[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
                            WELFARE TO WORK:
                     WHAT IS WORKING, WHAT IS NEXT?

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON EMPOWERMENT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                      WASHINGTON, DC, MAY 25, 1999

                               __________

                           Serial No. 106-14

                               __________

         Printed for the use of the Committee on Small Business





                    U.S. GOVERNMENT PRINTING OFFICE
60-578                      WASHINGTON : 1999





                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
MICHAEL P. FORBES, New York          DENNIS MOORE, Kansas
JOHN E. SWEENEY, New York            STEPHANIE TUBBS JONES, Ohio
PATRICK J. TOOMEY, Pennsylvania      CHARLES A. GONZALEZ, Texas
JIM DeMINT, South Carolina           DAVID D. PHELPS, Illinois
EDWARD PEASE, Indiana                GRACE F. NAPOLITANO, California
JOHN THUNE, South Dakota             BRIAN BAIRD, Washington
MARY BONO, California                MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

                      SUBCOMMITTEE ON EMPOWERMENT

                JOSEPH R. PITTS, Pennsylvania, Chairman
PHIL ENGLISH, Pennsylvania           JUANITA MILLENDER-McDONALD, 
JIM DeMINT, South Carolina               California
FRANK A. LoBIONDO, New Jersey        DENNIS MOORE, Kansas
EDWARD PEASE, Indiana                STEPHANIE TUBBS JONES, Ohio
                                     TOM UDALL, New Mexico
               Stephanie O'Donnell, Legislative Assistant




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 25, 1999.....................................     1

                               Witnesses

Ballard, Charles Augustus, Founder and CEO, Institute for 
  Responsible
Fatherhood and Family Revitalization.............................     2
Powelson, Robert F., President, Chester County (PA) Chamber......     4
Cove, Peter, Founder, America Works..............................     7
Yergan, Eric, Owner, The Yergan Agency...........................     9

                                Appendix

Opening statement: Pitts, Hon. Joseph R..........................    27
Prepared statements:
    Ballard, Charles Augustus....................................    30
    Powelson, Robert F...........................................    64
    Cove, Peter..................................................    83
    Yergan, Eric.................................................    89




            WELFARE TO WORK: WHAT IS WORKING, WHAT IS NEXT?

                              ----------                              


                         TUESDAY, MAY 25, 1999

                  House of Representatives,
                       Subcommittee on Empowerment,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Joseph R. Pitts 
(chairman of the Subcommittee) presiding.
    Chairman Pitts. Ladies and gentlemen, the time of 10:00 
having arrived, I think we will go ahead and start. Some of the 
other Members are on their way. But we will go ahead and start 
if that is all right.
    Thank you for joining me and the other members of the 
Subcommittee on Empowerment today for this hearing to discuss 
the important issue of welfare-to-work. We are privileged to 
have with us today several experts on this subject. During this 
hearing, we will examine several welfare-to-work programs in 
order to discover what strategies are successful in moving 
people from dependency on public assistance to gainful 
employment and, ultimately, self-sufficiency.
    We all have something to gain from breaking the cycle of 
welfare dependency and empowering people to end their reliance 
on cash payments by the government. By providing education, 
training, job placement to welfare recipients, welfare-to-work 
programs strengthen our Nation's work force and, ultimately, 
our economy.
    A recent study conducted by the Economic and Social 
Research Institute surveyed 500 small businesses and found that 
small employers are seeking reliable, motivated workers with 
positive attitudes, and are less concerned with the limited 
education and job training of many welfare recipients. 
Additionally, 62 percent of the employers surveyed had hired 
someone who was on welfare, and of this percentage, 94 percent 
were willing to hire a welfare recipient again.
    These findings suggest that since there is no shortage of 
employers to hire welfare recipients, perhaps welfare-to-work 
programs are part of the solution to facilitating the job 
search for welfare recipients. These programs provide training 
that will help welfare recipients portray themselves as 
successful candidates to prospective employers.
    Indeed, the past few years have been a transitional period 
for welfare reform following the passage of the Personal 
Responsibility and Work Opportunity Reconciliation Act in 1996. 
This law established the Temporary Assistance for Needy 
Families (TANF) program which mandates that after 2 years of 
receiving welfare assistance, recipients must have a job or be 
participating in some type of work activity or job training.
    This welfare-to-work initiative ensures that welfare 
recipients have the opportunity to make a long-term life 
improvement, by sustaining a job, in hopes that eventually they 
will become independent of government assistance. This is 
especially important since participation in the TANF program is 
not infinite. In fact, current law limits the receipt of 
welfare benefits, in most cases, to no more than 60 months in 
one's lifetime.
    The transition from dependency to gainful employment is a 
life-changing experience involving education, job training, and 
time-management skills. All of these factors must be taken into 
account in order to ensure that a welfare recipient will be 
able to sustain employment for an extended period of time and 
not regress to relying solely on a welfare check. Many 
organizations offer comprehensive programs designed 
specifically to move people from welfare rolls into the labor 
market. These welfare-to-work programs attract, train, and 
assist in placing welfare recipients in jobs.
    We are fortunate to have with us today a diverse panel of 
experts in this area who will be able to provide us with 
insight into welfare-to-work issue. We will hear from Mr. 
Charles A. Ballard, Founder and CEO of the Institute for 
Responsible Fatherhood and Family Revitalization who will 
testify about his welfare-to-work program for fathers. Mr. 
Robert Powelson is President of the Chester County Chamber of 
Commerce and Industry in my district, the 16th Congressional 
District of Pennsylvania. He will discuss his program which 
provides mentors to those entering or reentering the work 
force. Mr. Peter Cove, the founder of America Works will 
discuss his New York City based welfare-to-work program. And 
finally, Mr. Eric Yergan, an Allstate insurance franchisee will 
share his experiences hiring employees from the welfare roles.
    [Mr. Pitts' statement may be found in the appendix.]
    Chairman Pitts. We will now hear from our panel. And I 
would like to ask Mr. Charles Ballard, founder and CEO of the 
Institute for Responsible Fatherhood and Family Revitalization 
of Washington D.C. to make the first statement, if you would 
please.

   STATEMENT OF MR. CHARLES A. BALLARD, FOUNDER AND CEO, THE 
INSTITUTE FOR RESPONSIBLE FATHERHOOD AND FAMILY REVITALIZATION, 
                         WASHINGTON, DC

