t have an understanding of some of their

outreach in the community.

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After speaking with many of the case workers and other social

service providers in our county, I realized that we needed to lend

a helping hand to providing employment opportunities to job-ready

candidates. You know, if you look at this issue, and I want to share

this with you because in my line of work welfare reform is really

not a politically sexy issue to talk about because in chamber work,

we are more worried about the recruitment and retention of IT

workers in our county, the expanse of manufacturing jobs, but

when we look at this issue more in depth, you realize that this is

Work Force Development 101.

When we had—when I took the tour back in 1997 of our DPW

office and met with the staff, we realized that there were a group

of people who did the right thing, they beat the March 3 deadline

in our State, found work, and as a result of going out and finding

work, their income was beginning to be means tested.

So certain benefits that they were given were beginning to kind

of wean off. In many cases, we found that many of these new workers were coming back to the system or, in many cases, losing an

employment opportunity for a number of reasons. So we realized

that in just that one meeting we had with our two State senators

along with our folks at the DPW office that we needed to design

a system whereby business and the community-at-large could come

together and provide a safety net for those individuals that entered

into an employment opportunity but were kind of falling by the

wayside in terms of staying in that job.

And from the chamber perspective, I realized that we needed to

branch out to our 1,100 members which represent some of most notable companies in this country to work with them to get their employees involved in this initiative. So after our initial meeting, I sat

down with some folks and said we are going to move forward in

adopting a mentoring program whereby the Chester County Chamber would go out in the community, and voluntarily recruit mentors to serve as role models to individuals that have again beaten

our March 3 deadline in finding work in Pennsylvania and working

with them in a new relationship.

Now, there are a whole host of issues associated with our mentoring program that I want to share with you, and I will also share

with you a personal experience that I have been involved in. First

of all, for those individuals that again have beaten our March 3

deadline in Pennsylvania and found work, in many cases these individuals are coming from second and third generation families

where there is no by-product of work.

So there are certain things that happen in the course of an employment situation where many of us in this room over years of internships or mentoring, we have learned to kind of adapt to work.

But how about the case where a welfare client entering into a new

employment situation is delegated a responsibility and the manner

in which the manager says or delegates the responsibility is taken

the wrong way. And that individual leaves the office that day very

upset, outraged by that experience, and is ready to quit.

Now, realize they go back to a family structure where there was

no by-product of work. In fact, in many cases the family structure,

if there is one, says quit, give up. Well, the stakes are too high.

And this is where we have come through in putting this mentoring

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network together where that individual, where that situation may

arise, can call that mentor, and talk and solve that problem.

Very powerful tool here. It is a retention tool. Because we are

able to kind of bridge the gap between the employer and the employee, and the mentor is involved in that relationship.

Now, during the past 18 months we have successfully recruited

30 volunteer mentors for this program. Our goal by the year 2000,

by the end of the year 2000, is to recruit 150 mentors. And I know

I provided you a program narrative of how we go out and recruit

mentors. And I would like to get into that a little later for our

panel group discussion.

But, for the record, I serve as a mentor to a single mother who

has three children. Her problems are overwhelming to the average

person. I am here to tell you that we are friends and that we respect one another. And my relationship with her has included such

things as redesigning her resume, to helping her kids get into a

YMCA summer camp program. For someone who had little hope in

making the transition, my mentee has made a commitment to

change her life. In my mind, the role of a mentor is to help an individual do the right thing.

And I can honestly tell you that mentoring has been a cornerstone in my upbringing. And if you look around corporate America,

the most successful companies in this country do not hire someone

to fail at the work site. The Boy Scouts, the YMCA’s across this

country do not bring people into this system that they have designed for failure. And that is why I think mentoring is all around

us. And that is why I think it is critical with welfare reform that

we have type of models.

Now, when we implemented our program, we realized that we

provided tremendous legitimacy to the welfare office in our county.

Why do I say that? Well, for one, the chamber represents business.

We have over 1100 member businesses, companies as large as the

Vanguard Group all the way down to your small mom and pop organization.

Now, when we pitch a community project, again, we are asking

for business community buy-in. That is exactly what we did with

our mentoring program. It wasn’t the social service provider saying

I have got this program, I need your support. It was the business

community, it was the chamber of business and industry going out

and saying we are going to do this and we would like you to join

us in this effort.

Now, the other thing that is very interesting, which I take great

pride in along with our staff at the chamber, is when we pick up

the phone and we call an H.R. professional about providing an employment opportunity, it is a much more powerful message because

it is not the old case worker calling trying to get someone placed

in a job. And this is a very powerful tool. And, finally, we have

been able to create an awareness that many social service providers have long sought to do, realizing that we are a business organization.

I know we have a long way to go in this endeavor. However, I

am really proud to report that we as an organization have moved

beyond the rhetoric and have implemented a program that is workVerDate 11-MAY-2000 13:22 Aug 30, 2000 Jkt 062233 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HEARINGS\60578 pfrm01 PsN: 60578
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ing. Over the past, again, 18 months I have traveled to six of our

counties in Pennsylvania to share this model.

As my Jesuit professors once taught me, you can implement the

‘‘BAA’’ principle with our narrative. You can borrow, add, and

adapt aspects of our program and implement it in your community.

That is what we are doing. We have a dialogue set up in nearby

Bucks County, which is a suburban county around Philadelphia.

We have also started dialogue in Montgomery County. And many

counties have seen the benefit of what we are doing. Moving forward, I am confident that our program will be an adopted model

across Pennsylvania.

And I want to thank Congressman Pitts and the members of this

Committee for giving us this opportunity to share with you some

exciting developments that are taking place in a county right outside of Philadelphia.

Thank you.

Chairman PITTS. Thank you very much, Rob, for that testimony.

I am sure we will have some questions for you.

[Mr. Powelson’s statement may be found in the appendix.]

Chairman PITTS. We have been joined by other members of the

Committee, the gentleman from Indiana, Ed Pease, and the gentleman from Pennsylvania, Phil English.

The next statement is by Peter Cove, founder of America Works

from New York. Welcome.

STATEMENT OF MR. PETER COVE, FOUNDER, AMERICA

WORKS, NEW YORK, NEW YORK

Mr. COVE. Thank you, Chairman Pitts and Congressman English

and Congressman Pease.

I appreciate being here today. I was recently introduced at a conference in Washington by a leading expert on welfare and they said

no one infuriates nor stimulates the public sector around welfare

as Peter Cove. And I am not sure whether that was a compliment

or not. But I often tend to be the skunk at the picnic regarding welfare-to-work even though I am probably the most optimistic person

you will ever meet.

I really do believe very strongly in welfare-to-work programs.

