The 104th Congress is moving to make major changes in AFDC, the nation’s largest cash assistance program for needy families with children. Under consideration are limiting the number of years that cash assistance may be received, capping benefit increases for mothers on welfare who have additional children, denying cash assistance to unwed mothers under 18 years old, and transforming AFDC from entitlement status to a block grant administered by states. Also under consideration are the type and extent of work requirements to be established. In 1988, the Congress created the JOBS program to transform AFDC into a transitional program geared toward helping parents become employed and avoid long-term welfare dependence. Under JOBS, states are to assess the needs and skills of AFDC recipients, prepare them for employment through education and training as needed, and place them in jobs. We reported earlier that while states have made progress in implementing JOBS, only a small percentage of the almost 4.6 million adults on AFDC participated in work-preparation activities in fiscal year 1993. Moreover, little is known about the JOBS program’s progress in moving parents into employment and reducing their dependence on welfare. To help the Congress as it considers welfare reform, the Ranking Minority Member of the Senate Committee on Finance requested us to provide information on (1) examples of county or local programs that stressed job placement, subsidized employment, or work-experience positions for welfare recipients; (2) the extent to which county JOBS programs nationwide emphasized these employment-focused activities; and (3) factors that hinder program administrators’ efforts to move welfare recipients into jobs. Through AFDC, the federal government and the states provide cash assistance to needy families with children who lack support from one or both parents because of death, absence, incapacity, or unemployment. As shown in figure 1.1, since 1970, the number of female-headed families, including those headed by women who have never married, has more than doubled, as has the number of families receiving AFDC. According to a Congressional Budget Office study, the growth in female-headed families, especially those headed by females who had never been married, accounted for about one-half of the sharp increase of 1.2 million in the number of AFDC families between 1989 and 1993. Forecasting AFDC Caseloads, With an Emphasis on Economic Factors, Congressional Budget Office Staff Memorandum (Washington, D.C.: 1993), pp. 1, 3. mothers receiving AFDC who had never been married has doubled, from 21 percent in 1976 to 52 percent in 1992. About 70 percent of families receiving benefits have 1 or 2 children. While most AFDC recipients are single mothers, these women are a diverse group, making use of the program in different ways. For example, one study has estimated the total time that those receiving AFDC at a point in time can be expected to receive benefits, as shown in figure 1.2. This analysis indicates that 9 percent of these recipients are using AFDC for only a short time—2 years or less. About 76 percent, however, are receiving AFDC benefits for a total of 5 years or more, when all moves on and off welfare are considered. According to these data, under a 5-year limit on receipt of cash assistance—a measure included in the House welfare reform bill—about three-fourths of those on AFDC may be expected to hit the time limit and need to support themselves through employment or other means. This prospect poses a formidable challenge for many AFDC recipients who have limited education, job skills, and work experience. About 45 percent of all AFDC recipients, for example, have less than a high school diploma.Surveys of several thousand AFDC recipients expected to participate in JOBS in selected sites showed that at least one-third had extremely low literacy skills and between one-fourth and more than one-half lacked prior work experience. Over one-fourth thought they could not prepare for work because they or their family members had health or emotional problems.Such recipients are at risk of long-term welfare dependence. We reported previously that states have made some progress in working with some of these recipients but that many remain unserved. The JOBS program, begun in 1989, was designed to improve upon the performance of previous welfare-to-work programs and help combat long-term welfare dependence. Research studies conducted up to then showed that employment training programs for welfare recipients could have a positive but generally modest effect on increased earnings and reduced welfare costs. They also showed that programs that emphasized low-cost services, such as job search, generally did not help welfare recipients get higher paying jobs than they would have without the programs or help the more disadvantaged. It was hoped that JOBS could improve upon previous programs’ performance by reaching further into the AFDC caseload and providing more comprehensive services, including education and training, to help parents find jobs that would end their dependence on welfare. To this end, under JOBS, states are to (1) provide a broad range of education, training, and employment-related activities; (2) increase the number of AFDC recipients participating in these activities; (3) target resources to the hard-to-serve; and (4) provide support services, including child care, transportation, work-related, and other support services, such as mental health counseling, if deemed necessary. To encourage states to work towards the federal goal of reducing welfare dependency, the Congress created minimum participation and targeting requirements that states must meet to receive their full share of federal funding. The minimum participation requirements rose from 7 percent of nonexempt AFDC recipients in fiscal year 1991 to 20 percent in fiscal year 1995. Under the targeting requirements, states must spend 55 percent of their JOBS funds on designated target groups. The Congress also expected that performance standards based on outcomes, such as increased employment and earnings and reduced welfare dependency, would be established after the initial implementation of the program. Outcome-related performance standards have not yet been established. (For more information on the current status of these performance standards, see p. 42.) While most states have met the minimum participation requirements, the number of AFDC recipients participating in JOBS remains limited. About one-half of the adults receiving AFDC have been exempted from JOBS, most often because they are caring for a young child. Of those considered nonexempt, states decide how many to serve in JOBS based on the availability of state resources. As shown in figure 1.3, the number participating in JOBS each month, while increasing, has remained limited for fiscal years 1991 through 1993. In 1993, about 11 percent of the 4.6 million adults receiving AFDC were active in JOBS activities each month. Although some individual programs have succeeded in serving most of their nonexempt AFDC recipients, JOBS programs overall served only about one-fourth of the nonexempt population. Federal law requires JOBS programs to make an assessment of employability based on a participant’s educational, child care, and other support services needs; skills and work experiences; and family circumstances. The types of assessments used can range from 5-page surveys filled out by participants to comprehensive career-oriented assessments. If participants are considered job-ready when they enter the program, they may be required to look for work immediately without further employment preparation. Programs have varying criteria on when a participant is considered job-ready. While some local programs encourage all of their participants to look for work before being placed in education, training, or work-related activities, most require some minimum level of education, skills, or work experience before participants are expected to look for work. Within the