INCREASING EMPLOYMENT OUTCOMES USING PERFORMANCE MANAGEMENT

INCENTIVES

Jason A. TurnerPractical Government Solutions

Milwaukee Wisconsin USA

Former Commissioner, New York City Human Services Agency; 1998 - 2002

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.

USUAL JOB TRAINING IMPACTS$10 BILLION ANNUALLY

Wages 2 ½ years after:

Men + 5%Women +10%Youth – female +1%Youth - male - 4%Youth - male, crime - 22%

WISCONSIN MAJOR FEATURES

POLICYWelfare benefits paid only after work activity

MANAGEMENT Fully privatized with companies at financial risk

PERFORMANCE INCENTIVEPrivate companies earn money through reduced government costs resulting from employment.

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

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

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%

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.

Compare

NYC CONTRACT PAYMENTS1. Create Employment Plan $2502. Place in job and keep 30 days 15003. Still employed at 90 days 15004. Still employed at 180 days 12505. Bonus for case closing and wage

gains

MAXIMUM TOTAL $5500

Significant Achievements

Progressive improvement

in overall Center

performance13.417.5

21.1 20.8

31.6

22.2

35.2

44.6

13.4

15.3

15.6

16.7

18.8

19.2

21.2

23.4

-5

5

15

25

35

45

55

May June July August September October November December

JobStat City Index Scores

May - December, 2000

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%

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.

UK Performance Payments

Pricing placements

Job Seekers

Vend

or c

ost p

er jo

b

0

Contract $$ per placement

Performance payments by category

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