And it is why I set up America Works which is a private for-profit

company operating in seven cities. Currently, we have been in business 15 years and placed almost 20,000 welfare recipients into jobs.

And a recent study by the New York State Department of Labor

found that after 3 years, 88 percent of the people we had placed

were still off welfare with an average of 5 years on welfare prior

to coming to America Works.

We will stand on that against any record out there. There is a

reason for that: we run a good program. But I am not going to tell

you too much about my program right now. I would be glad to

when we get into questions and answers, if you wish. I am going

to use this opportunity to encourage the Congressmen here and

others to do something that has needed to be done for the last 30

to 35 years in welfare-to-work but has not: the government should

pay for the results of welfare-to-work programs rather than pay for

the process of welfare-to-work programs.

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For the last 30 to 35 years in this country, we have continued

to basically pay for programs in welfare-to-work, instead of paying

for the outcome. By continuing to pay for the process rather than

for the outcome, we are producing programs with a varying degree

of success. But as we all know, in terms of getting people permanently in jobs off welfare most programs in welfare-to-work have

not worked very well. And the reason they haven’t worked very

well is because they haven’t been paid to work. They have been

paid for their program. They have been paid for their process. And

that continues to this day.

The Department of Labor, which has most of the welfare-to-work

money at this point, continues to discourage pay-for-performance

programs. And when I say pay-for-performance, what do I mean by

that? I mean that a program should be paid only if it ensures that

a person is still working 6 months after having been placed by the

program. Otherwise, why pay for it?

In government, we certainly don’t pay for a box of pencils that

is half broken when we get it. We pay for the whole box of pencils.

In welfare-to-work, we will pay maybe half the money or threequarters of the money or 90 percent of the money or 100 percent

of the money even if the program doesn’t work for the people that

it is trying to place. This continues in the United States. And this

is the reason why I feel we have not had really successful welfareto-work in this country.

As I am sure you know the reduction in the caseloads around the

country has not come because of an outgrowth of fabulously new

great creative welfare-to-work programs. It has come because there

is a tightening of eligibility, it has been reduced because of diversion of people from welfare to other kinds of activities. It has come

about because of work fare. It has come about because of a good

economy where some people have moved into jobs. But it has not

come about because there has been a change in the quality of the

programs that we are funding to bring people from unemployment

and dependence to employment and independence.

I have to give you an anecdote that happened to me. I was negotiating a contract in a major State about a year and a half ago. And

I said to the contract officer, why don’t you just pay me for my results. Why are you paying me for all these things along the way?

I can make more money that way, I can be more successful in

terms of my profitability. You, on the other hand, along with the

taxpayer are not going to get what you should be getting. You

should only pay me for my results. And she replied, Oh, no, I can’t

do that, Mr. Cove. And I asked, why. And she said, I would lose

all my contractors. I said to her, I didn’t know that you were in

the business of propping up an inefficient marketplace, I thought

you were in the business of getting people off welfare. And she patted me on the shoulder, and said, Aren’t you kind of naive about

that.

There is a welfare industrial complex in this country made up of

organizations, very similar to the workings of the military industrial complex.

They wish to continue to be paid for their process. They do not

want to be paid for their results. If there is any one thing that you

could do to change the quality of welfare-to-work programs in this

9

country, it would be to change the way in which the Federal government allows the local government to pay for its programs.

There are all kinds of good programs out there, and there are

lots of ones too. But what you will get, if you were to help to do

this, would be a marketplace, a much more rational marketplace

that really brought us welfare-to-work the way we really want to

see it.

Thank you very much.

Chairman PITTS. Thank you, Mr. Cove. I am sure we will have

lots of questions for you.

[Mr. Cove’s statement may be found in the appendix.]

Chairman PITTS. We have been joined by the Vice Chairman of

the Subcommittee, the gentleman from South Carolina, Mr.

DeMint. And we will go to the last statement now from Eric

Yergan who is the owner of the Yergan Agency in New York City,

an Allstate insurance franchise which employs graduates the from

America Works program.

Mr. Yergan.

STATEMENT OF MR. ERIC YERGAN, OWNER, ALLSTATE—THE

YERGAN AGENCY, NEW YORK, NY

Mr. YERGAN. Thank you, gentlemen, for letting me come here

today on relatively short notice.

As you said, my name is Eric Yergan. I am an exclusive agent

from Allstate Insurance and the owner of the Yergan Agency which

is an insurance agency on the upper side of Manhattan—excuse

me, yeah, the upper side of New York City.

First, I would like to tell you a short success story which—this

is one of many. Allstate and many of its franchises have hired

many people through America Works and other types of programs

both from the private sector and from State and Federal type of

programs. Through America Works, I was able to hire a young lady

named Anna Rodriguez last July 29 to be exact. She is a single

mother of three, divorced from her husband and had been on welfare for 5 years, 5 plus years.

We were immediately impressed with her work and her work

ethic and her desire to learn. After several months we sent her to

school in New York State to get an insurance license. It is quite

a long, drawn-out process. It takes at least 4 weeks of classroom

study and then taking a State exam.

We sent her at no cost to her while we paid her—while I paid

her to go to school. When she did get her license, she did take the

test; and she passed it on the first try, which is something that

many people could not do.

Right away, I noticed an improved sense of her self-esteem. She,

all of a sudden, had this smile and this proudness about her that

she really did not have prior to that. Since then, she has, blossomed might be the word, progressed and blossomed to being a fullfledged salesperson in my office.

Her income has increased because she now receives commissions

which is a good thing. The education—through the education that

we provided her, she now has the opportunity to improve her life

and she has a future. She is an important part of my business, an

important part of my agency. And she has pride in her work, and

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she will move up in responsibility in the future and in earnings.

And things continue the way they plan to be, she will end up with

an ownership stake in the agency.

Secondly, I would like to tell you about why the current strategy

of America Works and other such, I guess, vendors in the welfareto-work programs works for me and other employers. It saves us

time, gives us a product in an efficient and cost-effective manner.

What do I mean? Potential employees are prescreened. Only one

that meets all hiring objectives are supplied to us for interviews.

Additionally, a working relationship develops between employers

and such vendors where they include training that we require as

part of their programs.

As importantly, they also serve as a middleman, so to speak, in

the beginning period of transition for that welfare recipient as they

start to work, you know, through their counselors and other staff

who works for America Works. If we have a concern or a problem

at that beginning of a new employee, I speak to the counselor. That

counselor speaks to the employee.

And what that does, that enables a good working relationship to

develop without it being poisoned by oh, no, the boss is getting on

my back again, oh, no, you know, he is always saying I am not up

to speed. We work with the counselors to get that person up to the

level where we need him to be. And I think that is probably one

of the most beneficial aspects as an employer for that.

