Grubb, W. N., Badway, N., Bell, D., Chi, B., King, C., Herr, J., Prince, H., Kazis, R., Hicks, L., & Taylor, J. C. (1999). Toward order from chaos: State efforts to reform workforce development systems (MDS-1249). Berkeley: National Center for Research in Vocational Education, University of California.

SECTION 5

THE ROLE OF WELFARE "REFORM" AND "WORK FIRST"

Welfare reform, both at the state and national levels, is having a substantial effect on states' efforts to reform their education and training systems. This is not really surprising, since the question of how to deal with welfare and disadvantaged populations within existing education and training efforts has been a vexing one since at least the mid-1960s. Even so, the degree to which it is affecting more systemic workforce reforms in these states is both remarkable and disturbing.

In part, these developments reflect bad timing. Just when states had become serious about the need for thoughtful, comprehensive changes in their workforce development systems--whether in response to economic distress or as the culmination of deliberations about ways to streamline and make them more efficient--along came the most massive restructuring of the state and national welfare systems since they were first created in the mid-to-late 1930s. Moreover, this round of welfare changes has been driven far more by ideology and single-minded visions of what reform should be, in sharp contrast to the bipartisan Family Support Act of 1988 and its Job Opportunities and Basic Skills (JOBS) training program, the product of broad-based analysis and careful evaluations.

As welfare reform came along, economic conditions made it appear that employment and "work first" could succeed. Between 1990 and 1997, more than 13 million jobs were created by the U.S. economy, pushing the civilian unemployment rate down to the 4.5 to 5% range last seen almost three decades ago. Unfortunately, many of these jobs are in the low-paid service sector, with few opportunities for advancement; and large numbers of these jobs may be the result of splitting existing full-time jobs, especially in services, into two or more part-time remnants (Thurow, 1997). Still, states whose economies are booming and whose labor markets have been tight for several years are convinced that "anyone who wants a job can find one."

For welfare recipients, these developments have translated into a single-minded rush to implementing "work first" strategies, along with time limits, as the centerpiece of welfare reform--treating welfare recipients in ways substantially different from other students and clients.[26] In many states--though not all--the obsession with "work first" has carried over into and even begun to dominate broader workforce development reforms. The central theme of this section, therefore, is the emergence and implementation of "work first" strategies as states move into welfare reform, and how this is affecting their broader attempts to reform their workforce development systems. First, we clarify what we mean by "work first." Then, we characterize where the states we have examined are in their implementation of "work first" and related welfare reform initiatives. We go on to explore a number of key welfare and workforce development issues, after which we offer several conclusions.

"Work First" Clarified

"Work first" clearly means different things in different states, and there is no one standard model or approach. However, there is at least a common philosophy undergirding all of the approaches now parading under the "work first" banner, which is that "any job is a good job and the best way to succeed in the labor market is to join it, developing work habits and skills on the job rather than in a classroom" (Brown, 1997, p. 2; Weissman, 1997).

Typical features of "work first" programs include the following:

They seek to move individuals from welfare into unsubsidized work as soon as possible.
Job search tends to be a central activity, though many are quick to point out that "`work first' is more than just job search" (Brown, 1997, p. 2). Job search ensures that the labor market, rather than a host of program counselors or other staff, is the mechanism for testing an individual's employability.
For those not found to be immediately employable in the market, "work first" models may provide subsequent activitiesto address barriers to employment such as education, training, work experience, and others. These activities tend to be closely monitored and may be combined with or followed by job search.
A fairly common "work first" participant flow (see Box V.1) has individuals proceeding from job search to orientation and assessment; followed by job club; another more in-depth assessment; and finally some combination of added job search and short-run education, training, or work experience (or subsidized work). Individuals may leave for employment at any step along the way, and are certainly expected and encouraged to do so.

Some examples of "work first" programs include the following (Brown, 1997, pp. 2-3):

"Labor force attachment" sites in the ongoing JOBS evaluation (those in Riverside, California; Atlanta, Georgia; and Grand Rapids, Michigan), in which group job search is the first activity for most participants, followed typically by short-term education and training and subsequent job search for those remaining unemployed.
Florida's Project Independence, in which those identified as job ready via their education and work experience (most of the recipients) performed self-directed job search, then job club and another search, generally followed by some education or training for those still unemployed. Those not job ready were instead assigned to education or training as their first activity.
San Diego's Saturation Work Initiative Model (SWIM), in which most participants were first assigned to two weeks of a job search workshop; followed by (if still unemployed) three months of unpaid work experience concurrent with job club; and, ultimately, education and training.


