Understanding the Costs of the DOL Welfare-to-Work Grants Program. Costs Differences Reflected Programs' Emphasis on Work Experience and Postemployment Support

08/01/2002

The programs in each WtW model shared similar priorities and, in general, offered a similar mix of services, but they emphasized different individual services or program components. This variation in emphasis led to notable differences in average costs per participant, even for WtW programs in the same model category. In particular, differences in the costs per participant of WtW programs reflected their relative emphasis on, and the structure of, work experience and postemployment components.

a. Costs Were Higher, but Still Varied, in Programs That Offered Paid Work Experience

Programs that included paid work experience generally had higher costs per participant than those that did not (Figure III.4). However, the costs per participant of WtW programs with such a component still varied widely, reflecting specific features of these components. In particular, costs varied based on (1) the prevalence of participation in paid work experience among WtW participants, (2) wage payments and other costs (for example, payroll taxes) incurred on behalf of work experience participants, and (3) the overall intensity of work experience activities, as defined by participation duration and the extent of job readiness services offered with work experience (Table III.3).

Figure III.4
Allocations of Costs per Participant to Main Wtw Program Components

Figure III.4 Allocations of Costs per Participant to Main Wtw Program Components

Table III.3
Factors Influencing the Per-participant Costs of WtW Work Experience
Programs with a Work Experience Component
(Average Cost per Participant of Work Experience)(a)
Prevalence of Participation Wage Payments and Other Costs Incurred on Behalf of Participants Intensity of Work Experience Activities
Duration of Participation Integration of Job Readiness Services
Philadelphia-TWC
($3,101)
Most. Participants completing 2-week orientation/job readiness component High. $5.15 per hour, for up to 25 hours weekly; $50 monthly payment to mentors Long. Until assessed work ready, up to 6 months High. Career development training for 10 hours weekly while in transitional work; weekly worksite visits to assess performance and work readiness
Chicago-Pyramid
($2,244)
Most. Participants completing 4-week job readiness workshop High. OJT positions paid between $6.25 and $8.25 per hour; 30 hours per week Short. 4 to 6 weeks Limited. No structured job readiness concurrent with work experience
Yakima-FWC
($1,824)
As needed. Only participants failing to secure employment after 12 weeks of structured job search High. $6.72 per hour (minimum wage in Washington), up to 20 hours weekly Long. Until participant secured unsubsidized employment, up to 9 months High. Individualized work readiness and job search support during work experience
West Virginia-HRD
($1,430)
All. Participants completing 4-week job readiness workshop Modest. - Mostly OE: $1.60 per hour stipend for 25 to 35 hours/week (as determined by TANF benefits/minimum wage)
- Some OJTs: WtW paid up to half of entry-level wages (no range available)
Modest. Duration varied according to participants' work readiness:
- Less work ready: OEs at nonprofits for up to 6 months
- More work ready: OEs at for-profits for up to 1 month or OJTs for up to 6 months
Limited. No structured job readiness concurrent with work experience
Chicago-Easter Seals
($1,266)
As needed. Only participants completing 4-week job readiness/search workshop without employment High. Industrial workshop participants paid on piecemeal basis, $6 per hour average, 15 hours weekly Short. Until placed in subsidized or unsubsidized employment, up to 4 weeks High. Job readiness training for 15 hours per week while in industrial workshop
Chicago-Catholic Charities
($1,084)
As needed. Only participants completing 2-week job readiness class plus 3 weeks of structured job search without unsubsidized job High. $5.15 per hour, up to 30 hours weekly Long. Until participant secured unsubsidized job, up to 6 months Limited. No structured job readiness concurrent with work experience
Yakima-OIC
($937)
As needed. Only participants failing to secure employment after 12 weeks of structured job search High. $6.72 per hour (minimum wage in Washington), up to 20 hours weekly Long. Until participant secured unsubsidized employment, up to 9 months High. Individualized work readiness and job search support during work experience
Yakima-PFP
($883)
As needed. Only participants failing to secure employment after 12 weeks of structured job search High. $6.72 per hour (minimum wage in Washington), up to 20 hours weekly Long. Until participant secured unsubsidized employment, up to 9 months High. Individualized work readiness and job search support during work experience
Nashville-Pathways
($243)
Few. Only participants needing work experience to fulfill 40-hour/week TANF work requirement High. $5.25 per hour, up to 20 hours weekly Modest. Up to 3 months Limited. No structured job readiness concurrent with work experience
a. Average per participant costs of work experience were computed by applying the program's work experience allocation of total costs for the cost analysis year to the estimate of average cost per participant. Thus, these estimates should not be interpreted as the average cost of work experience per participant involved in such activities.
OE = occupational exploration; OJT = on-the-job training; TANF = Temporary Assistance for Needy Families.