federal JOBS guidelines, states and localities assess the needs of their JOBS participants, determine the type and intensity of services provided, and set the criteria by which participants are deemed job-ready. They also have discretion to establish the wage level and benefits associated with the employment goal established in the employability development plan. Some programs set wage goals as high as $8 per hour, while others believe that a job at any wage level is an appropriate goal. To help AFDC recipients move towards self-sufficiency, states rely on two federal funding sources. First, about $1 billion of federal JOBS funds has been made available annually in recent years for allocation to the states. States must then commit their own funds to JOBS to match these federal funds. In fiscal year 1993, states used about 70 percent of the federal JOBS funds available to them. Second, the federal government has provided an uncapped source of funds to share with states the costs of providing child care assistance to AFDC recipients in education or training programs or who are employed. In fiscal year 1993, the federal government provided about $1.2 billion of the almost $2 billion spent by states on JOBS and AFDC child care. HHS oversees the JOBS program at the federal level and state AFDC agencies supervise it. At the local level, JOBS is administered either by the state AFDC office or by county officials. Before using JOBS funds to purchase services for participants, programs must make full use of the services and resources available in their communities without charge to AFDC recipients. Programs may also contract with other organizations for services. As a result, programs rely heavily on a variety of community resources, such as Job Training Partnership Act (JTPA) agencies, adult basic education programs, high schools, the state employment service, Head Start, and community colleges. To identify welfare-to-work programs that strongly emphasize employment or work for their welfare recipients, through job-placement activities, subsidized employment, or work-experience positions, we reviewed welfare-to-work evaluations and HHS program data and contacted HHS officials and welfare experts. We then visited selected programs in Riverside County and San Jose, California; Athens, Ohio; and New York, New York. Also, in Charleston, West Virginia, we spoke with six JOBS officials representing 11 West Virginia counties. Where results from impact evaluations were available, they are included in the text; however, only two of the five programs have been rigorously evaluated to measure program effects. We also note that the program cost data cited may not be comparable among the different programs described. To determine the extent to which county JOBS programs nationwide used these employment-focused elements and to identify factors that hinder administrators’ efforts to move AFDC recipients into employment, we collected and analyzed data from a range of sources. To obtain nationally representative data, we randomly sampled 453 of the nation’s 3,141 counties and mailed questionnaires to their JOBS administrators in May 1994. The sample was stratified to ensure representation of the nation’s central-city, suburban, and rural counties. It included the nation’s 10 largest central-city counties, based on the number of female-headed families with children receiving public assistance in 1990. Our analysis of the questionnaire data generally showed few material differences among the responses of the counties comprising the 10 largest central cities, other central-city counties, suburban counties, or rural counties. Consequently, we present the results using combined data from all the strata. See appendix II for more information about our sample. The questionnaire and summaries of the responses are in appendix III. For more information on JOBS program implementation, we spoke with program administrators at HHS and the Department of Labor; representatives of the National Alliance of Business and the American Federation of State, County and Municipal Employees; and welfare experts. We also reviewed HHS and congressional welfare reform proposals and analyzed economic data provided by the Bureau of the Census and the Department of Commerce. In addition, we visited JOBS programs in Alameda, Napa, Santa Clara, and Sonoma Counties in California; Franklin County in Ohio; and gathered additional information at a meeting with JOBS administrators from 12 counties in the San Francisco area. We conducted our work between September 1993 and April 1995 in accordance with generally accepted government auditing standards. Some local welfare-to-work programs are well-focused on employment, working closely with employers to help participants find jobs or using subsidized employment or work experience to promote work for welfare recipients. We saw this in programs at five locations we visited: Riverside County and San Jose, California; New York, New York; Athens, Ohio; and West Virginia. The programs in these places vary in their costs per participant and other features. Yet they all focus on work as the ultimate goal, with three of the programs—in Riverside County, San Jose, and New York—working closely with employers to move participants into paid employment, and the Athens and West Virginia programs supporting work- experience positions when regular employment was not available. Table 2.1 summarizes selected program features and highlights important differences among the programs. For example, the Riverside County program is administered by a welfare agency and involves all of the county’s JOBS participants. While welfare agencies also operate the Athens and West Virginia programs, their work-experience programs involve only a portion of their JOBS participants. The other programs are not JOBS programs and are not operated by welfare agencies. A nonprofit organization operates the San Jose program, which serves welfare recipients among other individuals in the community. And a for-profit firm runs the New York City program under contract to the state welfare agency; it serves but a small fraction of the JOBS participants in the city. We also note that the Riverside County and San Jose programs have research-documented success in getting more AFDC recipients employed than would have occurred without the programs. A more detailed discussion of these programs follows. The Riverside County JOBS program stresses that its purpose is to place participants in jobs quickly. Researchers believe that this strong employment message may have been one of the key factors in producing results. Using an experimental design to evaluate JOBS programs in six California counties, researchers found that the Riverside County program increased the earnings of single AFDC parents by 49 percent and decreased welfare costs by 15 percent over 3 years. Results in the other five counties were about one-half that level. As shown in figure 2.1, the Riverside County program produced greater net gains than the other counties for both welfare recipients and government budgets, saving almost $3 for every $1 spent by the federal, state, and local governments. Moreover, long-term AFDC recipients, those with little education, and those more job-ready have benefited under Riverside’s approach. Researchers who studied the six California counties believe that Riverside County’s greater positive impacts may be due to a combination of program features. For example, the program had sufficient resources to make efforts to enroll all the AFDC recipients deemed mandatory for JOBS. In addition, it used the threat of reduced AFDC benefits for uncooperative participants to secure their participation in JOBS. In contrast with the other counties evaluated, Riverside also articulated a simple goal: participants are there to get a job and leave welfare as soon as possible. They are, therefore, encouraged to take any job offered, including low-wage jobs, part-time jobs, or jobs without benefits. To help participants get jobs, five full-time job developers