One of the main arguments in favour of privately-run welfare-to-work programs like JobWave and Destinations has been that they don't really cost the taxpayer anything, since they are paid for out of what we save by moving people off of welfare. But an 11-month-old report prepared for the provincial government, quietly added to the province's website this week, shows that people in the programs do only marginally better in their job hunts than people who aren't in the programs. The government won't start saving money because of the programs for six or seven years, if ever.
As recently as January premier Gordon Campbell was at JobWave's Victoria headquarters for a public relations event congratulating the company on placing 30,000 welfare clients in jobs. Past human resources ministers Susan Brice, Murray Coell and Stan Hagen all pointed to the program as a big part of the government's strategy to move people into work. Hagen even "raved" about JobWave to Ontario officials who recently adopted a similar program.
Now it turns out they've had a report for almost a year that raises serious questions about the program.
Peter Adams and Cathy Tait of Victoria Consulting Network Ltd. wrote the report, Evaluation of the Job Placement Program and the Training for Jobs Program. The report is dated September 9, 2004, but it wasn't released until August 3 of this year.
The summary is 32 pages. A spokesperson for the employment and income assistance ministry, Richard Chambers, said a requested copy of the full report would be available Tuesday, too late for a thorough reading before the deadline for this story.
Client survey finds bad reviews
According to the summary, the researchers looked at four key questions. They wanted to know whether the program was really helping people "achieve independence through sustained employment" and whether it was equally effective for all clients. They also looked at what characteristics of the program made it successful, and looked at the net cost of the program to the ministry. What they found was not encouraging.
There are four contractors with the job placement program. The largest is WCG International Consultants Ltd. which runs JobWave out of its Fort Street office in partnership with the BC Chamber of Commerce. The next biggest is the accounting firm Grant Thornton, which runs Destinations, a program with a focus on the tourism industry. The researchers didn't compare contractors, but looked at the program on the whole. The government spends about $100 million a year on job programs, with JobWave and Destinations taking up nearly half of that.
Part of the report includes a client survey. While 72 percent of the people who found jobs through the job placement programs said they were satisfied overall, fewer than half said they felt more employable or that they'd gained job search skills. As many as 34 percent said the job leads didn't help them get a job.
"This finding reflects the fact that many of the people placed could have found work even without any help from the contractors," write Adams and Tait. "The contractors have a financial incentive to accept the most employable people even if they need very little assistance."
For people who did not find work through the program, not unexpectedly, the satisfaction numbers were even worse.
More than one out of four disagreed or strongly disagreed with the statement "I was satisfied with the service I received."
Four out of ten failure rate
Adams and Tait also say, "A large number of people referred to [Job Placement] do not benefit from the program." Nearly 30 percent of people who are referred to the programs don't show up, and of the ones who do, many don't get a job even for a month. "More than 40 percent of people accepted by contractors do not achieve independence within the program timelines."
It may be, they add, that many of the people being referred aren't ready for the program. "Some persons are being referred simply to ensure that referral targets are met, not because they are suitable for the program." They recommend, "The referral process should be changed to ensure that referrals are determined by the best interest of clients not the need to meet contractual referral obligations."
The training for jobs program, by the way, had a similar problem. "Without these persons to help 'make up the numbers', some contractors would not have been able to offer training to the most suitable clients. However, it is clearly not in the interest of the Ministry or the client to spend money on training that is not beneficial."
Easier cases favoured
One could excuse the fact many clients don't like the programs, and that many don't benefit from them, if there was evidence they were getting results. As the authors point out, that's not easy to measure since many people do find their own jobs. So they compared people participating in the programs to people who had been referred to the programs, but who were not accepted. This is not a good comparison. Representatives of JobWave have said in the past that they won't accept people with "barriers" to employment such as drug addiction or not wanting to work. They admit to taking only the people who are easiest to work with, so the two groups are unlikely to be very similar.
The authors acknowledge this in their July, 2005, update, saying, "These estimated savings may be somewhat overstated because persons accepted into the program are likely to [be] more employable than those not accepted."
