Benefit Conditionality in the U.S. Welfare System and How it Applies to WIA Jason Turner, Heritage Foundation Former Chief Administrator of New York City’s Welfare and WIA System ( )

Conditionality—Requirements that recipients of government benefits reciprocate in exchange for assistance. Welfare is the program to provide income support and employment for the lowest income parents of children, mostly with marginal prior work backgrounds. Benefits are conditional. WIA for adults is more broadly intended to help low and moderate income workers who are mostly unemployed find work or receive skills training. Services are mostly voluntary.

Policy—To improve TANF employment effectiveness. Administrative—Requires agency management improvements. Ethical or Philosophical—Supports public wishes for reciprocity. U.S. Welfare Conditionality has Three Significant Features:

Conditionality in welfare resulted from public dissatisfaction with unconditional distribution of benefits without expectations of self-help. Welfare incorporates conditionality as a central part of its program; it is possibly its single most important feature of its required work program.

During the 1980’s conditionality was incorporated into the welfare program in the form of “participation,” or attendance requirements in welfare-to-work programs. The 1996 major welfare-to-work reform (TANF) increased the numbers of recipients who could be required to participate, and increased the expected level of effort. Proportion of those expected to be actively participating: 50%. Number of hours/week of activity required: 30.

Human Resources Administration CA Weekly Report—October 25, 2009

Human Resources Administration CA Weekly Report—October 25, 2009 (cont.)

Human Resources Administration CA Weekly Report—October 25, 2009 (cont.)

Communicating with potential applicants and current recipients. Maximize enrollment in work program. Start participation immediately start participation immediately of assignment. Management Elements of “Full Engagement” in Work Activities

Have a suitable work activity available for everyone. Follow every individual to assure they are meeting their participation obligations (tracking). Impose swift penalties for non-compliance in required activities. Management Elements of “Full Engagement” in Work Activities (cont.)

Keep goal of private employment topmost in mind and continuously look for employment while engaged in other program activities. Use performance payments to signal to employment vendors what their program objectives are. Adopt data-driven continuous improvement measures for local and state agencies. Management Elements of “Full Engagement” in Work Activities (cont.)

How the Texas WIA Program and the New York City’s “Welfare to Work” Program Used Similar Management Tools to Boost Employment Effectiveness

Program Feature Welfare (TANF) NEW YORK CITY (1998 – present) Unemployment (UI) TEXAS (2003 – present) Former program emphasis-Fast approval and initial payment to recipient -Accurate ongoing payments to recipient -Fast approval and initial payment to recipient -Accurate ongoing payments to recipient Revised program emphasisEmployment leading to caseload reduction Early re-employment and increased use of the program by employers for recruitment purposes Conditionality MeasureRequired and measured participation in work-based programs for those receiving cash welfare benefits. Required and measured number of weekly applications for employment by those receiving UI benefits Immediate enrollment in employment activities Job search required beginning at the time of initial application for benefits Job search required at the time of approval of application for benefits Significant effort required by recipients of benefits At least 30 hours per week of participation in program work activities Applications made to at least three employers per week; local agency has authority to increase this standard.

Program Feature Welfare (TANF) NEW YORK CITY (1998 – present) Unemployment (UI) TEXAS (2003 – present) Measuring the level of required participation to assure compliance by recipients Weekly “engagement reports” show the participation status of 100% of caseload Agency tripled the number of contacts with employers to measure the applications confirm individuals applications were received were actually made. Reducing benefits to participant if not attending Cash benefits reduced if recipient stops attending work program UI benefits terminated if minimum number of job applications to employers are not made Main performance measure for local agency offices -“Full Engagement”, or assuring that all recipients are accounted for and partici- pating in work program activities, or in the process of entering activities -Number of employment entries. -Proportion of new UI applicants that are placed into employment within the first ten weeks. -Proportion of posted job openings filled by agency. -Percentage of all local employers using the program. Paying employment vendors for success All payments to employer vendors are made on the basis of employment entries. WIA One-Stops have discretion to use financial rewards to employment vendors for job placement.

Program Feature Welfare (TANF) NEW YORK CITY (1998 – present) Unemployment (UI) TEXAS (2003 – present) Employer satisfactionJob retention measures tracked for performance payment to vendor and calls made to employer where there are problems with new employee Proportion of local employers using the One-Stop system is tracked. Continuous improvementRegular scheduled operations meetings between local and central office management teams with heavy emphasis on performance data. Ranking of local offices based on performance. Long-term local agency performance tracking with incentive bonuses for best agencies. Ranking of local offices based on performance

Texas Re-employment Rate (Within 10 Weeks of Unemployment) Conditional Changes 2Q/3Q 2003 Placed One-Stops under requirement to measure how many get jobs within ten weeks of unemployment application (plus three other new measures) Merged WIA and unemployment assistance to in order to place management emphasis away from benefits and onto employment

Conditional Changes 4Q 2004 Increased to three the number of required weekly applications for employment Increased agency monitoring of weekly applications for employment Texas Re-employment Rate (Within 10 Weeks of Unemployment)

TANF eliminated entitlement formula funding for cash benefits. Replaced by fixed formula grants to states with required state share. Block Grants Have Policy Implications

Made it easier for federal government to enact conditional program requirements. Placed pressure on state governments to move recipients into labor force. Stabilized federal expenditures as compared to prior upward trajectory. Total Before (Billions) 1990–221995–30 (+27%) Subset Federal 1990–121995–16(+33%) Trend After (Billions) 1997–232001–25 Major Program Implications

Conditionality of welfare payments on the receipt of public benefits has certainly contributed to the success of the 1996 welfare reforms. Conditionality usually operates in conjunction with a benefit such as cash assistance or unemployment benefits. However it can operate less broadly in conjunction with a non-monetary requirement, such as enforcement of certain laws. Lessons for the European Commission

To adopt conditionality into a program is not only a matter of policy—it requires a tremendous commitment in administrative attention and resources, and requires political determination to succeed. European governments wishing to adopt conditionality as a feature of some of their programs for the underemployed should look for ways to connect in addition of conditioned requirements to accepted norms and values of the electorate. Lessons for the European Commission (cont.)

To adopt conditionality into a program is not only a matter of policy—it requires a tremendous commitment in administrative attention and resources, and requires political determination to succeed. European governments wishing to adopt conditionality as a feature of some of their programs for the underemployed should look for ways to connect in addition of conditioned requirements to accepted norms and values of the electorate. Lessons for the European Commission (cont.)