March 19, 1999

Public Job Creation:
Current State and City Initiatives

by Clifford M. Johnson


Washington state: The Community Jobs Initiative (CJI) began operating in five areas of the state with the goal of placing 540 hard-to-employ welfare recipients in part-time jobs in public and non-profit agencies. The jobs last for up to nine months and pay the state minimum wage (currently $5.70 per hour). CJI is funded through the state's "WorkFirst" TANF program and administered at the state level by the Washington Department of Community, Trade, and Economic Development (CTED), which contracts with local agencies to operate the program in designated sites. These local contractors develop work sites, provide case management services, and identify appro-priate education and training activities for participants whenever possible. The state recently redesigned the program to simplify its administration and increase financial incentives for participants. Under the new structure, CJI participants will enjoy substantial earnings gains as a result of their part-time work, even after FICA payroll taxes and other work-related expenses are taken into account. The state now is using surplus TANF funds to expand CJI, choosing new contractors that will enable the program to operate in all regions of the state and serve up to 2,500 participants.

Vermont: The state's Community Service Employment (CSE) program provides publicly-funded jobs for all welfare recipients who are not exempt from work require-ments, who have received cash assistance for at least 30 months, and who are unable to find unsubsidized jobs. CSE positions in public and non-profit agencies can last for up to 10 months, with possible reassignment in cases where a subsequent job search is unsuccessful. Participants are paid the state's minimum wage ($5.25 per hour). The hours of work for participants are set so that their earnings equal their prior welfare grant, although the required work cannot exceed 20 hours per week for single parents with children under age 13 (or 40 hours per week for other parents receiving welfare benefits). A total of 215 CSE placements have been made statewide since November 1995, when the state began operating the program under a welfare reform waiver from the federal government. Based on its early experience with CSE, Vermont now is developing new CSE alternatives that will allow some recipients with multiple barriers to employment to work in more structured and supportive settings.

Baltimore: The city's Office of Employment Development (OED) will launch a new welfare-to-work initiative this spring that places up to 1,100 hard-to-employ welfare recipients in publicly-funded jobs in public and non-profit agencies. These jobs will provide an average of 25 hours per week of work at $6.10 per hour for a maximum of six months. OED has selected four local agencies to administer the program, although it also plans to operate an initial pilot project serving several hundred participants directly in order to identify problems that its contractors are likely to encounter. Baltimore's initiative uses a combination of federal welfare-to-work funds and diversion of participants' TANF grants to pay wages and cover other costs of program administration.

Detroit: Using its federal welfare-to-work funds, Detroit will create as many as 2,400 jobs lasting six months for hard-to-employ welfare recipients. Its Private/Public Service Employment (PSE) program places participants with for-profit employers as well as non-profit and public agencies, and seeks commitments from these employers and agencies that participants will be retained in jobs paying livable wages (targeted at $11/hour) at the end of the six-month period of fully subsidized employment. Most PSE jobs begin at 25 hours per week and initially pay wages comparable to employees in similar jobs (typically ranging from $6 to $8 per hour). The PSE program is admini-stered by the City of Detroit's Employment and Training Department through contracts with a wide range of local agencies. Approximately 300 participants were enrolled in the program by the end of 1998.

Minneapolis: With funds from a competitive welfare-to-work grant from the U.S. Department of Labor as well as a grant from the Ford Foundation, the City of Minneapolis is launching a new program that uses publicly-funded jobs and a variety of other strategies to boost employment rates among and child support payments by low-income, non-custodial fathers. The FATHER program (Fostering Actions To Help Earning and Responsibility) will place up to 100 participants in full-time, minimum-wage jobs in non-profit agencies that agree to provide close supervision at the work site. These jobs will last no longer than six months, although in some instances they may be designed to provide as little as four weeks of paid work experience before participants move into unsubsidized employment. In addition to the minimum wage, the program will place $1.00 per hour in escrow as a cash bonus for participants who successfully complete their publicly-funded job and who remain in an unsubsidized job for at least six months.