You know, additionally, it appears that programs such as this instills pride into the participants, pride of improving their own fate,

pride of moving off welfare. This pride that gets established and

gets reinforced by the positive experiences of both the vendors of

such programs and positive work experiences is priceless. It is just

priceless to those participants.

It is this pride that will keep them off welfare forever. It is this

pride that will make them grow as productive members of the work

world. It is this pride that gets established in these individuals. As

far as I am concerned, programs like this should continue. You

know, the people change. They start to work. They bloom. And they

just feel rewarded just from an emotional standpoint and hopefully,

also from a financial standpoint.

And I would just tell a quick little story, a situation the other

day in my office. I am blessed with this lady, Anna Rodriguez. I

also have another person who I recently hired from the school—

from the Board of Ed School of Cooperative Education. And I have

another person who is a welfare recipient who works part time.

The contrast of the people who have been through such programs

versus the people who have not is just totally amazing. As a matter

of fact, I stepped out of office the other day, which almost never

happens, but I actually was out. When I came back in they were

in the middle of somewhat of an argument with the person who is

currently on welfare who was explaining to Anna. Well, Anna, you

still qualify for food stamps. You still should get them. You have

three kids, you know, your income is not high enough now. You

could still get that money.

And Anna was in the process of saying, I don’t care. I am not

going to do that. This is where I am going to work. I am going to

earn what I get, and I am going to take care of my family. And

11

that pride, that anti-welfare pride, whatever you want to call it, as

far as I am concerned, makes programs like this—and that is something they help instill in the person, priceless. I thank you very

much.

Chairman PITTS. Thank you.

[Mr. Yergan’s statement may be found in the appendix.]

Chairman PITTS. We will proceed now with the first round of

questioning and start with Mr. Ballard.

Mr. Ballard, how does the Institute for Responsible Fatherhood

and Family Revitalization partner with TANF agencies or other

community programs to achieve the high job retention rate that

you mentioned? I think you said 72 percent is your job retention

rate. What is the key there?

Mr. BALLARD. Well, I think the major key is that we hire people

from the community. We take a married couple that we have

trained, and we move them back into the high-risk community so

they live among the people they are going to be working with. We

have a very intensive door-to-door campaign. We knock on doors,

we meet mostly women. And from these women we get the name

of the fathers. We go in there and find these fathers. We do a 2

to 3 weekday visit at their homes.

Many of these men have never had jobs before, or they are on

drugs or alcohol. And they are not going to come to us so we have

to go to them. And we live a risk-free life-style, no drugs, no alcohol, no cigarettes and the like. And that life-style is different than

what they have experienced. So the modeling piece, plus the very

intensive counseling piece about who they can be in the world, we

think has probably made it a success.

Mr. Cove said earlier about this idea of getting paid for what you

do which is what the community doesn’t understand. But when

they grasp it, my experience has been when they are getting paid

for what they have themselves earned, they feel much better. And

we believe that programs that are worth anything don’t mind being

put up against men having outcomes like these. We believe that

when the people are treated with respect and they are expected to

succeed and they see a model of success around them, they come

to the forefront.

We do that work with TANFs around the country. We have six

centers around the country, Tennessee—Nashville, Tennessee; Milwaukee, Wisconsin; Yonkers, New York; Cleveland, Ohio; and the

District. And we work with community organizations; we work with

businesses. We work with, I guess, well over 100 organizations

around the country at this present time that are asking us for

these kinds of people.

And what they say is essentially someone who will come to work

on time, someone who will work when they get to work, and someone who will leave work as well. And they ask us to send them

more fathers, expectant fathers because they believe by getting a

father to the work place they can reduce crime and other kinds of

problems.

Chairman PITTS. Thank you.

Mr. Powelson, you mentioned in your testimony that mentoring

forms the basis of your program. Is it a major factor in long-term

employment success for welfare recipients?

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How do you create your mentors? How do you match them up

with participants?

Mr. POWELSON. Our program is very straight forward, Congressman. What we do in—the chamber will go out to its 1100 members—and I think I have enclosed in there an enrollment form with

a cover letter that goes out on my stationery asking a chamber

member if you would be interested in becoming a mentor.

[The information may be found in the appendix.]

Mr. POWELSON. We also take a full-page ad in our local newspaper. And in that ad we invite them, we invite community folks

to a meeting. We bring those individuals together.

I should share with you our first meeting we had over 50-some

people. As a result of our first training session—and I forgot to

mention all mentors go through 6 hours of training. So I have been

trained to understand this clientele. As they get—the clientele also

gets trained. When we bring these individuals together, or, excuse

me, for our first organizational meeting some people said right

away this is not for me. And as a result we kind of narrowed our

group down.

How do we match them? Well, we have been blessed in our county to hire a professional trainer who worked for Dr. Leon Sullivan

at OIC. She lives in West Philadelphia, has worked with this population for 25 years, and she trains our mentors and works with my

staff and I on matching individuals. That is basically how we do

it.

Chairman PITTS. Thank you.

Mr. Cove, you mentioned that programs should be paid for outcomes and results, not process. Could you tell me a bit about the

payment schedule at America Works, when do you accept payment

and what is the process for that?

Mr. COVE. It differs from city to city and contract to contract.

What I would like to see is not what exists in most of the cities.

What we would like to see is a situation in which we were responsible for moving a person from welfare into a job, and after 6

months be paid for that outcome.

Instead, we are paid along the way. And, again, it differs from

city to city. For instance, we are paid a portion of the money just

for enrolling a person at America Works, some portion of the

money. And then we may be paid another portion of the money for

the person completing a classroom activity. And then we may be

paid some portion of the money for the person being placed in a

job. And then we may be paid a further portion of the money for

the person being there for, say 30 days. Finally, we may be paid

the final portion of the money if the person is there after 3 months

or whatever. The fact is we can earn most of the money and the

person can drop out after 2 or 3 months, and the program has been

a failure. That isn’t what happens, but that is what can happen.

And that is what happens in many programs.

Chairman PITTS. I am sure we will have more questions. I want

to complete my turn with a question for Mr. Yergan. Would you

have even considered the possibility of seeking to hire welfare recipients if you didn’t have the relationship with America Works?

Mr. YERGAN. I would have considered it, it would never have

happened. You know, maybe just from my own personal backVerDate 11-MAY-2000 13:22 Aug 30, 2000 Jkt 062233 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HEARINGS\60578 pfrm01 PsN: 60578
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ground of a belief that one gives back certain things to the community, that would have been a desire; but would it have happened,

would I have taken the time to go search out such a welfare recipient and interview 20 of them to find one instead of interviewing

three? The answer is no.

