Is This The Way Out Of Welfare?

Tulsa's aggressive program is getting noticed nationwide IndEx's track record

By the time President Clinton signed a bill to push welfare recipients onto payrolls, Sandra Barnett had made the transition. She had dropped out of school in seventh grade, become pregnant at age 17, and begun a seven-year dependence on the American welfare system. Now, the 30-year-old single mother of two holds a full-time job earning twice the minimum wage. "I just bought me a brand-new home and a convertible," she says.

Barnett is the product of Tulsa's aggressive welfare-to-work program, which has become the centerpiece for a state-wide project and a beacon for cities nationwide. The nonprofit operation, called IndEx, is unique in that it is run by the private sector. It expects to put 100 people on payrolls this year--about the same number as in its first three years combined. "We're living Clinton's dream down here," says Wayne Rowley, the human resources coordinator at the local Chamber of Commerce who masterminded the program. "I'm no flaming liberal. But this makes good business sense."

Indeed, this is no charity project: It was always about doing business. IndEx--short for Industrial Exchange Inc.--began in 1992, when Wal-Mart Stores Inc. asked its biggest fishing-reel supplier, Zebco, to make rods in the U.S. at prices competitive with Asian makers. Zebco was based in Tulsa, where the economy had just rebounded from a bad oil slump and labor was getting scarce. Rowley proposed a deal: manufacture fishing rods inexpensively with recipients of Aid for Families with Dependent Children (AFDC).

The chamber rented a small, defunct elementary school and tapped the Human Services Dept. for 40 clients. The YWCA provided day care, and the city threw in transportation. The workers assembled fishing rods four hours a day and spent another four hours improving their reading abilities. They were sanctioned for showing up late or missing work, and learned a slew of new skills: How to use a computer or behave on a job interview; how not to hit a fellow worker; how to dress. They worked out problems that kept them out of work, from day care to drugs. "I think of it kind of as a boot camp," says Tim Westberry, the director of IndEx. "It's all about changing people's attitudes."

Participants typically spend six months in the program, receiving only their welfare checks. After they pass tests for everything from drug use to attendance, they are funneled into jobs, often as temporary workers for the first 30 days. The employer pays IndEx $6.50 an hour for the temp; IndEx pays the employee $4.50. The remainder is split between worker's compensation and the program's coffers. Those who make it through the trial end up on the corporate payroll, earning an average of $6.50 an hour.

IndEx produced a quarter million rods for Zebco, but proved to be too small to meet the growing demand. So Zebco subcontracted the work to an Asian-owned startup nearby and IndEx diversified. It now packages toggle switches for Hilti Inc., produces catalogs for Laufen International Ceramic Tile, and assembles mailings for Communications Graphics, a printing company. More than 300 people have passed through so far. "About half went back to watching As the World Turns," Rowley says.

"MORAL OBLIGATION." Programs such as IndEx have gained attention in the weeks since President Clinton signed the Welfare Reform Act, forcing welfare recipients to find work or lose benefits. In accepting the Democratic nomination last week, Clinton declared "a moral obligation" to move Americans off welfare and into jobs, calling on employers to "try to hire somebody off welfare, and try hard."

Yet critics say it will cost states billions of dollars to comply, and there's no safety net for countless recipients who will be unable to land jobs. LaDonna Pavetti of the Urban Institute in Washington says her research shows that half the people on the dole have never worked full-time and are burdened by low skills, substance-abuse problems, and mental or physical illnesses. The problem is so bad that even regions with all the right ingredients--low unemployment, a robust economy, a low percentage of welfare families, and strong incentives to work--are struggling to shrink their welfare rolls. "Getting people into the labor market is going to be much harder than people expect," Pavetti says.

Tulsa's 5,008 welfare cases, for example, amount to only 1% of its population. And because IndEx is voluntary, it has yet to tackle the hardest core of unemployed. Still, the welfare-to-work process is daunting. Many of the city's welfare cases have severe learning disorders, psychological problems, or addictions. "There's a certain segment that will never, ever hold a job," says Galen Haydon of the Job Development Service of Tulsa.

LEAP OF FAITH. But for every one of the hard-core unemployed, there's a Carlos Smith, just waiting for a chance to make a better life. He was left to care for his two young children when his wife died of alcohol abuse. After only a few months on welfare, he entered the IndEx program. "I wanted the education," he says. "But a lot of people there didn't care if they got a job." He earns $6 an hour now making placards at Nameplates Inc. That's double his welfare check, but he's still barely getting by, now that he has taken his rent and food expenses off the shoulders of the government.

Nameplates is among a growing number of employers using welfare workers to combat a labor crunch and score public relations points. Human Resources Director Carol Koepernick says she was skeptical at first, because many AFDC recipients lack a solid work history. But when Tulsa's unemployment rate sank below 4%, she tried out six IndEx temps and hired four. Two, including Smith, worked out. "We've had as much success as with anybody we hire for entry-level positions," she says.

Those who study work-to-welfare programs say that overall, IndEx's track record is good. The program is so highly regarded, in fact, that Oklahoma is considering expanding it statewide. "It's one of the best prototypes," says Robert Ivry, who has studied a number of programs, including Tulsa's, for Manpower Demonstration Research Corp. in New York. "What they've done can be transported to other urban areas."

True. But can Tulsa's tiny project be replicated on a grand enough scale to transform millions of welfare dependents into working class citizens--even in the nation's most poverty-torn cities? "It will be very, very difficult," Ivry concedes. Then again, all mass change begins with small steps. And in Oklahoma, Sandra Barnett, Carlos Smith, and dozens of others have already taken the first.

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