The New Democrat approach to welfare reform has two key elements. The first is to adopt a single, overriding national goal: employment for welfare recipients in private-sector jobs that lift them from dependence on public assistance onto a track of upward mobility. The second is to develop the best possible strategies to achieve that goal by encouraging a variety of experiments at the state and local level.

This formula has distinguished the Clinton Administration's approach from those on the right who oppose any national goals for reform other than reducing public assistance caseloads, and from those on the left who oppose efforts to break down the old public-sector monopolies governing income maintenance and job-training programs.

Achieving the goal of private-sector jobs for welfare recipients through innovative, non-bureaucratic strategies requires stimulating a whole new marketplace of public and private intermediaries offering job placement and support services. Indeed, some of the best success stories in welfare reform have involved the imaginative use of such intermediaries, who differ from traditional bureaucracies in being rewarded for their "output" -- placing and keeping welfare recipients in private-sector jobs-- rather than their "inputs" -- caseload levels.

Now Mayor John Norquist of Milwaukee, already an innovator in welfare reform, is supporting an experiment that takes the next big step in the use of such "results-oriented" intermediaries: the employment maintenance organization (or EMO). Like health maintenance organizations, EMOs would contract to supply a whole range of employment-related services for a fixed, per-customer rate. Unlike most HMOs, however, EMOs would be required to produce a very specific set of outcomes for welfare recipients: job placement, job retention, decent earnings, and fulfillment of parental responsibilities.

Under the Milwaukee proposal (approved by the U.S. Department of Labor for funding under a welfare-to-work grant program, and designed to operate as a pilot program alongside a more traditional welfare-to-work initiative), if the EMO does not produce the agreed-upon results for a given recipient, it will be responsible for providing community service employment until it does. Milwaukee also avoids the "best customer skimming" problem often encountered with HMOs by requiring bidders for EMO status to accept as its first clients a group of hard-to-employ recipients, along with a group of fathers who need income to discharge child support obligations.

The idea is simple: more freedom from government micro-management of inputs in exchange for more responsibility for publicly established outputs. Since that's the basic thrust of the nation's welfare reform experiment generally, we applaud Milwaukee's effort to "push the envelope" in the right direction.

For more information on Milwaukee's EMO proposal, contact David Riemer, Director of Administration for Milwaukee, at (414)286-3828.