Chief Executive Magazine, April 1997

We have to launch a national effort in every state and every community to make sure that the jobs are there for people who have to make the transition from welfare to work," President Clinton stated during a meeting with 13 CEOs. "Welfare reform, if it is going to work, will need the leadership of the private sector in turning welfare checks into paychecks."

In inviting the CEOs of some of America's most prominent companies to meet with him on the issues of putting long-term indigents to work, President Clinton raised a controversial issue--the private sector's role in welfare reform. As Milton Friedman is fond of saying, anything the private sector can do, the government can do worse. So far, the government, which runs no less than 154 job-training programs at an annual cost of $25 billion, has failed to transition welfare recipients into the productive sector. But does this mean the private sector can do it better? Or is this just President Clinton's attempt to dump an "unfunded mandate" on the private sector?

Fred M. Grandy, president and CEO of Goodwill Industries, a $1 billion-a-year nonprofit company that specializes in vocational rehabilitation, thinks the private sector has a role to play. "Without the private sector, it doesn't happen," states Grandy, who served as a Republican in Congress from 1986 to 1994. "Anyone who is down in the trenches of human services knows that a fully supportive business community with a high level of participation is the only way we can realize welfare reform, which is essentially job creation."

So too does Bernard Cammarata, president and CEO of The TJX Companies, the world's largest off-price apparel retailers. "Based on my recent meeting with the President, I am confident that the private sector will step up to the plate and play an important role in assisting individuals coming off the welfare roles," he says.

But before altruistic CEOs get caught up in the President's rhetoric and send a memo to their human resources departments, they should remember that private sector participation can take many forms.

"I agree completely that the answer to breaking the welfare cycle can and should be found in the job market," states ARCO's chairman and CEO, Mike R. Bowlin, who joined Cammarata in meeting with the President. "But simply saying that we need to create jobs is begging the question: today's marketplace is a tough, disciplined place in which value is created and individuals are rewarded--but only to the degree that they are prepared to take advantage of opportunities that the market offers."

Bowlin points to several forms that private-sector involvement may take: polling existing businesses, new investors, and business development organizations to determine the jobs of the future; channeling grant money to community organizations involved in job-creation activities; and helping schools through grants and volunteers to improve educational quality.

Another form may be the creation of firms that specialize in preparing individuals with few connections to the work force for work. In fact, there are already many organizations, from the nonprofit Goodwill Industries and the Salvation Army to the for-profit America works and Maximus, that do just that. Manpower, the world's largest temporary employment company, has already completed a demonstration project with former welfare recipients. "We've learned quite a bit from the project, Mitchell S. Fromstein, Manpower's chairman and CEO, told Business Week magazine, adding that one lesson was the importance of social work in preparing people for jobs.

This is a niche market in which players such as Manpower may face stiff competition from such specialists as Goodwill Industries, which currently has 32 temporary employment services, and America Works and Maximus, which contract with counties, cities, and states to train and then put welfare recipients to work. "We think that there is a permanent lace for temporary employment in the future," asserts Goodwill's Grandy, who concurs with the assessment that a host of services are needed to put long-term welfare recipients to work. "Our goal is not just employment, but employability," states Grandy, whose Goodwill placed 26,000 individuals in competitive employment last year alone.

While American industry can find the employable employment, it cannot be expected--by President Clinton or anyone else--to give the unemployable employability. This will have to be the work of the Goodwills, America Works, and Maximuses of the world. As Henry Scanlon, CEO of Comstock told CNN, "I've got a payroll to meet. I've been meeting it for 20 years and no amount of predilection towards altruism is going to help me if I am sitting there trying to write payroll checks and there's no money there."

'A fully supportive business community is the only way we can realize welfare reform.'