I am a business person. Time is my biggest problem, is my biggest concern. And trying to make the business profitable and, of

course, make money. But the reality, it would not have happened

because the process would not have been there. And I would not

have gone through a bureaucratic process for it to happen.

So it is the speed and the efficiency, it is just a series of couple

quick phone calls. And I don’t mean it the way it sounds, to tell

them what product I wanted and to get that product delivered and

quick and easy and efficient. And that is probably my biggest desire in life is efficiency and time.

If you can somehow give me 6 more hours in the day, you got

my vote.

Chairman PITTS. All right.

Thank you. We will go to the other Members.

Mr. BALLARD. Mr. Pitts, if I may, please, let me show you the

power of outcome-driven organizations. Now, our success is because

the people who live in the community have been trusted to bring

the community back. And so they go out and knock on doors to find

these fathers. We are planning to move to an entrepreneurship

mentality or spirit by paying our workers for the number of fathers

he places and are retained for 6 months.

Now, this was given to us by one of our employees who we hired

coming out of prison, who—we hired him, we trained him and he

has done great, but he is saying make us earn our money. So I

think we need to go full force. The Bible says, if I man does not

work, he shouldn’t eat. So if a company doesn’t work for outcomes,

it shouldn’t get paid.

But also I think what can drive that is having employees thinking the same way. That if I can put five fathers, ten fathers into

the work place and he is there for 6 months, I should get a benefit

from that. Now, I should also say if he gets married, which makes

a stronger family, the kid has a better parent, he gets another

point. If the man is on a job for a year he gets another point. So

I think if we can do this thing if we work hard together with it,

both the government and the community to bring America to a

point where it works for all of us.

Chairman PITTS. Thank you.

Mr. English.

Mr. ENGLISH. Thank you, Mr. Chairman.

This panel has been most enlightening, and I think this hearing

occurs at a critical time. I serve on the Human Resources Subcommittee of Ways and Means, and we are endeavoring to look into

the same subject. What I particularly wanted to focus on in my

questions was some of the tax policy that goes along with welfareto-work.

I notice, Mr. Cove, toward the end of your written testimony you

suggested that we should change our tax policy considerably, move

away from the current work opportunity tax credit and the President’s welfare-to-work tax credit and move towards something else.

14

I wonder if you could—first of all, elaborate on the problems you

see with the current tax credits, and second of all give us a suggestion as to where you would like to see tax policy go to encourage

the hiring of people out of the welfare system.

Mr. COVE. I have never really been a major supporter of tax credits to the private sector for hiring of difficult-to-hire people. And

that would sound funny since I am a private-for-profit company,

you would perhaps expect me to be in favor of that.

But I have not seen it work to significantly increase the up-take

in hiring by private companies of dependent populations. And the

reason is employers are not stupid. They know what is going on.

If you are giving me a tax credit, you are giving me a problem. You

are in effect asking me to solve a problem for you. And you

wouldn’t give me the tax credit otherwise.

And as Mr. Yergan said, there are issues that have to be dealt

with. There are areas where when people are moving from welfareto-work, they need to be assisted. And the private sector just hasn’t

got a lot of time to do that. Consequently when our sales staff go

out to sell our services to private companies, we mention tax credit

as an icing on the cake. It really is not the significant issue for the

companies.

Although I cannot go into too much details as I am not entirely

familiar with the issues, I can tell you that a significant number

of people are disallowed any tax credit by Labor Department. There

are various reasons behind this decision including lack of records,

duration on welfare, etc.

Often people are being told that they are eligible for the tax credit. And the private sector is being told these people are eligible for

tax credits. But, in fact, the departments are disallowing that. That

is happening in New York quite significantly.

Mr. ENGLISH. If there would be some method, then, by which

there could be some certainty as to eligibility for the credit, would

that improve the way the system works?

Mr. COVE. It sure would improve the way the system works. But

as my opening statement indicates, I am not sure whether it really

makes a significant difference in the up-take and hiring of welfare

recipients. I think the testimony on the targeted job-tax credit

originally back when it was being sunsetted, pretty much indicated

that. I think that it really didn’t seem to be making a significant

difference in the hire.

Mr. ENGLISH. I am very familiar with that testimony. As you

know we dramatically changed the way the credit was structured

in part through the efforts of my colleague, Mr. Holden.

Mr. Powelson, what are your thoughts on this? Does the tax credit assist in the process of moving people from welfare-to-work?

Mr. POWELSON. Well, I have a personal story to share with the

committee. Our program has evolved in such a way that we envision the most powerful mentoring is where we are going to go within companies and get mentors so you will have on-the-job mentors.

About 4 months ago, I was invited over to one of our larger employers, they sell things on television, QVC network. The head of H.R.

said, I want to meet with you. Our CEO is well aware of what you

are doing, we need to talk.

15

He said, Let me tell you what our problem is, and we want to

work with you. Yes, we take the tax credits to hire. We will take

15 people. They better be job-ready. And I don’t want to hear about

transportation, day care, and the other issues. They have to show

up to work on time. We will get them here.

I tell you what I am going to do. I am going to take the tax credit, but I am going to recruit 15 people at QVC to become mentors.

And what I am going to do with the tax credit is for those 15 individuals that volunteer to be mentors to those new employees that

we have taken off public assistance, we are going to pay their Federal income tax for volunteering. That is the most powerful, I don’t

know of any other model in this county. So they are taking the tax

credit, okay, you are getting about an 18 month subsidy in the

Commonwealth of Pennsylvania, and they are going to say to that

employee you are empowered now. If you volunteer to do this, we

will reward you for it. And I think that is very powerful. We are

working it out.

And our DPW office is very excited. It is kind of a carrot and

stick. I mean the tax credit for QVC, I mean they are going to get

18 months of subsidized wage, but they are also to get people at

the job to be mentors. I think it is very powerful. We will see if

it works.

Mr. ENGLISH. Mr. Yergan, you are in the private sector. Do you

have a thought on this?

Mr. YERGAN. Well, I think the tax credit was a consideration. I

think the tax credit is a good thing. However, I think the majority

of the tax credit does find its way back to the—in this case to my

Anna or to my welfare recipient, or ex-welfare recipient. In regards

to—I am aware of this tax credit that I will get, but this also allowed me to make the decision that I am going to send her to

school for 4 weeks. Although Allstate did the training, I still had

to pay her, you know, her normal salary, and it really became like

5 or 6 weeks.

So knowing I was going to get that tax credit, the gamble that

yes she will stay with me for more than a year, yes that she will

get licensed, yes she will become a productive member of my company or my agency was done with the awareness of the tax credit.

