Temporary Employment and Welfare

For those on welfare, are temporary jobs a stepping stone to full-time employment? Surprisingly, temporary jobs may limit rather than enhance the chances of obtaining a full-time job:

For Welfare Clients, Temporary Jobs Can Be a Roadblock.by Deborah Solomon, Wall Street Journal: ...Proponents of welfare-to-work argue that a client who gets a job, even a temporary one, is less likely to become chronically dependent on public aid. Nationally, between 15% and 40% of all welfare recipients who do work are in temp jobs.

The prevailing view ... has been that temp jobs, despite their obvious disadvantages, help welfare recipients taste the dignity of work and develop valuable habits, such as punctuality and learning how to interact with others.

But a recent study of job programs in Detroit, which has one of the largest welfare populations in the country, is challenging the long-held belief that a temp job is better than no job.

"Encouraging low-skilled workers to take temporary help agency jobs is no more effective -- and possibly less effective -- than providing no job placements at all," says economist Susan Houseman, of the W.E. Upjohn Institute for Employment Research... She is co-author, with David Autor of the Massachusetts Institute of Technology, of a study that tracked 23,000 Detroit welfare recipients.

The results surprised even the researchers. "If anything, we thought that temporary agencies would help welfare workers build skills, connect with potential employers, and so increase their future earnings," says Mr. Autor. "But this is not what we found."

Temp-agency work, they discovered, can create an unyielding cycle of finding and losing jobs. Detroit's Work First clients often had low morale, slim chances for job stability and plenty of setbacks. "While you're working at the temp job you're not connecting with direct-hire employers...you're not making any advances towards finding a permanent job," says Ms. Houseman.

The academic research confirms what some people involved in Detroit's system have suspected all along: that temp work has serious drawbacks. "Having a job this week and no job next week is not conducive to independence," says Melvin Chapman, director of a nonprofit welfare-to-work program called Diversified Educational Services Inc. ... DES provides job training and placement assistance for 2,000 welfare recipients annually and generally shuns temp gigs for its clients.

One reason: When a welfare recipient loses a job -- especially through no fault of his or her own -- it can create resistance to wanting to work, says Mr. Chapman, a psychologist. In those cases, battle-scarred clients "are more difficult to send on another placement, saying, 'I know how this works, it's a merry-go-round,'" he says.

In addition to their ephemeral nature, temp jobs can have what the researchers call a "displacing" effect. They take up valuable time that welfare recipients could be using to find better, more stable positions...

Detroit's Work First program randomly assigns its clients to private job-placement organizations. Some send workers to temporary jobs; some don't.

In their study, conducted from late 1999 to mid-2003, Mr. Autor and Ms. Houseman compared work histories of individuals who went the two routes -- as well as those who tried to find work on their own. Of the individuals they studied, about 38% were placed in a permanent job during their Work First participation, 10% were placed with a temporary agency. The remaining 52% left the program without being placed in a job... In those cases, many clients also lost their welfare benefits.

Crunching data from the state's unemployment-insurance wage records, the researchers uncovered some surprising trends. Among workers with similar backgrounds, those placed in temp jobs earned more money at first than those who had been hired directly by an employer for a permanent post. But after a year, the temp workers were earning less money and had less stable employment. They were also more likely to wind up back on welfare...

Even more striking, workers who got jobs through temporary agencies over a two-year period earned about $2,200 less than those who didn't get placement but presumably found work on their own. The researchers' conclusion: Most welfare clients who were encouraged to take temporary help jobs ... would have done better by finding a job directly with an employer after ... searching on their own. ...

Here's the study.