Job program for welfare recipients falls flat

A central piece of the state's sweeping welfare reform, which sought to enlist Massachusetts companies to hire and train welfare recipients, has failed to attract employers and is virtually defunct, records show.

The program began with fanfare a decade ago, with the expectation that thousands of private employers would be lured through wage subsidies and tax breaks to actively recruit and hire welfare recipients.

But statistics show that business participation in the state's Full Employment Program has fallen dramatically from its peak of 500 employers in 1998 to only 32 businesses today, and the state has stopped enrolling new companies.

Now, with the number of people on the welfare rolls up since 2001, state officials are pledging to find ways to revamp the program and address concerns of employers. Employers have said the risks of hiring welfare recipients -- including high turnover and greater need for job training -- are not offset by the tax benefits. They have also complained the program is overly bureaucratic.

"The tax credit in and of itself will not be a determining factor in who gets hired," said William Nofsker, a Haverhill businessman who chaired a welfare-to-work advisory committee in 1996 under Governor William F. Weld. "The perk does not create jobs."

Under the program, employers who agree to give a welfare recipient a full-time job receive a $2.50-an-hour wage subsidy in the first year. If that employee is kept on after the first year, the employer receives a maximum $1,200 annual tax credit (with no wage subsidy) depending on how long the employee stays.

Nofsker said a revamped tax credit program may work, but only if it is accompanied by strong state-sponsored worker training programs and enthusiastic promotional efforts.

He said the current program was never promoted well. Out of curiosity, he said, he would periodically call up the state agency in charge of welfare-to-work initiatives, the Department of Transitional Assistance , saying he was a businessman who was hiring. Few of the workers seemed knowledgeable about the employer-incentive programs, he said.

When contacted by the Globe last week , the longtime president of the state's largest retail trade association said he had never heard of the program.

"Nobody has promoted it to me or my members," said Jon Hurst, who has been head of the 2,700-member Retailers Association of Massachusetts for 16 years.

Other employers said the program wasn't worth the problems. Theresa Senckowski, who helped manage a family-owned appliance business in Worcester, said she wanted to help welfare mothers "get further in life." In the late 1990s, her store hired about a dozen welfare mothers, but soon found "it was costing a lot to train" them and then "they weren't committed to stay."

She said her family decided to drop out because the incentives were not enough to compensate for the losses. Ultimately, "it was not as cost-effective as we thought it would be."

Employers have voiced similar complaints about other state and federal welfare-to-work tax credit programs, said Sarah Hamersma, a University of Florida economist who has studied them. She said many employers who hire welfare recipients don't even claim the credits because they want to avoid government bureaucracies or don't know about the programs. And those that do claim credits are largely national retail chains that employ thousands of workers in low-skill jobs and hire consulting firms to process the tax paperwork. She said such companies often cash in on federal tax credits for employing workers they would have hired anyway.

Some of the problems with the Massachusetts program became painfully evident within a couple of years of its debut, said Edward Sanders-Bey, assistant commissioner for policy at the Department of Transitional Assistance.

He said many companies bristled at the extensive regulations. Employers had to assign a mentor to each welfare recipient and set aside some of the state subsidy into a separate savings account for the worker. Every step had to be documented for the state.

As employers' complaints mounted, state officials stopped actively promoting the program.

State officials were also distracted by the early successes of the welfare overhaul. The roaring economy of the late 1990s helped put thousands of welfare recipients into jobs. Welfare rolls shrank from roughly 79,000 to 42,700 families between 1996 and 2001, aided by the new law, which required able-bodied welfare recipients to work and imposed two-year time limits on benefits for many families. State officials noted the fact that many welfare recipients were finding work in the private sector with companies that were not participating in the state's Full Employment program.

But since 2001, the welfare rolls are up, records show. Last month, 45,261 families remained on welfare. Many community leaders say the state must come up with creative solutions to meet the employment needs of the hard-to-hire welfare recipients, and a revamped version of the Full Employment Program may be part of the answer.

Lois Pines, a Newton Democrat and former state senator who was active on welfare reform issues in the late 1990s, said she questions why the state didn't make mid-course corrections to this program to keep it from dying.

Senator Therese Murray, the chief architect of the state's welfare overhaul, including the Full Employment Program, and now chairwoman of the Senate Ways and Means Committee, declined Globe requests for interviews about the program and its future.

State welfare officials say they also need to address another problem: the wariness of some people to reveal that they are on welfare, fearing it might discourage employers from hiring them. That makes it harder for firms to identify applicants who would make the companies eligible for tax credits.

Sanders-Bey said his agency is eager to come up with a new approach. He said the state may need to assume more financial and legal responsibility during the initial period after the employee is hired, and for on-the-job training, while making sure welfare recipients do not feel stigmatized.

"Let's learn from this experience," he said.

Patricia Wen can be reached at wen@globe.com.