Private Employers and TANF Recipients. 3.2  Unanswered Questions


The existing research provides solid answers to some of ASPE's questions and less satisfactory answers to others. The questions in the first category are the ones that can be addressed with descriptive information. The available research explains reasonably well which types of employers are most likely to hire TANF recipients, the main reasons employers hire or do not hire welfare recipients, and identifies those segments of the TANF population that present the greatest challenges to employers. While there are answers to these questions, the answers could be sharpened with additional research using a combination of TANF and UI data, WIASRD, and the U.S. Census Bureau's Longitudinal Employer-Household Dynamics (LEHD) data described below.(13)

The questions that cannot be answered reliably are the ones that require comprehensive descriptive or credible evaluation evidence. The available research studies cannot tell us what works because they have not compared, in any systematic way, the performance of different types of employer and intermediary practices. Ultimately, their performance should be compared in terms of multiple outcomes. "Success," from the standpoint of employers, must take account of outcomes such as job retention; from the perspective of TANF recipients, TANF administrators, and intermediary organizations, comparisons should also consider outcomes such as job advancement, improvement in job skills, and measures of progress toward economic self-sufficiency.(14)

Thus, ASPE's second question  What do employers relying on low-skill, entry-level workers do to employ TANF recipients successfully?  currently can only be answered based on descriptive information, which is far from comprehensive, in terms of industry and geography, and the range of important practices. Some claim to have identified practices for employing TANF recipients "successfully." However, if "successfully" has a comparative meaning  for example, if it means with better than average employment outcomes  these claims are on shaky ground. The practices have not been systematically compared.

ASPE's last question  What would enable employers to increase and improve their efforts?  at present must be answered based on limited information. We simply do not know what types of employer or intermediary practices work best or what government actions can be taken to improve employer practices. The research literature is filled with case study evidence that particular practices hold promise. However, in only a few areas, notably temporary employment agencies, does the evidence involve consistent data collected across multiple practitioners.

Fundamentally, what is needed is research evidence that compares inputs and outcomes  and the interactions between the two  for alternative employer practices used to achieve specific objectives in recruiting, hiring, and employing TANF recipients. Ideally, such evidence should be assembled for different types of practices in recruitment and outreach, screening, hiring, training, performance assessment, employee support, and compensation and advancement. Ideally, too, the information on inputs and outputs should be sufficiently detailed to support analysis of the reasons particular practices are effective or ineffective. For example, if specific types of employer training result in higher job retention and employee earnings, it is important to identify the features of the training  such as its curriculum, teaching methods, and setting  that lead to these improvements. This would be easier if consistent data were available on inputs, such as types of computerized instruction, and intermediate outcomes, such as skill test scores for individual employees.

While systematic comparisons of this kind are needed for the full range of employer practices, several practices deserve priority attention given the findings of the research summarized in Chapter 2 and other research. For example, given the research evidence on the effectiveness of mentoring in other settings,(15) a comparison of employers with and without mentoring programs would be instructive. The presence or absence of a meaningful soft skills training program could be examined in a similar fashion.

Comparisons could be based on a sample of employers and their TANF recipient employees. For example, assessing the experience of employers using different recruitment strategies would entail identifying the recruitment methods and resources used by the employers, measuring short- and longer-term outcomes for job candidates and employees, and analyzing differences associated with individual practices.

Alternatively, such comparisons could focus on labor market intermediaries. One critical area in which employer practices differ is in the use of intermediaries, and the practices of these labor market organizations vary as well. Recent research attention has focused on community organizations such as the Center for Employment and Training (CET) in San Jose, California, and Project QUEST in San Antonio, Texas (McGahey, 2003), and on temporary help firms such as Manpower, Inc. (Autor and Houseman, 2002). However, other institutions, such as community colleges and WIA One-Stop Centers, also play an intermediary role. If we take this broad view of intermediaries, a substantial fraction of the firms that employ TANF recipients may be said to utilize them.

In some cases intermediaries exert a strong influence on employer practices and secure explicit commitments to hire welfare recipients and other low-wage workers. For example, Project QUEST has sometimes operated as "an extension of the firm's human resources department" (Osterman and Lautsch, 1996). In other cases, good working relationships have been established, but the employers' hiring behavior has not been noticeably altered by the intermediaries.

Much of the research reviewed in the last chapter focused on employer behavior, ignoring the fact that employers use intermediaries. This omission, though less important in many other circumstances, is problematic in the context of TANF recipients. As noted earlier, intermediaries represent one of the main vehicles used by employers to recruit, hire, and support workers from the welfare population.

Exhibit 3.2 depicts a simple comparison of activities and short- and longer-term outcomes for employers using two types of intermediaries and employers relying on their own human resources (HR) procedures without the involvement of intermediaries. The first row of boxes in the figure is the one that involves employers working with intermediaries focusing on welfare recipients. The second row shows employers partnering with intermediaries that serve a broader group of workers, and the third shows employers relying on their own HR offices.

