Company’s Business Is Trimming Hefty Welfare Rolls : Economy: New York State pays America Works to put people to work and keep them working.
Philip Jones is making his way through the back halls of Plenum Publishing Corp. when he spots a woman pushing a mail cart on the other side of a glass door. The 20-year-old woman, a tiny gold dollar sign pinned to her right nostril, turns to unlock the door for Jones. No, she says, she’s not having any problems. But she confides that another employee has been coming to work late and isn’t coming in at all for the second Monday in a row.
The mail clerk’s tip is valuable to Jones. It alerts him to a problem he must solve if his company, America Works of New York Inc., is to earn its $5,300 fee from New York State for finding a job for the tardy woman and keeping her off welfare.
Making the transition from welfare roll to private payroll is not easy, Jones explains later.
“You’ve got to change your whole lifestyle,” he says. That can range from finding a baby-sitter to turning away the taunts of friends who continue to hang out in the housing projects, or escaping an abusive boyfriend who is upset about the new job.
Helping people through these monthslong transitions is the key to Jones’ job at America Works, a small, New York City-based, for-profit company that gets paid only when it places out-of-work people in jobs and keeps them there.
Logical as it seems, being paid strictly for performance is the exception among organizations trying to break generational patterns of welfare dependence. Although America Works places only about 450 people a year, its owners and operators say they hope their entrepreneurial example will encourage other organizations and government agencies to use the profit motive to cut welfare rolls.
Many organizations around the country have been trying since the 1960s to help otherwise capable people overcome the stigma and discouragement of being on welfare and get jobs. Most of these programs receive government funding for putting welfare recipients through training programs. Sometimes the programs receive extra money if they show they’ve helped keep someone in a job for a month or three months.
America Works sets its standards higher, taking credit for a placement only after the person has held a job for four months.
When state officials checked to see if taxpayers were getting lasting value for the placements, they found that nearly 90% of people America Works placed were still working a year later, according to Oscar Best, the state deputy commissioner for income maintenance. Best says the company also excels by placing people in private-sector jobs with opportunities for advancement; other organizations tend to place people in government jobs, he says.
For the state, the $5,300-per-employee fee compares with a $15,000 annual cost of maintaining a parent and two children on welfare. America Works estimates that the people they place in jobs have spent an average of five years on welfare. Many have been through countless training programs.
“It is a guaranteed return on any taxpayer investment because they only pay us if and when the person is successful,” says Lee Bowes, America Works’ operations director and co-founder.
The company brings in revenues of about $3 million through its office in the city and another in Hartford, Conn. About two-thirds of its revenues here come from the fees paid by the state. The rest comes from a spread the company makes from clients’ wages during their first four months on the job. The welfare recipients are paid the $4.25-an-hour minimum wage by America Works, which then sells their labor to private employers for nearly the rate they will be paid if they are hired at the end of the four-month period--usually about $3 an hour more.
America Works is literally a mom-and-pop operation run by the wife-and-husband team of Bowes, 39, and Peter Cove, 50, a pair of liberals transformed by decades of work in abandoned social programs and by the newfound guidance of a capitalist and retired tallow processor, Abe Levovitz.
Levovitz, 66, of Newton, Mass., took on the company’s books and management consulting after the couple ran into financial trouble about six years ago. Bowes and Cove were trying to run a program where they were reimbursed for only certain government-approved expenses. Levovitz urged them to quit contracting for piecemeal services and start selling a finished product--a placement--just as a shoemaker sells a shoe.
Besides coaching, Levovitz also put up some badly needed cash--$300,000 to fund the Hartford office, the first, in exchange for half ownership of the business there. Three years ago he put up another $300,000 for the New York City office and took full ownership of the company here. The investments earn 10% to 15% a year before taxes, he says.
Levovitz says he has had to spend a lot of time lobbying for contracts because of suspicions of his profit motive. But there are some signs that such apprehension is giving way to recognition of American Works’ success rate. Manhattan Borough President Ruth Messinger, for example, has embraced the company and wants the city to contract with America Works to run a hiring program in Harlem.
Messinger says the government contribution to the profit-making enterprise is justified because it’s “based on demonstrated success.”
“That strikes me as a very good way of paying for services,” she added. “This is an area where we see lots of programs come and go without any conviction that we know what it is that works.”
