Employer Incentives in Welfare Reform

One of the main concerns in the implementation of CalTAP is obtaining placements for thousands of people who have minimal or negative experience in the job market. Employers, accustomed to screening out such applicants, are naturally hesitant to open themselves to the risks.

• Hiring more employees instead of using overtime to expand capacity may lead to more layoffs when the workload is down, increasing the unemployment taxes paid by the company.
• Worksite accidents by people who may have minimal training and no experience in basic industrial safety principals may raise workmen's compensation rates.
• Concerns about theft, discipline issues, and the time and expense of dismissing an employee for unsatisfactory performance will cause employers to request exemption from the normal employee protection mechanisms.

 These are very valid and predictable concerns, and clearly some sort of accommodation will have to be made to encourage employers to participate in the welfare reform effort. However it is important to design systems with the desired short and long term results in mind, including:

• Creating access to the workforce for large numbers of people who would not normally be competitive applicants without completely disadvantaging other entry level work applicants. It would not be desirable to force people onto welfare just so they can get a job.
• To create a system in which people are hired into "entry level" rather than "dead end" positions that will never lead to a living wage or meaningful employment. "New jobs" created solely for the incentive, with no intention on the part of the employer to provide permanent employment or any transferable training, will only provide the illusion of short term success. Experience has proven that this is not a good method of moving people towards self-sufficiency. As soon as the incentives are gone, they are very close to back where they started.
• Discouraging the replacement of current workers with welfare recipients who come with "incentives". Historically, even when provisions prohibit this practice, enforcement is almost seldom attempted. Many of those displaced may be legal immigrants who will not have access to food stamps or possibly even TANF (depending on the final legislation and budgets).
• To avoid increasing the number of jobs by reducing the hours of already underemployed workers. This will merely keep people cycling through the public assistance programs until their time limits are expired.
• Most importantly, not to accidentally create an "underclass" of workers who have no rights and may be punished for complaining about unsafe work environments, abuse, or harassment on the job.

 Clearly employers will incur additional cost and risk by accepting some welfare recipients into their workplace, but the "solutions" should not be as simplistic as giving employers money or eliminating their responsibility to provide basic workplace protection to all of their employees equally. The design of the system will determine the success of the program for both taxpayers and applicants.

 A modified version of the Temporary Public Employment program (TPE) would avoid many of the pitfalls. TPE, normally activated to help workers displaced as the result of a disaster, a non-profit becomes the Employer of Record, which develops positions and matches applicants (usually referred by the EDD) with employers. Standardized time cards are verified and submitted to the Employer of Record from every worksite and paychecks are mailed directly to the employees. The advantages are obvious.

Payroll taxes, workmen's compensation, unemployment, and disability are not the responsibility of the worksite. Employees should receive the equivalent to other employees in the same position with the same qualifications, with the Worksite responsible for 50% and the Employer of Record responsible the other 50% plus all payroll taxes. (The Employer of Record would issue the check for the entire amount and bill the worksite for their portion monthly). Depending on the level of training and employer commitment, the subsidy would be paid up to a certain cap (either length of time, hourly wage, or maximum amount).  

• At a pre-agreed upon time, the worksite would assume responsibility for the employee (or not), giving him/her all benefits available to other employees at the same level and length of employment. At this point (possibly 6 months) the employee would have had a chance to learn and demonstrate acceptable workplace habits and the risk level should be less than with a regular new employee.
• If there is a problem in the initial 30 - 60 days, the Employer of Record could be contacted to mediate, attempting to find a mutually acceptable solution in coordination with the DSS caseworker, such as additional training for the employee, switching worksites, or termination. This will be to the advantage of both the employer and employee.
• Contracts should be issued for fixed periods of time with written progress reports required by both the worksite supervisors and the employees. There could be no requirements for keeping these employees on permanently, but employers who consistently terminate within 6 months after the subsidy stops, would not be eligible for future contracts.
• The Employer of Record would be available for employee questions regarding appropriate work requirements and behavior and also to arrange emergency support if the employee is having problems with transportation, childcare, etc.
• Individual employees may require 2 or 3 placements as the economy changes or their skills increase.

 The Welfare Reform Employment Program could differ in two main ways from the disaster relief TPE program. Under TPE, worksites must be either non-profits or public agencies and the work must have some relation to the disaster recovery effort. Also, the TPE goal is not meant to be permanent employment or skill enhancement, only a paycheck until the normal economy is re-established. Relatively low maximum payments for individual employees insure that placements are only entry level and often menial jobs. This would not be advantageous in welfare reform, and employee advancement on the job should be encouraged for those who prove themselves.

 Payment for the Employer of Record would have to include the wages and taxes, hardware and software for administration, a staff of job developers and counselors, and travel for worksite visits and monitoring. Some of these tasks could be performed by the DSS. The Internet could also be utilized to identify openings and place resumes for employers to browse.

 Funding for this program could be from the amount budgeted for employer incentives, and should not exceed the $10,000 per person tax credit that has been proposed. The advantages of a Welfare Reform Employment Program benefit both the worksite owner and the employee. First, the $10,000 amount has no relevance either to the amount of cost / risk to the worksite or to the level of training and increased employability for the employee. It has the appearance of more of a bribe to convince the employer to set aside valid reservations about the applicant. Secondly, it eliminates the need to reduce employee protection in the workplace (selectively or blanketly) by removing most of the risk from the worksite owner. Thirdly, in the event of abuse, the Employer of Record can immediately intervene and take appropriate measures, which would be more difficult under normal circumstances.

 Ideally, Employers of Record would be local non-profits or service agencies with experience in job training, development, and placement in each county or city. Possibly some sort of partnership between the DSS or EDD and local agencies could be worked out. This has been demonstrated to be effective after several disasters when the member organizations of La Cooperativa in Sacramento oversaw employment for thousands of displaced farmworkers in affected counties.

			Cristal Verde

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