Working On Welfare

The Big Picture

Organizations representing the small-business community strongly support the welfare-to-work movement--but some of their members question the benefits.

It's not that these entrepreneurs don't need the workers. After all, hiring welfare recipients would ostensibly solve a pressing problem many firms face nationwide: a severe labor shortage. But there's much more to their needs than just willing hands; one fear business owners have is that those coming off welfare don't possess the education needed for many positions.

Their fears are not unfounded. According to a report from the Urban Institute for the Department of Labor's Employment Training Administration, a general profile of the welfare population reveals that 42 percent have less than a high school degree. (Seventy-five percent of the U.S. population aged 25 and older has a high school diploma.) On the plus side, however, 42 percent of recipients have earned a high school diploma or equivalent and another 16 percent have some college education. Seventy percent have recently worked, and the average employment experience is 4.2 years.

For firms in areas such as the service, retail and hospitality industries, which do not require highly skilled employees, matching these people with jobs may be possible. "Retailing is often the first employer of people coming into the work force, and we are eager to recruit," says Kathy Mance, vice president of research, education and community affairs at the National Retail Federation. The organization, which represents an estimated 1.4 million retail establishments, projects the industry will need 3 million new employees between 1994 and 2005.

While retail and related fields can absorb entry-level employees with rudimentary skills, manufacturing jobs and positions such as office clerks, secretaries and bookkeepers require workers with much more training.

"Manufacturers need skilled employees because entry-level positions require a different kind of person than [they did] five years ago," says Phyllis Eisen, executive director of the Center for Workforce Success at the National Association of Manufacturers. "Employees need communication skills as never before. With organizations flattening and more individual responsibility being pushed down to the front line, these new workers must be able to handle a [variety of tasks, including] a call from a customer.

"Manufacturers can't afford to [hire] someone who will cause a defect," Eisen says. "There is no tax break or subsidy valuable enough to accept reduced productivity."

Eisen says today's factory employees must also be able to work in teams and possess basic computer skills. And therein lies another major problem for many small businesses. In addition to being concerned that welfare recipients may not understand "soft" employment skills such as getting to work on time and working a full day, entrepreneurs often perceive that these individuals do not have the basic job skills needed.

"I would do anything to help individuals [on welfare]," says Julie Johnson McKee, owner of Rockford, Illinois-based Pacolet International Translations Inc. "However, as a business owner who has bills to pay and children to feed, I still have to look at the bottom line. I cannot bring in an employee who does not have good phone skills or a fairly solid basic knowledge of computers. We're just too small, and we don't make that kind of profit."

McKee is especially sensitive to the issue of hiring welfare recipients. For about 10 years in the late 1970s and early 1980s, the Illinois entrepreneur and her three children went on and off Aid to Families With Dependent Children. Today, McKee's 4-year-old firm has seven in-house workers and 300 contract employees worldwide. Pacolet International brought in approximately $750,000 last year.

While McKee is actively involved in welfare-to-work initiatives, other small-business owners think that in the abstract, having access to the new labor pool welfare recipients represent is a good idea--but they are concerned about whether these people can do the job with the minimal training businesses can afford to provide.

"The job I would have [involves] clerical work and customer service," says Frank S. Joseph, founder of Key Communications Group Inc., which produces The Federal Personnel Guide, an annual guide of federal employee rules and regulations. "We talk with dozens of federal agencies and individuals in the federal government selling, explaining and taking orders for our products. The person [in this position] has to keep in touch with our circulation management service and do filing and invoicing."

It's not an easy job, says Joseph, and one he is reluctant to fill with a person on welfare. "I think it's too scary to bring in a welfare recipient, knowing what I've read all my life about people on welfare," says Joseph, whose wife, Carol A. Jason, now owns the company, which is operated from the converted basement of their Chevy Chase, Maryland, home. "I figure they don't have the education and job skills [required]."

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: Working On Welfare.

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