    Mr. Ballard. Thank you, Congressman Pitts, for inviting us 
to be a part of this, I think, history-breaking event of 
welfare-to-work. And it is really interesting to know that 
small businesses are concerned about this area. I think it is 
one thing to hire someone, but it is another thing for that 
person to be able to have a thinking or mind-set to not only 
have a job, but to go beyond that even to starting a business.
    I was before Nancy Johnson's committee, the Health--the 
Ways and Means Subcommittee, that as a fatherhood counts bill 
that she is looking at that would help men--fathers, to become 
better fathers, better husbands, and better men. So I thank you 
for the opportunity to be a part of this hearing today.
    Last night, over 23 million children went to bed in a home 
where there were no fathers. I look back on that experience, 
and I had that same experience. Many of these children grow up, 
dropping out of school; so did I. Some will have drug problems; 
so did I. Some of these young men and girls, we have in prison; 
so did I.
    When I was 3\1/2\, my father became mentally ill and was 
moved from the home. When I was 8 years of age, he died in a 
mental institution. So I grew up a very angry young man, angry 
with the world, and in gang membership, got a girl pregnant, 
ran away, joined the Army, ended up in prison and undesirable 
discharge from the Services. Got out of prison, but I came back 
home with a new thinking, with a new mind to be a good father 
to my son and be a good man to the community.
    Now, if you note, I said I didn't finish high school, had a 
drug problem, had an alcoholproblem, had been in prison, and I 
had been undesirably discharged. That was in 1959 before integration, 
where things were still tough for African males, but one who had a 
prison record it was almost impossible to find a job. But kind of like 
the bumblebee--the bumblebee really should not be flying, but no one 
has been able to convince him of that so he continues to fly.
    So no one convinced me that being in prison, dropping out 
of school, undesirably discharged from the Services made a 
difference. So I went on to adopt my son. I took dishwashing 
jobs, floor-scrubbing jobs. I got my GED, went on to get a BA 
degree, and got a masters degree. And my son today is a grown 
man, and he has his own masters. He is 42 years of age.
    Now I am telling that story because it takes more than a 
job to bring America up to where it should be. People must have 
a sense of entrepreneurship. They must think that this job is 
my business. It is not just an 8 to 5, but it may be a 7 to 6. 
I remember when I was told to be in at 5:00 in the morning to 
wash dishes, I always showed up at 4:00 in the morning. I was 
to get off at 3; I often got off at 5. It was amazing because I 
only made $23 a week.
    And all I had to look for in this country were those kinds 
of jobs. But because of my entrepreneurship spirit and thinking 
I wanted more than that, I wanted my son to have more than 
that, so I went on, as I said before, to get my masters degree. 
In 1972, I decided to do something about this problem of 
fathers not being around. So I worked at a hospital and then 
later on I created the first program to reach out to fathers.
    And the model is really modeled after my own life. That if 
you don't convince people that they are fragile, that they are 
broken, that they are poor, they won't act that way. But it you 
treat people as that they have worth, that they have something 
to observe, that they have a contribution, my experience has 
been that men will come through.
    Last year we received a $4.5 million grant from the 
Department of Labor to put 480 fathers back to work, and in 
some cases to work for the first time. Men coming out of 
prison, men who have drug problems, men who are abusive and so 
on and so on.
    Well, we officially started the program last September; and 
since that time, we have put to work over 230 fathers and 
mothers in full-time unsubsidized jobs. And many of them by 
their employers are considered to be entrepreneurship-minded 
which is what we teach these young men to be.
    One corporation sent us a letter saying that send me more 
people like this. I have this person. She has been on the job 
just about 6 months. Other employees look to her, look to him, 
for direction. And so that person got a promotion. We have a 72 
percent retention rate. I think the District only wants 25 
percent. But we have a 72 percent retention rate of our hard-
to-place men and women, especially fathers, over \2/3\ fathers, 
keeping these jobs. So I think if we are going to make the 
welfare-to-work program complete, we must emphasize the mother 
and the children, but there is a man some place who is in a 
prison, who is on drugs, who is homeless, who we must find and 
return him back to the home, back to the work place.
    And I think our program is a model for that. And that we 
can work together and create this entrepreneurship thinking, 
this spirit of entrepreneurship where people that don't have a 
job to go to but they are going to a business, and which they 
will show up before time and leave after time and in the middle 
time don't take breaks. I believe that this kind of attitude 
and spirit is what has founded America. And I believe if we are 
going to bring America back to be a strong country, each one of 
us must have that kind of spirit. Thank you.
    Chairman Pitts. Thank you very much, Mr. Ballard, for that. 
We will hear all of the witness statements before beginning 
questions.
    [Mr. Ballard's statement may be found in the appendix.]
    Chairman Pitts. Rob Powelson from my district, President of 
the Chester County Chamber of Commerce and Industry.

  STATEMENT OF MR. ROBERT POWELSON, PRESIDENT, CHESTER COUNTY 
  CHAMBER OF COMMERCE AND INDUSTRY, WEST CHESTER, PENNSYLVANIA

    Mr. Powelson. Thank you, Congressman Pitts and Members of 
the Committee, for the invitation to share with you some 
exciting developments that are taking place within our county 
on welfare-to-work. The program that I would like to share with 
you this morning is one that involves all levels of the 
community. And, in my very humble opinion, I think that it is 
fair to say welfare reform is working in Pennsylvania. The 
facts, since 1997, 72,000 welfare recipients have found full- 
or part-time employment. From a statistical analysis, this 
represents a 40 percent decline from 1993 levels.
    In my position I think it is fair to say that we all 
realize that there is still much work to be done in providing 
meaningful employment to welfare recipients. Back in 1997, I 
was asked to tour our public assistance office with two of our 
State senators to discuss strategies on how we involve the 
business community in working with our department of welfare in 
providing outreach and job placement opportunities.
    Let me share with you that I have been president of the 
Chester County Chamber for 5 years now. I could not tell you 
where the welfare office was in our county. I knew a little bit 
about their activities, but really didn't have an understanding 
of some of their outreach in the community.
    After speaking with many of the case workers and other 
social service providers in our county, I realized that we 
needed to lend a helping hand to providing employment 
opportunities to job-ready candidates. You know, if you look at 
this issue, and I want to share this with you because in my 
line of work welfare reform is really not a politically sexy 
issue to talk about because in chamber work, we are more 
worried about the recruitment and retention of IT workers in 
our county, the expanse of manufacturing jobs, but when we look 
at this issue more in depth, you realize that this is Work 
Force Development 101.
    When we had--when I took the tour back in 1997 of our DPW 
office and met with the staff, we realized that there were a 
group of people who did the right thing, they beat the March 3 
deadline in our State, found work, and as a result of going out 
and finding work, their income was beginning to be means 
tested.
    So certain benefits that they were given were beginning to 
kind of wean off. In many cases, we found that many of these 
new workers were coming back to the system or, in many cases, 
losing an employment opportunity for a number of reasons. So we 
realized that in just that one meeting we had with our two 
State senators along with our folks at the DPW office that we 
needed to design a system whereby business and the community-
at-large could come together and provide a safety net for those 
individuals that entered into an employment opportunity but 
were kind of falling by the wayside in terms of staying in that 
job.
    And from the chamber perspective, I realized that we needed 
to branch out to our 1,100 members which represent some of most 
notable companies in this country to work with them to get 
their employees involved in this initiative. So after our 
initial meeting, I sat down with some folks and said we are 
going to move forward in adopting a mentoring program whereby 
theChester County Chamber would go out in the community, and 
voluntarily recruit mentors to serve as role models to individuals that 
have again beaten our March 3 deadline in finding work in Pennsylvania 
and working with them in a new relationship.
    Now, there are a whole host of issues associated with our 
mentoring program that I want to share with you, and I will 
also share with you a personal experience that I have been 
involved in. First of all, for those individuals that again 
have beaten our March 3 deadline in Pennsylvania and found 
work, in many cases these individuals are coming from second 
and third generation families where there is no by-product of 
work.
    So there are certain things that happen in the course of an 
employment situation where many of us in this room over years 
of internships or mentoring, we have learned to kind of adapt 
to work. But how about the case where a welfare client entering 
into a new employment situation is delegated a responsibility 
and the manner in which the manager says or delegates the 
responsibility is taken the wrong way. And that individual 
leaves the office that day very upset, outraged by that 
experience, and is ready to quit.
    Now, realize they go back to a family structure where there 
was no by-product of work. In fact, in many cases the family 
structure, if there is one, says quit, give up. Well, the 
stakes are too high. And this is where we have come through in 
putting this mentoring network together where that individual, 
where that situation may arise, can call that mentor, and talk 
and solve that problem.
    Very powerful tool here. It is a retention tool. Because we 
are able to kind of bridge the gap between the employer and the 
employee, and the mentor is involved in that relationship.
    Now, during the past 18 months we have successfully 
recruited 30 volunteer mentors for this program. Our goal by 
the year 2000, by the end of the year 2000, is to recruit 150 
mentors. And I know I provided you a program narrative of how 
we go out and recruit mentors. And I would like to get into 
that a little later for our panel group discussion.
    But, for the record, I serve as a mentor to a single mother 
who has three children. Her problems are overwhelming to the 
average person. I am here to tell you that we are friends and 
that we respect one another. And my relationship with her has 
included such things as redesigning her resume, to helping her 
kids get into a YMCA summer camp program. For someone who had 
little hope in making the transition, my mentee has made a 
commitment to change her life. In my mind, the role of a mentor 
is to help an individual do the right thing.
    And I can honestly tell you that mentoring has been a 
cornerstone in my upbringing. And if you look around corporate 
America, the most successful companies in this country do not 
hire someone to fail at the work site. The Boy Scouts, the 
YMCA's across this country do not bring people into this system 
that they have designed for failure. And that is why I think 
mentoring is all around us. And that is why I think it is 
critical with welfare reform that we have type of models.
    Now, when we implemented our program, we realized that we 
provided tremendous legitimacy to the welfare office in our 
county. Why do I say that? Well, for one, the chamber 
represents business. We have over 1100 member businesses, 
companies as large as the Vanguard Group all the way down to 
your small mom and pop organization.
    Now, when we pitch a community project, again, we are 
asking for business community buy-in. That is exactly what we 
did with our mentoring program. It wasn't the social service 
provider saying I have got this program, I need your support. 
It was the business community, it was the chamber of business 
and industry going out and saying we are going to do this and 
we would like you to join us in this effort.
    Now, the other thing that is very interesting, which I take 
great pride in along with our staff at the chamber, is when we 
pick up the phone and we call an H.R. professional about 
providing an employment opportunity, it is a much more powerful 
message because it is not the old case worker calling trying to 
get someone placed in a job. And this is a very powerful tool. 
And, finally, we have been able to create an awareness that 
many social service providers have long sought to do, realizing 
that we are a business organization.
    I know we have a long way to go in this endeavor. However, 
I am really proud to report that we as an organization have 
moved beyond the rhetoric and have implemented a program that 
is working. Over the past, again, 18 months I have traveled to 
six of our counties in Pennsylvania to share this model.
    As my Jesuit professors once taught me, you can implement 
the ``BAA'' principle with our narrative. You can borrow, add, 
and adapt aspects of our program and implement it in your 
community. That is what we are doing. We have a dialogue set up 
in nearby Bucks County, which is a suburban county around 
Philadelphia. We have also started dialogue in Montgomery 
County. And many counties have seen the benefit of what we are 
doing. Moving forward, I am confident that our program will be 
an adopted model across Pennsylvania.
    And I want to thank Congressman Pitts and the members of 
this Committee for giving us this opportunity to share with you 
some exciting developments that are taking place in a county 
right outside of Philadelphia.
    Thank you.
    Chairman Pitts. Thank you very much, Rob, for that 
testimony. I am sure we will have some questions for you.
    [Mr. Powelson's statement may be found in the appendix.]
    Chairman Pitts. We have been joined by other members of the 
Committee, the gentleman from Indiana, Ed Pease, and the 
gentleman from Pennsylvania, Phil English.
    The next statement is by Peter Cove, founder of America 
Works from New York. Welcome.

