Welfare-to-Work Policy: Employer Hiring and Retention of Former Welfare Recipients

The focus of the new U.S. welfare reform legislation is to move welfare recipients into jobs. There is widespread agreement that at least three components of this transition should be reflected in the measurement of a state's performance with respect to this objective: The percent of eligible TANF recipients who begin work; The percent of those beginning work who retain that job; and The quality of the jobs represented in (1) and (2) above. This papers addresses two issues raised by these challenges. In particular, we use administrative records to identify which industries primarily hire former welfare recipients (incidence) as well as the observable characteristics of hiring entities in addressing objective. We discuss whether there is firm specific persistence in the hiring of welfare recipients to address issue. Finally we measure job quality by both how long the job lasted and whether the recipient returned to AFDC rolls to address issue (3). The particular database used consists of confidential unit-records that includes all employment and earnings information reported by one state's employers who are required to submit such quarterly reports to comply with the state's unemployment compensation law.