provide direct access to employers and support the five JOBS offices that served about 2,000 active JOBS participants each month in 1993. The Riverside program also uses placement standards for its JOBS workers; case managers are expected to place at least 12 participants in employment each month. Stressing the importance of job search along with education in the basic skills of reading, writing, and math also appears to benefit Riverside. In Riverside and the other counties, new participants whose test results indicate that they need basic education have the option of entering the classroom immediately or attending 3 weeks of job search. However, Riverside’s orientation results in proportionately more of its participants being in job search than is the case in most other California counties studied. Also, Riverside encourages those participants in education and training to find jobs quickly. Staff closely monitor these participants and expect those not making progress to look for work. Riverside’s emphasis on short-term job search along with longer-term education may also account for its relatively low average cost of $3,000 per participant in 1993 dollars, compared with other California counties studied. Consistent with its emphasis on moving participants quickly into the work force, Riverside makes less use of basic, vocational, and postsecondary education than some other counties. For example, in Alameda County, which used education extensively, the 1993 average participant cost was $6,600. While the Riverside County results indicate that an emphasis on job placement, among other factors, is important, questions remain about what works best to help welfare recipients get jobs and earn enough to support their families. HHS has contracted with researchers to conduct experimental design studies to provide additional information on the cost effectiveness of higher-cost education and training programs compared with lower-cost programs that emphasize quick entry into jobs. While the Riverside program produced greater earnings increases and welfare savings than in the other counties, about 40 percent of its participants were still on AFDC 3 years after the study began, and many of those who did leave AFDC remained in poverty and possibly at risk of returning to welfare. Some of those that left AFDC may also have continued to receive other forms of public assistance, including Food Stamps and housing subsidies. The researchers also noted that it was not clear that Riverside’s program could be replicated or, if replicated, could produce similar results in other localities nationwide—for example, in inner cities where AFDC recipients may face greater barriers. In addition, while they concluded that the Riverside County results appear not to be fully explained by its local labor market conditions, they cautioned that similar results may not be possible in areas with very poor economic conditions, such as rural areas with high unemployment rates. The Center for Employment Training (CET), a nonprofit organization founded in 1967 and based in San Jose, California, represents another approach to promoting employment that has demonstrated positive results. CET contracts with job training and local welfare programs to provide job skills training, combined with remedial basic education, when needed. Using an experimental design, researchers found that this program increased employment and earnings for minority female single parents on or at risk of becoming dependent on AFDC who volunteered for training. The research study noted that at the end of 12 months, 46 percent of CET participants were working compared with 36 percent of a control group and participants earned 47 percent more on average than the control group. These results were also greater than those for other sites in the study. To help its participants get higher-wage jobs with a potential for upward mobility, CET offers job skills training in a range of occupations for which employers have demonstrated consistent demand. About 28 courses are offered, including child care provider, automated office skills, home health aide, commercial food service, and electronic assembly. Remedial education is integrated into the job skills training curriculum for participants who have basic skill deficiencies, rather than being offered separately. Researchers who have studied the CET program believe that its strong focus on employment and integrated training design are important features. The employment focus is evident in several CET activities. CET’s full-time job developers make contact with employers in the community and meet with participants who are nearing completion of training to help them find appropriate work. The job developers are assisted in their placement efforts by CET’s vocational instructors, who maintain close contacts with local employers. CET also has an industrial advisory board, composed of employers, that meets monthly to provide advice on the types of training equipment to be used and other issues to ensure that the training offered meets the needs of employers. Board members also conduct mock job interviews with participants. One employer we spoke with, manager of a local sheet metal fabrication company, emphasized that his company relies heavily on CET graduates. He believes that this saves him advertising and other hiring costs and guarantees him well-prepared workers. At the time of our visit, he was planning to open a company cafeteria to be staffed with CET graduates. Another key feature, integrated training, provides basic education in a practical context. Participants lacking basic educational skills are entered into job skills training immediately to help maintain their motivation and focus on work. Because basic education is provided within the skills training class itself, participants appear more likely to accept the remedial help and to succeed. Participants attend classes during the normal work week in a setting designed to simulate the workplace, using the tools of their trade under the guidance of instructors with recent industry experience. Individualized instruction allows new participants to enter class on the first day of any week of the year, to proceed at their own pace, and to leave as soon as they have demonstrated the necessary competencies. Training courses average 6 months in length and cost about $6,000 to $7,000 per participant. Another example of a work-focused program is seen in New York City. There, the welfare agency, as part of its work-supplementation program, contracts with a private for-profit firm called America Works. America Works quickly prepares JOBS participants for employment, places them in jobs, and provides counseling and support to ease their transition to work. Staff and resources are devoted to working with employers and supporting clients after job placement to help alleviate any personal problems that may arise and threaten their ability to continue to work. America Works emphasizes the development of good work habits and skills required for entry-level jobs during the short training period it provides participants. Specifically, participants are urged to demonstrate punctuality, reliability, appropriate professional dress and demeanor, a constructive and cooperative attitude, and an ability to get along with others in a work environment. Participants attend a week-long pre-employment class and 6 weeks of business laboratory where they use self-paced computer-assisted office skills programs. Tardiness and absences may result in suspension from the program. Participants who complete the business laboratory are placed by the firm’s job developers with private employers for 4 months of supported work, during which time they are on the payroll of America Works. The America Works payroll in New York City is supported by AFDC grant funds and funds from employers. Upon placement, participants are provided a support system, whereby America Works staff help participants with personal problems, such as creditor or landlord disputes, that interfere with their ability to