Employer-based training programs for TANF recipients: a public policy examination.

• Author: Ellis, Nan S.
• Position: Temporary assistance for needy families

INTRODUCTION

Although the United States is one of the most affluent nations in the world, a substantial number of people in this country continue to live in poverty. In 2003, 35.9 million people lived below the poverty threshold, 16.7% of whom were children. (1) Policy makers have continually struggled with how to address the persistent issues of poverty, joblessness, and homelessness. The most recent round of discourse on welfare reform culminated with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ("PRWORA" or "Act"). (2) One of the central features of PRWORA was time-limited welfare and work requirements; under PRWORA, work is seen as the way out of poverty.

Perhaps because of the Act's increased focus on employment, numerous training programs have been designed to help welfare recipients make the transition from welfare to work. The public sector has been offering such programs for years, and these programs have been the subject of extensive evaluation. (3) Most studies report modest success at best, with increased earnings resulting from a greater number of hours worked, rather than from higher wages. (4) Overall, research has revealed little evidence of long-term employment, advancement, or retention as a result of participation in these training programs. (5) The private sector naturally offers training designed to increase the skills of its employees. More recently, some private sector companies, such as the Marriott Corporation and United Parcel Service, have begun to offer training geared to the welfare population and to work in partnership with public sector training programs or training providers under the Workforce Investment Act ("WIA"). (6) Limited research has focused on the employers' role in welfare reform, so called "demand-side" research. (7) The demand side is particularly important given the emphasis on employment as a panacea for welfare and poverty. In other words, if we expect welfare recipients to work their way out of poverty, we cannot focus solely on workers. Instead, we must also recognize the employers' role in the labor market. Researchers and policy makers are beginning to recognize the importance of the demand side in welfare implementation. Some research has focused on employer-based training models, (8) some research has looked at employer attitudes toward training and development, (9) and some studies have considered employer attitudes toward hiring, retaining, and promoting welfare recipients. (10)

One type of training that shows promise is employer-based training ("EBT"). EBT is training that is typically employer-initiated and customized to meet the needs of the employer. It involves an extensive assessment of the employee's skills and job performance. (11) Although research into EBT is just beginning, results suggest that EBT is beneficial. (12) There are indications that EBT programs might offer better opportunities for at least a segment of the welfare population. (13) In addition, people are just beginning to recognize the importance of post-employment training and development if former welfare recipients are to remain and be promoted in the workplace. (14)

The purpose of this Article is to investigate the strengths and weaknesses of EBT programs and to consider whether it is desirable for such programs to be supported by TANF reauthorization. To accomplish this goal, it is important to understand the landscape of workforce training and development for welfare recipients. The work requirements imposed under PRWORA were not a new idea; work requirements had been part of the public policy agenda for years. (15) Furthermore, training and education programs designed to aid welfare recipients in the transition from welfare to work were common under previous law. (16)

Part I describes public sector training and education programs common before PRWORA as well as their philosophical underpinnings. This Part briefly outlines the limited success of such programs and the philosophical shift from a human capital development approach to a work-first approach. This shift led to a reduction in support for public sector education and training programs geared to the welfare population.

Part II explores training in the private sector and considers the theory behind private sector training advanced in economic literature. Under this theory, employers are most likely to provide job-specific training, and train those who are highly educated and likely to remain employed for a long period of time. Hence, employers are unlikely to provide training to the welfare-to-work population and other low-skilled employees. In recent years, some firms have begun offering training programs geared to the welfare-to-work population. Some firms have offered what is termed "employer-based training." Part II describes these EBT programs and considers their viability as an alternative to public sector training programs. Part II concludes that EBT programs offer significant advantages over purely public sector training programs for segments of the welfare-to-work population.

Part III considers the theoretical and practical limitations of workforce training as a solution to poverty. Part III concludes that although EBT programs do not offer a panacea for poverty, and are not the solution for all segments of the welfare population, they will make the transition from welfare to work easier for a portion of welfare recipients. Lastly, Part IV considers how EBT programs can be supported through public policy.

1. THE LANDSCAPE OF TRAINING AND DEVELOPMENT

   In a Clinton Administration, we're going to put an end to welfare as we know it.... We'll give them all the help they need for up to two years. But after that, if they're able to work, they'll have to take a job in the private sector, or start earning their way through community service. (17) U.S. welfare policy is a policy of ambivalence. (18) On the one hand, we want to provide assistance for those unable to provide for themselves. On the other hand, we fear that such assistance will provide long-term dependence. (19) To a large extent, this ambivalence is essential to understanding the landscape of training and development in the welfare context.

   1. The Statutory Landscape

      The statutory landscape of workforce training and development in the welfare context was historically comprised of a myriad of overlapping schemes. The primary method of providing assistance was under Aid to Families with Dependent Children ("AFDC"), created by the Social Security Act of 1935. Training and development was governed largely by the Job Training Partnership Act ("JTPA") of 1982. (20) Although not limited to the welfare population, Title II-A of the JTPA was designed to provide training for disadvantaged youth and adults. (21) Later, the relationship between welfare delivery and workforce training and education was complicated by the creation of welfare-to-work training programs, such as the JOBS training programs authorized by the Family Support Act of 1988. (22) All of this changed in 1996 with the passage of PRWORA.

      1. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996

         PRWORA replaced AFDC with Temporary Assistance for Needy Families ("TANF"), and replaced the entitlement programs with block grants to the states to administer TANF programs. (23) Most importantly for the purpose of this Article, work requirements were an integral part of the statute. (24) These requirements were imposed by the statute in two ways. First, state participation rates were mandated. In order to receive the full block grant, states were required to have twenty-five percent of families receiving assistance engaged in a "work activity" by the end of 1997. (25) The percentage rose to fifty percent by 2002. (26) Work activities were statutorily defined to include such activities as unsubsidized employment, subsidized private and public sector employment, on-the-job training, job searches within specified limits, community service programs, vocational training, and attendance at secondary school. (27) Second, the state was required to impose work requirements upon recipients who had received assistance for two years before they could continue to receive assistance. (28) Furthermore, an absolute time limit of five years to receive assistance was set forth. (29)

      2. The Workforce Investment Act of 1998

         The WIA replaced the myriad of existing job training and development programs administered under the JTPA (30) with three block grants to the states funding adult employment and training, disadvantaged youth, and adult education and family literacy. One of the major goals of the WIA was to streamline services. (31) To meet this objective, each local area established a one-stop delivery system offering multiple employment and training services serving both employers and job seekers. (32) The one-stop center allows clients to engage in job search activities, explore work preparation and career development services, and access a full range of employment, training, and adult educational programs at a single location. (33)

         The one-stop delivery system is envisioned as a community resource for all Americans to help them develop job skills throughout their careers. (34) To this end, the WIA set forth a multi-tiered access scheme. (35) There is universal access for all core services under the first tier. (36) Core services include job search and placement assistance, career counseling, provision of labor market information, and provision of information on eligible training providers. (37) Furthermore, assistance in establishing eligibility for welfare-to-work programs and in obtaining financial aid is available. (38) Although access to the WIA is universal rather than targeted, (39) if funds are limited, welfare recipients and other low-income individuals receive priority for training services. (40) The second tier provides intensive...