The FATHER program is a partnership between the City of Minneapolis Employment and Training Program, Minnesota State and Hennepin County child support enforcement agencies, and several non-profit organizations that provide employment services in Minneapolis' low-income neighborhoods.

Philadelphia: Under a new program called [email protected], the city plans to place up to 3,000 welfare recipients in publicly-funded jobs over the next two years. These transitional jobs in public and non-profit agencies pay minimum wages, provide an average of 25 hours per week of work, and last no longer than six months. Participants spend an additional 10 hours per week in training, education, and job search activities. Specially-trained "job coaches" act as mentors, oversee participants' skill development, and assist them in finding unsubsidized jobs. Participants who find jobs and leave the program before the end of the six-month period will receive cash bonuses. A newly-established non-profit organization, the Transitional Work Corporation, is administering the program. By the end of 1998, about 200 welfare recipients were participating in the [email protected] program. The City of Philadelphia is using a combination of TANF funds provided by the state, federal welfare-to-work grants, and private foundation funds to finance this effort.

San Francisco: As part of its efforts to implement the state's TANF program, CalWORKs, the San Francisco County Department of Social Services has launched a 200-person pilot program to test the feasibility and effectiveness of wage-based community service. State law requires that all welfare recipients who have received assistance for at least 18 months (or 24 months at county option) be engaged in some form of community service for a minimum of 26 hours per week. The Community Jobs program responds to this mandate by placing welfare recipients in jobs that pay the state minimum wage ($5.75 per hour) in public and non-profit agencies. The county welfare agency has contracted with three non-profit agencies to operate the program, and the San Francisco Private Industry Council will administer payroll and act as the employer of record. If successful, the Community Jobs program may become the county's primary mechanism for implementing the CalWORKs community service requirement. Funding sources for the program include TANF funds, federal welfare-to-work grants, and general revenues from the City of San Francisco.

Seattle: The Seattle Jobs Initiative (SJI), one of six city-focused efforts launched by the Annie E. Casey Foundation, has developed a "Preparatory Employment" program that will place up to 50 hard-to-employ welfare recipients in closely-supervised jobs paying $8.00 per hour. The program emphasizes training both on-the-job and at training sites where the curriculum is closely linked to participants' roles and responsibilities at work. Work site supervisors receive initial training and ongoing support to help them develop clear goals for participants, including expected time frames for mastering predetermined employment competencies. TANF funds provided by the state welfare agency cover a portion of the cost of participants' wages, while the balance is paid by employers and SJI.

Pennsylvania: State law in Pennsylvania requires welfare recipients who have been receiving aid for at least 24 months to be engaged in some form of work or community service in order to retain their welfare benefits. Up until recently, however, the state's plans for implementing this requirement have been quite unclear. The state has been under considerable pressure to ensure that work or community service positions will be available to all recipients who need them. An estimated 39,000 welfare recipients in Pennsylvania are expected to reach their 24th month on public assistance in March.

The new state budget submitted by Governor Ridge last month provided a partial response to these concerns by calling for the creation of up to 16,000 wage-paying, transitional jobs throughout the state for welfare recipients who are subject to the community service requirement. Under this new state program (called "Work Opportunities"), six-month positions in non-profit and public agencies will provide 20 hours of work per week at the minimum wage, and participants will be required to engage in an additional five hours per week of training activities. The state Department of Public Welfare will pay the full cost of wages and worker compensation coverage. The governor's budget proposal for 1999-2000 earmarks $33 million for the Work Opportunities program.

Wisconsin: The state of Wisconsin has been assigning welfare recipients to "community service jobs" for some time under its "Wisconsin Works" (or "W-2") program, but it has relied upon a "work-for-welfare" model rather than paying wages to participants. In his budget for the 1999-2001 biennium, Governor Tommy Thompson has proposed to begin to change that model by giving local W-2 agencies the authority to create up to 2,500 wage-paying jobs for W-2 participants. To the extent that W-2 agencies exercise this authority to its fullest extent, this number may be sufficient to provide jobs for as much as 30 or 40 percent of the remaining welfare caseload that is subject to W-2's work requirements. These minimum-wage jobs could be used by local W-2 agencies for any individual that is "capable of working in an unsubsidized job but who, despite reasonable efforts, is unable to secure full-time unsubsidized employment." The proposal is particularly significant because it represents the first acknowledgment within the W-2 structure that some welfare recipients with the ability to work nonetheless are unable to secure unsubsidized employment.