work. America Works staff believe that their support system for participants who have been newly placed in jobs is key to keeping many of their participants employed. According to data compiled by the New York State welfare agency, about 65 percent of participants in supported work are ultimately hired by the private employers with whom they have been placed. America Works receives about $5,300 from the state’s welfare agency when an AFDC recipient enrolled in America Works remains employed and off AFDC for at least 7 months. Unlike the Riverside and CET programs, the outcomes of the America Works program have not been compared with a comparison or control group to determine whether the effects were due to the program. Some of the America Works participants might have found jobs on their own, especially because many of them were motivated volunteers. While the program’s design screens out those not motivated, the program does work with many long-term welfare recipients with low levels of education. The typical participant is an adult female head of household on AFDC an average of 5 years. Also, the typical participant in America Works has volunteered for the program, has a sporadic history of minimum-wage jobs, and can read and write well enough to complete a brief application. Applicants who need remedial basic education or English language training are referred to other community providers. About one-half of the participants have not completed high school. America Works officials believe that reaching out to employers and responding to their needs is a prime program goal. They noted that employers who take on America Works participants save on placement agency fees as well as costs of advertising for and screening job applicants. In addition, they obtain workers at reduced wage and benefit costs initially, and with lower turnover and related costs. America Works guarantees that employers will be satisfied with participants placed with them or replacements will be found. About 60 percent of the jobs that America Works staff develop are the result of repeat business with satisfied employers. JOBS programs in Athens, Ohio, and West Virginia reveal a different kind of work focus, typified by placing participants in community work- experience positions with public and nonprofit agencies. Welfare officials at the sites we visited indicated that having AFDC recipients perform community service can benefit their communities, in addition to developing participants’ work habits and providing work experience that may lead to paid employment. The JOBS program in Athens County, Ohio, uses work-experience positions to increase the confidence and competency of participants, and in some cases these positions lead to permanent employment. The county’s welfare agency is the largest utilizer of work-experience participants, many of whom are subsequently transferred to the county’s payroll and leave welfare. One office unit within the welfare agency is staffed primarily by work-experience participants, and an estimated three-fourths of the welfare agency’s personnel consist of former welfare recipients. West Virginia, where unemployment rates are among the highest in the nation, uses community work experience extensively to develop and maintain work habits among its JOBS participants. This involves work for various public or nonprofit organizations. Since the 1980s, West Virginia’s welfare-to-work program has promoted the idea that AFDC recipients should contribute to their communities in exchange for their benefits, and work for such organizations has been used to promote work among AFDC recipients, especially men. The state has made greater use of community work experience than most other states, with about 2,500 AFDC recipients enrolled in June 1994, mostly at government agencies but also at nonprofit agencies. Participants often work for an average of 62 hours a month, putting in full 40-hour weeks for some part of the month or part-time hours throughout the month. Single parents with young school-age children, for example, may work during the 6 hours of a normal school day and care for their children at home the remainder of the day, thus saving on child care expenses. West Virginia administrators we spoke with noted that much time, effort, and resources must be devoted to operate a work-experience program. Major work-experience program expenses involve intensive use of JOBS staff to arrange for jobs with employers, screen and match participants to available jobs, and provide follow-up support. JOBS case managers check monthly timesheets and ask to be called if problems arise at the workplace. They rarely visit worksites, however, because they average caseloads of 300 to 400 participants. Based on experimental design studies of the use of work experience in several sites in the 1980s, including some in West Virginia, researchers have concluded that unpaid work experience alone does not increase paid employment, earnings, or welfare savings. However, they also found that these programs could produce benefits for taxpayers through the work performed by welfare recipients. In addition, program administrators and welfare recipients involved generally thought that they had performed meaningful work, although the participants said that they would have preferred to work in paid positions. Based on their review, the researchers estimate that the annual cost of a work-experience position in 1993 dollars would range from $2,000 to $4,000, excluding the AFDC benefit and child care costs. While some county and local organizations have forged links with employers to promote work for welfare recipients, these programs are more the exception than the rule across the nation. A majority of county JOBS programs do not work closely with employers to help their participants find work. Administrators and researchers cited many factors that hinder efforts to find or create employment for welfare recipients, including insufficient staff and resources and poor labor market conditions. In addition, we found that the federal JOBS participation requirements emphasizing the enrollment of eligible persons into JOBS programs without an emphasis on the graduation of enrollees into employment provide programs little incentive to redirect their resources to job-placement efforts. Most programs do not fully use the tools available to help move participants quickly into work. This is demonstrated by the limited emphasis on job development, work incentives, and work activities, including subsidized employment or work experience. Although job development is a potentially important tool for moving JOBS participants into employment, about one-half of the nation’s county JOBS administrators believe that they are not doing enough job development to help JOBS participants find work. In addition to preparing AFDC recipients for employment through education and training, JOBS programs are required to engage in job development to help participants secure jobs. Program officials may also work with employers to identify the types of education and training needed for participants to meet employers’ needs. These job-development activities can play an important role in making JOBS programs more responsive to their local labor markets. While almost all county JOBS programs perform some job-development activities, in most, their job-development resources are limited. We found that JOBS programs rely on a variety of local agencies and organizations, such as JTPA, the Employment Service, and education providers, to perform job-development activities for JOBS participants. While other organizations are involved in helping JOBS participants find work, in most counties, the welfare agency itself takes the lead in job development. However, about one-third of the nation’s programs have no full- or part-time staff dedicated to job-development activities. And while caseworkers may also perform job-development activities, we found that they devote little time to working with employers. More than three-fourths of all JOBS administrators report