Private Employers and TANF Recipients. 2.4  Employer Reasons for Hiring TANF Recipients

05/25/2004

Why do employers hire or make an effort to hire TANF recipients?

A relatively large number of research studies have used survey and focus group data to address this question. These studies consistently indicate that businesses participating in welfare-to-work programs and hiring welfare recipients do so primarily to meet business objectives. Firms are especially concerned about the frequency and cost of job turnover (Roberts and Padden, 1998a).

This conclusion was reaffirmed by members of the project's expert panel. One panel member said that companies have to make a business case for hiring welfare recipients. Another member of the panel agreed with the research findings that companies are concerned about turnover. These two panel members also agreed that, given this reality, it is important for employers to have access to good assessment tools and work supports. Thus, assessment tools (discussed in the previous section) are important to employers at the recruitment and hiring stages to increase retention, while tools such as work supports are important once individuals are employed. When seeking to engage business, it is important for social service agencies and other labor market intermediaries to take this finding into account. These organizations should frame welfare-to-work training and placement programs in business terms and describe ways in which such programs can meet business objectives.

Employer demand for welfare recipients is strongly influenced by economic conditions (Holzer, 2002a; Holzer and Stoll, 2001). Combining data from employer surveys administered in the early 1990s (addressing low-wage, low-skill employees) and late 1990s (focusing on TANF recipients), Holzer and Raphael (2003) found that employers substantially changed their hiring practices and increased their wages as labor markets tightened during the decade. This increased demand applied to all workers except those with severe stigmas, notably ex-offenders. Thus, employer interest in hiring recipients roughly corresponds to the changes in the business cycle.

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