W-2 agencies will be allowed to require participants to work up to 30 hours per week in such jobs and to spend up to 10 additional hours per week in job search activities. Those employed in these positions will be eligible for the federal Earned Income Tax Credit by virtue of their earnings, although as proposed by the governor they would not be eligible for the state's EITC. Most of the new wage-paying jobs are expected to be created in the Milwaukee metropolitan area, where the great majority of the state's remaining welfare caseload resides. As envisioned in the governor's budget proposal, the effective date of these new provisions authorizing wage-paying jobs would be January 1, 2001.

Southeastern Ohio: With federal funds awarded under a competitive welfare-to-work grant from the U.S. Department of Labor, the Corporation for Ohio Appalachian Development (COAD) is using a combination of paid work experience and family-focused case management to help long-term welfare recipients in 30 rural counties in Southeastern Ohio make the transition to unsubsidized employment. Seventeen COAD-member community action agencies (CAAs) which serve these Appalachian counties are subcontractors under the grant and responsible for implementing the project in local communities. These CAAs work with local welfare offices to identify eligible welfare-to-work participants and then place those participants in paid work experience positions in public or non-profit agencies or for-profit employers.

Under the COAD model, work experience participants become employees of the local CAA and are paid in accordance with their established wage scale (often at or near the minimum wage but in some instances more than $7.00 per hour based on the participant's skills and the requirements of the position). Employees work at least 20 hours per week for an average of nine months. Their earnings are subject to Ohio's TANF earned income disregards, which means that the first $250 and 50 percent of all additional earnings are not counted by the welfare agency when calculating TANF benefits. (This disregard applies only for 18 months from the time at which a welfare recipient first obtains employment.) The CAAs administer payroll on behalf of the individual work sites and pay for workers' compensation and unemployment insurance coverage.

To date, COAD's member agencies have enrolled 181 welfare recipients in the program. As many as 40 percent of the work sites identified thus far have been with for-profit employers, including a number of very small businesses in rural communities. Recruitment has proven difficult in most counties: welfare caseloads in Ohio have declined substantially, it is time-consuming to forge collaborative relationships with welfare offices in 30 different counties, and the eligibility criteria for participants in projects funded with federal welfare-to-work grants are very narrow. Nonetheless, COAD thus far has succeeded in meeting its initial enrollment targets and hopes to serve a total of 530 participants under the WtW grant.

St. Francis County, Arkansas: As part of its welfare reform efforts, the state of Arkansas makes grants to local coalitions (based upon the number of welfare recipients in each county) to plan and coordinate the delivery of services to welfare recipients. The St. Francis County Workforce Alliance, a community development corporation that leads the local coalition in this largely rural part of eastern Arkansas with a 10-percent unemployment rate, has developed plans to use its funds in part for a wage-based community service program. Its P.R.E.P. program (People-Realizing-Employment-Possibilities) is designed to advance four goals: (1) increase the employability of welfare recipients by giving them skills and work experience; (2) provide needed services in the community; (3) expand access to social and educational services for welfare recipients; and (4) assure community support.

An initial group of 25 participants will work for up to one year in P.R.E.P. positions that provide 20 hours per week of work at $6.00 per hour. Many placements will be placed in child care programs and schools, part of an effort in the county to improve access to quality child care and strengthen community learning centers. The Workforce Alliance also is planning to launch a new recycling project in the county and to create a "business incubator" for new microenterprises, focusing on non-traditional occupations for women such as welding and home renovation. The association is undertaking these efforts in partnership with the Foundation of the Mid-South.