that caseworkers devote 20 percent or less of their time to job development. In many programs, the extent of job development performed on behalf of JOBS participants is limited and may not meet the needs of the job-ready looking for work. For example, about 60 percent of the nation’s JOBS programs or their contractors arranged job interviews for or marketed to employers only some or few of their job-ready participants. Moreover, about 46 percent or more cited that the program or its contractors worked with each of the following only sometimes or rarely: public employers, private-sector employers, the Chamber of Commerce, or other employer associations. Local administrators themselves also believe that job development is underutilized in JOBS programs. A majority of administrators believe that they did not conduct enough job-development and job-placement activities to meet the needs of their JOBS participants, as illustrated in figure 3.1. Furthermore, a 1994 study of JOBS implementation in 30 localities in 10 states also noted that job- development and job-placement activities are underutilized in JOBS programs. Many JOBS programs nationwide do not make all participants aware of some important incentives to seek employment. To encourage work, the AFDC program provides some assistance to recipients who become employed by temporarily disregarding part of their earnings, including some of those expended for child care, in calculating their AFDC benefits. These income and child care disregards allow AFDC recipients who go to work to avoid the cutback in benefits that would ordinarily result from an increase in earnings. In addition, to further ease the transition to employment, AFDC recipients who earn enough to leave the welfare rolls are eligible for 1 year of child care subsidies if needed and continued Medicaid coverage. Other assistance may be available after AFDC recipients leave the welfare rolls. When the 1 year of transitional Medicaid coverage is exhausted, the children of AFDC recipients may still be covered due to recent changes in Medicaid coverage for all children in families below the poverty line. And the recently expanded Earned Income Tax Credit (EITC) will increase some low-wage workers incomes by up to 40 percent. These federal supports can increase the attractiveness of low-wage work. However, many JOBS programs do not inform all their participants of the work incentives that may be available to them. Based on our survey, from 67 to 84 percent of county JOBS programs inform all or almost all of their participants about each of the following: the availability of transitional child care, transitional Medicaid, AFDC income disregards, and child care disregards. However, only about one-half of the nation’s JOBS programs inform all or almost all their participants of the EITC. While we identified about 18 percent of the programs that worked with all or almost all their participants to develop a sample budget demonstrating the benefits available to them when working, about 60 percent of the nation’s JOBS programs reported that they do so for one-half or fewer of their participants. These findings are consistent with other studies showing that those on welfare, as well as welfare and JOBS caseworkers, may not be aware of or understand work incentives. One study of a sample of 30 women in Chicago concluded that the EITC may not provide an incentive to work because few recipients have a clear understanding of how it operates.Another study of welfare administrators found that many did not know that Medicaid coverage was available for certain children in families with incomes up to or, in some cases, beyond the federal poverty line. Almost all JOBS programs encourage participants to engage in job search activities at some point in their enrollment in JOBS, but many job-ready participants do not become employed for a variety of reasons. For JOBS participants who cannot find regular employment, local JOBS programs have the option of using cash wage subsidies to encourage employers to hire them into on-the-job training or work-supplementation programs. Another option is to place participants in work-experience programs. For example, as discussed in chapter 2, West Virginia has used its community work-experience program to promote work among its welfare recipients when jobs were not available. Yet the use of work activities is limited, even though about 70 percent of the administrators reported that one-half or fewer of their job-ready participants became employed during their most recent program year. The distribution of counties according to their placement rates is shown in figure 3.2. The limited extent of work activities is seen in the following numbers: nationwide in mid-1994, of about 586,600 JOBS participants each month, about 59,000 were in work-experience programs, 3,000 were in on-the-job training, and 1,000 were in work-supplementation programs. As shown in figure 3.3, these work activities were little used compared with other JOBS activities. Moreover, more than 80 percent of the nation’s counties have no experience operating work-supplementation programs and almost 50 percent have no experience in on-the-job training. This demonstrates that counties will face a major challenge in supporting the work programs called for in some welfare reform proposals. For example, H.R. 4 requires states to provide work activities for an increasing percentage of those receiving cash assistance or face penalties of up to 5 percent of the state’s block grant. In 1996, states would have to involve 10 percent of all families in work activities, with the requirement rising to 50 percent by 2003. And the administration’s proposal before the 103rd Congress called for those young mothers who do not find unsubsidized employment after 24 months of receiving AFDC to be placed in subsidized minimum-wage jobs. The House bill and the administration’s proposal place a much greater emphasis on work activities than current law. Under both of these proposals, welfare agencies will need to work with many welfare recipients who cannot find jobs on their own. Attention will have to be paid to preparing these recipients for the workplace, because administrators we spoke with emphasized the importance of screening and selecting able and motivated participants to place with employers to maintain employer interest in participating in the programs. This is consistent with our survey results showing that in most counties the typical JOBS participant enrolled in on-the-job training or work supplementation has at least 1 year of previous work experience and high levels of motivation. Also, in most counties, participants in these work activities tended to be more educated than JOBS participants in general. While work activities are little used in JOBS, most administrators believe that they are effective tools that warrant expansion. Of the relatively small number of JOBS administrators currently using work supplementation, 70 percent rated it moderately or highly effective in moving AFDC recipients off welfare and 83 percent wanted to expand their use of it. Of those using on-the-job training, 72 percent thought it at least moderately effective in moving individuals off welfare and 88 percent expressed interest in expanding its use. Almost all counties used work experience, with 76 percent rating it as effective and 84 percent wishing to expand its use. In sites we visited, JOBS participants had been placed with a range of employers and other community organizations. They performed community service work with a county planning office, the Indian Health Service, and a community food bank. In addition, through the work-supplementation program, participants had found jobs at a car dealership, a large health care provider, and a small doctor’s office. In one site, the work-supplementation program helped refugees receiving AFDC gain employment at worksites where they could improve their English-language skills. According to the program supervisor, some of the refugees had been in English as a Second