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Introduction

The past four years have witnessed the transformation of welfare from a system focused on income maintenance to a system focused on employment. "Work first" was the message of welfare reform, and in many respects that message was delivered successfully. In 1999, the percentage of working welfare recipients reached an all-time high of 33 percent--nearly five times the percentage in 1992 and three times the percentage in 1996. Work was also the driving factor behind the dramatic shrinkage in caseloads since the enactment of welfare reform in 1996. According to an Urban Institute survey, more than two-thirds of welfare "leavers" cite work as their reason for dropping off the rolls.

This experience confirms the conviction long held by the Progressive Policy Institute (PPI) that private sector jobs are the best and first resort for welfare recipients seeking to enter the workforce, and that the private sector can well absorb the entry of these new workers. The decline in caseloads is slowing, however, and those left on welfare are likely to have trouble finding employment. Compared to four years ago, welfare recipients today are less likely to have finished high school, less likely to have had significant work experience, and more likely to face multiple obstacles to employment such as mental and physical disabilities or problems with drugs and alcohol. Absent a great deal of help, work first is unattainable for many of these disadvantaged individuals.

To provide this help, states have employed a variety of approaches--training, education, job search assistance, "job clubs," interviewing workshops, and the like. But in some cases, the best option may in some ways be the simplest: If a recipient can't find a job, the state should provide one. While PPI does not advocate a massive public jobs program, publicly funded transitional jobs may offer some recipients the best bridge into private sector employment.

Publicly funded work, however, comes in various guises, some more effective than others. "Workfare," which became prevalent in the mid-1980s, is probably the best-known type of public work program. Also known as "unpaid community work experience," workfare is used on a large scale in some places, most notably New York City. The concept of workfare is simple: Recipients work in exchange for their welfare checks. Workfare participants, however, generally do not enjoy all the benefits of a "real" job. They are not eligible to apply for the Earned Income Tax Credit (EITC), for example, and they do not receive a paycheck determined by the hours worked. Because of these and other drawbacks discussed below, large-scale workfare programs may not be the best means of helping hard-to-employ recipients make the transition from welfare to work.

A far more promising model is "wage-based transitional employment," variations of which are being used effectively in Oregon, Washington state, Philadelphia, and a few other states and localities. The principal benefits of these programs derive from their "job-like" aspects. Wage-based programs, for example, offer participants a paycheck based on hours worked. As "employees," participants are also able to take advantage of the EITC to supplement their earnings. Wage-based programs also instill in participants the expectations of the working world, while at the same time providing a structured environment to smooth the transition to work for individuals unaccustomed to holding down a job. These programs also typically supplement job placements with training, education, or counseling to assist participants in overcoming obstacles to employment.

Intensive programs such as these are undeniably expensive. The decline in caseloads, however, has provided states with a generous surplus in funding for welfare programs--approximately $8 billion as of 1999. Some of this money would be well spent investing in programs aimed at helping welfare's toughest cases.

Publicly funded transitional jobs should supplement, not replace, the array of tools already available to states in moving recipients from welfare to work. Moreover, the evidence indicates that widespread use of public jobs is likely to be unnecessary. Private sector employment remains the paramount goal, and transitional jobs should serve solely as a means to that end. Finishing the job of welfare reform means not only requiring work from all those capable of doing so, but empowering those who face obstacles to employment with the skills and supports to enter the workforce. For some hard-to-employ welfare recipients, a transitional job may be the best option for achieving that goal.

Blueprint Keyword: Extra TANF

Anne Kim is director of the Working Families Project at the Progressive Policy Institute.