Understanding the Costs of the DOL Welfare-to-Work Grants Program. WtW Favors Work but Still Emphasizes Skill Building

08/01/2002

Programs that emphasize quick entry into employment and provide mostly job search assistance and placement services consistently have had relatively low costs, regardless of their target population. With mean costs of $502 and $2,131 per participant, respectively, the WIN and JOBS "labor force attachment" programs were the least costly among related efforts (Table IV.1).Similarly, the "enhanced direct employment" WtW programs ($3,559) were less costly, on average, than the $4,077 average across all "transitional employment" WtW programs (Table III.6).

Programs serving harder-to-employ participants have generally provided more than basic employment services. Programs have offered education and training, work experience, and other intensive service components aimed at increasing skills and overall human capital to individuals for whom job search and placement assistance alone did not, or were not expected to, result in rapid or adequate employment. Not surprisingly, programs have had higher costs when they offered expanded services such as adult basic education (ABE), English as a Second Language (ESL) instruction, and occupational training. For example, WIN I ($3,384) and JOBS human capital ($3,934) programs emphasized such education alternatives for their less work-ready participants, and cost more, on average, than WIN ($502) and JOBS labor force attachment programs ($2,131), their rapid-attachment counterparts (Table IV.1).

WtW programs have not emphasized traditional education and training activities, yet their costs are similar to programs that did. Instead of emphasizing education and training, WtW programs sought to build participants' foundation for employment through direct work experience and other activities more directly related to employment. WtW programs emphasized structured job readiness classes, work experience, and skills upgrade activities wrapped around work hours, as a way to enhance participant human capital. Thus, the costs of WtW programs overall ($3,607) were roughly similar to those for education-based programs (see above) because both emphasized skill building for their hard-to-employ participants.

However, WtW programs that offered work experience (at an average cost of $5,098 per participant--Table III.2) were, on average, more costly than all WIN and JOBS programs, even though WIN and JOBS also typically offered work experience as a preemployment option (Table IV.1). This was because WtW programs generally paid or subsidized participant wages and often provided work experience to a substantial portion of their participants, while WIN and JOBS programs did not pay participant wages and enrolled few participants in work experience.(3) Furthermore, work experience in WtW lasted longer--six months or more in seven of the nine WtW programs that offered work experience, compared to a three-month limit under both WIN and JOBS.

None of the WtW work experience programs, however, were as costly as the National Supported Work Demonstration programs, which provided highly structured and closely supervised work experience to their hard-to-employ participants. Supported Work was particularly costly because program operators had to set up and maintain business enterprises that could provide appropriate work experience opportunities to groups of participants at any given time (Hollister et al. 1984). In contrast, the WtW programs that offered work experience relied primarily on placements in the public or nonprofit sectors. Hence, even the most structured WtW work experience program, Philadelphia-TWC, had an average cost of $6,641 per participant, a full 42 percent less than the average Supported Work program ($11,572).(4)

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