The extraordinary success of work-based welfare reform over the last five years -- with caseloads dropping more than fifty percent nationally -- may have led some federal and state policymakers to conclude there's little work left to be done. In fact, the states may well need to become even more aggressively involved in welfare-to-work efforts in the immediate future, for two reasons.

First, and most obviously, the current economic slowdown, even if it's temporary, will likely loosen up the exceptionally tight labor market of the late 1990s, making it harder for welfare recipients to get and keep private-sector jobs.

Second, the welfare recipients still on the public assistance rolls are much more likely to represent the "hard cases" -- people with serious impediments to employment, including very young children at home, various disabilities, extremely low skills levels, or residences remote from the available jobs. According to a survey by the Urban Institute, 41 percent of current welfare recipients have not completed high school, as compared with 29 percent of those who have left the rolls. Moreover, 43 percent of current recipients report they last held a job three or more years ago.

Many of the "hard cases" need a lot more help in getting and keeping work than the carrots, sticks, and temporary transitional benefits typically offered to welfare recipients. A new briefing paper by Anne Kim, director of the Progressive Policy Institute's Working Families Project, makes the case for "transitional job" programs involving more intensive public support for welfare-to-work efforts, and discusses a variety of innovative and successful initiatives around the country.

As Kim reports in her paper, publicly funded "transitional jobs" come in two forms: private-sector jobs with unusually intensive public support, often including child care, transportation, and job-preparation services, and sometimes even wage subsidies; and jobs where the public sector not only provides support but is the actual employer. Private sector jobs with public support are preferable, since new workers are directly introduced to the mainstream economy where future and better opportunities are available.

In cases of publicly provided jobs, Kim argues that "wage-based jobs" where workers receive a check, pay taxes, and have incentives to succeed, are preferable to "workfare," where welfare recipients do not have wage-related benefits like the Earned Income Tax Credit, and are working to avoid losing their public assistance check, not to earn wages. Whether the job is private, public, or a hybrid involving a public-private partnership, it's important to ensure that it offers an avenue into real-life work experience, skills enhancement, and rewards for performance.

Kim notes three common elements of most successful transitional jobs programs:

• They provide generous work support and post-program transitional services. That means participants should receive the tools needed to overcome the particular obstacles they face in getting and keeping jobs, whether it's child care, job-readiness training, remedial education, or transportation. In addition, support services should continue for some time once the worker is successfully placed.
• They are administered in a flexible, performance-measured, community-based manner. That means abandoning traditional welfare bureaucracies and creating small-scale transitional jobs initiatives tailored to the particular needs of the community, and rewarding success in job placement and retention.
• They provide safeguards against displacement of existing workers. Public subsidies should not create a competitive advantage for welfare recipients.

Successful models of transitional job programs, include New York City's EarnFair; Philadelphia's Transitional Work Corporation; Washington State's Community Jobs program; Tulsa, Oklahoma's Industrial Exchange, Inc.; Vermont's Community Service Employment Program; and Oregon's Jobs Plus program. (See Anne Kim's report for descriptions of each.)

The main rap on transitional job programs is that they are expensive as compared to more traditional stick-and-carrot approaches. But thanks to rapidly declining caseloads, the states have already accumulated a total of $8 billion in unused federal welfare funds as of 1999. The logic of welfare reform is that the funds generated by the departure from public assistance of the "easy cases" should be concentrated on the "hard cases." The cost of ignoring them -- measured in continuing welfare costs, the associated perils of entrenched poverty, and in lost opportunities for these citizens, their children, and our country -- is far higher.