Understanding the Costs of the DOL Welfare-to-Work Grants Program. Variation in Costs per Placement

08/01/2002

The goal of WtW programs was to place participants in unsubsidized employment and, thus, help them make strides toward self-sufficiency. The cost of achieving this objective can be summarized as the cost per placement--the resources programs had to invest, on average, to have one participant reach unsubsidized job placement. Our estimates of cost per placement for WtW programs cover a wide range--from $3,501 for Boston-Marriott to $13,778 for Philadelphia-TWC.

These estimates should not be interpreted as measures of programs' efficiency or effectiveness, for several reasons. Differences in cost per placement partly reflect differences in the mix and intensity of services that WtW programs offered. For programs that offered similar services, differences in cost per placement may reflect important differences in the populations served and, therefore, the relative ease or difficulty with which programs could achieve placements. Differences in cost per placement also do not take into account potentially important differences in the quality or long-term success of programs' placements. Thus, differences in costs per placement probably bear no relation to differences in outcomes or impacts across programs.

For any individual WtW program, cost per placement is principally a function of its cost per participant and its placement rate. Different factors can influence a program's cost per participant, placement rate, or both--and, through them, its cost per placement. In this section, we examine how program characteristics, contextual factors, and participant characteristics relate to the variation in costs per placement observed across WtW programs.(11) In general, we found that job-matching strategies and participant characteristics were the most important factors in understanding differences in WtW costs per placement.

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