So helps allow me to fund the program, so to speak, that gets it

to where I want it to be. So that money is not going to find its way

into my pocket directly because it will, in essence, be filtered down

to her, to reward her, to motivate her, and also to pay for that

overhead expense.

Mr. ENGLISH. Well, that is very thoughtful. And let me say, Mr.

Chairman, I am coming to the conclusion that while I think this

is an important area of tax policy and it is still important to have

these credits, we should be looking at their structure to make sure

that they actually do have a positive impact. I want to thank the

panelists for their contribution.

Mr. BALLARD. Mr. English, if I may address it from a different

standpoint. If a mother works for any of us and she makes $10,000

a year she would get an income tax credit in a year of $3,800. If

her boyfriend or child’s father does the same thing, he gets the

same amount of money.

16

So that is $7,600 they get together. If they get married, we take

away $1500 from each one of them, they lose $3,000 just for getting

married to give this child a future by the importance of marriage.

And I would like to see—I have no problem of giving the business

the money, but I think we can invest in the community. We need

to give people a chance to make it. And when you penalize marriage, you say to the poor community, we don’t care about your future, we don’t care where you are going to go, we just want you

to get out of our faces.

But when we leave the money in place, and just—this is a powerful example here. We have $7,600, if they get married and keep the

same amount of money. If they get involved in an IDA program,

Individual Government Account, to create asset, and let’s say they

take that money and go over to a company that will give them $2

for one, they have got now over $20,000. Now, that has to boost

that family’s not only income, but boost their esteem. So our government gets into not only giving out tax dollars to corporation, but

it gets into building communities, building marriages, good marriages, sound marriages. And you are going to build a future that

we all want.

Mr. POWELSON. Congressman English, I would also like to make

a pitch. My organization, we have just hired someone off public assistance. And I had the opportunity—in fact yesterday I met with

my mentee, and we met for our weekly meeting. And I had my new

person sit in on it.

Here I am as a C–6 organization doing the right thing and we

are investing in this person, but as a nonprofit we get no credit.

So I mean we are—in the nonprofit community, believe it or not,

there a lot of job opportunities out there whether it be United Way,

YMCAs, and we are not getting the benefit of the tax credit. So

there might be some legal room there in the code to provide nonprofits some relief there. Because there are job opportunities there.

Mr. ENGLISH. Those are two excellent points, the first one being

that we ought to be taking a look at how tax policy affects lowerincome people as far as the marriage penalty. One part of the marriage penalty debate that is largely forgotten is how this affects the

earned income tax credit, which unfortunately has not attracted

enough attention on our committee, Ways and Means. I intend to

try to rectify that.

Your point that nonprofit organizations also should have some

incentives to do the right thing is also a powerful argument.

I thank you, Mr. Chairman, as your mentee, for the opportunity

to extend my time.

Chairman PITTS. Thank you.

Mr. DeMint.

Mr. DEMINT. Thank you, Mr. Chairman. And I want to thank the

panelists as well. It is really encouraging to hear about the

progress.

I have been concerned for years with the problems we have created in this country by creating so much dependency and how

much we have taken from the lives of many Americans and to hear

that you are beginning to restore some of that self-esteem and selfworth by letting people have the opportunity to earn their own income, it is exciting to hear the progress.

17

I really appreciate the ideas that have been offered about the

marriage penalty, the nonprofit tax credit. And that is really what

I am after this morning is a few more ideas that we can change

at the Federal level that can make these programs work better and

better.

As you know, the further we go with welfare-to-work, the more

people that we are picking up who are more and more difficult to

employ. Now, those that were ready for work are probably back at

work. So this job is going to get harder and harder and it is increasingly important that we continue to provide whatever incentives or remove whatever obstacles are necessary to make your programs and others continue to work.

I have got many friends in business. I have talked to them about

this welfare-to-work. A number of them have tried. They have mentioned things like the real problem with reliability. If they hire

someone there is a risk they may have a lot of difficulty remembering to come to work and to stay at work once they receive their

first paycheck, as well as the risk of them going on disability. Many

of them have been briefed before they get to work on how they can

take advantage of employers.

There is very little flexibility in employment law on how to deal

with folks that might require a great deal of expense in the beginning. And so the way the tax policy is set up, the way the Federal

guidelines about employment are set up, are there some obstacles

that we can remove within reason that would make it easier, less

risky for employers?

I am sure, Mr. Yergan, you had to think of that possibility. Every

one you hire, you have some liability attached to that. What can

we do to make the system work better and better in addition to the

ideas that you have already mentioned?

Mr. Cove, we will start with you. You look the most anxious.

Mr. COVE. Well, I didn’t describe our program at all. And our

program does really help to get at the issues that you were just

speaking about.

So if I could just quickly mention how it operates. What we do

after a company has an opportunity to interview a couple of people

and select someone, if they want, they have no obligation, the person stays on our payroll for 4 months. And during that period of

time the transaction looks a bit like a temporary agency transaction.

We bill a company on an hourly basis for the hours worked by

the welfare recipient. The welfare recipient stays on welfare. Although the grants get reduced, they still are eligible for some of the

benefits of welfare. If the company hires them after 4 months, then

they go off of welfare. Although some other benefits, such as food

stamps may continue depending on how much money they are

earning.

But what that does and why the companies love it is it gives

them the opportunity to get past the issue that you were just raising, Congressman, which is that they stay on our benefit package.

We assume all responsibility just as a temp agency would. And the

company gets a chance to try before they buy, which companies

really like very much.

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So a process in which an individual is essentially tried out and

‘‘temped’’ out for a period of time as a program idea really works.

And I think if you had the kind of changes that I suggest in payfor-performance, you would find many more companies following

America Works’ lead in putting people in a temp position for a period of time and then being hired into a permanent position.

Mr. POWELSON. I would just like to reiterate what was just stated. Over the last year, I have become a professional grant writer.

And I can tell you that there is a feeding frenzy within our State

for organizations that are going—and I commend our governor and

our State legislature—all our grants now are competitively bid out.

So there is going to be an end result that you better attain in

meeting a goal. And I can tell you in this social service provider

bureaucracy that is out there, many of the dollars haven’t gotten

back to the recipients or helping really advance a meaningful

cause. And it gets tied down in administrative costs. And with our

program we are able to—through private and public dollars, we

work this program off about $110,000. We have—we will have one

full-time welfare-to-work coordinator, another very powerful statement that a Chamber of Commence would have someone out there

doing that.

And I have taken a barrage of phone calls that—here is a classic

one. Your organization stole my money; your organization isn’t involved in work force development. Well, you know on those two

points alone I beg to differ with the audience that I have had. It

bugs me to no end because I have seen this happen.