	Box V. 1 Common "Work First" Program Participant Flow
Job Search
Orientation
Initial Assessment
Job Club
In-Depth Assessment

	Additional Job Search	Education (short-term)	Vocational Training (short-term)	Work Experience/ Subsidized Work (short-term)
Source:Brown (1997), Figure 1, p. 13

Arkansas' WORK Program, in which all participants were assigned to job club followed by up to three months of individual (self-directed) job search, then (if still unemployed) unpaid work experience.

"Work first" often is implemented with a variety of "diversion" initiatives which seek to keep families from going on welfare. For example, Florida, Texas, and several other states have recently linked the two in an approach some have termed "diversion squared." In these states, families that apply to their human services agency for public assistance are first diverted to a resource room to seek assistance such as shelter, food, or even employment from nongovernmental sources, before their applications will be accepted. If unsuccessful in their efforts and still in need, they can return to the agency to pursue applying for aid. Then, once their application is accepted, it may be "pended" while the potential aid recipient is sent to the workforce agency for orientation and job search assistance. Often this takes the form of self-directed job search. Once the individual can show evidence of a bona fide effort to find work, his or her application for aid is finally processed. This diversion process may take weeks or even a month. While it is taking place, the potential welfare applicant is diverted both from public aid as well as to more intensive workforce development services.

State Approaches to "Work First"

Even though there are some consistencies underlying "work first," such programs exhibit large variation in terms of the services they provide, the sequencing of those services, the extent to which participation in those services is required (and enforced), and their specific goals and approach to meeting them (Brown, 1997). In the states examined in our study, there is a continuum of approaches to serving welfare recipients. On one end of this continuum are states that, despite considerable pressure to join the in-crowd by jumping onto the "work first" bandwagon, are holding to a human capital approach and attempting to maintain more holistic systems for workforce development. Of the states we studied, Iowa and Oregon are representatives of the human capital end of the continuum. Oregon espouses a "blended" approach, favoring elements of "work first," but with considerable stress on preparation for work that pays a living wage for all residents. Oregon policymakers have not bought into the notion that "any-job's-a-good-job," but, rather, they emphasize the kinds of competencies defined by America's Choice: High Skills or Low Wages!,the 1990report of the Commission on the Skills of the American Workforce. At the local level, a number of administrators were glad that welfare is moving from a system that simply determines eligibility for benefits to one that encourages (or pushes) recipients to attain self-sufficiency. Their main concern has been to ensure that there is a continuum of further education and training. As one staff member said, she "still saw a lot of people getting stuck in the welfare system, in the ABE classroom, in a first job that was not going to lead them to self-sufficiency"; and the one-stop center planning committee "really saw a need for that continuum of services to help them move along." So pressure from welfare reform is beneficial but not sufficient; it also requires an array of education and training.

At the other end of the continuum are the overwhelming majority of states which have fully embraced "work first" as the only vehicle for welfare reform. These states might further be divided into those which have let "work first" and welfare changes subsume their broader systems for workforce development, including Texas and Wisconsin; and those which have isolated it and maintained the rest of their workforce system intact, including Florida, Massachusetts, Michigan, and North Carolina.

Effects on Workforce Development Programs

The efforts of states to implement welfare reform have had several effects on broader efforts to reform workforce development. Examples of these effects are described below.

Undermining the High-Skills/High-Wages Agenda

For most participants who have skill deficiencies, state workforce systems seek to enhance their skills and to assist them in finding suitable employment which will offer opportunities for career advancement and increased earnings. In contrast, for welfare recipients the message is that they should be seeking a job, "any job." In Massachusetts, one local provider said,

Job training doesn't figure in current Massachusetts thinking. This is especially true regarding welfare. I've heard both [the] governor and the lieutenant governor say, "Allowing job training [to substitute for required work experience] would gut the system." The welfare agency has no interest in anything beside getting people off the welfare rolls.

Similarly, a state official complained,

Welfare reform in Massachusetts came one year before the federal legislation, at a time when job training funds had shrunk to a ridiculously low level. It overwhelmed us. [State welfare officials] have said that no longer-term training will be available for recipients, and almost no education. Post-employment services aren't even on their radar screen.

North Carolina may be a partial exception, providing ladders from its second-chance systems into occupational skills training in its respected system of community and technical colleges. However, even here, "work first" was cited as presenting an important barrier to integrating
welfare-to-work efforts into the broader push for workforce reform. Skills development, career advancement, and increased earnings are to be found almost exclusively on the job, not through public programs offered by community organizations or community and/or technical colleges.

In addition, as Bloom (1997) and others have pointed out, the various welfare-to-work strategies yield widely differing results. "Work first" generally has been found to offer some temporary benefits for society and to provide net benefits for taxpayers by reducing welfare caseloads quickly. Yet, over the longer-term, there appear to be few if any lasting benefits for individuals; any earning gains from the initial increase in employment tend to be offset by declines in income from welfare benefits.