STATEMENT OF MR. PETER COVE, FOUNDER, AMERICA WORKS, NEW YORK, 
                            NEW YORK

    Mr. Cove. Thank you, Chairman Pitts and Congressman English 
and Congressman Pease.
    I appreciate being here today. I was recently introduced at 
a conference in Washington by a leading expert on welfare and 
they said no one infuriates nor stimulates the public sector 
around welfare as Peter Cove. And I am not sure whether that 
was a compliment or not. But I often tend to be the skunk at 
the picnic regarding welfare-to-work even though I am probably 
the most optimistic person you will ever meet.
    I really do believe very strongly in welfare-to-work 
programs. And it is why I set up America Works which is a 
private for-profit company operating in seven cities. 
Currently, we have been in business 15 years and placed almost 
20,000 welfare recipients into jobs. And a recent study by the 
New York State Department of Labor found that after 3 years, 88 
percent of the people we had placed were still off welfare with 
an average of 5 years on welfare prior to coming to America 
Works.
    We will stand on that against any record out there. There 
is a reason for that: we run a good program. But I am not going 
to tell you too much about my program right now. I would be 
gladto when we get into questions and answers, if you wish. I 
am going to use this opportunity to encourage the Congressmen here and 
others to do something that has needed to be done for the last 30 to 35 
years in welfare-to-work but has not: the government should pay for the 
results of welfare-to-work programs rather than pay for the process of 
welfare-to-work programs.
    For the last 30 to 35 years in this country, we have 
continued to basically pay for programs in welfare-to-work, 
instead of paying for the outcome. By continuing to pay for the 
process rather than for the outcome, we are producing programs 
with a varying degree of success. But as we all know, in terms 
of getting people permanently in jobs off welfare most programs 
in welfare-to-work have not worked very well. And the reason 
they haven't worked very well is because they haven't been paid 
to work. They have been paid for their program. They have been 
paid for their process. And that continues to this day.
    The Department of Labor, which has most of the welfare-to-
work money at this point, continues to discourage pay-for-
performance programs. And when I say pay-for-performance, what 
do I mean by that? I mean that a program should be paid only if 
it ensures that a person is still working 6 months after having 
been placed by the program. Otherwise, why pay for it?
    In government, we certainly don't pay for a box of pencils 
that is half broken when we get it. We pay for the whole box of 
pencils. In welfare-to-work, we will pay maybe half the money 
or three-quarters of the money or 90 percent of the money or 
100 percent of the money even if the program doesn't work for 
the people that it is trying to place. This continues in the 
United States. And this is the reason why I feel we have not 
had really successful welfare-to-work in this country.
    As I am sure you know the reduction in the caseloads around 
the country has not come because of an outgrowth of fabulously 
new great creative welfare-to-work programs. It has come 
because there is a tightening of eligibility, it has been 
reduced because of diversion of people from welfare to other 
kinds of activities. It has come about because of work fare. It 
has come about because of a good economy where some people have 
moved into jobs. But it has not come about because there has 
been a change in the quality of the programs that we are 
funding to bring people from unemployment and dependence to 
employment and independence.
    I have to give you an anecdote that happened to me. I was 
negotiating a contract in a major State about a year and a half 
ago. And I said to the contract officer, why don't you just pay 
me for my results. Why are you paying me for all these things 
along the way? I can make more money that way, I can be more 
successful in terms of my profitability. You, on the other 
hand, along with the taxpayer are not going to get what you 
should be getting. You should only pay me for my results. And 
she replied, Oh, no, I can't do that, Mr. Cove. And I asked, 
why. And she said, I would lose all my contractors. I said to 
her, I didn't know that you were in the business of propping up 
an inefficient marketplace, I thought you were in the business 
of getting people off welfare. And she patted me on the 
shoulder, and said, Aren't you kind of naive about that.
    There is a welfare industrial complex in this country made 
up of organizations, very similar to the workings of the 
military industrial complex.
    They wish to continue to be paid for their process. They do 
not want to be paid for their results. If there is any one 
thing that you could do to change the quality of welfare-to-
work programs in this country, it would be to change the way in 
which the Federal government allows the local government to pay 
for its programs.
    There are all kinds of good programs out there, and there 
are lots of ones too. But what you will get, if you were to 
help to do this, would be a marketplace, a much more rational 
marketplace that really brought us welfare-to-work the way we 
really want to see it.
    Thank you very much.
    Chairman Pitts. Thank you, Mr. Cove. I am sure we will have 
lots of questions for you.
    [Mr. Cove's statement may be found in the appendix.]
    Chairman Pitts. We have been joined by the Vice Chairman of 
the Subcommittee, the gentleman from South Carolina, Mr. 
DeMint. And we will go to the last statement now from Eric 
Yergan who is the owner of the Yergan Agency in New York City, 
an Allstate insurance franchise which employs graduates the 
from America Works program.
    Mr. Yergan.

