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Just Connect

Common sense suggests that people find jobs by knowing the right people. The Clinton Administration is pondering a strategy for matching jobs to welfare recipients trying to get into the workforce.

By Rochelle L. Stanfield
National Journal, May 31, 1997

Knowing the right people counts. Getting a job, any job, is largely about connections. This fact of life is well understood by all the people who work on Capitol Hill, in the executive branch or for an interest group involved in shaping federal policy. Without connections, they know, none of them would be where they are.

But it's only now beginning to dawn on a few Washington decision makers that connections are also crucial to getting a job in an electronics assembly plant in Seattle, in an auto- repair shop in Brooklyn or in hundreds of other entry-level occupations with a future--the kind that welfare reformers envision for people on public assistance and that urban economic developers seek for residents of distressed city neighborhoods.

A group of senior Clinton Administration officials from the Treasury and Labor Departments and the Office of Management and Budget has been meeting quietly to ponder the question, how can we expedite the making of those connections? Christine Todd Whitman of New Jersey and a handful of other Republican governors are also looking at it. They are discovering that the whole concept of making connections is absent from federal policy on employment and training. So an answer, they're beginning to see, will require turning decades of policy on its head and overcoming enormous bureaucratic inertia, while confronting a variety of well-entrenched interests in the job-training and vocational education business.

Meanwhile, Congress, with official Administration support, is tinkering with conventional job-training assistance through amendments to the 1982 Job Training Partnership Act (JTPA). While the measure has stirred up considerable heat among constituent groups, advocates of fostering connections dismiss the exercise as irrelevant.

Beyond the Capital Beltway, the notion of facilitating job connections is not new. Since the late 1960s, a handful of community organizations have become expert in making matches between employers and potential workers. Groups such as the Center for Employment Training (CET) in San Jose, Calif., the New Community Corporation in Newark, N.J., and Project QUEST in San Antonio gain the trust of employers, who agree to take a chance on usually overlooked job seekers. In the meantime, they prepare applicants for the workplace and then help them keep the job once they're hired.

Common sense inspires this kind of workforce development. ``Most people find their jobs through connections, which do three things,'' explained William T. Dickens, a senior fellow at the Brookings Institution who was a senior economist for the Council of Economic Advisers in 1993-94. ``First, they tell you the job exists. You have an uncle who works at a company who says, `A job is going to open up tomorrow, be there at 10 A.M.' And you get the job.

``Second, the supervisor talks to your uncle to get information about you,'' he continued. ``That makes the employer feel more comfortable about hiring someone with no employment record. Third, they know that because your uncle helped get you the job, you're going to be on your best behavior, because if you screw up, your father is going to hear about it.''

MILLIONS OF MATCHES

That dynamic is absent among families with many members on welfare and in inner-city neighborhoods where few adults have jobs. What the successful community organizations do, Dickens continued, ``is focus on what's missing in those neighborhoods.''

Many of these community-based matchmakers started out as local political organizations, so they know the neighborhood and its families and thus can act like Dickens's hypothetical uncle. They also connect in a very personal way with local firms, even using the employer's equipment and enlisting its supervisors as instructors to train applicants to be workers. Unlike the federal government's conventional job banks, they're able to make matches because they have earned the trust of both sides.

These organizations work mainly outside federal job- training programs. Although they patch together various sources of federal, state and local assistance, they are financed primarily by foundations.

``We haven't sought any federal aid, because I don't think it's a good approach,'' said Gary G. Mulhair, president of Pioneer Human Services in Seattle, a nonprofit group that trains and employs hundreds of ex-offenders and others who have had trouble finding or keeping a job. ``I think it's bullshit.''

Many nonprofit organization executives, foundation officials and academic researchers who've been studying the problem say they agree. But they also acknowledge that the scope of the undertaking will require federal involvement.

Even the most successful of the community-based groups can train and place only hundreds of workers a year. But just to meet the work requirements of last year's welfare reform law will entail making millions of matches. And that doesn't count the working poor, the unemployed and the underemployed, and dislocated workers, who are the traditional targets of federal programs for employment and training.

Those trying to design a new policy haven't yet decided what the federal role should look like, but they are convinced that it must take an approach that is radically different from current job-training programs, which simply provide job seekers information about vacancies.

