A Perspective on Employers: Put Illinois to Work Presented at Creating Employment Opportunities through TANF: Lessons Learned from TANF ARRA ECF, National Transitional Jobs Network 2012 Conference Amy Terpstra

2012

Program Impetus: The Recession

New ARRA money available through TANF Emergency Contingency Fund for subsidized jobs

764,825 unemployed workers in Illinois and an unemployment rate of 11.5%

Poverty rate was at 13.3% and household incomes were declining

Program Partners and Timing

A public-private collaboration: ◦ Illinois Department of Human Services (DHS) ◦ Heartland Human Care Services (HHCS)

Launched April 2010, ended in January 2011

Extended by Governor when the TANF ECF ended 9/30/10

Program Goals: Workers

Provide unemployed and underemployed low-income job seekers with paid work experience that would: • help them support their families

• gain job skills

• make professional connections that they could use to find employment in the future

Program Goals: Businesses

Provide businesses an opportunity to: • try out new workers for a period while wages are

100% subsidized

• train these workers

• explore whether they are a good long-term fit

• have the option to hire them once PITW ends

Program Eligibility: Workers A Trainee-Worker Must…

Be legally present in the U.S. and authorized to work

Be an Illinois resident

Be a parent of a minor child (custodial or non-custodial) or be between the ages of 18 and 21 and living with a parent or caretaker relative

Have a household income under 200% of the FPL

Be willing to work at least 30 hours per week

Not be a registered sex offender

Program Eligibility: Businesses An Employer Must…

Not be in default on payroll or business taxes

Comply with applicable labor laws

Provide a minimum of 30 hours of work per week per trainee-worker

Provide necessary training and supervision

Not hire trainee-workers to comprise more than half of the workforce at each worksite

Not rehire individuals that were laid-off after 3/15/10

Not belong to certain sectors

Program Design: Statewide Reach

26 subcontractors: • recruit employers and job seekers

within geographic regions

• make matches between job seekers and employers

Subcontractors and HHCS receive a fee for each job placement

HHCS is the employer of record for all trainee-workers

Trainee-workers are paid $10 an hour

IDHS

HHCS

26 Subcontractors Employers Job Seekers

Pays Wages

Program Scale PITW…

put 27,000 low-income people to work

through 4,200 employers

paid over $213 million in wages

generated over $26.7 million in federal income, Medicare, and Social Security taxes

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

0

5,000

10,000

15,000

20,000

25,000

Gross Wages and Trainee-Workers Paid

Gross Pay Worker-Trainees Paid

Picture of Employers

42%

16%

31%

5% 5%

Worksites by Type of Business

Corporation

Individual

Non-Profit

Other

Public

32.4%

34.6%

19.1%

5.1%

7.1%

1.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Size of Employer by Total Number of Employees

500 or more

100 to 499

50 to 99

15 to 49

5 to 14

Less than 5

Majority for-profit or nonprofit

Majority small 62% never participated in

subsidized jobs program

Employer Reasons for Involvement

Help struggling community and neighbors with jobs 60% Create an opportunity for somebody who wants to upgrade skills/get trained 58% Opportunity to "test" new workers without risk but with potential to hire later 53% Opportunity to have subsidized labor for a few months 45% Help struggling business 25% Test partnership with a social service agency for another program 14% Other 3%

Top two reasons: altruistic?

Significant portion testing involvement in more permanent way

Recession’s Business Impact 27% report that businesses were financially

unhealthy or very unhealthy before PITW

Only around 1 in 7 reported experiencing no negative impacts of the recession on their business

49% experienced cash flow problems

36% experienced reductions in sales

31% had an increase in customers paying late or not at all

Weathering Recession

• 36% reduced employee hours

• 36% put off upgrades and expansions

• 35% operated with a deficit

• 35% froze hiring

As a Result of PITW…

74%: productivity increased

69%: current workforce satisfaction with workload improved

67%: able to serve more customers

61%: quality of work improved

58%: saw customer satisfaction improve

58%: financial health was better or somewhat better ◦ 47% attributed at least half of that improvement directly to

participation in PITW

Employer Satisfaction

88% indicate they would participate in PITW or a similar program if it were offered again

If the wage subsidy were halved, 40% of employers report they would participate, and 43% might participate

Employer Satisfaction

67% would give an employment reference for more than half or all of their TW

52% of employers would permanently hire half to all of their TWs if they were financially able to do so

Half of all employers stated that they are more willing now to hire low-income parents and young adults than before PITW.

Takeaways Related to Businesses

Program had important outcomes for businesses

Changed minds about hiring certain population

Lessons for employer engagement

For More Information: Amy Terpstra aterpstra@heartlandalliance.org www.heartlandalliance.org/research