Give Me Your Poor

Is hiring employees from the welfare rolls worthwhile? Yes. Is it easy? No

Craig Hoekenga's memories of the public hearing are vivid and painful. In the summer of 1995, Hoekenga was preparing to move his growing circuit-board company, Microboard Processing Inc. (MPI), from Stratford, Conn., to a larger building in nearby Trumbull. He thought the hearing, a public forum for Trumbull's residents, was simply a formality. "The town council welcomed us with open arms," recalls the soft-spoken CEO. But a few of his prospective neighbors felt otherwise. One woman took the floor and asked pointedly, "Are you going to allow your employees to go outside during break times and lunch?" Hoekenga thought she was joking. "Well of course we will," he responded lightheartedly. The woman burst into tears. "I'm afraid for my children," she cried. Later, another resident cornered Hoekenga and threatened to use every means at his disposal to prevent MPI from moving to town. "You won't need to," Hoekenga said. He had abandoned his plans to relocate to Trumbull, sadly concluding, "Either the door is open, or it's closed."

Hoekenga's own door is clearly open. Over the past 12 years the CEO has gone out of his way to hire people that most company owners wouldn't even interview: former welfare recipients, convicted felons, and recovering drug addicts. Some of his employees fit into all three categories, provoking the kind of "not in my backyard" resistance that Hoekenga encountered in Trumbull. Indeed, he has battled the same attitude within his company. "When I first proposed hiring welfare recipients, the staff didn't support it," he says. "It wasn't that they didn't think it was worthwhile. They just thought that in a competitive marketplace, it would drain our organization."

That was back in 1988, when MPI was a five-year-old company with 50 employees and $2.5 million in revenues. Then, Hoekenga was simply trying to do the right thing, as he is now, and he forged ahead in spite of the protests. But as it turns out, his commitment to hiring people with troubled backgrounds also makes good business sense. At a time when Connecticut's unemployment rate is at its lowest in 10 years, the now-$35-million company has tapped a reliable pipeline of well-trained entry-level workers.

Hoekenga is doing exactly what President Clinton had in mind in 1996, when he signed the Personal Responsibility and Work Opportunity Reconciliation Act. That piece of legislation is aimed at moving welfare recipients into the workforce by imposing strict time limits on the public assistance they can receive and by shifting power and money to the states to create back-to-work and training programs. But among small-business owners, Hoekenga is in the minority. The Welfare to Work Partnership, a national group comprising 12,000 businesses, reports that 30% of the members with fewer than 250 employees have yet to hire their first former welfare recipient, compared with only 10% of the large companies that are members. And a recent survey conducted by the Florida State Wages Board and the National Federation of Independent Business showed that while employers said they believed in hiring former welfare recipients, only 25% of respondents had in fact knowingly done so. "Small businesses need more help getting started," says Eli Segal, president and CEO of the Welfare to Work Partnership. "They may not know how to access government, and they often don't have the resources to partner with job-training organizations."

But trouble getting started isn't the only thing holding small companies at bay. There's also trepidation -- some of it justified. People freshly off the welfare rolls sometimes overwhelm bare-bones human-resources departments. Difficulty securing transportation and child care may result in employee tardiness or absenteeism, which can take a big toll on small organizations. Add to the equation a mountain of paperwork imposed on those businesses by government agencies, and it's hard to imagine why any employer would choose to wade into these waters.

Yet some do, and in many cases their companies are stronger for it. The employers who are most successful, experts say, go into the situation with their eyes wide open and form partnerships with community-based organizations, or CBOs. Hoekenga works with a local nonprofit CBO, for example, that trains people who are on public assistance and places them in jobs. The CEO certainly considers MPI a success story: over the past nine years it has hired more than 30 former welfare recipients and promoted half a dozen of them to supervisory positions. And although Hoekenga has endured his share of difficulties in the process, he's well aware that his trials pale in comparison with those of his employees, some of whom have known extreme poverty, drug addiction, and domestic violence.

Admittedly, such histories take a toll on worker performance. MPI's retention rate for former welfare recipients is just 50%, compared with 80% for employees from more stable backgrounds. "They bring so many problems with them," says Hoekenga. "Outside influences like abusive boyfriends or drugs can drag them back into the pit they were in before they came here." Hoekenga hopes to raise the retention rate among his welfare-to-work employees to 75% by hiring them directly from Training, Education and Manpower (TEAM), the Derby, Conn., social-services agency with which he has developed a customized training program. The program runs for 8 to 10 weeks and covers basic workplace skills as well as specific subjects, such as an electronics-industry quality standard. Hoekenga has pledged to hire 20 people from TEAM over the next year.