A recent Economic Policy Institute study has estimated that the implementation of federal time limits on welfare may lead to a 10-12% decline in real wages, due for the most part to large numbers of poorly prepared, low-skilled women being forced into the labor market. This finding is echoed in a number of state research reports as well. Lawson and King (1997) found that implementation of Texas' time limits could lead to considerable downward pressure on wages, especially along the border and, without significant efforts to build the skills of the women affected, would consign them to lowly paid work, mostly part-time/part-year jobs, in sales and service occupations, many of which provided few employee benefits. To the extent that state "work first" programs are focused on immediate employment in "any job" and those jobs fail to offer such workers access to further education and training (Carnevale & Goldstein, 1990), we will have done little to foster a HS/HW agenda.

Replacing Universal with Fragmented Approaches

A characteristic of the most recent wave of many workforce reforms is that they develop more universal systems serving the entire range of populations, from dislocated aerospace, banking, and defense industry employees to youth, ex-offenders, and welfare recipients. But welfare reform strategies of the mid-1990s conflict sharply with these universalist approaches, instead creating fragmented programs. By developing "work first" approaches for welfare recipients only, they create conflicting goals and send contradictory messages to major actors in the system. They also create what is in effect a caste system for participants. Incumbent workers, the system's "Brahmins," have access to high-quality training provided on-site or at community colleges or universities; this training may be funded by their employers or one of the customized training funds financed by UI payroll taxes or general revenue. Dislocated workers may be offered similar services. Economically disadvantaged participants who are not on welfare are typically assessed to determine skill needs, aptitudes, and interests; they are typically offered access to short-term training in the usual "second-chance" system. Welfare recipients, the "untouchables" who have some of the lowest academic and occupational skills and the least work experience, are offered the least intensive services and sent off into the low-skilled, low-wage labor market. In addition, this approach attaches an even greater stigma to recipients of public assistance. Serving welfare recipients in such a noticeably different manner may also have the effect of harming those individuals the systems are attempting to help (Burtless, 1985).

Hijacking Workforce Reform

In several of the states we studied, most notably Texas, Michigan, and Wisconsin, welfare reforms have gained such momentum that they affected broader workforce reforms. This phenomenon is reflected in several ways. First, state policymakers have devoted an inordinate amount of their time and resources to the workforce implications of welfare reform--despite the fact that public assistance represents a strikingly small share of state revenues (often less than 1%[27]), that caseloads have been falling in virtually all states since 1994, and that welfare recipients comprise only a small share of those needing education and training. As a state official in North Carolina mentioned,

Welfare reform is competing with education for time and energy and a place at the table and on the agenda. Everybody is just running around like Chicken Little about the sky falling in with this new welfare reform initiative that just got passed.

In addition, states have often acted as if welfare reforms should drive other programs. For example, Texas developed planning guidelines for local workforce boards that began with the following sentences (TWC, 1996):

The thrust of state welfare reform is a "work first" approach to assisting people in moving from dependence on welfare programs to economic independence through employment. . . . The Texas Workforce Commission was created to implement legislative changes in the way welfare and employment programs are delivered in support of the "work first" approach.

These guidelines encompassed nearly allworkforce services ranging from JTPA programs for disadvantaged adults and dislocated workers to Food Stamp Employment and Training, as well as JOBS for welfare recipients. In addition, the first goal for the workforce system as a whole was the following: "Increase the percentage of Texans who become and remain independent of public financial assistance" (TWC, 1996, p. 6).

Similarly, Wisconsin has made its highly touted Jobs Centers the heart of its W2 (Wisconsin Works!) program. Where once they served as the gateway to a broad array of services for many diverse population groups, they are fast becoming welfare/workforce service centers. Other groups are going to be more likely to turn to their community or technical college for assistance rather than a local Jobs Center. Only the Regional Training Centers and employer-supported incumbent worker training appear to have relative immunity from W2 in Wisconsin.

The implementation of the new federal Welfare-to-Work (WtW) Grant program, providing additional federal funds for welfare-related training, will only exacerbate this phenomenon. In many states, funds for WtW, TANF (Temporary Assistance to Needy Families), and FSE&T (Food Stamp Employment and Training) will account for the largest single share of their workforce development funding; in Massachusetts, for example, fully 40% of Regional Employment Board (REB) funds derive from the state's welfare agency. As Pressman and Wildavsky (1973) and others have noted, policymakers' attention tends to be drawn to those areas with the greatest growth in funding or which are perceived in some way to be "hot" policy areas.