   STATEMENT OF MR. ERIC YERGAN, OWNER, ALLSTATE--THE YERGAN 
                      AGENCY, NEW YORK, NY

    Mr. Yergan. Thank you, gentlemen, for letting me come here 
today on relatively short notice.
    As you said, my name is Eric Yergan. I am an exclusive 
agent from Allstate Insurance and the owner of the Yergan 
Agency which is an insurance agency on the upper side of 
Manhattan--excuse me, yeah, the upper side of New York City.
    First, I would like to tell you a short success story 
which--this is one of many. Allstate and many of its franchises 
have hired many people through America Works and other types of 
programs both from the private sector and from State and 
Federal type of programs. Through America Works, I was able to 
hire a young lady named Anna Rodriguez last July 29 to be 
exact. She is a single mother of three, divorced from her 
husband and had been on welfare for 5 years, 5 plus years.
    We were immediately impressed with her work and her work 
ethic and her desire to learn. After several months we sent her 
to school in New York State to get an insurance license. It is 
quite a long, drawn-out process. It takes at least 4 weeks of 
classroom study and then taking a State exam.
    We sent her at no cost to her while we paid her--while I 
paid her to go to school. When she did get her license, she did 
take the test; and she passed it on the first try, which is 
something that many people could not do.
    Right away, I noticed an improved sense of her self-esteem. 
She, all of a sudden, had this smile and this proudness about 
her that she really did not have prior to that. Since then, she 
has, blossomed might be the word, progressed and blossomed to 
being a full-fledged salesperson in my office.
    Her income has increased because she now receives 
commissions which is a good thing. The education--through the 
education that we provided her, she now has the opportunity to 
improve her life and she has a future. She is an important part 
of my business, an important part of my agency. And she has 
pride in her work, and she will move up in responsibility in 
the future and in earnings. And things continue the way they 
plan to be, she will end up with an ownership stake in the 
agency.
    Secondly, I would like to tell you about why the current 
strategy of America Works and other such, I guess, vendors in 
the welfare-to-work programs works for me and other employers. 
It saves us time, gives us a product in an efficient and cost-
effective manner.
    What do I mean? Potential employees are prescreened. Only 
one that meets all hiringobjectives are supplied to us for 
interviews. Additionally, a working relationship develops between 
employers and such vendors where they include training that we require 
as part of their programs.
    As importantly, they also serve as a middleman, so to 
speak, in the beginning period of transition for that welfare 
recipient as they start to work, you know, through their 
counselors and other staff who works for America Works. If we 
have a concern or a problem at that beginning of a new 
employee, I speak to the counselor. That counselor speaks to 
the employee.
    And what that does, that enables a good working 
relationship to develop without it being poisoned by oh, no, 
the boss is getting on my back again, oh, no, you know, he is 
always saying I am not up to speed. We work with the counselors 
to get that person up to the level where we need him to be. And 
I think that is probably one of the most beneficial aspects as 
an employer for that.
    You know, additionally, it appears that programs such as 
this instills pride into the participants, pride of improving 
their own fate, pride of moving off welfare. This pride that 
gets established and gets reinforced by the positive 
experiences of both the vendors of such programs and positive 
work experiences is priceless. It is just priceless to those 
participants.
    It is this pride that will keep them off welfare forever. 
It is this pride that will make them grow as productive members 
of the work world. It is this pride that gets established in 
these individuals. As far as I am concerned, programs like this 
should continue. You know, the people change. They start to 
work. They bloom. And they just feel rewarded just from an 
emotional standpoint and hopefully, also from a financial 
standpoint.
    And I would just tell a quick little story, a situation the 
other day in my office. I am blessed with this lady, Anna 
Rodriguez. I also have another person who I recently hired from 
the school--from the Board of Ed School of Cooperative 
Education. And I have another person who is a welfare recipient 
who works part time.
    The contrast of the people who have been through such 
programs versus the people who have not is just totally 
amazing. As a matter of fact, I stepped out of office the other 
day, which almost never happens, but I actually was out. When I 
came back in they were in the middle of somewhat of an argument 
with the person who is currently on welfare who was explaining 
to Anna. Well, Anna, you still qualify for food stamps. You 
still should get them. You have three kids, you know, your 
income is not high enough now. You could still get that money.
    And Anna was in the process of saying, I don't care. I am 
not going to do that. This is where I am going to work. I am 
going to earn what I get, and I am going to take care of my 
family. And that pride, that anti-welfare pride, whatever you 
want to call it, as far as I am concerned, makes programs like 
this--and that is something they help instill in the person, 
priceless. I thank you very much.
    Chairman Pitts. Thank you.
    [Mr. Yergan's statement may be found in the appendix.]
    Chairman Pitts. We will proceed now with the first round of 
questioning and start with Mr. Ballard.
    Mr. Ballard, how does the Institute for Responsible 
Fatherhood and Family Revitalization partner with TANF agencies 
or other community programs to achieve the high job retention 
rate that you mentioned? I think you said 72 percent is your 
job retention rate. What is the key there?
    Mr. Ballard. Well, I think the major key is that we hire 
people from the community. We take a married couple that we 
have trained, and we move them back into the high-risk 
community so they live among the people they are going to be 
working with. We have a very intensive door-to-door campaign. 
We knock on doors, we meet mostly women. And from these women 
we get the name of the fathers. We go in there and find these 
fathers. We do a 2 to 3 weekday visit at their homes.
    Many of these men have never had jobs before, or they are 
on drugs or alcohol. And they are not going to come to us so we 
have to go to them. And we live a risk-free life-style, no 
drugs, no alcohol, no cigarettes and the like. And that life-
style is different than what they have experienced. So the 
modeling piece, plus the very intensive counseling piece about 
who they can be in the world, we think has probably made it a 
success.
    Mr. Cove said earlier about this idea of getting paid for 
what you do which is what the community doesn't understand. But 
when they grasp it, my experience has been when they are 
getting paid for what they have themselves earned, they feel 
much better. And we believe that programs that are worth 
anything don't mind being put up against men having outcomes 
like these. We believe that when the people are treated with 
respect and they are expected to succeed and they see a model 
of success around them, they come to the forefront.
    We do that work with TANFs around the country. We have six 
centers around the country, Tennessee--Nashville, Tennessee; 
Milwaukee, Wisconsin; Yonkers, New York; Cleveland, Ohio; and 
the District. And we work with community organizations; we work 
with businesses. We work with, I guess, well over 100 
organizations around the country at this present time that are 
asking us for these kinds of people.
    And what they say is essentially someone who will come to 
work on time, someone who will work when they get to work, and 
someone who will leave work as well. And they ask us to send 
them more fathers, expectant fathers because they believe by 
getting a father to the work place they can reduce crime and 
other kinds of problems.
    Chairman Pitts. Thank you.
    Mr. Powelson, you mentioned in your testimony that 
mentoring forms the basis of your program. Is it a major factor 
in long-term employment success for welfare recipients?
    How do you create your mentors? How do you match them up 
with participants?
    Mr. Powelson. Our program is very straight forward, 
Congressman. What we do in--the chamber will go out to its 1100 
members--and I think I have enclosed in there an enrollment 
form with a cover letter that goes out on my stationery asking 
a chamber member if you would be interested in becoming a 
mentor.
    [The information may be found in the appendix.]
    Mr. Powelson. We also take a full-page ad in our local 
newspaper. And in that ad we invite them, we invite community 
folks to a meeting. We bring those individuals together.
    I should share with you our first meeting we had over 50-
some people. As a result of our first training session--and I 
forgot to mention all mentors go through 6 hours of training. 
So I have been trained to understand this clientele. As they 
get--the clientele also gets trained. When we bring these 
individuals together, or, excuse me, for our first 
organizational meeting some people said right away this is not 
for me. And as a result we kind of narrowed our group down.
    How do we match them? Well, we have been blessed in our 
county to hire a professional trainer who worked for Dr. Leon 
Sullivan at OIC. She lives in West Philadelphia, has worked 
with this population for 25 years, and she trains our mentors 
and works with my staff and I on matching individuals. That is 
basically how we do it.
    Chairman Pitts. Thank you.
    Mr. Cove, you mentioned that programs should be paid for 
outcomes and results, not process. Could you tell me a bit 
about the payment schedule at America Works, when do you accept 
payment and what is the process for that?
    Mr. Cove. It differs from city to city and contract to 
contract. What I would like to see is not what exists in most 
of the cities. What we would like to see is a situation in 
which we were responsible for moving a person from welfare into 
a job, and after 6 months be paid for that outcome.
    Instead, we are paid along the way. And, again, it differs 
from city to city. For instance, we are paid a portion of the 
money just for enrolling a person at America Works, some 
portion of the money. And then we may be paid another portion 
of the money for the person completing a classroom activity. 
And then we may be paid some portion of the money for the 
person being placed in a job. And then we may be paid a further 
portion of the money for the person being there for, say 30 