Among the study site programs, Philadelphia-TWC had the highest cost per participant ($6,641), for all the reasons mentioned above. Most TWC clients participated in the program's work experience component, which was relatively long. Because the program explicitly targeted individuals with limited or no work experience, all TWC clients who completed the program's initial job readiness activities were placed in transitional work activities.(6) TWC participants were expected to spend 25 hours each week in transitional work and were paid $5.15 per hour. They remained in the positions until they were considered ready for work, up to a maximum of six months. Another distinctive feature of the TWC program was that further job readiness and skills upgrading were integrated into the program's work experience component. While in transitional work, TWC participants were required to attend 10 hours of career development training each week.

High participation rates in work experience and high wage costs also appeared to contribute to the high per-participant costs of the Chicago-Pyramid program ($5,826). In contrast to the employer-tailored programs in Boston, which integrated unpaid job shadowing into participants' job readiness activities, Pyramid featured a four- to six-week paid work experience placement for all its participants. Moreover, while most WtW work experience placements in other programs paid minimum wage, Pyramid placed its WtW participants in on-the-job training positions, which generally paid higher wages.

Conversely, the cost per participant for the West Virginia-HRD program was lower ($3,771), mainly due to modest wage costs. Although all participants were expected to receive some work experience, they did not always receive direct wages from the WtW program. Most participants "worked off their TANF grants" and received only a small stipend ($1.60 per hour) to supplement their cash assistance.

Among WtW programs that offered work experience, costs were lower where such placements were based on need. For example, the Yakima programs (with average costs ranging from $3,530 to $4,912) used paid work experience only for participants who had completed 12 weeks of structured job search without securing unsubsidized employment.(7) The initial sequence of job readiness and job search activities at Chicago-Catholic Charities and Chicago-Easter Seals helped WtW staff identify relatively "work ready" WtW participants, contributing to lower per-participant costs ($3,310 and $3,087, respectively).(8)

Paid work experience was a minor component of average costs in the Nashville-Pathways program ($1,964). While Pathways offered paid work experience for up to 12 weeks, few participants were placed in such positions. Only 69 of the 870 individuals ever active in Pathways during the cost analysis year (about eight percent) participated in work experience during that year.

b. Differences in Preemployment Costs Reflected the Structure of Job Readiness and the Use of Work Experience

The costs of WtW job readiness and preemployment case management varied widely, largely because of differences in the nature of job readiness activities and the duration of case management. Average costs ranged from $695 (Nashville-Pathways) to $2,548 (Boston-Partners) per participant (Table III.4).

Table III.4
Factors Influencing the Per-participant Costs of Wtw Job Readiness and Preemployment Case Management
WtW Program (Average Cost per Participant of Job Readiness and Preemployment Case Management)(a) Duration of Structured Job Readiness Activities Intensity and Duration of Preemployment Case Management
Boston-Partners ($2,548) 7-week work preparation class Case managers led work preparation classes; individualized support until job entry; mental health counseling also offered
Yakima-OIC ($1,822) No structured job readiness Individualized work readiness/job search support during work experience (up to 9 months), until job entry
Chicago-Pyramid ($1,817) 4-week work preparation class Periodic followup during work preparation and OJT (up to 6 weeks); individualized support until job entry
Yakima-FWC ($1,806) No structured job readiness Individualized work readiness/job search support during work experience (up to 9 months), until job entry
Chicago-Maximus ($1,709) 6-day job readiness class Case managers led job readiness classes; individualized job search support until job entry
Chicago-E&ES ($1,668) 2-week job readiness workshop plus work-related soft-skills classes concurrent with job search Individualized work readiness/job search support until job entry
Yakima-PFP ($1,420) No structured job readiness Individualized work readiness/job search support during work experience (up to 9 months), until job entry
Fort Worth-ANS ($1,375) 4-week job readiness workshop Individualized work readiness/job search assistance until job entry
Philadelphia-TWC ($1,219) 2-week orientation/job readiness workshop Weekly followup (minimum) during work experience (up to 6 months); individualized support until job entry
Chicago-Catholic Charities ($1,118) 2-week job readiness class Periodic followup during job readiness and work experience (up to 6 months); individualized support until job entry
Boston-Marriott ($1,059) 2-week work preparation class (plus 4 weeks job shadowing) Case managers led job readiness class; individualized support until job entry
Fort Worth-ANS ($1,375) 4-week job readiness workshop Individualized work readiness/job search support until job entry
Fort Worth-WC ($934) 5-day job readiness workshop Individualized work readiness/job search support until job entry
West Virginia-HRD ($810) 4-week orientation/job readiness workshop Individualized support during job readiness, work experience (up to 6 months), and job search, until job entry
Phoenix-EARN ($851) 3-week job readiness class Periodic followup during job readiness class; individualized job search assistance to (a few) participants exiting class without employment
Chicago-Easter Seals ($719) 4-week work readiness/job search workshop Periodic followup during work readiness/job search and industrial workshop (8 weeks total); individualized support until job entry
Nashville-Pathways ($695) No structured job readiness Individualized work readiness/job search counseling until job entry; monthly meeting
Note:  Table excludes the JHU programs, which focused on postemployment services.
a. Average costs per participant of job readiness and preemployment case management were computed by applying each program's allocation of total costs during the cost analysis year to job readiness and preemployment case management to the estimate of average cost per participant. Thus, these estimates should not be interpreted as the average cost of job readiness and preemployment case management per participant involved in such activities.