And in the old system it was like, Chamber of Commerce, could

you sign a letter of support for my grant? And now that we are engaged in this, it has changed radically. And I have realized that

there are organizations out there that have just kind of, you know,

they have taken money off this trough that is out there.

And the rules have changed. And they should continue to change.

Mr. BALLARD. Mr. England—I am sorry, Mr. DeMint, I would

like to address your question in several ways. Number one, we hire

people who are high risk, high risk for drug addiction, high risk for

incarceration, because most of us have been there. So we are not

hiring what we call goody two shoes. We are hiring people who

have a real problem but who have overcome and now look to people

who have overcome.

There is a bill that we worked with last year called the Fathers

Counts; and this bill is a non-punitive approach to do intensive

work with fathers in particular, very high-risk fathers; and I would

suggest strongly that you support that bill, Nancy Johnson’s bill,

that it gets through.

I think in that bill should be that organizations should support

good, strong, loving marriages. They should support men having

good-paying jobs so that they can take care of their family, get

them off welfare. They should support men thinking what I call entrepreneurial thinking so they don’t just want to own a business,

they want to treat the job like it is a business.

When I came out of prison, I wasn’t called a deadbeat dad. I

wasn’t called a dead-broke dad. I know things were said, but the

government wasn’t saying those kinds of things. I think the government has done us a disservice by calling men deadbeat, dead broke.

19

They are not good terms, and children don’t feel good when their

dads are called that way.

I would suggest we take out of our language these what I think

are very punitive approaches to getting men to pay child support.

You can force a man to pay child support. He will pay it for a

while, and he will go and hide. We need a better approach to getting to these men, and we need to kind of back off the bully pulpit

mentality.

These are fathers. They love their children. They want to be involved. There are a lot of problems they are going through. I think

that as we look at the pain they have experienced, some men didn’t

even have fathers as they grew up so they have no idea how to be

fathers unless someone leads them in the direction.

So I think we have a great opportunity here to do some great

things with this Fathers Counts bill, and I would appreciate if you

could give Nancy Johnson support around it.

Mr. DEMINT. Thank you, Mr. Chairman.

Chairman PITTS. Thank you.

Mr. Cove, you mentioned that 88 percent of participants in your

program remain off welfare rolls 3 years later. That is an outstanding success rate. Do you have any data of what percentage of

America Works participants go on to, for instance, enhance their

education by getting a GED or college courses? Do you see continuing education as a factor in keeping people employed and off

welfare roles?

Mr. COVE. We really don’t have but anecdotal information on

people and how they have either been promoted or moved into

other educational opportunities. I know that it happens, but to be

honest, if happens randomly.

What I would suggest is that, if I had any druthers in terms of

Federal policy, I would take the tax credits that are given to the

private sector, the work opportunity credit and others, and I would

convert that money into vouchers for individuals or for companies

to upgrade welfare recipients who have been placed in jobs. To me,

that would be a much better use of public monies than the use of

the monies for tax credits. I know there are differences of opinion

on this panel regarding tax credits. But my experience over 35

years has been that they are not terribly successful.

I would love to see an opportunity where welfare recipients, once

getting a job, had a voucher available for upgrading in education

or training; alternatively if that was not available that voucher

being given to a private company for them to then use for upgrading that individual. That, to me, would be significant.

Our job has really been to get people into the marketplace and

keep them there. Unfortunately, we really haven’t worked on that

other side.

Chairman PITTS. Thank you.

Mr. Powelson, I know another facet of your program is the establishment of a loan pool for your clients. Who would be eligible for

such loans and on what terms and what role, for instance, have

community banks played in this process?

Mr. POWELSON. Our program, as designed some 18 months ago,

we have in working with the DPW office realized that there are

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emergency needs that are identified where cash assistance just

cannot solve the problem.

An example, if I—actually, I took public transportation, but if I

were driving down to Washington today, and I had a blown tire,

between the credit card, a checking account, a savings account, I

am going to fix that problem, and I am going to get to this hearing

on time.

Imagine this scenario. The welfare client going to work. If they

have transportation, blown tire, entered into a new work situation

so there is no roll of accumulated savings during the first 6 months

of work, that situation arises. As a result of the blown tire, they

have—the axle breaks. For that individual, it is catastrophic. And

what happens is that is not communicated back to the employer.

The employer gets a little weary of the individual.

Wouldn’t it be nice, we said, if that individual could access for

that emergency need as identified by the mentor presented back to

our program coordinator, could go to a local community bank and

access a loan. The loan guidelines, as we have established them

now, they can borrow up to $1,000 but not at a 16 percent APR

like a Visa or a MasterCard—at maybe 2 percent.

They go into a local community bank. They sign a note, teaching

the individual fiduciary responsibility. Those monies are used to

help that emergency need. As a result, we figured that the community bank loves it because they get a CRA for servicing that population.

So that is what we have been able to create. We haven’t really

promoted it. We don’t want to make the clients too aware of this

fund that we have set up, but there are many programs out there.

There is one I think in the State of Minnesota where a local community has done the exact same thing. It is remarkable that we

have this, because there are situations that come up.

Chairman PITTS. Thank you.

Mr. Ballard, is the cycle for dependency on welfare more likely

to be broken when a child has a working parent as a role model?

What I am interested in knowing is what is the most immediate

benefit for a family when a parent successfully completes your program?

Mr. BALLARD. Someone had said that more is caught in the world

than taught. I think when people and children see their parents

living a certain lifestyle, whether it is good or bad, they are going

to model that. In fact, the Bible says that the sins of the father will

follow the children to the third generation.

One of the reasons I think when I came out of prison I went to

work was because my grandfather who worked on a farm in southern Alabama taught me how to work. He said, if you work, you will

always have income.

I think children will see their parent doing something. My son,

who is now 43, has a master’s degree. He talks about how I raised

him. He said, my dad would take any kind of job that was honest

just to make a good living and take care of me; and he feels that

that modeling of seeing me go to work is what has kept him as he

is today.

Many children tell us that their parents are in bed at 8:00, 9:00,

10:00, even at noon; and they go to school many times not dressed

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properly. They go to school hungry. So how can we model that kind

of concept and expect people come off welfare and make it?

We have to have parents to become good parents, and good parents mean getting married. Good parents mean having good-paying

jobs, paying their taxes and contributing to society and raising your

children right. I think as children see modeling of good parenting

they will grow up and themselves become good parents.

Chairman PITTS. Thank you.

Mr. Yergan, you mentioned a success story, Ms. Rodriguez I

think it was. Could you describe in a little more detail the changes

you have seen in Ms. Rodriguez since she has been employed by

your company?