Language classes for several years but had not progressed to employment. Of those program administrators not currently using on-the-job training, about 32 percent believed it to be moderately or highly effective in moving recipients off AFDC and about three-fourths supported expansion. At least one-half of the administrators without work-supplementation programs also wanted to develop or expand these programs, although they were less sure about the effectiveness of such programs. Evaluations of on-the-job training and work-supplementation programs have shown positive results in terms of increased employment and earnings for welfare recipients, but did not conclude that the programs produced welfare savings. As discussed in chapter 2, evaluations of work-experience programs have shown that they offer productive work for participants and benefits to taxpayers, but do not generally produce increased earnings, employment rates, or welfare savings. While JOBS administrators acknowledged that they did not work enough with employers to help participants find jobs, they identified several administrative and programmatic factors that hindered their efforts. Further, administrators and researchers identified certain labor market conditions that hinder efforts to place AFDC recipients in jobs. Most administrators reported that insufficient staff hindered their efforts to work with employers to place JOBS participants in unsubsidized jobs or work activities. Local program administrators, researchers, and HHS officials have noted that working with employers to find job openings or to create and maintain work-activity positions requires a lot of time and effort on the part of JOBS workers. For example, to operate work-supplementation programs, AFDC grant dollars must be diverted to employers to subsidize wages. Many administrators believe that it is difficult to develop and administer a tracking system to operate such a program. In addition, staff must market their programs to employers and sometimes visit worksites to maintain contact or monitor operations. Economies may be achieved if many participants are placed at a single worksite, but we found that generally only one or two participants are placed with each employer. Administrators believe that they need more staff to work with employers because current JOBS staff and resources are mainly devoted to participant intake and management of often heavy caseloads. According to HHS, JOBS caseloads range from 30 to 400 participants per worker. Administrators we met explained that expansion of job-development and work activities would necessitate shifting current staff from intake and case management functions. They also noted that hiring additional staff is not an option where budgets are constrained. While in some cases resource constraints may limit the number of JOBS staff, they may also affect administrators’ and caseworkers’ decisions about the activities in which they enroll participants. The study of JOBS programs in 10 states referred to earlier noted that the availability of education, training, and employment-related activities tends to drive the placement of participants. For example, as a result of resource constraints, programs would often place participants in activities that were readily available or free of charge rather than create or purchase services that were deemed needed by participants. We also found that funding constraints limited the use of on-the-job training. About one-half of the JOBS administrators cited insufficient funds and one-third cited the high costs of on-the-job training compared with other JOBS activities as a major or moderate hindrance to its expansion.On-the-job training is sometimes more costly to a JOBS program than other activities because many of the educational or other activities in which participants are placed are funded by other providers or programs and do not require expenditures of JOBS funds. For example, a JOBS program may not pay for adult basic education or college courses funded by federal, state, or county providers. Funding constraints also hinder the use of work supplementation, even though this form of employer subsidy is funded by AFDC grants instead of JOBS funds. An official in Texas told us that in states with low AFDC grants, the amount of money that can be diverted to the employer is not sufficient for a wage subsidy. For example, the average AFDC grant in Texas equals $159 a month, providing few dollars to subsidize wages. In 1994, 31 state welfare agencies decided not to include work supplementation in the state JOBS plans they must submit to HHS for approval. As a result, the local programs in these states were barred from operating work-supplementation programs. The current federal JOBS participation and targeting requirements provide little incentive for states to redirect scarce resources to increase their focus on moving AFDC recipients into employment. The JOBS performance measurement system is process-oriented, based on the numbers and types of participants enrolled in activities, and does not include outcome measures, such as the portion of participants who become employed and leave welfare. While the participation requirements have played an important role in encouraging states to serve more participants, including the hard-to-serve, the ultimate goal of JOBS is to increase employment and reduce welfare dependence. Yet states are not required by HHS to report the total number of JOBS participants who find jobs each year and are not held accountable for the number of JOBS participants who become employed. Some program administrators and researchers have noted that programs can meet federal participation requirements by placing participants in readily available JOBS activities more easily and with less cost to their programs than finding them unsubsidized jobs or creating subsidized employment. Because program administrators can meet federal requirements without redirecting scarce resources to focus more on employment, they have little incentive to do so. JOBS programs may, therefore, emphasize getting clients into program activities without also focusing on establishing links with employers to realize the ultimate goal of employment. For example, at one site we visited, a woman had successfully completed several different training programs. Under the current performance system, this individual helps the program meet the federal requirements to receive its full share of federal funding. Yet she remained unemployed and on AFDC. Labor market realities also pose a range of problems for JOBS administrators as they attempt to move AFDC recipients into the workplace. Several factors are important in this regard. Administrators and research studies cite high unemployment and low job growth as hindering programs’ efforts to get jobs for participants. Nearly three-fourths of local JOBS administrators identify current labor market conditions, which are outside their control, as a hindrance to their job-development efforts. Many counties operate JOBS in areas of high unemployment or negligible job growth. For example, in 1993, unemployment rates reached 8 percent or more in 30 percent of the nation’s counties; job growth was 1.5 percent or less in one-half the nation’s counties and negative in about one-third of the counties. While some research has shown that the outlook for job growth nationwide over the next few years is encouraging, in specific locations the number of job openings may not meet local needs. For example, a May 1993 survey of Milwaukee area employers identified about 12,000 full-time job openings, which represented only 20 percent of the jobs needed for the estimated 63,000 welfare recipients and unemployed persons seeking or expected to work. When part-time jobs were included, the number of available jobs represented 35 percent of the total jobs needed. Likewise, JOBS officials in Silicon Valley in California, where many once-booming high-tech computer companies are located, and other areas in California believe that their JOBS participants and staff