Reflecting an overall commitment to building "human capital," the most costly WtW programs placed participants in structured job readiness components (lasting up to seven weeks) and lengthy work experience with associated case management (that could last up to nine months). Boston-Partners, with the highest costs for job readiness and preemployment case management, put participants in seven weeks of classroom-based work preparation activities, and Partners case managers tracked participants closely until they were placed in unsubsidized jobs. Similarly, the Yakima WtW programs had relatively high average costs for job readiness and preemployment case management ($1,822 to $1,420). Although these programs did not include a lengthy routine job readiness component, many participants were placed in work experience for up to nine months and received individualized work readiness and job search support during that period.

Costs were lowest where participants pursued more independent job readiness activities and individualized objectives, since WtW staff did not always have to be intensely involved in such activities. In Nashville, for example, the main activity for all Pathways participants was a monthly meeting, in which they shared their accomplishments and challenges with their case managers and each other. Job readiness costs averaged $695 per participant.

c. Variation in Postemployment Support Costs Reflects the Labor Intensity of Services and Participant Payments

Helping WtW participants not just secure employment but also retain and, if possible, move on to better jobs was an important goal for all of the programs we examined. In most WtW programs, postplacement support consisted of brief staff contacts with participants (and sometimes their employers), and costs were therefore modest. In 11 programs, these contacts typically lasted through the first six months of employment, with decreasing frequency and intensity, at a cost ranging from $241 (Fort Worth-ANS) to $419 (Chicago-Pyramid). The remaining seven programs provided more intensive postemployment services, wage supplements, or retention incentives to participants, and their costs for postplacement services ranged from $473 (Philadelphia-TWC) to $1,520 (Phoenix-EARN) per participant.

Postemployment costs were relatively high in the two JHU programs--in Florida and Maryland--which provided their participants with intensive postemployment support. These Career Transcript System programs worked mostly with newly employed individuals (and their supervisors), and their objective was to help participants retain their jobs, identify advancement opportunities, and move up a career ladder. By design, then, WtW spending focused on postemployment case management. At costs of $1,309 per participant in JHU-Maryland and $1,198 in JHU-Florida, postemployment services represented 60 and 55 percent, respectively, of overall average costs for these programs.

Postemployment services were most costly, however, in Phoenix-EARN, which complemented follow-up case management with structured mentoring. All EARN participants placed in unsubsidized jobs received regular follow-up visits by professional counselors for six months after placement. These visits were in addition to brief follow-up contacts by EARN case managers (similar to those made by most other WtW programs). This additional attention brought postemployment costs to $1,520. The Yakima-OIC program also featured postplacement mentoring services, which contributed to higher-than-average costs for postemployment services ($504 per participant).

Wage supplements and other direct payments to WtW participants could also raise postemployment costs. WtW participants in West Virginia-HRD who worked 30 or more hours per week and earned less than $7.75 per hour received such supplements for their first 24 weeks of employment.(9) Philadelphia-TWC participants were eligible for up to $800 in retention bonuses: $400 after completing their first month of unsubsidized employment, $200 after three months of continuous employment, and another $200 after six months of continuous employment.(10) In these programs, postemployment costs per participant were $870 (West Virginia-HRD) and $473 (Philadelphia-TWC).

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