Mr. YERGAN. Yes. As I was saying earlier, she is a mother of

three, divorced from her husband who left her about 5, 6 years ago,

went on to welfare because that was the only way she could survive. She is probably the most conscientious person in my office in

regards to—sometimes including me—of getting there exactly or

early for work. She is supposed to be there at 9:00; she is there at

8:30. When the clock, so to speak, ticks at 6:00 and she is supposed

to leave, she is not running out the door. She is finishing what

work she has to do before she goes. And if it is 6:06, 6:08, she signs

out at 6:00.

It is not like she is trying to get every little minute from that

standpoint, but it is also maybe just the little ways that she carries

herself, the way she interacts with people. On the phone initially,

you know, very maybe meek might even be the word and now joyful, laughter, but also then says, well, do you want that policy or

also then relating it to what a salesperson is supposed to do.

And I think from what I have heard, that is carried out, you

know, in her—maybe her relationships outside the office. She is

more assertive. She is more demanding of what she is seeking out

of life.

And it is just, you know, a similar evolution of what we see as,

you know, our children as they grow. You see them as they

progress. Not relating her to a child but just in regards to that evolution of life. And, you know, I am sure there will be times when

she will become more demanding to me about when is that next

raise going to be, when am I going to have something more to do,

and I know that is coming, and I am going to beat her off at the

path, so to speak. But I have rewarded her increasingly since she

has been there, and I just think she just walks taller, so to speak.

Chairman PITTS. Thank you.

We have been joined by the gentleman from Kansas, Mr. Moore.

Do you have some questions?

Mr. MOORE. No, sir, I don’t. I regret that I was here late, and

I don’t want to ask questions that have already been asked. Thank

you very much, Mr. Chairman.

Mr. BALLARD. If I could just make a comment. I can’t remember

your name, sir. But he talked about mentoring, and mentoring to

us is like modeling, and we believe that there is not enough good

mentoring going on. And his program sounds like a really good

model to do that. By living in a community where the people are—

by going to their homes, we are doing some of the same things. We

are actually showing them how to live and how to carry themVerDate 11-MAY-2000 13:22 Aug 30, 2000 Jkt 062233 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HEARINGS\60578 pfrm01 PsN: 60578
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selves, and I think this is a very good approach to provide this

whole mentoring concept to the community as well.

Chairman PITTS. All right. We will take just a few more questions before we wrap it up.

Mr. Cove, what type of companies do your sales representatives

establish contact with?

Mr. COVE. From the largest companies like Aramark Food Service, an international food service company that has hired, until

now, close to 500 people from us to small little companies, ma and

pa stores. It really depends where the openings are.

The easiest way to think about it is to think about, first of all,

the range of jobs that are available up to about $12 or $13 an hour

where most of the people—not all but most of the people will go

into. And it can be anything from a Barnes and Noble, where we

have placed dozens of people in cashier and other positions, to

manufacturing, or customer service. It really is a wide range, because there really is a wide range of experience and potential of

people on welfare.

It ranges from modest, entry-level jobs to quite interesting jobs

that would probably surprise the members of the Committee that

welfare recipients would be able to move into. But it really is a

vast range of companies, from the smallest to the largest.

Chairman PITTS. Mr. Powelson, in your partnership with the private sector and government, what role has small business played

as part of your program either as serving as mentors or in hiring

clients?

Mr. POWELSON. Our biggest mission with small business is to

take the fear out of hiring; and, you know, I guess again the carrot

and stick approach uses—is educating them on tax credits that are

made available to them. Many of our employers, small businesses

that have hired, share with us the horror stories, so it is kind of

changing the mindset; and then when we are working now more

closely with the DPW office, we make darn sure when that resume

comes back to the Chamber and we are going to make that call to

get someone into a job, that that person has been screened, they

are job ready, really ready to hit the ground running. Because the

old saying, you never get a second chance to leave a first impression.

And some of the things that we have done is it has been a leap

of faith, and I am putting my reputation as a head of the Chamber

on the line in some cases. I was burned once, and I am learning

from some of these situations.

Chairman PITTS. Mr. Ballard, what in your experience are the

most significant barriers to long-term retention and what does your

program do to confront or overcome these obstacles?

Mr. BALLARD. Over the past 30 years has been drug use, alcohol,

behavior problems, people responding to employers in ways that

are inappropriate. We address these by, once a person is placed in

a job, our office contacts the person once a week and we contact

the employer once a week. And employers have said to us if every

company does this, this kind of follow-up, the retention is much

higher.

We model risk-free lifestyles. We believe that if a person drinks

and does drugs, he cannot maintain a job very long, so we work

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with them in this 30-day period. It is a very intensive one-to-one

in his home to help him overcome drugs. We also make referrals

to drug programs when necessary.

But the idea is to counsel him about the importance of a riskfree lifestyle, having a good attitude and also modeling that same

attitude.

Chairman PITTS. Mr. Yergan, based on Ms. Rodriguez’s success,

do you anticipate that you will continue to hire participants from

America Works or other welfare to work programs?

Mr. YERGAN. Yes, I do.

If I could go back to Ms. Rodriguez, after you asked me the question, some things came to mind and how it affected her. I remember after she had been with me about 2 or 3 months, I said, now

I want you to go to school to learn about insurance and get a license. The look on her face, the beaming that she had when she

went home and explained that to her family and her mother and

her aunts and uncles, it was just like a whole tremendous avalanche of feelings in the family.

Then when she actually started school and had homework every

night and had to come home—she had to go to school from 9:00 to

5:00, and then she had to study. She was able to sit down. While

her kids were doing homework, she had homework. So it was, oh,

I am doing my homework with mommy. And her daughters would

say and her sons would say—or son—I am doing homework with

mommy, and that helped them also see the importance. So there

was like a spillover effect of that.

And then once she actually took the test and passed it the first

time, where many people with college don’t necessarily pass this

test the first time, and she did; and that had a positive effect not

just in herself, in her own feelings, but also in her whole family.

Now she had told me her son is applying for, I guess, a scholarship or a certain exam to get into Stuyvesant, which is one of the

best public schools in New York City; and it was something that

he hadn’t really thought about before he saw—this is according to

her—before he saw that a mother could move from where she was,

that there were certain things that his mother was achieving. So

now he has set his own goals higher. So that is from your last

question.

Now to answer this question. It just kind of took a while to come

back to me. Yes, as a matter of fact, at one point, you know, I did

speak about America Works to another full-time person. Turned

out that that person, who I wanted, I wasn’t able to hire because

another employer also thought highly of her and was willing to pay

her considerably more than I was. And at the same time, the training program that I was trying to hire for was postponed, so it kind

of fit my timing.