The job-training bill before Congress would merely streamline this information flow by consolidating dozens of separate programs into three block grants and establishing local one-stop centers where job seekers can learn about employment opportunities. The House-passed bill attempts ``to be more efficient, not better connected,'' said Bennett Harrison, a professor of urban economics at the New School of Social Research in New York City. ``Connectedness requires relationships, which simply cannot be standardized.''

Advocates of a new approach are similarly skeptical of traditional federal aid to employers in the form of tax credits for hiring targeted categories of job applicants, such as veterans, the disabled, the poor or--under the balanced budget deal struck by Congress and the White House--welfare recipients. Most studies over the years show that these credits did little more than provide a windfall for employers who would have hired the same kinds of workers for the same jobs even if the government had not bothered to help.

Nonetheless, the framers of workforce development proposals are looking at some form of tax incentive because that's one of the few politically acceptable ways these days to pay for government initiatives. They're carefully examining the concept behind the low-income-housing tax credit, a complicated and indirect tax break for businesses that invest in affordable housing.

In fact, the workforce development policy planners are looking at the entire phenomenon of affordable housing development over the past two decades as a model. They see housing as a natural parallel to job searching because many of the community-based groups involved in job connections got their start in housing and learned how to package business deals by using the low-income-housing tax credit.

Others are wary of simply copying the housing model. ``It is an interesting analog but very imperfect because, in the end, [with housing] you're talking about very concrete things,'' said Gary Walker, president of Public/Private Ventures, a nonprofit consulting and research organization in Philadelphia. ``Developing the workforce is fuzzier.''

LIKE HOUSING, LIKE JOBS?

Among the many reasons for choosing affordable housing as a model for a new workforce development policy is the fact that it is a success story. And it is the kind of tale very popular right now: private, nonprofit community-based organizations, usually called community development corporations (CDCs), triumphing where entrenched bureaucracies have failed.

The community-based organizations involved in workforce development now ``are at the level of maturity the CDCs in the affordable-housing world were at 20 years ago,'' said Bruce J. Katz, the director of Brookings's new Center on Urban and Metropolitan Policy. ``What we're seeing is the emergence of another sector [that would] basically compete with--and maybe ultimately take over from--the bureaucratized employment service agencies.''

In the late 1970s, federal low-income housing programs were discredited, just as JTPA is now. Inner-city CDCs concocted public-private financing packages to develop affordable housing.

``In the early years, it was very chaotic and pretty cumbersome and very frustrating,'' recalled Benson F. Roberts, vice president for policy in the Washington office of the New York City-based Local Initiatives Support Corp. (LISC). ``Over time, people figured out how to put it together, so now you have a system.''

LISC played a major role by teaching many CDCs how to run their own organizations, put together deals, manage housing and deal with banks. In 1986, Congress adopted the Low Income Housing Tax Credit. LISC and the Enterprise Foundation, a similar organization established by shopping-mall developer James Rouse in Columbia, Md., figured out how to syndicate the tax credits on a nationwide basis.

The workforce development planners draw three basic lessons from the housing model: focus on community-based organizations; develop some kind of nonfederal national or regional middleman (perhaps like LISC and Enterprise); and figure out a way to make tax credits at once attractive to business investors and useful to the community organizations that actually make the connections between employers and potential employees.

But there's a very basic, nagging problem that could undermine any policy built upon these notions: Is workforce development enough like housing to use it as a model? Even some of the most enthusiastic advocates of this approach have doubts.

``I worry that it's the wrong model,'' said Robert P. Giloth, a senior associate at the Baltimore-based Annie E. Casey Foundation, which is financing six community-based workforce development experiments. ``This is not cookie-cutter stuff, and housing is cookie-cutter in a certain respect.''

In the housing arena, LISC and Enterprise have developed a pretty standard recipe for putting together a housing deal. But the art of making connections between employers and potential workers defies standardization.

