Select Committee on Work and Pensions Third Report


Committee Visit to the United States - 17-20 June 2002

Monday 17 June

Dr Mark Allen-Hughes, University of Pennsylvania

A fundamental difference between the UK and USA was that of divided sovereignty between federal, state and local authorities, without an understanding of which it was impossible to understand the aims and achievements of the US system.

There had not been a unified approach after the introduction of the Temporary Assistance for Needy Families (TANF) reforms, but some states had introduced additional policies. The US was trying to unify work policy areas and was spending $40 billion per year ($16 billion on TANF). Of this, $1.2 billion was allocated to Pennsylvania. There was complexity in the system: workforce development was administered by 6 state agencies. For example, the Transitional Work Corporation (TWC), whom the Committee were to meet, reported to two or three state agencies.

There were 5.1 million people in the Greater Philadelphia region, the fourth largest in the US. Philadelphia was the fifth largest city with a population of 1.4 million. There were 2.25 million jobs in the region, but most growth in recent years had been outside the city boundary.

The introduction of work reforms and TANF had created further complexity. For example, those travelling further to work needed help with transport costs (some claimants helped by provisions of TANF). The asset rules had had to be relaxed for some small businesses such as auto repair.

Greater Philadelphia and four suburban counties had combined to form Workforce. Investment Boards were entirely separate and were rewarded by results. There was no flexibility for counties. A new Bill renewing the TANF provisions was expected, but local politicians were generally resistant to change.

The federal lead on sanctions (claimants required to seek work after 24 months, excluded from public assistance after 60 months) had been adopted by Pennsylvania. Many states had stronger demands. The sanctions had not been widely applied. Full family sanctions were also available, but nearly all those liable had been given exemption.

The administration of the Transitional Work Corporation was funded by the Pew Trusts to the tune of $3 million to pay core costs. TWC received some $32 million from state and city for programme costs.

The programme paid for the first six months. As it evolved, training had become a bigger feature, but there were continuing questions over the standard required.

There was an Earned Income Tax Credit (EITC) for those earning $10,000-$13,000 per year with two children. Cost in a full year was $30 billion and was administered by the IRS. Take-up rates were a problem.

There was a need to expand the outdated transport system in Philadelphia to reflect the location of newly emerging growth areas. More workers were commuting from suburb to suburb and city to suburb than ever before. The geographic mismatch between urban supply and suburban demands created transport problems which had welfare implications; jobless welfare recipients needed transport to get to the new jobs, and public transport links didn't necessarily exist. Flexible funding within the TANF budget was being used to finance car repairs or to enable people to rent or buy cars so that they could travel to work. TANF had removed the "asset cap" so that the value of cars was disregarded; but the Food Stamps programme had not - thus there was a mismatch between programmes. Thus one response had been to try to connect people in the city to jobs in the wider region through providing transport. Other responses were the creation of Employment Zones and tax breaks to encourage employers into the city; also giving housing assistance (using TANF moneys) to help people move to the jobs.

The effects of TANF, in imposing time-limits on receipt of welfare had been difficult to quantify. Teenage pregnancies had fallen, but marriage rates remained low.

City of Philadelphia

Mr Gary Ledebur, Director of Social Services; Mr Paul DiLorenzo, Director of Children's Policy; Ms Sally Glickman, Workforce Investment Board and Ms Harriet Williams, Philadelphia Health Care Corporation.

The City of Philadelphia had developed initiatives to build on the state and federal network. Younger children had benefited economically by welfare to work policies, but by pulling mothers into work, the downside was, possibly, that older children were getting into more trouble, which would be helped by more after-school activity. The Workforce Investment Board allocated $3 billion (from federal funds) to the hardest to place.

The primary purpose of the city's children strategy was to be proactive. There was intensive assistance for the most vulnerable families. A programme had been created targeting the 40,000 children who missed more than 25 days school per year.

There was too little flexibility in the $1.5 billion funds received from federal and state agencies. The City strategy was 'place-based' to regenerate neighbourhoods and reduce 'address blight'.

There was still a culture of benefit dependence exacerbated by a jobs mis-match in Philadelphia.

The Bill to reauthorise the TANF provisions had been passed by the House of Representatives and if passed by the Senate, would cost Philadelphia $6bn. 50% of students dropped out or did not attain appropriate qualifications. Drug abuse was a severe problem and there was a police initiative to try to repossess the streets.

There was a one-stop system for access to unemployment benefits but social security was still dealt with separately. The outcomes of voluntary service projects were measured by performance-based contracts.

At the end of a sixth year, the state would be asked to fund a seventh year.

Government servants must be US citizens.

Ideally, the money received should be more flexible and the unreasonable demands of state funders should be reduced.

Transitional Work Corporation (TWC)


The Committee met Richard Greenwald, President and CEO of TWC, Board Members David Florey (Director, Bureau of Labor and Employment Training Programs, Pennsylvania Department of Public Welfare) and Julie Kerksick (Executive Director, New Hope Project Inc. Milwaukee, Wisconsin), and staff members Achee O'Quinn, Director of Employment and Kim Williams, Team Manager.

