Welfare clients are highly aware of the stigma attached to welfare reliance and express a strong commitment to self-sufficiency. Employers need a productive and reliable workforce, and many employers recognize that former welfare clients may help them meet this need. The transition of former welfare clients into the workforce is a critical issue that affects not only former welfare clients and employers but also customers, taxpayers, and society in general. Employers provide a key to the success of this transition and, through their human resource management practices, can make a difference in the job retention of former welfare clients.
Welfare reform in the 1990s has increased the urgency of the transition from welfare to work by attaching work requirements to the receipt of welfare payments. In the United States, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 abolished the Aid to Families with Dependent Children (AFDC) program and established Temporary Assistance to Needy Families (TANF) in its place. TANF included work requirements for welfare clients deemed able to work and provided funds for support services such as child care and transportation. In addition, TANF imposed a five-year lifetime limit on the receipt of welfare benefits. As governments around the world have embraced capitalist globalization and implemented policies of deregulation, privatization, and social austerity, assistance to persons living in poverty has increasingly become linked to work requirements. These policy changes have increased pressure on welfare clients to make the transition to work.
But how able are welfare clients to achieve self-sufficiency through work? To answer this question requires examining the population of welfare clients and their life circumstances. In the United States, Black and Hispanic individuals historically have been more than twice as likely as Asians or Whites to live below the poverty level. In 2003, Blacks and Hispanics constituted about 13 percent and 14 percent of the U.S. population respectively, and 1,376,000 Whites, 618,000 Blacks, and 505,000 Hispanics aged 15 years and older were on TANF. In the United States, welfare clients are predominantly women with children. Being less educated, being unemployed, and having a work-related disability are all positively associated with using welfare assistance.
Many clients go off welfare on their own, but for many others, TANF supports for training, child care, and transportation assistance are critical for easing the transition from welfare to work. Job skills training, job readiness training, and other supports for helping welfare clients enter paid employment are generally not provided directly by the government in the United States. Rather, consistent with the philosophy of privatization, private for-profit and nonprofit agencies contract with the states to provide such services to welfare clients. One study of welfare clients receiving these services in Philadelphia, Pennsylvania, showed that the average client was a 32-year-old, non-White woman with between three and four children who had been on welfare for 32 months with skills equivalent to an eighth-grade level in reading and a sixth-grade level in math.
Given the importance of human capital endowments for escaping poverty and avoiding reliance on welfare, the profile of the average welfare client receiving job readiness assistance indicates important challenges. The jobs available to someone whose skills are below that of a high school graduate are unlikely to pay a sufficient wage to support a family of three or more. When TANF-related child care benefits end, wages must cover day care and afterschool care expenses. In addition, demonstrated differences in earnings between White and non-White women when skill levels are controlled indicate possible employer discrimination and reluctance to hire women of color. The relatively low wages associated with jobs likely to be available to women, combined with substantial family care responsibilities, low skills, and possible employer discrimination, create a formidable set of barriers to self-sufficiency for women on welfare.
These challenges mean that employers play a critical role in the transition from welfare to work. Some employers choose not to hire former welfare clients because of concerns about productivity. However, numerous employers have successfully employed former welfare clients and gained competitive advantage through this source of labor. Former welfare clients are generally in ample supply, enabling a firm to better handle periods of tight labor markets. The jobs that former welfare clients hold, in occupations such as food service and child care, often involve front-line interaction with the firm’s customers, and continuity of service and care may critically affect revenue and reputation. The employment of former welfare clients can also be an image boost for an employer, further impacting the bottom line.
Job retention is the critical indicator of a successful transition. If the experience of employers and former welfare clients is a revolving door, then neither benefits. Research has identified several employer human resource management practices that contribute to retention. Perhaps foremost are good wages and financial and health benefits. While it may be possible for an employer to hire former welfare clients at low levels of compensation, paying more than necessary may be a good investment that pays off in future retention and productivity. Development opportunities are also important. Research indicates that practices such as mentoring and career coaching enhance retention even during the first six months of employment. This period of the transition to work may be the most difficult. Even good wages may not make ends meet, and child care and other challenges can lead to discouragement. Development plans may provide the hope necessary to survive this period. Family-friendly benefits, such as paid time off and subsidized child care, also can contribute to retention by accommodating the needs of former welfare clients during this transition.
Numerous societal stakeholders, including employers, their customers, taxpayers, and welfare clients themselves, have an interest in making the transition from welfare to work successful. Governments, nonprofit agencies, and researchers need to continue to find ways to support welfare clients and employers in this transition.
- Bartholomae, S., Fox, J. J. and McKenry, P. C. 2004. “The Legacy of Welfare: Economic Endowments or Cultural Characteristics?” Journal of Family Issues 25:783-810.
- Hartmann, Y. 2005. “In Bed with the Enemy: Some Ideas on the Connections between Neoliberalism and the Welfare State.” Current Sociology 53:57-73.
- Perlmutter, F. D. 1997. From Welfare to Work: Corporate Initiatives and Welfare Reform. Oxford, England: Oxford University Press.
- Rank, M. R. 2001. “The Effect of Poverty on America’s Families: Assessing Our Research Knowledge.” Journal of Family Issues 22:882-903.
- Rom, M. C. 1999. “From Welfare State to Opportunity, Inc.: Public-private Partnerships in Welfare Reform.” American Behavioral Scientist 43:155-176.
- Weinrach, S. G. 2003. “A Person-centered Perspective to Welfare-to-Work Services.” Career Development Quarterly 52:153-161.