Welfare to temporary work: Implications for labor market outcomes

Kenneth R. Troske, University of Missouri, Columbia MO, United States

Recent welfare reforms are prompting some state and local welfare agencies to use
temporary help service firms to help place welfare recipients into jobs. Concerns have arisen that
these jobs are more likely to pay low wages, provide fewer benefits, and offer less stability. We
explore the effects of temporary help firms on the labor market outcomes of welfare recipients by
looking at the characteristics of welfare recipients who go to work for temporary service firms
and by examining their subsequent employment and welfare dynamics. We find that although
welfare recipients who go to work for temporary help service firms have lower initial wages they
experience faster subsequent wage growth. Two years later, their wages are only slightly below
workers who initially had jobs in other sectors, and they are no more likely to be unemployed and
are only slightly more likely to remain on welfare.

Date: 26 May-00 0000