acting on their behalf operate at a distinct disadvantage because of the increase in competition for positions in general. They noted that they must operate their programs in areas where employers are often faced with a surplus of job applicants, especially for relatively unskilled, entry-level positions. Administrators we surveyed and spoke with emphasized that lack of employer interest also hindered the expansion of work activities. Administrators cited as one contributing factor a federal displacement restriction. Under work-supplementation and work-experience programs, participants may only be placed in positions newly created by employers—not positions that become vacant due to turnover. This prohibition is intended to protect workers from being displaced through layoffs and replaced by federally subsidized JOBS participants. About three-fourths of the administrators operating work-supplementation programs reported that this restriction hindered expansion of their programs and about 46 percent of all administrators said that they probably or definitely would like to use work supplementation for existing positions also. In addition, work-experience positions are restricted to sponsors who serve a public purpose, another restriction that about 72 percent of administrators would like to see changed, allowing them both more as well as a greater variety of employers with which to place participants to help them gain work experience. Like work-supplementation, work-experience positions are also subject to displacement restrictions. While most administrators did not believe that the displacement restriction was currently a factor hindering expansion, about one-half supported placing work-experience participants in existing positions. Administrators we spoke with thought that other workers and individuals could be protected without restricting work programs to new positions only. Local administrators also cited other reasons. For example, for on-the-job training, the JOBS program and employers must generally enter into contracts covering the employment of participants, maintain timekeeping and payroll records subject to audit, develop individual training plans, establish qualitative measures of success, and assess the progress of participants in acquiring jobs skills. Some employers may feel that the wage subsidy they receive—up to one-half of participants’ wages when training is completed—does not adequately compensate them for any extra work they must do. In a work-experience program, while a participating employer gets an unpaid worker, the employer is not compensated for any supervision costs involved. Administrators we met cautioned that the number of available supervisors among employers places an upper limit on the expansion of work experience. Administrators also cited employer concerns about welfare recipients being unprepared for work. Employers’ perceptions may be skewed by unfavorable stereotypes or unsuccessful prior experiences. One study of a welfare-to-work program in an inner-city neighborhood noted that many of the participants who found jobs had problems keeping them for various reasons, including chronic lateness and misunderstandings with supervisors. To overcome these perceptions and problems, program administrators told us that they often select their most capable participants for work activities. While the lack of jobs is a problem in many areas, the low-wage work that is available to many AFDC recipients discourages their movement off AFDC. Our work in 1991 demonstrated that many single mothers will remain near or below the poverty line even if they work at full-time jobs. More recently, we found that in 1993 the typical single mother with a low-wage job had more income than a comparable mother and family on AFDC, but was nevertheless still in poverty. Moreover, a low-wage worker may incur significant job-related costs, such as child care, which could make her family worse off financially than some AFDC families. In addition, employment or increased earnings may affect her receipt of other forms of assistance. For example, the previously cited survey of several thousand AFDC recipients found that 60 percent of the respondents in Atlanta lived in public housing projects or other subsidized housing. As a result, their incentive to find jobs may be affected because increased earnings may cause them to incur significantly increased housing costs. The belief and often the reality that a poor single mother can better provide for her family by being on welfare than by working at a low-wage job plays a critical role in discouraging AFDC recipients from looking for and accepting employment. As figure 3.4 shows, about three-fourths of the JOBS administrators cited the lack of jobs with sufficient wages and benefits as a moderate or major reason that their job-ready clients did not become employed. About 70 percent of administrators also noted that their participants did not become employed because of concerns about losing their AFDC benefits, Medicaid, or housing subsidies. By comparison, about one-half of administrators cited the lack of jobs as a major or moderate reason. One study found that 55 of 69 randomly selected current and former AFDC recipients interviewed in Tennessee and North Carolina said that they were not likely to accept a minimum-wage job that did not provide health insurance for them and their children. Most of the 55 thought that health insurance was a necessity and others said that they could not support their families with a minimum-wage job. Concerns about participants’ abilities to support their families may affect the attitudes of administrators and staff in promoting employment as the ultimate program goal. For example, we found that while about 60 percent of local administrators said that they would definitely encourage a 30-year-old JOBS participant with one child to accept a minimum-wage job with health insurance benefits, only 26 percent would definitely encourage her to accept such a job without health benefits. Recent studies of labor market conditions and the characteristics of welfare recipients indicate that employment training strategies to improve the earnings capacities of welfare recipients through education and training may not lead to earnings increases great enough to allow single parents to support themselves with their own earnings. These studies demonstrate that the supports available to low-wage workers, for example, the EITC, expanded Medicaid coverage, child support payments, and child care subsidies, play an important role in helping families get jobs and remain employed. Our recent work on child care subsidies indicates that assistance with child care has a large effect on the likelihood that poor women will work. Thus, subsidies may help welfare recipients become employed and remain off the welfare rolls. The 104th Congress proposes to fundamentally change AFDC—the nation’s largest cash assistance program for poor families with children. While there is general agreement that reforms should promote work, the Congress is considering the type and extent of work requirements to be linked to the receipt of cash assistance. Whether AFDC continues as an entitlement program or is converted into a block grant, program administrators at the county and local levels will be concerned with moving large numbers of welfare recipients into employment. Our work highlights examples of programs that are well-focused on the ultimate goal of employment—stressing the importance of work for their participants and forging links with employers to identify jobs or create work opportunities where none is available. However, these programs appear more the exception than the rule. Most programs appear to emphasize preparing participants for employment without also making strong efforts to help place their participants in jobs. While we acknowledge that some administrators face factors beyond their control that may limit program choices, including budget constraints and a lack of jobs, other programs facing similar constraints have taken