Indeed, CEOs who hire from the welfare rolls are careful to distinguish between a second chance and a free ride. Hoekenga grants welfare-to-work employees a six-month grace period, during which tardiness and productivity issues are dealt with gently. After six months, those workers are treated like everyone else and held to the company's "three strikes and you're out" rule: Anyone who is habitually late, absent, or unproductive is fired.
Others believe that any preferential treatment is a mistake. Scott Hauge, CEO of CAL Insurance, in San Francisco, recalls that one of his welfare-to-work employees took what added up to 27 days of sick leave in her first year at the company. "It was so disruptive that we finally had to release her," says Hauge, who admits he had let the situation get out of hand. "Our first lesson was, whomever you hire, let the standard of the company apply to everyone. You don't lower your standard. You don't allow a person to not show up for 27 days. That was absurd." Hauge says he did another welfare-to-work employee a disservice by promoting her too soon. "It was done in good faith, but we made a mistake by promoting her beyond her capabilities," he recalls. "She ended up leaving."
The promotion may have been a mistake, but it was committed for a good reason. Although many former welfare recipients bring transitional benefits to their jobs, the clock is always ticking. "What happens at the end of two years, when they don't get subsidies for transportation, health care, and child care?" Hauge asks. "They won't be able to live unless they've moved up the wage scale." A dead-end job can be a ticket back to public assistance, he says. And that would leave him back where he started: recruiting yet another employee for an entry-level position.
The situation grows thornier as the best-qualified people are snatched up, leaving companies to recruit from a population designated by welfare case workers as "hardest to serve." "Many people are not in a position to work," says Peter Edelman, a professor of law at Georgetown University Law Center and former assistant secretary for planning and evaluation at the Department of Health and Human Services. "They've got chronically ill children, or they're caring for an infirm relative. Then you have people with depression, drug and alcohol problems, and domestic-violence issues." Such cases account for many of the 40% of former welfare recipients who have left the rolls but don't have jobs. Edelman calls them "America's disappeared."
Implementing traditional means of job placement for those people is like "trying to chop a tree down with a hammer," says Rob Franciose, co-owner of ETI Managed Work Services, in Portland, Maine. Franciose and two partners founded the company in 1993 as a private-placement agency for people with disabilities and soon expanded their services to include welfare recipients. Companies outsource jobs -- or entire departments -- to ETI, and ETI fills those positions with its contractors. The outsourced jobs, generally low-wage, entry-level positions, are intended as transitional employment. "There's a site manager and job coaches who train people and work with them on self-confidence and job development," says Franciose. "In essence, it's a school, but you work." Employees remain at the company until they're ready for more permanent employment. Twenty percent end up working for the host companies.
"It's a very important source of stable employees," says Peter Wiberg, a human-resources representative at the Portland division of EM Solutions, a $100-million maker of computer cabinets and an ETI customer for three years. Depending on its needs, the Portland division fills 10 to 15 positions with ETI workers and deploys three coaches on-site. "They bill us per unit produced, plus an administrative fee," says Wiberg. "We don't have to deal with turnover or workers' compensation or health insurance." A dozen ETI employees have joined EM Solutions full-time. "They're very loyal and hardworking," Wiberg says.
"We want our best employees to leave," says Franciose, who puts the permanent-placement and retention rates for workers who "graduate" from ETI at about 80%. That success has attracted national attention: recently, the company was hired by the Enterprise Foundation, a nonprofit founded in 1982 by the late real estate developer James Rouse and his wife, Patty, to help duplicate its model in Baltimore; Washington, D.C.; St. Louis; East Palo Alto, Calif.; and San Antonio.
Companies like ETI will likely prosper as low unemployment continues to draw harder cases into the workforce. But if the economy goes south, demand for even the most employable welfare recipients is bound to drop. "If I can go out and get a bunch of seasoned workers because supply and demand has shifted, I'm going to cherry-pick and take the best," says Frank Tucker bluntly. "I might take some welfare-to-work people to help the community, but I won't do it at the level I'm doing it now."
Tucker says the only way to keep welfare-to-workers working is to make them "the best" at what they do. Toward that end he recently sent 20 employees to a training program where they earned advanced industry certification and, subsequently, higher wages. "We have a window of opportunity now to help these workers," Tucker says. "We have to get these people in at the entry level so that they become the highest skilled and most in-demand workers even when the economy softens."
That attitude is not unexpected from someone who once served as a social worker at Rikers Island. But Tucker scoffs at any suggestion that his actions are prodded only by a do-gooder's agenda. "It's just a smart investment," he says.