Alienating Employers

One goal of states' workforce development reforms has been to better serve employers as one of the system's primary customers. Historically, state workforce programs, most especially the much-maligned Employment Service (ES), have been criticized for doing a poor job of matching workers and employers. One result has been that ES has lacked credibility with employers and has tended to serve disproportionately the lower reaches of the labor market. While government contractors and other employer groups may have been required to list their openings with them, ES has generally not penetrated the ranks of managerial, administrative, professional, and other high-paying jobs very well.

As the emerging workforce development systems attempt to address this issue and more fully engage employers at all levels in the labor market (see Section IV), they have worked hard to build their credibility by assessing participants, providing them with improved services, seeking to train only for occupations in demand, and even "guaranteeing" their trainees. But with the onset of welfare reform, workforce systems are finding themselves in the uncomfortable position of referring large numbers of inadequately assessed, poorly trained, and inexperienced workers to employers for any job that they might have open. This has the effect of alienating the very employers whose support they need. The following statement, from a manager of a Dallas Career Center, indicates the problems of alienating employers through "work first":

I don't think that [it] is doing a service to the employer or the individual. . . . I would lose the employers who are the customers of the center, and I can't afford to lose them. The board will fire Lockheed Martin if we're just throwing bodies at employers.

This approach thus undermines state efforts to serve employers more effectively than in the past. It also jeopardizes employers' faith in the other trainees in the system.

Local/State Tensions

To the extent that states' welfare reform strategies reflect coercive, top-down policies, they are also in direct conflict with the broader workforce reforms which encourage greater local discretion in nearly all aspects of workforce development policy. Local workforce boards and PICs are increasingly resisting state efforts to circumscribe their discretion. Examples of such resistance can be seen in Dallas, where the local WDB has delayed shouldering full responsibilities for welfare recipients because of the divergence between their preferred practices and the treatment prescribed for this population. The potential liability incurred for failure to meet work participation requirements under federal welfare reform is also a deterrent. Similarly in Massachusetts, local REB center staff expressed concerns that devoting such large shares of their time and effort to welfare reform and "work first" contradicted their customer-driven mandate, causing them to neglect their customers who wanted services in favor of welfare recipients who did not want to be there. "Work first" has also alienated numerous CBOs, which had been their partners.

Local boards in Michigan also expressed similar sentiments, complaining that they "lacked autonomy" to design appropriate service strategies for welfare recipients. Boards found themselves operating market-driven, economic development type programs for most populations they served, while responding largely to top-down political pressures for welfare initiatives. A local official noted about the state's "work first" program, "Obviously this is an instance where the local WDBs are not having much autonomy."

In summary, the effects of welfare reform and "work first" on state efforts to reform workforce development systems have been largely negative. To be sure, some have welcomed the switch from welfare agencies as places checking eligibility for entitlements to programs that encourage or pressure welfare recipients to become self-sufficient. In addition, some states have experimented with new efforts to train welfare recipients in relatively short periods of time. On the whole, however, state reforms have been distracted and undermined--"hijacked"--by "work first." Welfare reforms create conflicts in goals and objectives, adverse effects on state efforts to create a customer-driven focus, greater stigma for welfare clients, increased employer alienation, and enhanced local/state tensions. The tendency to treat welfare recipients as the "undeserving poor" creates an increasingly fragmented, rather than more holistic, workforce system.

Furthermore, these enormous costs to workforce development will come without creating any substantial benefits to welfare recipients themselves. The latest research shows that participation in "work first" programs benefits taxpayers more than participants, for whom it generally yields significant impacts on employment only in the short run (Bloom, 1997; Friedlander, Greenberg, & Robins, 1997). Over the longer run, "work first" offers little hope of improving participants' employability and earnings or of contributing to states' economic progress.

Finally, the prospects for the future are discouraging. The current period in which "work first" has been implemented has been a time of economic growth and low unemployment, but no one believes that business cycles have come to an end. If as a nation we fail to improve the academic and occupational competencies of welfare recipients now--during a period when the economy is robust, state and federal treasuries are relatively full, and time limits have yet to expire for most welfare recipients--the problems of doing so will be even more difficult later on when the economy takes a serious downturn. In every dimension, welfare "reform" is short-sighted.

[26] It is worth noting that we have always treated welfare recipients differently. It has generally been acceptable, if not standard practice, to "regulate the poor" in most aspects of their behavior (see Piven & Cloward, 1971), when such restrictive approaches would be rejected for most others. In fact, efforts for welfare recipients have never really been part of the broader mainstream workforce development system in most states.

[27] Texas has gone so far as to put a 1% limit on welfare spending in its constitution.

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SECTION 5 THE ROLE OF WELFARE "REFORM" AND "WORK FIRST"