Each column of boxes in the figure involves potential comparisons. Comparing the boxes in the first column  that is, the first box in each row  raises a number of questions. For example, what are the reasons some employers work with TANF-focused intermediaries while others do not? Which types of intermediaries do employers most often use  private firms (such as Manpower, Inc.), public agencies (such as the TANF/WIA One-Stop Centers), or community-based organizations (such as Project Match in Chicago)? For what reasons do employers choose not to work with such organizations?

The boxes in the second column highlight another related set of questions. For example, what services do employers want from intermediaries? How do these services affect employer procedures? What are the services intermediaries arrange for and provide, particularly for TANF recipients? How do recruitment practices differ for employers using TANF-focused intermediaries, other intermediaries, and their own HR departments? How does involvement with an intermediary change employer practices such as screening? How does applicant screening differ across these three sets of circumstances? How do hiring practices differ? How do employee support, performance assessment, and other practices differ?

Exhibit 3.2
Activities and Outcomes with and without Labor Market Intermediaries

Activities and Outcomes with and without Labor Market Intermediaries.

For the third and fourth columns in this figure, how do key short- and long-term employment outcomes  in terms of hiring and job retention and advancement  differ across these three situations? In particular, are the employment outcomes significantly different? If the outcomes are significantly better for employers using intermediaries than for employers that do not  and if there are no differences between the employers and employees other than in the use of intermediaries  then intermediaries are producing a net impact on employment. While less than ideal,(16) such comparisons would provide more credible evidence of the intermediaries' effectiveness than currently exists. If the outcomes are indeed different, we would want to know why they are different. What specific activities or practices account for the value added by intermediaries? Gaining answers to such questions would be challenging for researchers, but also critically important for employers and policymakers.

Several studies have assessed the activities and outcomes of individual intermediaries such as Project QUEST (e.g., Rademacher et al., 2001). Clearly, however, the value of such information would be enhanced if it could be compared to the activities and outcomes of other intermediaries and/or employers that handle employment matters without the help of intermediaries. The same can be said for several other potentially important comparisons of employer practices. For example, one crucially important group of employer practices for the TANF population involves the management of workers once they are hired. Practices such as the assessment of employee performance are likely to be critical to job retention and advancement for welfare recipients.

In this important and broad area of employee management, it is clear that employer behavior differs. However, the pertinent research evidence is limited. As discussed earlier in this chapter, more attention has been paid to recruitment, screening and hiring methods, as well as to compensation matters, than to other practices. However, several of the post-hiring practices listed in Exhibit 3.1  such as soft skills training, the use of different formal and informal job performance methods, the use of mentoring and other types of worker support, and the availability of flexible scheduling options for employees  may be extremely important. Some of these practices, such as scheduling, only involve employers. Other practices, such as soft skill training, may involve intermediaries, either by referral or through outsourcing arrangements.


(11) Quantitative data on service utilization at One-Stop Centers is maintained in the WIASRD (Workforce Investment Act Standardized Record Data) data system, which is described in Chapter 4. However, as explained in Werner et al. (2002), the vast majority of available studies on the Centers have utilized case study information collected from individual programs rather than aggregate data from WIASRD.

(12) The Welfare to Work Partnership identified 237 potential intermediaries in the two metropolitan areas, 23 of which said they did not work with TANF recipients or did not provide pertinent labor market services. Of the remaining 214 organizations, 164 (77 percent) completed the full survey.

(13) These data sources provide extensive individual-level information on TANF recipients, but limited information on their employers.

(14) According to one definition, full economic self-sufficiency involves independence from poverty as well as from TANF and other forms of public assistance. Researchers have developed different measures of full and partial self-sufficiency. For a discussion of self-sufficiency outcomes based on this definition, see D. A. Long, "From Support to Self-Sufficiency: How Successful Are Programs in Advancing the Financial Independence and Well-Being of Welfare Recipients?" Evaluation and Program Planning, vol. 24 (2001), pp. 389-408.

(15) See, for example, J. P. Tierney and J. B. Grossman, Making a Difference: An Impact Study of Big Brothers/Big Sisters (Philadelphia, PA: Public/Private Ventures, 2000); and C. L. Sipe, Mentoring: A Synthesis of P/PV's Research (Philadelphia, Pa: Public/Private Ventures, 1996).

(16) Unless employers are randomly assigned to relationships with intermediaries, the results of these comparisons would be subject to selection bias. Such an assignment process is probably not feasible. However, in comparing outcomes for employers, an effort could be made to statistically control for differences between employers that use intermediaries and those that do not. Alternatively, job applicants or employees could be randomly assigned to intermediaries that provide recruitment, screening, and other services to employers (see Chapter 4 for further discussion).


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