INCREASING EMPLOYMENT OUTCOMES USING PERFORMANCE MANAGEMENT INCENTIVES

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INCREASING EMPLOYMENT OUTCOMES USING PERFORMANCE
MANAGEMENT INCENTIVES

• Jason A. Turner
• Practical Government Solutions
• Milwaukee Wisconsin USA
• Former Commissioner, New York City Human Services
  Agency 1998 - 2002

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WELFARE SITUATION 1964 - 1993

• Continuous increase in welfare dependency in good
  economy and bad.
• All efforts to increase employment outcomes had
  failed to result in significant positive change.
• National employment program 1989, coincided with
  increase in welfare caseload by one-third a few
  years after introduction.

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USUAL JOB TRAINING IMPACTS10 BILLION ANNUALLY

• Wages 2 ½ years after
• Men 5
• Women 10
• Youth female 1
• Youth - male - 4
• Youth - male, crime - 22

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WISCONSIN MAJOR FEATURES

• POLICY
• Welfare benefits paid only after work activity
• MANAGEMENT
• Fully privatized with companies at
  financial risk
• PERFORMANCE INCENTIVE
• Private companies earn money through reduced
  government costs resulting from employment.

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Contract provisions

• Vendors paid only from benefit savings
• - Vendor earns first 7 of all government
  benefit savings resulting from welfare case
  reductions
• Additional benefit savings
• - Vendor retains 10
• - 45 to state government
• - 45 to local government

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PROCESS CHANGES BY VENDORS

• Critical attention to important outcomes,
  including caseload and employment.
• Managers paid on performance basis.
• Staff changes from social workers to business
  representatives.
• Increased salaries for line staff.
• PROCESS CHANGES BY STATE AGENCY
• Relaxation of process rules to vendors.
• Attention focused on support services for
  employment

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EMPLOYMENT TWO YEARS LATER

• Total welfare cases at start 39,000 - 100
• Closed because of earnings 24,300 - 62
• WELFARE DEPENDENCY AFTER 3 YEARS
• Statewide caseload before 55,000
• After 11,000
• POVERTY DECLINE AFTER FIRST YEAR
• Milwaukee child poverty 26 to 20

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NEW YORK CITY

• Over 100 employment and training vendors
• Vendors paid on cost plus basis
• Central office had little influence on local
  operations (communication by mail).
• Agency did not track employment status of
  recipients.
• Bureaucratic culture
• Agency lacked a program mission and reward
  system.

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Compare
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NYC CONTRACT PAYMENTS

• Create Employment Plan 250
• Place in job and keep 30 days 1500
• Still employed at 90 days 1500
• Still employed at 180 days 1250
• Bonus for case closing and wage gains
• MAXIMUM TOTAL 5500

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Significant Achievements
Progressive improvement in overall Center
performance
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NYC EMPLOYMENT GAINS

• First full year after change
• 2 X more job placements
• 1/3 lower expenditures to government
• Weak vendors dropped out of program voluntarily
• Working in the private economy - - Mothers
  without High School degree
• Working 1995 16
• Working 2001 44

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UNITED KINGDOM

• New Labor Blair government, 1997, changed
  orientation in favor of work-first employment
  policy influenced in part by US experience.
• Employment efforts over ten years yield minimal
  results.
• Blair government hires David Freud to write white
  paper exploring changes, 2007.
• Labor government introduces partial performance
  payments, 2009.
• Conservative government combines elements of
  Wisconsin and NYC performance incentives, 2011.

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UK Performance Payments
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Pricing placements
Vendor cost per job
Contract per placement
0
Job Seekers
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Performance payments by category
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CONTRACT PRICE COMPARISON

• UK BEFORE NEW PROGRAM
• ACTUAL COST PER PERSON PLACED
• - - 48,600
• NY CITY CONTRACT MAXIMUM PER PLACEMENT
• - - 5500
• UK NEW PROGRAM CONTRACT MAXIMUM
• - - 4480
• UK LOWEST VENDOR CONTRACT BID FOR PLACEMENT
• - - 2300