days. Finally, we may be paid the final portion of the money if 
the person is there after 3 months or whatever. The fact is we 
can earn most of the money and the person can drop out after 2 
or 3 months, and the program has been a failure. That isn't 
what happens, but that is what can happen. And that is what 
happens in many programs.
    Chairman Pitts. I am sure we will have more questions. I 
want to complete my turn with a question for Mr. Yergan. Would 
you have even considered the possibility of seeking to hire 
welfare recipients if you didn't have the relationship with 
America Works?
    Mr. Yergan. I would have considered it, it would never have 
happened. You know, maybe just from my own personal background 
of a belief that one gives back certain things to the 
community, that would have been a desire; but would it have 
happened, would I have taken the time to go search out such a 
welfare recipient and interview 20 of them to find one instead 
of interviewing three? The answer is no.
    I am a business person. Time is my biggest problem, is my 
biggest concern. And trying to make the business profitable 
and, of course, make money. But the reality, it would not have 
happened because the process would not have been there. And I 
would not have gone through a bureaucratic process for it to 
happen.
    So it is the speed and the efficiency, it is just a series 
of couple quick phone calls. And I don't mean it the way it 
sounds, to tell them what product I wanted and to get that 
product delivered and quick and easy and efficient. And that is 
probably my biggest desire in life is efficiency and time.
    If you can somehow give me 6 more hours in the day, you got 
my vote.
    Chairman Pitts. All right.
    Thank you. We will go to the other Members.
    Mr. Ballard. Mr. Pitts, if I may, please, let me show you 
the power of outcome-driven organizations. Now, our success is 
because the people who live in the community have been trusted 
to bring the community back. And so they go out and knock on 
doors to find these fathers. We are planning to move to an 
entrepreneurship mentality or spirit by paying our workers for 
the number of fathers he places and are retained for 6 months.
    Now, this was given to us by one of our employees who we 
hired coming out of prison, who--we hired him, we trained him 
and he has done great, but he is saying make us earn our money. 
So I think we need to go full force. The Bible says, if I man 
does not work, he shouldn't eat. So if a company doesn't work 
for outcomes, it shouldn't get paid.
    But also I think what can drive that is having employees 
thinking the same way. That if I can put five fathers, ten 
fathers into the work place and he is there for 6 months, I 
should get a benefit from that. Now, I should also say if he 
gets married, which makes a stronger family, the kid has a 
better parent, he gets another point. If the man is on a job 
for a year he gets another point. So I think if we can do this 
thing if we work hard together with it, both the government and 
the community to bring America to a point where it works for 
all of us.
    Chairman Pitts. Thank you.
    Mr. English.
    Mr. English. Thank you, Mr. Chairman.
    This panel has been most enlightening, and I think this 
hearing occurs at a critical time. I serve on the Human 
Resources Subcommittee of Ways and Means, and we are 
endeavoring to look into the same subject. What I particularly 
wanted to focus on in my questions was some of the tax policy 
that goes along with welfare-to-work.
    I notice, Mr. Cove, toward the end of your written 
testimony you suggested that we should change our tax policy 
considerably, move away from the current work opportunity tax 
credit and the President's welfare-to-work tax credit and move 
towards something else. I wonder if you could--first of all, 
elaborate on the problems you see with the current tax credits, 
and second of all give us a suggestion as to where you would 
like to see tax policy go to encourage the hiring of people out 
of the welfare system.
    Mr. Cove. I have never really been a major supporter of tax 
credits to the private sector for hiring of difficult-to-hire 
people. And that would sound funny since I am a private-for-
profit company, you would perhaps expect me to be in favor of 
that.
    But I have not seen it work to significantly increase the 
up-take in hiring by private companies of dependent 
populations. And the reason is employers are not stupid. They 
know what is going on. If you are giving me a tax credit, you 
are giving me a problem. You are in effect asking me to solve a 
problem for you. And you wouldn't give me the tax credit 
otherwise.
    And as Mr. Yergan said, there are issues that have to be 
dealt with. There are areas where when people are moving from 
welfare-to-work, they need to be assisted. And the private 
sector just hasn't got a lot of time to do that. Consequently 
when our sales staff go out to sell our services to private 
companies, we mention tax credit as an icing on the cake. It 
really is not the significant issue for the companies.
    Although I cannot go into too much details as I am not 
entirely familiar with the issues, I can tell you that a 
significant number of people are disallowed any tax credit by 
Labor Department. There are various reasons behind this 
decision including lack of records, duration on welfare, etc.
    Often people are being told that they are eligible for the 
tax credit. And the private sector is being told these people 
are eligible for tax credits. But, in fact, the departments are 
disallowing that. That is happening in New York quite 
significantly.
    Mr. English. If there would be some method, then, by which 
there could be some certainty as to eligibility for the credit, 
would that improve the way the system works?
    Mr. Cove. It sure would improve the way the system works. 
But as my opening statement indicates, I am not sure whether it 
really makes a significant difference in the up-take and hiring 
of welfare recipients. I think the testimony on the targeted 
job-tax credit originally back when it was being sunsetted, 
pretty much indicated that. I think that it really didn't seem 
to be making a significant difference in the hire.
    Mr. English. I am very familiar with that testimony. As you 
know we dramatically changedthe way the credit was structured 
in part through the efforts of my colleague, Mr. Holden.
    Mr. Powelson, what are your thoughts on this? Does the tax 
credit assist in the process of moving people from welfare-to-
work?
    Mr. Powelson. Well, I have a personal story to share with 
the committee. Our program has evolved in such a way that we 
envision the most powerful mentoring is where we are going to 
go within companies and get mentors so you will have on-the-job 
mentors. About 4 months ago, I was invited over to one of our 
larger employers, they sell things on television, QVC network. 
The head of H.R. said, I want to meet with you. Our CEO is well 
aware of what you are doing, we need to talk.
    He said, Let me tell you what our problem is, and we want 
to work with you. Yes, we take the tax credits to hire. We will 
take 15 people. They better be job-ready. And I don't want to 
hear about transportation, day care, and the other issues. They 
have to show up to work on time. We will get them here.
    I tell you what I am going to do. I am going to take the 
tax credit, but I am going to recruit 15 people at QVC to 
become mentors. And what I am going to do with the tax credit 
is for those 15 individuals that volunteer to be mentors to 
those new employees that we have taken off public assistance, 
we are going to pay their Federal income tax for volunteering. 
That is the most powerful, I don't know of any other model in 
this county. So they are taking the tax credit, okay, you are 
getting about an 18 month subsidy in the Commonwealth of 
Pennsylvania, and they are going to say to that employee you 
are empowered now. If you volunteer to do this, we will reward 
you for it. And I think that is very powerful. We are working 
it out.
    And our DPW office is very excited. It is kind of a carrot 
and stick. I mean the tax credit for QVC, I mean they are going 
to get 18 months of subsidized wage, but they are also to get 
people at the job to be mentors. I think it is very powerful. 
We will see if it works.
    Mr. English. Mr. Yergan, you are in the private sector. Do 
you have a thought on this?
    Mr. Yergan. Well, I think the tax credit was a 
consideration. I think the tax credit is a good thing. However, 
I think the majority of the tax credit does find its way back 
to the--in this case to my Anna or to my welfare recipient, or 
ex-welfare recipient. In regards to--I am aware of this tax 
credit that I will get, but this also allowed me to make the 
decision that I am going to send her to school for 4 weeks. 
Although Allstate did the training, I still had to pay her, you 
know, her normal salary, and it really became like 5 or 6 
weeks.
    So knowing I was going to get that tax credit, the gamble 
that yes she will stay with me for more than a year, yes that 
she will get licensed, yes she will become a productive member 
of my company or my agency was done with the awareness of the 
tax credit. So helps allow me to fund the program, so to speak, 
that gets it to where I want it to be. So that money is not 
going to find its way into my pocket directly because it will, 
in essence, be filtered down to her, to reward her, to motivate 
her, and also to pay for that overhead expense.
    Mr. English. Well, that is very thoughtful. And let me say, 
Mr. Chairman, I am coming to the conclusion that while I think 
this is an important area of tax policy and it is still 
important to have these credits, we should be looking at their 
structure to make sure that they actually do have a positive 
impact. I want to thank the panelists for their contribution.
    Mr. Ballard. Mr. English, if I may address it from a 
different standpoint. If a mother works for any of us and she 
makes $10,000 a year she would get an income tax credit in a 
year of $3,800. If her boyfriend or child's father does the 
same thing, he gets the same amount of money.
    So that is $7,600 they get together. If they get married, 
we take away $1500 from each one of them, they lose $3,000 just 
for getting married to give this child a future by the 
importance of marriage. And I would like to see--I have no 
problem of giving the business the money, but I think we can 
invest in the community. We need to give people a chance to 
make it. And when you penalize marriage, you say to the poor 
community, we don't care about your future, we don't care where 
you are going to go, we just want you to get out of our faces.
    But when we leave the money in place, and just--this is a 
powerful example here. We have $7,600, if they get married and 
keep the same amount of money. If they get involved in an IDA 
program, Individual Government Account, to create asset, and 
