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This is the final report for the study “Private Employers and TANF Recipients.” It presents findings from our review of the research literature related to employers and recipients of Temporary Assistance for Needy Families (TANF) and summarizes what is and is not known about employer attitudes, policies, and practices. Based on this assessment, and on input from the project’s expert panel, we consider a number of options for future research in this area.
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The nation’s welfare reform efforts of the last decade, emphasizing “work first” sought to move families from the welfare rolls into employment. With the help of strong economic conditions during the 1990s, great progress was made toward this goal. The welfare caseload dropped by more than 50 percent between 1994 and 2000. Research has concluded that this reduction in welfare caseloads is due to welfare-to-work policies (1) and a robust economy.(2)
More recently, the work first approach has been supplemented in two ways. First, job search and placement assistance has been used to help re-employ TANF recipients who lost their jobs in the weaker economic environment of the last three years. Second, TANF programs have sought better ways to promote job retention and advancement. To date, most job retention efforts have focused largely on identifying and addressing the problems working recipients face in areas such as child care, transportation, and housing. Job advancement strategies for welfare recipients with low wages, limited fringe benefits, and/or difficult work hours or conditions have included education, training, and job placement services.(3)
With these efforts, the success of welfare policy continues to depend in part on the labor market. Given this, it is surprising that little attention has been given to employer attitudes, policies and practices. Policymakers and researchers have devoted considerable attention to the experience of current and former TANF recipients in finding and retaining employment. Thanks to a wide range of research studies, much is known about recipients' employment attitudes, barriers to employment, job search efforts, and employment outcomes under regular and experimental conditions. Research also has documented aspects of the low-wage, low-skill labor markets in which TANF recipients typically look for and hold jobs, including the size and location of these markets, the relative importance of different industries and occupations, and the implications of part-time and temporary work for long-term employment outcomes.
While we know a great deal about the employee (supply) side of the labor market, we know much less about the employer (demand) side. Most research on the influence of employers' hiring and employment practices on individuals transitioning from welfare to work has involved qualitative data covering a small number of employers. This research has examined not only the policies and practices of the employers themselves, but also those of labor market intermediaries (i.e., the public agencies, private companies, and community organizations that connect employers to potential workers). Such practices may be as critical to TANF's success in promoting employment as are the efforts of TANF recipients themselves, but we lack comprehensive knowledge of these practices.
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The heart of this project is a review of the research literature pertinent to employers and TANF recipients, and of the surveys and other data sources important to carrying out this research. The review is organized around the following questions:
The study team's search for research-based answers to these questions evaluated three types of studies. The first is employer-focused research, including qualitative and quantitative studies of employer recruiting, screening, hiring, assessment, and other practices. We concentrate on employer practices vis-à-vis TANF recipients, although these practices are often indistinguishable from practices affecting low-wage, low-skill workers more generally.
The second type of research examines the experiences of TANF recipients and other low-wage, low-skill workers. Most of these studies have estimated labor market outcomes and impacts for welfare recipients. Although most of these studies typically have focused on factors that affect labor supply (i.e., the employment of TANF recipients and workers) some also have examined the behavior of employers. These studies typically examine both labor supply and demand in particular markets and, within these markets, the experience of specific groups of employees or employers. While this project focuses on TANF recipients, it also considers the role of TANF recipients in the workplace in the broader context of the labor market.
The third type of research, studies of labor market intermediaries, examines neither employees nor employers, but the organizations that facilitate matches between the two. Intermediaries serve "dual customers" (i.e., employees and employers) typically by providing training and placement help to the former and screening and referrals to the latter. However, given the newness of this concept and the range of organizations that may be called "intermediaries" (e.g., welfare agencies, employment offices, outsourcing suppliers including temporary employment agencies, community colleges, technical schools, labor unions, and a variety of community-based organizations providing services to job seekers, employees, and/or employers) a consensus on intermediary functions and their impact has yet to emerge.
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An important aspect of this project is the guidance provided by an expert advisory panel, selected by ASPE with input from Abt Associates. This panel includes:
The advisory panel met on May 7, 2003 to discuss most of the materials and topics covered in this report. The thoughts and suggestions of panel members are reflected in each of the chapters in this report.
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This report has six chapters and an appendix. Chapter 2 presents the findings of our review of the pertinent research literature. This discussion is organized around each of the research questions listed above. Chapter 3 assesses the existing research and identifies, based on both the literature review and the input of the expert panel, the topics for which additional research evidence is most needed. Chapter 4 discusses the advantages and disadvantages of alternatives for addressing these needs. These alternatives include new data collection and research based on existing data sets. Chapter 5 examines one of these research options, a survey of employers and labor market intermediaries, in detail. The last chapter summarizes our findings and offers recommendations for future projects. Finally, the appendix summarizes each of the research documents examined in the literature review.
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(1) "Welfare-to-work" refers to employment and training services and financial incentives designed to promote the movement of welfare recipients into employment, rather than to specific programs such as the U.S. Department of Labor's Welfare to Work program or the Welfare to Work Voucher program administered by the U.S. Department of Housing and Urban Development.
(2) See U.S. Council of Economic Advisors, Explaining the Decline in Welfare Receipt, 1993-1996, Technical Report (Washington, DC: White House, 1996); and J. P. Ziliak, D. N. Figlio, E. E. David, and L. S. Connolly, "Accounting for the Decline in AFDC Caseloads," Journal of Human Resources, vol. 35, no. 3 (2000).
(3) In most states, a substantial proportion of these job search, placement, and advancement services have been provided through the One-Stop Centers operated under the Work Investment Act (WIA). For discussion, see A. Werner et al., Serving TANF and Low-Income Populations through WIA One-Stop Centers (Cambridge, MA: Abt Associates, 2002).
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