``The financial packages that LISC puts together are Wall Street packages,'' said Walker of Public/Private Ventures. ``Even the very best workforce development organization is going to tell you, `I just can't guarantee that somebody is going to work out.' It's just not as scientific as saying, `We've learned how to build a unit of housing, and by God, we can get this financial agreement down to this interest rate.' ''

Others question whether a national intermediary is even needed. ``There's enormous tension on this. Some grass-roots groups around the country don't want to see more intermediaries,'' said Marcus Weiss, president of the Economic Development Assistance Consortium, a consulting organization in Boston. ``There's another approach, where resources are provided through a regional collaborative that builds its own network and runs its own show.''

Besides, there are all the practical obstacles to designing a workable tax credit. With housing, there's something tangible to invest in. But with employing untested workers, that's missing.

Mulhair of Seattle's Pioneer Human Services has a plan that would work for other groups like his, which differ from most community-based organizations in that they own manufacturing and service companies. His operation takes hard-to-employ people who could earn at most about $5 an hour and trains them in skills marketable at $8 an hour. As part of the training process, it contracts with major companies such as Boeing Co. and Starbucks Coffee Inc. to manufacture parts and provide services.

``We've added $3 an hour to the value of those people,'' Mulhair explained. ``Why couldn't we monetize the value we've added to those people by giving a tax credit to the firms that [give] us work to do?''

Unlike the traditional employment tax credits, which don't require any extra effort or risk on the part of the hiring corporations, this sort of tax break would be confined to training and employing people who otherwise would not be hired and who would gain real earning power as a result. In that respect, Mulhair said, it would be somewhat akin to the housing tax credit.

IN THE COMMUNITY

Whatever reservations they have about the other pieces of an emerging strategy of workforce development, most of the policy plotters are enthusiastic about featuring community-based organizations as the centerpiece. But even their biggest boosters acknowledge that as good as they are, these community groups have their drawbacks.

``I get a little cautious of over-romanticizing community-based organizations as though Congress can write a piece of legislation and say, `Go out and create community,' '' said Joan L. Wills, the director of the Center for Workforce Development in Washington.

``The capacities of community-based organizations are enormously uneven,'' the New School's Harrison said. ``Some of these groups are woefully inadequate, and they'll get totally blown over by this. Having said that, I think that the infusion of resources and responsibility [from being the centerpiece of a new policy] would add capacity to a number of groups that are poised to run with it.''

Are there enough groups like that? Harrison estimates there may be only 25 of them across the country.

Of course, as he and others are quick to point out, when the affordable-housing movement got off the ground, there were few productive CDCs packaging housing deals. The number and capability of the groups--now in the thousands--grew through necessity, experience and the hands-on assistance of LISC and Enterprise. Others are just as quick to respond, however, that workforce development is a much trickier business than housing production. And cloning successful programs is even more challenging.

Take the case of the Center for Employment Training, the San Jose matchmaker that is considered by far the most successful enterprise of this sort.

CET's secret ``in a nutshell is the dual nature of linking backward to the community--having real empathy and support mechanisms for participants to go through the process-- and linking forward to the employers, having close connections to the employers,'' said Edwin Melendez, a University of Massachusetts (Boston) economics professor who has studied CET. But applying that secret in a new context isn't just a matter of taking a list of program elements ``and making a check-mark against each one,'' he said. ``It's a lot more complicated than that.''

Indeed, CET was deemed so successful that, in 1992, the Labor Department sponsored 15 copies of it around the country. But an in-depth study of the clones showed that two years later none of the copies had performed as well as the original, maybe because only three of them were run by community-based groups or because the replicas failed to duplicate the close connections with employers.

The San Jose group worked mainly with Latinos who had been farm workers but were trained and placed in high-technology firms in Silicon Valley. How do you transfer that experience to welfare mothers, mostly African-American, in a distressed inner city on the East Coast or in the Midwest with few job openings? But that's exactly the population served by other community-based organizations, such as New Community Corporation in Newark, Project Strive in Chicago and Focus Hope in Detroit.

The community-based employment and training movement is in ``a funny time right now with all these possibilities and prospects,'' Harrison said. ``But it's also very fuzzy. We know what it looks like on the ground, but we don't know what the program or policy would look like.''

That's what Administration officials are doing in their quiet, behind-the-scenes meetings--trying to take dozens of quirky operations that work in a particular place or context, draw universal lessons from them and then try to fashion a workable policy. They're still at the beginning of a very messy process. But the clock, they know, is ticking.

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