steps that promote work more strongly for their participants. These steps include focusing staff and participants on the importance of employment, working more closely with employers to identify job openings, determining employers’ needs, and helping match recipients’ education and training activities to labor market demands. Even programs that are well-focused on moving AFDC recipients into employment have faced challenges, however. For example, the Riverside County program strongly emphasized moving recipients quickly into jobs; yet after 3 years, about 40 percent of its participants remained on AFDC. Many who became employed remained on AFDC or, if off AFDC, continued to receive other forms of public aid, including Food Stamps or federal housing assistance. And some of those who left AFDC remained in poverty and at risk of returning to AFDC. In those cases where unsubsidized employment is not available or the characteristics of participants do not make them readily employable, strategies like work supplementation or on-the-job training may help welfare recipients become employed. And where regular jobs or subsidized employment are not feasible, work-experience programs may serve as an alternative that promotes work for welfare recipients. Administrators generally supported the use of these work activities. However, they believe that they need more flexibility to design work activities to meet the needs of their participants and local labor markets. In commenting on a draft of this report (see app. IV), HHS’ Administration for Children and Families (ACF) disagreed with our conclusion that JOBS programs do not have a strong employment focus. ACF stated that we did not sufficiently recognize programs’ use of job search or the extent of their job-development activities in evaluating their employment focus. It also stated that we did not acknowledge the many ways that programs could focus on employment and, instead, relied too much on programs’ low use of subsidized employment and work experience to indicate a weak employment focus. We continue to believe, based on all the evidence we gathered, that many JOBS programs nationwide do not have a strong employment focus. More specifically, ACF commented that the report does not recognize job search as an employment-focused activity and its extensive use in JOBS, thus, underrepresenting the employment efforts of JOBS programs. We acknowledge that programs can emphasize employment through their use of job-search activities for participants. As we had shown in figure 3.3, the participants enrolled in job search nationwide numbered 75,000 out of 586,600. In addition, we note that all programs use job search as an integral part of their programs and have added this information to the report. We also found, however, that while job search plays a role in all programs, its use varies considerably. Only about one-third of programs employ an early job search strategy that encourages participants to look for work upon enrollment in JOBS, in effect letting the local labor market decide who is job-ready and employable. Those who fail to find work initially are then placed in job search again after participating in education and training. On the other hand, most programs do not expect all participants to look for work upon enrollment, instead limiting job-search activities until participants have received the education and training that the program determines they need to become employed. We also note that the programs we highlighted for their strong job-placement efforts took steps beyond enrolling participants in job-search activities. These programs facilitate job-search activities by working closely with employers, through job-development efforts, to help participants find work. In addition, it is important that programs encourage their participants to accept employment by, for example, helping all participants understand the work incentives available to them. We found, however, that most programs did not strongly emphasize job-development efforts or inform all participants of important work incentives. In addition, ACF believes that we did not adequately recognize the extent of programs’ connections with employers through their job development efforts. Our data show and the report acknowledges that almost all JOBS programs include some job-development activities, performed either by a program’s own staff or through other organizations. We also found, though, that the extent of job development performed on behalf of JOBS participants, whether by the welfare agency itself or other organizations, is limited. For example, about 60 percent of program administrators reported that their program or its contractors arranged interviews for or marketed to employers only some or few of their job-ready participants. In addition, over one-half of the nation’s program administrators believe that their program or its contractors did not do enough job development to meet their participants’ needs. ACF also noted that JOBS programs can take many approaches to help their participants become employed. In addition, ACF stated that the relatively low use of subsidized employment and work experience does not necessarily indicate a lack of employment focus. We agree that there are many ways that programs can focus on employment, as we demonstrated with the examples of different approaches in chapter 2. We also agree that programs do not have to use subsidized employment or work experience to be considered employment-focused. The Riverside County program, for example, does not emphasize these options. However, we found that most programs reported placement rates for their job-ready participants of 50 percent or less. Yet programs were not widely using existing subsidized employment or work-experience options to foster work among the many participants unable or unwilling to find work. In addition to these issues, ACF expressed concern that our draft report promoted holding states accountable for the employment outcomes of their JOBS programs without noting the problems involved in such an approach. We acknowledge the challenges inherent in holding JOBS programs accountable for results. We maintain, however, that strong congressional interest in AFDC becoming more focused on helping recipients become employed, as well as requirements in the Government Performance Results Act that performance monitoring become more outcome-oriented governmentwide, indicate that more attention to outcome measures and goals is appropriate. ACF also suggested certain technical revisions to the draft, which we incorporated as appropriate.

Summary: Pursuant to a congressional request, GAO provided information on employment-focused welfare-to-work programs, focusing on: (1) the extent to which county and local Job Opportunities and Basic Skills Training (JOBS) programs focus on employment; and (2) factors that hinder administrators' efforts to move Aid to Families With Dependent Children (AFDC) recipients into jobs. GAO found that: (1) some welfare-to-work programs stress employment and work closely with employers in promoting work among welfare recipients; (2) although the programs reviewed keep participants focused on the importance of work and help program participants find jobs or work-experience positions, they vary in their approach; (3) many county JOBS programs do not have a strong employment focus and many county administrators do not work with employers to find jobs for participants or use work-experience programs; (4) many local program administrators believe that insufficient staffing and resources hinder their work with employers and more flexibility in federal rules governing work-experience programs would facilitate their use; (5) the low-wage work available to many AFDC recipients discourages their movement into the work force; and (6) AFDC programs may emphasize preparing participants for employment without also making strong efforts to help them get jobs, since states are not required to track the number of AFDC recipients who get jobs or earn their way off AFDC.