They are also clear about the incentives that exist for the contractors to only work with the most employable clients, and that there is nothing built into the contracts to reward them for working with people who may need more help.
"Once placed, some clients achieve independence quickly and remain independent," they write. "Because payment to the contractor is linked to independence achieved by the clients, contractors may receive the largest payments for clients who were easiest to place and for whom they have had to provide the least support. In contrast, they may earn very little from providing a large amount of support to a client who finds it difficult to find a job or sustain independence. Under the performance-based contract, there is no direct relationship between payment received for, and the effort expended on, individual clients."
Despite contractors admitting to turning down people they think they'll have a hard time getting into jobs, the authors go ahead and make the comparison anyway, finding that for "participants in the program [there is] a small but positive program impact for each accepted person of 0.4 months of incremental independence 21 months after referral."
Program loses $13 million
After 34 months, says the update, people who've been through the program have been, on average, independent of welfare for an extra 1.4 months. Based on that, they say, the ministry will save $18 million on welfare payments. However, the program will have cost $31 million to make that saving. That amounts to a loss of $13 million on a program that was supposed to break even.
That's only slightly better than what Tait and Adams found in their original report, where they looked at one part of the program, referred to as 'JP2'. Payment to the companies "excludes other Ministry costs associated with program delivery (e.g. staff salaries, systems development and maintenance costs, etc.)," they write. Even ignoring that, they conclude, "If the impact of the program is sustained, the cumulative savings to the Ministry in [British Columbia Employment Assistance] savings will exceed the amount paid to contractors 6 to 7 years after the period of referral to JP2."
They also write, "It is unlikely that the Ministry's savings in BCEA payments will exceed the cost of the program for some time. In this respect, actual performance falls well below some of the more optimistic expectations for the program.
"However, actual performance of JP reflects the inherent difficulty in designing an employment program that would pay for itself. The difficulty is one of designing a process for identifying, in advance, the individuals who would benefit from the program and, thereby, not investing resources in persons who are unlikely to benefit."
The authors of the report had a number of suggestions for fixing the program. One was to allow people to collect welfare a little longer before referring them to a job contractor. They write, "Since a number of BCEA clients can find work quickly on their own, the Ministry may wish to expect a longer period of independent job search before a person is referred to JP. This would allow the Ministry's limited employment dollars to be focused on those who need assistance."
They also suggest rejigging the performance targets that determine how much contractors are paid. "The structure of performance incentives in the contract should be fundamentally redesigned," they say. "Contractors are currently paid on the basis of independence achieved by some individuals. However, success of the program can only be measured by the incremental performance of all persons accepted into the program."
Finally, and perhaps most disturbingly, they say the government needs to get better documentation from the contractors. "The Ministry should require contractors to provide regular monitoring reports on services provided and routine financial statements that clearly identify the costs associated with providing the service."
The report raises a number of interesting political questions. Why did it take so long to figure out the programs were wasting taxpayer money? Why wasn't this caught after the pilot program? Why did it take so long to release the report? Why was only a summary released? What changes have they made to the programs in the wake of the report? What changes are coming?
Claude Richmond, the minister for employment and income assistance, was unavailable. He received the post in premier Gordon Campbell's new cabinet after the May 17 election. The ministry's spokesperson Chambers says Richmond will be out of town until the end of August and unavailable.
He did, however, point the way to the answer on the question of what changes are coming to the programs. On August 5 the ministry issued a request for information looking for companies interested in running a new, revamped suite of employment programs. The job placement contracts will end in January, 2006, and something new will be in place by April. It will be interesting to see whether the new program includes the contractors the government's report now says did such a lousy job.
Andrew MacLeod is a reporter for Monday Magazine, where a version of this article also appears today. MacLeod wrote a four part special series detailing problems with the Liberal government’s welfare reform program last year in The Tyee. Here are those articles:
Welfare's New Era: Survival of the Fittest
Where Did All the Welfare Cases Go?
Welfare Reform's Public-Private Partnerships
Shut Out at the Entrance