Welfare-to-Work Program to Pose Special Hurdles for Small Businesses

California’s dramatic plan to slash welfare rolls is expected to depend heavily on participation by small businesses, which historically have generated the majority of new jobs.

But the welfare-to-work program will be a hard sell for many small businesses that lack the resources and the will to screen and train people with little or no work experience, according to employers across the state.

“Only 10% of the nation’s companies--the large companies--can deal with these types of programs,” said Philip Barquer, an Irvine-based consultant and president of Professionals in Human Resources, a Los Angeles-based organization with 3,500 members. “Small companies are going to be ill-prepared.”

More than half of all employees in California work for companies with fewer than 100 employees, according to the state Employment Development Department, and only a third work for companies with more than 250 employees.

President Clinton has applauded large employers such as UPS, United Air Lines and Burger King for programs that help welfare recipients acquire basic “life skills” that most employers take for granted.

Despite the challenge of hiring such workers, some smaller companies are optimistic.

“As the government gets out of the welfare business, companies like ours have an opportunity,” said Craig Clayton, vice president of J.D. Rush Co., an oil pipe supplier in Bakersfield. “There’s going to be a greater supply of potential workers out there for us.”

Like many small businesses that depend on entry-level workers, J.D. Rush has trouble finding reliable employees. Turnover among the 100 employees is high because the work--loading heavy pipes onto trucks even when summer temperatures soar above 100 degrees--is hard, the pay is minimum wage and the best employees move on to better jobs.

Experts say small businesses such as J.D. Rush must be particularly wary when they venture into the new pool of job-seeking welfare recipients.

Managers who double as accountants, shop managers and personnel experts run the risk of being overwhelmed by the immense task of interviewing candidates whose resumes might contain little more than names and addresses.

Most companies “already have trouble hiring the known candidates, the people we call proven employees,” said Holly Culhane, a Bakersfield consultant who advises small businesses on personnel matters. “But [welfare-to-work] brings up a new issue: You can’t do reference checks, and you can’t call past employers because there aren’t any.”

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Even if the government helps screen applicants and funds training programs, experts say, the next hurdle will be finding small companies willing to take a chance on unproven employees.

There is talk in Sacramento of tax credits and other programs that would make welfare recipients more likely to be offered jobs. However, interviews with business owners and human resources experts indicate that most small businesses are leery of government programs.

And some employers who have experimented with tax credits say they are not always a wise choice.

The governor’s office provided the name of Juanita’s Foods Inc. as an example of a company that has had experience hiring from the welfare rolls. But the company, which processes menudo in a Wilmington industrial park, experienced “a nightmare” with one of several welfare recipients hired in return for a state tax credit, said Gerard Mangan, controller of the family-owned business.

“He ended up robbing a couple people in the parking lot of a market in Wilmington with a shotgun,” Mangan said. “But before that, he went out on a worker’s comp claim. He just got out of jail, and he’s filed another worker’s comp claim.”

Mangan now views credits as “something that might tip the scale--but only if both candidates were equal.”

Gina Harpur, general manager at Juanita’s Foods, suggests that the government could help small business by establishing a “temporary employment agency of sorts” that would allow employers to give job tryouts without the threat of potentially costly wrongful termination suits.

Acknowledging problems, Gov. Pete Wilson has endorsed amending laws to protect employers from what he called “a legal form of extortion.”

Joe Dailey III, a Los Angeles businessman who has been hiring homeless people at his family-owned printing company for two decades, argues that welfare reform is long overdue. He likens welfare payments to “giving a teenager an allowance for the rest of his life . . . for some people, that’s not going to help.”

But Dailey, a member of a committee that is advising Wilson on how to draw business support for the welfare-to-work shift, acknowledges that it is difficult to balance societal good against the demands of running a profitable business.

“These people are at the bottom,” Dailey said. “We’re trying to get them to the level where they have sufficient work habits, the confidence in themselves to succeed. And it’s a slow process.”

Human relations experts also say some existing employees will resent the new arrivals.

“We can educate current workers that business is morally obligated to help deal with this nontraditional group of people,” Culhane said. “But with some employees, they’re going to worry if their purse is safe. And you’re going to have to deal with their concerns.”