The Pew Charitable Trusts

Six years after sweeping welfare reform legislation began moving hundreds of thousands of people off welfare, many former recipients are failing to stay employed and work themselves out of poverty.

But an innovative welfare-to-work program created by a Michigan plastics manufacturing firm is bucking that trend by achieving record-breaking success in helping people become independent of public assistance.

The company, Cascade Engineering of Grand Rapids, has developed a welfare-to-work partnership with a local chapter of Michigan's Family Independence Agency (FIA) that has tripled the retention rate of its welfare employees in the past four years.

"This is one of the most successful models for welfare-to-work, and state and business leaders should look to it as a model for helping people retain jobs," said Jack Tweedy, a welfare analyst for the National Conference of State Legislatures.

Two aspects of this program are unique and worth noting. First, the state welfare agency placed two caseworkers at Cascade to provide day-to-day support services; second, Cascade instituted company-wide training programs to give welfare-to-work employees job and social skills and help them function in a middle class environment.

Out of 1,100 employees, Cascade Engineering currently has 96 people hired through its "Welfare-to-Career" program, with a monthly retention rate of 95 percent. National retention rates vary from state to state, but welfare analysts estimate that between 40-60 percent of welfare-to-work employees lose their job within the first 90 days.

Programs like this are models because while welfare rolls have been cut in half, states need to provide services to help former welfare recipients stay employed and advance in their jobs, Tweedy said. It's not clear whether Cascade's program can be easily replicated elsewhere, but its unique strategy can provide a lesson for other states seeking to improve welfare-to-work retention rates.

Cascade's welfare-to-work efforts date back to 1991, when Fred P. Keller, the firm's owner and CEO, tapped Ron Jimmerson, a human resources worker, to recruit labor from a local homeless shelter. Jimmerson, who had trained as a social worker, hired 11 workers from the shelter that year, but they all quit or were fired within two weeks.

"We were just lacking a lot of knowledge on what these people's basic needs were," said Jimmerson. "We were under the same impression that most Americans are under: In order for a person to be self-sufficient, all a person needed was a job."

In 1995, Jimmerson tried to form a transitional work program with the owner of a Grand Rapids Burger King franchise. The program was called "Work-to-Work," and participants were promised a higher paying ($10/hour) job at Cascade after they had worked at Burger King for six months, to get "socialized into the working environment."

After a year and half, no one had moved to Cascade and the program was canceled.

As Cascade was giving up on the program, Jimmerson began meeting with welfare agency official Randy Koekkoek to discuss how the firm could take advantage of initiatives being developed under the federal welfare reform law passed in 1996.

"Cascade was finding out that there's a lot of support service needs for these people, and human service agencies like the FIA need to be involved because there's no way the private sector could begin to afford these kinds of services," said Randy Koekkoek.

By the end of 1997, Jimmerson was hiring welfare recipients for Cascade out of the welfare office after they met with a social worker to see what support services they were eligible for. Ninety percent of the welfare recipients were single mothers, so childcare and transportation were the two most important services provided by the FIA.

Cascade began to see some success through this arrangement, but the program still experienced high turnover rates.

To try to solve this problem, Koekkoek assigned a welfare specialist to Cascade's clients, and got permission to open a small office at the plastics plant, where she was available to assist her clients after they started work.

This was so successful that the FIA sent another caseworker, allowing the first to focus on job retention.

Despite the extra attention Michigan gives the Cascade recipients, the program costs the state little. Cascade does not charge FIA rent for their office, and will pay half the $117,000 salary for the two caseworkers starting next year, said CEO Keller.

The state provides several incentives for companies to hire welfare recipients, like paying the first 30 days of wages - $785.50 per hire - and offering an array of tax credits that can be applied to most welfare-to-work expenditures. Jimmerson said most companies are not aware of the tax benefits, and Cascade, for example, failed to take advantage of at least $125,000 in tax credits last year for training programs it created.

The Grand Rapids FIA is now trying to adapt Cascade's model for smaller businesses. Most companies cannot hire as many welfare recipients as Cascade, so the FIA and Jimmerson are trying their model on a consortium of 10 local businesses called The Source.

Koekkoek plans to open a small office in downtown Grand Rapids by early 2003, funded by The Source companies and staffed by a caseworker who will make weekly visits to companies to work on job retention.

Andrew Zylstra, FIA director for Kent County said that this partnership never would have happened without the progressive outlook of Cascade Engineering's owner.

Keller said that a progressive social outlook has been part of his corporate philosophy since he founded the company 28 years ago. He said that success shouldn't be measured by financial returns alone, but must include a company's environmental performance and its impact on society.

"My motto has been: Do something good and then make it good business," he said.

In the second installment of a two-part profile of Cascade's Welfare-to-Career partnership, Stateline.org looks at how the plastics company helped one welfare recipient become self-sufficient.