Private Employers and TANF Recipients. 2.3  Employer Practices

05/25/2004

What do employers relying on low-skill, entry-level workers do to employ TANF recipients successfully?

There is very little information on what employers do to successfully employ TANF recipients. Most workforce development initiatives that facilitate the placement and retention of TANF recipients are led by social service agencies and community-based organizations that partner with employers. Accordingly, most documents that discuss innovative and promising strategies for hiring and retaining TANF recipients discuss the strategies used by these labor market intermediaries or discuss strategies that employers adopt in concert with agencies and organizations acting as intermediaries.

In addition, the research evidence for identifying the most successful employer practices is limited. Using a case study approach, a number of researchers have identified "best" or "promising" employer practices. However, it is important to note that these terms mean different things to different people. This research has examined general employer approaches rather than concentrating on particular practices such as screening tests or job performance assessment.

One of the most frequent types of practices involves employers facilitating TANF recipients' employment and retention by participating in industry-specific recruitment, training, and employment initiatives, and working with social service agencies that devote substantial resources to pre-placement services. These services often include training programs and programs geared to match welfare recipients with jobs that correspond to their individual skills and interests. The leading example of this type of research is The Aspen Institute's Sectoral Employment Development Learning Project (Zandniapour and Conway, 2001; Radamacher, 2002; Radamacher, Bear, and Conway, 2001).

2.3.1 Recruitment and Hiring

Considerably more is known about employer recruitment and hiring than other employer practices. This research suggests that while employers who hire current and former welfare recipients use a variety of recruitment strategies, most rely on word of mouth and newspaper advertisements as opposed to employment agency referrals. Holzer (1996) reports that only about 5-10 percent of hires for low-skill, low-wage jobs involve private employment agencies.

Once individuals have been recruited, employers focus a great deal on screening potential candidates. Roughly 70 percent of jobs that do not require a college education do require prior work experience; nearly three-quarters of these jobs require references. Job interviews are conducted for nearly 90 percent of non-college jobs and tests are used as a screening mechanism for about half of these jobs. In addition, checks on applicants' educational credentials and criminal activity are done about 40 percent of the time (Holzer, 1996). Although few studies have documented this practice, the consequences of "creaming," or working only with the most skilled and least difficult individuals within a specific disadvantaged population, are apparent from the characteristics of the TANF recipients who are hired by employers in comparison to those who are not hired (see discussion in Section 2.5 below).

At the expert panel meeting, Branka Minik explained that Manpower Inc. uses a complex screening tool in order to identify job-specific skills that are useful to employers. The company stands behind a screened employee as a guarantee to the employer that this person fits the job's requirements. She noted that such "pre-screening" is necessary because the subsequent employer screening process is expensive. Manpower cannot send people with inadequate skills to employers if they would fail the screening tests. When Manpower has used this pre-screening process the job retention rate has been consistently high. On the other hand, when the company relied on other organizations to do the pre-screening, the program was much less successful. Manpower does not view this as "creaming," but rather as only involving in its training programs individuals who are ready to be involved.

Most employers hire welfare recipients individually or in small groups. Some employers, however, hire large "classes" of welfare recipients. These workers are less likely to remain employed consistently than those who work for organizations that hire smaller numbers of recipients (Lane and Stevens, 1997), perhaps because the former were not individually screened.

2.3.2 Services and Training

Work supports and services can be important to the employment success of TANF recipients, particularly job retention (Boushey, 2002). However, the research literature offers little information on the supports and services provided by employers to new hires. Some analyses indicate that many human resources (HR) departments find it difficult to provide the range of services typically needed by current and former welfare recipients, as their needs are often much greater than those of typical employees (Mills and Kazis, 1999).

At the expert panel meeting, one employer noted that implementing an integrated work support program can help a company retain employees. At Save-A-Lot, Ltd., new employees sign up for public supports such as the Earned Income Tax Credit (EITC), the State Children's Health Insurance Program (SCHIP), and assistance with child care and transportation, at the same time they enroll in company-funded health insurance and other fringe benefit programs. In this way, workers receive maximum overall income and benefits and also can maintain health insurance and child care coverage even if primary arrangements are disturbed.

Some employers devote substantial resources to training low-wage and low-skill workers, but most do not.(7) Training provided by employers may increase welfare recipients' ultimate job retention and advancement, although there is limited evidence to support this proposition.(8) Research indicates that about 10-15 percent of workers receive some form of on-the-job training. The likelihood that a worker will receive training depends on the type of position and the employers' characteristics. Individuals in permanent, full-time jobs are more likely to receive training than temporary and/or part-time workers (Isbell, Trutko, Barnow, Nightengale, and Pindus, 1996a).

On-the-job training for TANF recipients is concentrated in a few areas (e.g., management and computer skills) and tends to be provided by larger companies. Mid-sized, Midwestern, health care, and publicly-owned companies are more likely to provide training to low-skilled workers than are other companies (Isbell et al., 1996a).

Research on the experience of public agencies that have sought to promote job retention and advancement by welfare recipients offers little guidance to employers on how to provide training. The Post-Employment Services Demonstration (PESD), which operated from 1993 to 1999, sought to promote retention, advancement, and reemployment for employees who lost their jobs. This demonstration provided services and enhanced financial support (such as payments to cover work-related expenses) for employed current and former welfare recipients in Chicago, Illinois; Portland, Oregon; Riverside, California; and San Antonio, Texas. However, the impacts of the services, measured using an experimental research design, were negligible (Rangarajan, 2002).

2.3.3 Performance Assessments

Very little research evidence is available regarding employers' job performance assessment practices. This is surprising, given the presumed importance of such assessments for employees' job retention and advancement. The most pertinent available information comes from survey evidence reported by Holzer (2002a). Holzer and his colleagues found that TANF recipients' job performance generally has been judged to be as good as, or better than, other workers' performance in the same jobs. However, absenteeism and poor "soft skills" were found to be important issues (Holzer and Stoll, 2001; Holzer, 2002a).(9) The most common soft skill deficits concern attitudes toward work and relationships with coworkers. Poor performance and turnover are associated with absenteeism and attitude problems (Holzer, 2002a). However, absenteeism is also correlated with other problems such as lack of child care, transportation, and poor health.

At the expert panel meeting one employer said that often welfare recipients' literacy skills have not been adequate to permit them to participate in company training for promotion, thereby stifling their prospects for advancement. She noted that many recipients have no more than an eighth-grade reading level despite having a high school diploma.

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