let's say they take that money and go over to a company that 
will give them $2 for one, they have got now over $20,000. Now, 
that has to boost that family's not only income, but boost 
their esteem. So our government gets into not only giving out 
tax dollars to corporation, but it gets into building 
communities, building marriages, good marriages, sound 
marriages. And you are going to build a future that we all 
want.
    Mr. Powelson. Congressman English, I would also like to 
make a pitch. My organization, we have just hired someone off 
public assistance. And I had the opportunity--in fact yesterday 
I met with my mentee, and we met for our weekly meeting. And I 
had my new person sit in on it.
    Here I am as a C-6 organization doing the right thing and 
we are investing in this person, but as a nonprofit we get no 
credit. So I mean we are--in the nonprofit community, believe 
it or not, there a lot of job opportunities out there whether 
it be United Way, YMCAs, and we are not getting the benefit of 
the tax credit. So there might be some legal room there in the 
code to provide non-profits some relief there. Because there 
are job opportunities there.
    Mr. English. Those are two excellent points, the first one 
being that we ought to be taking a look at how tax policy 
affects lower-income people as far as the marriage penalty. One 
part of the marriage penalty debate that is largely forgotten 
is how this affects the earned income tax credit, which 
unfortunately has not attracted enough attention on our 
committee, Ways and Means. I intend to try to rectify that.
    Your point that nonprofit organizations also should have 
some incentives to do the right thing is also a powerful 
argument.
    I thank you, Mr. Chairman, as your mentee, for the 
opportunity to extend my time.
    Chairman Pitts. Thank you.
    Mr. DeMint.
    Mr. DeMint. Thank you, Mr. Chairman. And I want to thank 
the panelists as well. It is really encouraging to hear about 
the progress.
    I have been concerned for years with the problems we have 
created in this country by creating so much dependency and how 
much we have taken from the lives of many Americans and to hear 
that you are beginning to restore some of that self-esteem and 
self-worth by letting people have the opportunity to earn their 
own income, it is exciting to hear the progress.
    I really appreciate the ideas that have been offered about 
the marriage penalty, the nonprofit tax credit. And that is 
really what I am after this morning is a few more ideas that we 
can change at the Federal level that can make these programs 
work better and better.
    As you know, the further we go with welfare-to-work, the 
more people that we are picking up who are more and more 
difficult to employ. Now, those that were ready for work are 
probably back at work. So this job is going to get harder and 
harder and it is increasingly important that we continue to 
provide whatever incentives or remove whatever obstacles are 
necessary to makeyour programs and others continue to work.
    I have got many friends in business. I have talked to them 
about this welfare-to-work. A number of them have tried. They 
have mentioned things like the real problem with reliability. 
If they hire someone there is a risk they may have a lot of 
difficulty remembering to come to work and to stay at work once 
they receive their first paycheck, as well as the risk of them 
going on disability. Many of them have been briefed before they 
get to work on how they can take advantage of employers.
    There is very little flexibility in employment law on how 
to deal with folks that might require a great deal of expense 
in the beginning. And so the way the tax policy is set up, the 
way the Federal guidelines about employment are set up, are 
there some obstacles that we can remove within reason that 
would make it easier, less risky for employers?
    I am sure, Mr. Yergan, you had to think of that 
possibility. Every one you hire, you have some liability 
attached to that. What can we do to make the system work better 
and better in addition to the ideas that you have already 
mentioned?
    Mr. Cove, we will start with you. You look the most 
anxious.
    Mr. Cove. Well, I didn't describe our program at all. And 
our program does really help to get at the issues that you were 
just speaking about.
    So if I could just quickly mention how it operates. What we 
do after a company has an opportunity to interview a couple of 
people and select someone, if they want, they have no 
obligation, the person stays on our payroll for 4 months. And 
during that period of time the transaction looks a bit like a 
temporary agency transaction.
    We bill a company on an hourly basis for the hours worked 
by the welfare recipient. The welfare recipient stays on 
welfare. Although the grants get reduced, they still are 
eligible for some of the benefits of welfare. If the company 
hires them after 4 months, then they go off of welfare. 
Although some other benefits, such as food stamps may continue 
depending on how much money they are earning.
    But what that does and why the companies love it is it 
gives them the opportunity to get past the issue that you were 
just raising, Congressman, which is that they stay on our 
benefit package. We assume all responsibility just as a temp 
agency would. And the company gets a chance to try before they 
buy, which companies really like very much.
    So a process in which an individual is essentially tried 
out and ``temped'' out for a period of time as a program idea 
really works. And I think if you had the kind of changes that I 
suggest in pay-for-performance, you would find many more 
companies following America Works' lead in putting people in a 
temp position for a period of time and then being hired into a 
permanent position.
    Mr. Powelson. I would just like to reiterate what was just 
stated. Over the last year, I have become a professional grant 
writer. And I can tell you that there is a feeding frenzy 
within our State for organizations that are going--and I 
commend our governor and our State legislature--all our grants 
now are competitively bid out.
    So there is going to be an end result that you better 
attain in meeting a goal. And I can tell you in this social 
service provider bureaucracy that is out there, many of the 
dollars haven't gotten back to the recipients or helping really 
advance a meaningful cause. And it gets tied down in 
administrative costs. And with our program we are able to--
through private and public dollars, we work this program off 
about $110,000. We have--we will have one full-time welfare-to-
work coordinator, another very powerful statement that a 
Chamber of Commence would have someone out there doing that.
    And I have taken a barrage of phone calls that--here is a 
classic one. Your organization stole my money; your 
organization isn't involved in work force development. Well, 
you know on those two points alone I beg to differ with the 
audience that I have had. It bugs me to no end because I have 
seen this happen.
    And in the old system it was like, Chamber of Commerce, 
could you sign a letter of support for my grant? And now that 
we are engaged in this, it has changed radically. And I have 
realized that there are organizations out there that have just 
kind of, you know, they have taken money off this trough that 
is out there.
    And the rules have changed. And they should continue to 
change.
    Mr. Ballard. Mr. England--I am sorry, Mr. DeMint, I would 
like to address your question in several ways. Number one, we 
hire people who are high risk, high risk for drug addiction, 
high risk for incarceration, because most of us have been 
there. So we are not hiring what we call goody two shoes. We 
are hiring people who have a real problem but who have overcome 
and now look to people who have overcome.
    There is a bill that we worked with last year called the 
Fathers Counts; and this bill is a non-punitive approach to do 
intensive work with fathers in particular, very high-risk 
fathers; and I would suggest strongly that you support that 
bill, Nancy Johnson's bill, that it gets through.
    I think in that bill should be that organizations should 
support good, strong, loving marriages. They should support men 
having good-paying jobs so that they can take care of their 
family, get them off welfare. They should support men thinking 
what I call entrepreneurial thinking so they don't just want to 
own a business, they want to treat the job like it is a 
business.
    When I came out of prison, I wasn't called a deadbeat dad. 
I wasn't called a dead-broke dad. I know things were said, but 
the government wasn't saying those kinds of things. I think the 
government has done us a disservice by calling men deadbeat, 
dead broke. They are not good terms, and children don't feel 
good when their dads are called that way.
    I would suggest we take out of our language these what I 
think are very punitive approaches to getting men to pay child 
support. You can force a man to pay child support. He will pay 
it for a while, and he will go and hide. We need a better 
approach to getting to these men, and we need to kind of back 
off the bully pulpit mentality.
    These are fathers. They love their children. They want to 
be involved. There are a lot of problems they are going 
through. I think that as we look at the pain they have 
experienced, some men didn't even have fathers as they grew up 
so they have no idea how to be fathers unless someone leads 
them in the direction.
    So I think we have a great opportunity here to do some 
great things with this Fathers Counts bill, and I would 
appreciate if you could give Nancy Johnson support around it.
    Mr. DeMint. Thank you, Mr. Chairman.
    Chairman Pitts. Thank you.
    Mr. Cove, you mentioned that 88 percent of participants in 
your program remain off welfare rolls 3 years later. That is an 
outstanding success rate. Do you have any data of what 
percentage of America Works participants go on to, for 
instance, enhance their education by getting a GED or college 
courses? Do you see continuing education as a factor in keeping 
people employed and off welfare roles?
    Mr. Cove. We really don't have but anecdotal information on 
people and how they have either been promoted or moved into 
other educational opportunities. I know that it happens, butto 
be honest, if happens randomly.
    What I would suggest is that, if I had any druthers in 
terms of Federal policy, I would take the tax credits that are 
given to the private sector, the work opportunity credit and 
others, and I would convert that money into vouchers for 
individuals or for companies to upgrade welfare recipients who 
have been placed in jobs. To me, that would be a much better 
use of public monies than the use of the monies for tax 
credits. I know there are differences of opinion on this panel 
regarding tax credits. But my experience over 35 years has been 