So, yes, I would use them again. I have in other agencies within

Allstate.

As I said, in certain ways we are like franchises. They are finding out about America Works, and we are spreading the word, and

they will be using that type of organization.

You know, more recently, I just hired someone from the Board

of Education School of Coop Ed just because it was four blocks

away. That was a little risky to me because, in that case, they are

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on my payroll from the start; and if they don’t work out, I have got

to fill out all that paperwork and the whole process and that person doesn’t work out, however they are, I then would have been at

a disadvantage if—compared to if I used America Works, where it

is on their payroll, and it is just easier.

I guess, really, our concern is just time and what is easy, to get

the person who can produce. We are kind of in that pressure environment where, day in and day out, every day is another day.

Mr. COVE. I just wanted to reiterate something that the other

members of the panel have been talking about. Again, I didn’t go

into a description of America Works’ program, although it is in my

written testimony.

The major reason that America Works has the retention rates

that it does is because we send a staff person called a corporate

representative to the work site at the private company every single

week. This is the kind of mentoring that my colleagues have been

speaking about this morning. That person is there to make sure

that the line manager at the company and the worker are positive

that it is working out.

If the person is coming in late, we immediately move in to find

out what the issue is. Is it a day care issue? Is it a problem of just

being able to wake up on time? What is the issue? If there is an

abusive mate at home, we immediately get involved with that person with victims’ services and get protective orders or whatever are

necessary.

We believe very strongly people lose their jobs not because of

what they don’t know but because of their inability to fit in in the

workplace. I call it the static in their lives, the kind of things that

my colleagues were talking about today. The staff person who intervenes in the work site is known as the corporate representative

(the equivalent of the mentor). The involvement of the corporate

rep is critical to the success of these kinds of programs as it is he

or she who takes away some of the issues that could prevent a good

worker from succeeding in the workplace.

Again, if government were to pay for results, you would find

much more of this going on because, as you are hearing today from

the people on the panel, that really makes a difference.

Chairman PITTS. Mr. Powelson?

Mr. POWELSON. Congressman, if I may, I would like to share

with you, just as a tie-in to one of the other panelist’s comments.

I have found in my mentoring experience with my mentee, in my

initial meeting with her, I could tell you right from the start that

an individual in her situation is living day to day, where someone

in my position or your position or anybody in this room probably

has a game plan where we are going to be 6 months from now, a

year from now, wherever. Some people, I just found out, have a 35–

year plan.

My point is, we needed to start thinking the way I think and others think in terms of planning, and this is—I mentioned it in my

testimony. My mentee had no idea that there was a resource in the

community where she could get her kids involved in a summer

camp program. That little pick up the phone, get the paperwork

filled out and getting it done meant so much to her self-esteem and

to provide that for her kids.

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Her initial reaction when I brought it up is, I can’t afford that.

It wasn’t about affording it. There are resources in the community.

Someone in my position and many in this room, we know our resources. That is where we get around. And, you know, it is the

struggle of life and providing those resources, that insight has been

just the little thing that I do to help her. And she has got to help

herself has meant a lot to her and has built up this self-esteem,

as you have heard.

Chairman PITTS. Thank you.

Any members have any other questions? Mr. DeMint.

Mr. DEMINT. Thank you.

Mr. Cove, what are the incentives for private businesses to do

what you are doing? Where do you make your money? How does

it work that we could encourage others to do what you do?

Mr. COVE. Sure. What the government should do is decide what

it is worth to get someone off welfare, set a market price for what

it is worth or at least go to the marketplace and try to figure out

what it is really worth to get someone off welfare. This is never

done. It is calculated all kinds of other ways.

But that way of saying—it is costing us, let’s say, in New York

State 20,000 or more dollars per year to keep a mother and two on

welfare. What is it worth to the taxpayer to get the person off,

guaranteed? What is it worth? And come up with some figures that

make some sense.

Once that is established, and I think it should be done in conjunction with the marketplace: a fair market value is set, then the

government should say to the private sector and not-for profits,

now, give us your plans. Incidentally, this is very well done in England. Tell us what you plan to do, and as long as your plan is a

good plan, go right ahead and start taking people and placing them

in jobs and getting them off welfare: We will then pay you that fair

market value at the end of a period of time which is deemed long

enough by the government to increase the likelihood of that person

continuing in the job and off of welfare.

The way we make our money is a combination of two major

sources of funding. One is that money that we do receive from the

government to get someone off of welfare, though it is usually not

paid in the preferred way, i.e.: at the end and for a job well done.

The other source comes through the differential we charge Allstate

and others on an hourly basis a little less than it would have cost

them to keep the person in that job. Out of that we use the money

to pay the wage of the workers, as I indicated. The person is on

our payroll during the period of time they are working for the company, that 4-month period. So there are two sources of funds.

Ideally, ideally it would be a company such as ours, although our

program I don’t think is the only way to do it. I think we have a

great program, and it delivers at the end, but there are lots of ways

of doing that.

But what the government should be doing is paying for the programs for a period of time for individuals to be ‘‘temped’’ out, for

instance, the way we do it with Allstate and with other companies

around the country. Then, at the end, the government should pay

for the results. You would find a marketplace boom. You would

find, instead of the reaction I got in my anecdote earlier which was

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‘‘we can’t pay you for performance at the end, because we would

lose all our other contractors.’’ What you would find is the development of a private marketplace that really delivered welfare to

work.

Mr. BALLARD. I would say, treat nonprofits the same way. Whatever incentives you give to businesses, give those to us and make

us compete. Make this a competitive environment the way it was

when we first came to America and fought against the wilderness.

That spirit needs to come back, and we need to help people understand the importance of not only working but working good.

So I think that if we are given a challenge and we could do partnership with America Works, that we would find the fathers, we

would prepare him for the workplace. We would place the father

and together we would retain—we could have a 90 to 100 percent

retention rate, not just in 3 or 4 years but forever. So I think we

need to find better ways of doing business in America.

We have made America dependent, even corporations, on taxpayers’ dollars; and we need to find a way where taxpayers are

paying for what they are getting; and today that is not happening.

Chairman PITTS. Thank you.

The gentleman from New Mexico has joined us during the last

round, Mr. Udall.

Are there any other questions from the panelists? If not, this has

been an excellent panel with many good ideas, excellent testimony.

This will be a very important record to the members of the Committee, and we will keep the record open for 5 legislative days if

any of you would like to submit any further testimony.

We thank you very much for taking time to meet with the Subcommittee today; and if there are no other questions, this hearing

is adjourned. Thank you.

[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]

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