that they are not terribly successful.
    I would love to see an opportunity where welfare 
recipients, once getting a job, had a voucher available for 
upgrading in education or training; alternatively if that was 
not available that voucher being given to a private company for 
them to then use for upgrading that individual. That, to me, 
would be significant.
    Our job has really been to get people into the marketplace 
and keep them there. Unfortunately, we really haven't worked on 
that other side.
    Chairman Pitts. Thank you.
    Mr. Powelson, I know another facet of your program is the 
establishment of a loan pool for your clients. Who would be 
eligible for such loans and on what terms and what role, for 
instance, have community banks played in this process?
    Mr. Powelson. Our program, as designed some 18 months ago, 
we have in working with the DPW office realized that there are 
emergency needs that are identified where cash assistance just 
cannot solve the problem.
    An example, if I--actually, I took public transportation, 
but if I were driving down to Washington today, and I had a 
blown tire, between the credit card, a checking account, a 
savings account, I am going to fix that problem, and I am going 
to get to this hearing on time.
    Imagine this scenario. The welfare client going to work. If 
they have transportation, blown tire, entered into a new work 
situation so there is no roll of accumulated savings during the 
first 6 months of work, that situation arises. As a result of 
the blown tire, they have--the axle breaks. For that 
individual, it is catastrophic. And what happens is that is not 
communicated back to the employer. The employer gets a little 
weary of the individual.
    Wouldn't it be nice, we said, if that individual could 
access for that emergency need as identified by the mentor 
presented back to our program coordinator, could go to a local 
community bank and access a loan. The loan guidelines, as we 
have established them now, they can borrow up to $1,000 but not 
at a 16 percent APR like a Visa or a MasterCard--at maybe 2 
percent.
    They go into a local community bank. They sign a note, 
teaching the individual fiduciary responsibility. Those monies 
are used to help that emergency need. As a result, we figured 
that the community bank loves it because they get a CRA for 
servicing that population.
    So that is what we have been able to create. We haven't 
really promoted it. We don't want to make the clients too aware 
of this fund that we have set up, but there are many programs 
out there. There is one I think in the State of Minnesota where 
a local community has done the exact same thing. It is 
remarkable that we have this, because there are situations that 
come up.
    Chairman Pitts. Thank you.
    Mr. Ballard, is the cycle for dependency on welfare more 
likely to be broken when a child has a working parent as a role 
model? What I am interested in knowing is what is the most 
immediate benefit for a family when a parent successfully 
completes your program?
    Mr. Ballard. Someone had said that more is caught in the 
world than taught. I think when people and children see their 
parents living a certain lifestyle, whether it is good or bad, 
they are going to model that. In fact, the Bible says that the 
sins of the father will follow the children to the third 
generation.
    One of the reasons I think when I came out of prison I went 
to work was because my grandfather who worked on a farm in 
southern Alabama taught me how to work. He said, if you work, 
you will always have income.
    I think children will see their parent doing something. My 
son, who is now 43, has a master's degree. He talks about how I 
raised him. He said, my dad would take any kind of job that was 
honest just to make a good living and take care of me; and he 
feels that that modeling of seeing me go to work is what has 
kept him as he is today.
    Many children tell us that their parents are in bed at 
8:00, 9:00, 10:00, even at noon; and they go to school many 
times not dressed properly. They go to school hungry. So how 
can we model that kind of concept and expect people come off 
welfare and make it?
    We have to have parents to become good parents, and good 
parents mean getting married. Good parents mean having good-
paying jobs, paying their taxes and contributing to society and 
raising your children right. I think as children see modeling 
of good parenting they will grow up and themselves become good 
parents.
    Chairman Pitts. Thank you.
    Mr. Yergan, you mentioned a success story, Ms. Rodriguez I 
think it was. Could you describe in a little more detail the 
changes you have seen in Ms. Rodriguez since she has been 
employed by your company?
    Mr. Yergan. Yes. As I was saying earlier, she is a mother 
of three, divorced from her husband who left her about 5, 6 
years ago, went on to welfare because that was the only way she 
could survive. She is probably the most conscientious person in 
my office in regards to--sometimes including me--of getting 
there exactly or early for work. She is supposed to be there at 
9:00; she is there at 8:30. When the clock, so to speak, ticks 
at 6:00 and she is supposed to leave, she is not running out 
the door. She is finishing what work she has to do before she 
goes. And if it is 6:06, 6:08, she signs out at 6:00.
    It is not like she is trying to get every little minute 
from that standpoint, but it is also maybe just the little ways 
that she carries herself, the way she interacts with people. On 
the phone initially, you know, very maybe meek might even be 
the word and now joyful, laughter, but also then says, well, do 
you want that policy or also then relating it to what a 
salesperson is supposed to do.
    And I think from what I have heard, that is carried out, 
you know, in her--maybe her relationships outside the office. 
She is more assertive. She is more demanding of what she is 
seeking out of life.
    And it is just, you know, a similar evolution of what we 
see as, you know, our children as they grow. You see them as 
they progress. Not relating her to a child but just in regards 
to that evolution of life. And, you know, I am sure there will 
be times when she will become more demanding to me about when 
is that next raise going to be, when am I going to have 
something more to do, and I know that is coming, and I am going 
to beat her off at the path, so to speak. But I have rewarded 
her increasingly since she has been there, and I just think she 
just walks taller, so to speak.
    Chairman Pitts. Thank you.
    We have been joined by the gentleman from Kansas, Mr. 
Moore. Do you have some questions?
    Mr. Moore. No, sir, I don't. I regret that I was here late, 
and I don't want to ask questions that have already been asked. 
Thank you very much, Mr. Chairman.
    Mr. Ballard. If I could just make a comment. I can't 
remember your name, sir. But he talked about mentoring, and 
mentoring to us is like modeling, and we believe that there is 
not enough good mentoring going on. And his program sounds like 
a really good model to do that. By living in a community where 
the people are--by going to their homes, we are doing some of 
the same things. We are actually showing them how to live and 
how to carry themselves, and I think this is a very good 
approach to provide this whole mentoring concept to the 
community as well.
    Chairman Pitts. All right. We will take just a few more 
questions before we wrap it up.
    Mr. Cove, what type of companies do your sales 
representatives establish contact with?
    Mr. Cove. From the largest companies like Aramark Food 
Service, an international food service company that has hired, 
until now, close to 500 people from us to small little 
companies, ma and pa stores. It really depends where the 
openings are.
    The easiest way to think about it is to think about, first 
of all, the range of jobs that are available up to about $12 or 
$13 an hour where most of the people--not all but most of the 
people will go into. And it can be anything from a Barnes and 
Noble, where we have placed dozens of people in cashier and 
other positions, to manufacturing, or customer service. It 
really is a wide range, because there really is a wide range of 
experience and potential of people on welfare.
    It ranges from modest, entry-level jobs to quite 
interesting jobs that would probably surprise the members of 
the Committee that welfare recipients would be able to move 
into. But it really is a vast range of companies, from the 
smallest to the largest.
    Chairman Pitts. Mr. Powelson, in your partnership with the 
private sector and government, what role has small business 
played as part of your program either as serving as mentors or 
in hiring clients?
    Mr. Powelson. Our biggest mission with small business is to 
take the fear out of hiring; and, you know, I guess again the 
carrot and stick approach uses--is educating them on tax 
credits that are made available to them. Many of our employers, 
small businesses that have hired, share with us the horror 
stories, so it is kind of changing the mindset; and then when 
we are working now more closely with the DPW office, we make 
darn sure when that resume comes back to the Chamber and we are 
going to make that call to get someone into a job, that that 
person has been screened, they are job ready, really ready to 
hit the ground running. Because the old saying, you never get a 
second chance to leave a first impression.
    And some of the things that we have done is it has been a 
leap of faith, and I am putting my reputation as a head of the 
Chamber on the line in some cases. I was burned once, and I am 
learning from some of these situations.
    Chairman Pitts. Mr. Ballard, what in your experience are 
the most significant barriers to long-term retention and what 
does your program do to confront or overcome these obstacles?
    Mr. Ballard. Over the past 30 years has been drug use, 
alcohol, behavior problems, people responding to employers in 
ways that are inappropriate. We address these by, once a person 
is placed in a job, our office contacts the person once a week 
and we contact the employer once a week. And employers have 
said to us if every company does this, this kind of follow-up, 
the retention is much higher.
    We model risk-free lifestyles. We believe that if a person 
drinks and does drugs, he cannot maintain a job very long, so 
we work with them in this 30-day period. It is a very intensive 
one-to-one in his home to help him overcome drugs. We also make 
referrals to drug programs when necessary.
    But the idea is to counsel him about the importance of a 
risk-free lifestyle, having a good attitude and also modeling 
that same attitude.
    Chairman Pitts. Mr. Yergan, based on Ms. Rodriguez's 
success, do you anticipate that you will continue to hire 
participants from America Works or other welfare to work 
programs?
    Mr. Yergan. Yes, I do.
    If I could go back to Ms. Rodriguez, after you asked me the 
question, some things came to mind and how it affected her. I 
remember after she had been with me about 2 or 3 months, I 
said, now I want you to go to school to learn about insurance 
and get a license. The look on her face, the beaming that she 
had when she went home and explained that to her family and her 
mother and her aunts and uncles, it was just like a whole 
tremendous avalanche of feelings in the family.
    Then when she actually started school and had homework 
every night and had to come home--she had to go to school from 
9:00 to 5:00, and then she had to study. She was able to sit 
down. While her kids were doing homework, she had homework. So 
it was, oh, I am doing my homework with mommy. And her 
daughters would say and her sons would say--or son--I am doing 
homework with mommy, and that helped them also see the 
importance. So there was like a spillover effect of that.
    And then once she actually took the test and passed it the 
first time, where many people with college don't necessarily 
pass this test the first time, and she did; and that had a 
positive effect not just in herself, in her own feelings, but 
also in her whole family.
    Now she had told me her son is applying for, I guess, a 
scholarship or a certain exam to get into Stuyvesant, which is 
one of the best public schools in New York City; and it was 
something that he hadn't really thought about before he saw--
this is according to her--before he saw that a mother could 
move from where she was, that there were certain things that 
his mother was achieving. So now he has set his own goals 
higher. So that is from your last question.
    Now to answer this question. It just kind of took a while 
to come back to me. Yes, as a matter of fact, at one point, you 
know, I did speak about America Works to another full-time 
person. Turned out that that person, who I wanted, I wasn't 
able to hire because another employer also thought highly of 
her and was willing to pay her considerably more than I was. 
And at the same time, the training program that I was trying to 
hire for was postponed, so it kind of fit my timing.
    So, yes, I would use them again. I have in other agencies 
within Allstate.
    As I said, in certain ways we are like franchises. They are 
finding out about America Works, and we are spreading the word, 
and they will be using that type of organization.
    You know, more recently, I just hired someone from the 
Board of Education School of Coop Ed just because it was four 
blocks away. That was a little risky to me because, in that 
case, they are on my payroll from the start; and if they don't 
work out, I have got to fill out all that paperwork and the 
whole process and that person doesn't work out, however they 
are, I then would have been at a disadvantage if--compared to 
if I used America Works, where it is on their payroll, and it 
is just easier.
    I guess, really, our concern is just time and what is easy, 
to get the person who can produce. We are kind of in that 
pressure environment where, day in and day out, every day is 
another day.
    Mr. Cove. I just wanted to reiterate something that the 
other members of the panel have been talking about. Again, I 
didn't go into a description of America Works' program, 
although it is in my written testimony.
    The major reason that America Works has the retention rates 
that it does is because we send a staff person called a 
corporate representative to the work site at the private 
company every single week. This is the kind of mentoring that 
my colleagues have been speaking about this morning. That 
person is there to make sure that the line manager at the 
company and the worker are positive that it is working out.
    If the person is coming in late, we immediately move in to 
find out what the issue is. Is it a day care issue? Is it a 
problem of just being able to wake up on time? What is the 
issue? If there is an abusive mate at home, we immediately get 
involved with that person with victims' services and get 
protective orders or whatever are necessary.
    We believe very strongly people lose their jobs not because 
of what they don't know but because of their inability to fit 
in in the workplace. I call it the static in their lives, the 
kind of things that my colleagues were talking about today. The 
staff person who intervenes in the work site is known as the 
corporate representative (the equivalent of the mentor). The 
involvement of the corporate rep is critical to the success of 
these kinds of programs as it is he or she who takes away some 
of the issues that could prevent a good worker from succeeding 
in the workplace.
    Again, if government were to pay for results, you would 
find much more of this going on because, as you are hearing 
today from the people on the panel, that really makes a 
difference.
    Chairman Pitts. Mr. Powelson?
    Mr. Powelson. Congressman, if I may, I would like to share 
with you, just as a tie-in to one of the other panelist's 
comments. I have found in my mentoring experience with my 
mentee, in my initial meeting with her, I could tell you right 
from the start that an individual in her situation is living 
day to day, where someone in my position or your position or 
anybody in this room probably has a game plan where we are 
going to be 6 months from now, a year from now, wherever. Some 
people, I just found out, have a 35-year plan.
    My point is, we needed to start thinking the way I think 
and others think in terms of planning, and this is--I mentioned 
it in my testimony. My mentee had no idea that there was a 
resource in the community where she could get her kids involved 
in a summer camp program. That little pick up the phone, get 
the paperwork filled out and getting it done meant so much to 
her self-esteem and to provide that for her kids.
    Her initial reaction when I brought it up is, I can't 
afford that. It wasn't about affording it. There are resources 
in the community. Someone in my position and many in this room, 
we know our resources. That is where we get around. And, you 
know, it is the struggle of life and providing those resources, 
that insight has been just the little thing that I do to help 
her. And she has got to help herself has meant a lot to her and 
has built up this self-esteem, as you have heard.
    Chairman Pitts. Thank you.
    Any members have any other questions? Mr. DeMint.
    Mr. DeMint. Thank you.
    Mr. Cove, what are the incentives for private businesses to 
do what you are doing? Where do you make your money? How does 
it work that we could encourage others to do what you do?
    Mr. Cove. Sure. What the government should do is decide 
what it is worth to get someone off welfare, set a market price 
for what it is worth or at least go to the marketplace and try 
to figure out what it is really worth to get someone off 
welfare. This is never done. It is calculated all kinds of 
other ways.
    But that way of saying--it is costing us, let's say, in New 
York State 20,000 or more dollars per year to keep a mother and 
two on welfare. What is it worth to the taxpayer to get the 
person off, guaranteed? What is it worth? And come up with some 
figures that make some sense.
    Once that is established, and I think it should be done in 
conjunction with the marketplace: a fair market value is set, 
then the government should say to the private sector and not-
for profits, now, give us your plans. Incidentally, this is 
very well done in England. Tell us what you plan to do, and as 
long as your plan is a good plan, go right ahead and start 
taking people and placing them in jobs and getting them off 
welfare: We will then pay you that fair market value at the end 
of a period of time which is deemed long enough by the 
government to increase the likelihood of that person continuing 
in the job and off of welfare.
    The way we make our money is a combination of two major 
sources of funding. One is that money that we do receive from 
the government to get someone off of welfare, though it is 
usually not paid in the preferred way, i.e.: at the end and for 
a job well done. The other source comes through the 
differential we charge Allstate and others on an hourly basis a 
little less than it would have cost them to keep the person in 
that job. Out of that we use the money to pay the wage of the 
workers, as I indicated. The person is on our payroll during 
the period of time they are working for the company, that 4-
month period. So there are two sources of funds.
    Ideally, ideally it would be a company such as ours, 
although our program I don't think is the only way to do it. I 
think we have a great program, and it delivers at the end, but 
there are lots of ways of doing that.
    But what the government should be doing is paying for the 
programs for a period of time for individuals to be ``temped'' 
out, for instance, the way we do it with Allstate and with 
other companies around the country. Then, at the end, the 
government should pay for the results. You would find a 
marketplace boom. You would find, instead of the reaction I got 
in my anecdote earlier which was ``we can't pay you for 
performance at the end, because we would lose all our other 
contractors.'' What you would find is the development of a 
private marketplace that really delivered welfare to work.
    Mr. Ballard. I would say, treat nonprofits the same way. 
Whatever incentives you give to businesses, give those to us 
and make us compete. Make this a competitive environment the 
way it was when we first came to America and fought against the 
wilderness. That spirit needs to come back, and we need to help 
people understand the importance of not only working but 
working good.
    So I think that if we are given a challenge and we could do 
partnership with America Works, that we would find the fathers, 
we would prepare him for the workplace. We would place the 
father and together we would retain--we could have a 90 to 100 
percent retention rate, not just in 3 or 4 years but forever. 
So I think we need to find better ways of doing business in 
America.
    We have made America dependent, even corporations, on 
taxpayers' dollars; and we need to find a way where taxpayers 
are paying for what they are getting; and today that is not 
happening.
    Chairman Pitts. Thank you.
    The gentleman from New Mexico has joined us during the last 
round, Mr. Udall.
    Are there any other questions from the panelists? If not, 
this has been an excellent panel with many good ideas, 
excellent testimony. This will be a very important record to 
the members ofthe Committee, and we will keep the record open 
for 5 legislative days if any of you would like to submit any further 
testimony.
    We thank you very much for taking time to meet with the 
Subcommittee today; and if there are no other questions, this 
hearing is adjourned. Thank you.
    [Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
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