'Transitional work' had been designed to deal with the requirement under TANF rules that, after 24 months, welfare recipients must participate in work for at least 20 hours a week if they were to keep their benefit. TWC was founded in 1998. It was a partnership funded by the City of Philadelphia, the Commonwealth of Pennsylvania and the Pew Charitable Trusts (one of America's largest foundations) to help "the hardest of the hard to serve" into work while giving local employers a reliable service. Unlike most welfare to work programmes, it was a not-for-profit business. It blends the "work first" philosophy with the recognition that many welfare recipients need training and other support to make the transition to work. It had grown out of a recognition that education and training programmes by themselves did not get people into jobs. Supported work was a more effective method of getting employers to connect with people who had little if any previous work history. Employer feedback was that they didn't necessarily need people to have specific skills, rather they wanted people to know how to work: to have a good attitude, to dress properly, to be drug-free, and to have their GED.

The Pew Charitable Trusts put in around ten per cent of funding. The money was useful because it was not tied to state regulations, and therefore offered greater flexibility. The engagement of Pew gave the project prestige and weight. The coalition of State, City and Pew had helped in securing funding. Two thirds of their present $12 million budget was spent on wages.

How it works

After an initial period of intensive job­readiness training, TWC participants worked in temporary training positions in government or not­for­profit organisations for a maximum of six months before being placed in unsubsidised jobs. During this transition period, participants were paid by TWC, they received academic and career training and built a work history. In terms of permanent employers, the field was wider, extending to the private sector. Employers were not subsidised - apart from a token payment of $49 per month to staff members who acted as on-the-job mentors.

No one was accepted into the programme unless deemed "unprepared" for employment in two previous screenings. The TWC participants had serious skills deficiencies, and were almost all highschool drop­outs with virtually no work history. Almost all participants were women (reflecting the eligibility criteria for TANF). Ninety per cent were Afro-American, 8 per cent were Hispanic, and almost 2 per cent were white. The average participant was aged 29 with two children. Almost all had a child as a teenager, and had only reached the equivalent of grade 5 or 6 in English and Maths.

TWC used transitional jobs in not­for­profit organisations, City government and business to help participants get permanent unsubsidised employment. There were around 300 sites where participants worked. City and State government payed the wages through TWC (minimum wage $5.15 per hour) for the transitional jobs, as well as other benefits such as food stamps, transport, and childcare assistance. TWC also provided a clothing allowance, and assisted clients to prepare their résumé. Participants earned bonuses totalling $800 ($200 at start, $200 half way through, and $400 at the end) as they made the transition to a permanent job.

TWC linked each participant with a career adviser (who checked on the participant daily) and a "work partner," a staff member at the work site who had volunteered to serve as a mentor. Every week, participants worked for 25 hours and attended 10 hours of individualised training, enabling them to prepare for their high school diploma exams or to improve their computer skills or receive counselling or treatment for a drug or alcohol abuse problem if needed. The support continued at declining levels for six months after participants had moved into their permanent jobs. The key to a successful placement was achieving a good match between what the individual wanted to do and the needs of the employer.

In terms of results, the Pew Charitable Trusts had commissioned an independent evaluation of TWC which concluded: "TWC had rapidly become one of the nation's leaders in transitional employment programmes. Since its inception, TWC had placed over 5,500 people in paid work experience. These participants gain valuable skills and training and had begun the difficult road towards self­sufficiency. Perhaps equally important, however, TWC had placed over 1,883 individuals in unsubsidised employment. This accounted for 92 per cent of all participants who complete the transitional phase of the programmes. These participants earned on average $7.50 per hour for an average of 36 hours per week and most participants were offered medical benefits within six months of their date of hire. However, the most impressive thing about TWC was its success in retaining individuals in employment. Of all participants placed in unsubsidised employment, 63 per cent had retained that employment for at least two full quarters following placement. These statistics lead to one conclusion, for participants who actively become engaged in the programme, this model works, participants both obtain and retain unsubsidised employment." Overall, 30 to 40 per cent of initial entrants would get jobs at the end.

Key elements of the programme were:

  • the appearance and whole ethos of TWC was that of a workplace not a welfare office. People were given a pay cheque; they fill out a timesheet; they could be hired and fired if they seriously misbehaved e.g. being chronically late or absent, or having a drug or alcohol problem they could not control. The organisation was managed as a business, with performance indicators and continuous reviews and adjustments;

  • from the first day each participant received more money than they did on welfare providing clear proof that work pays. They were also eligible for Earned Income Tax Credit; and

  • each participant had both a career adviser and a work mentor. The career adviser not only listened to their problems, but helped participants overcome problems whether in getting childcare benefit or a restraining order against an abusive boyfriend. Close, continued individualised support and mentoring were important keys to success.

Why wait two years to offer supported work?

TWC was set up to deal with the TANF system as it operated in Philadelphia. There was a reluctance on the part of the state to finance a large scale public works programme; reducing the entry time limits would be expensive.

Getting tough - does it happen?

There had been around 10,000 sanctions applied in Pennsylvania, but very few full family sanctions - around 10.

How would Richard Greenwald like to see TWC develop?

He would like to be able to work with a bigger group of the working poor - not just lone mothers. It was hard to work with short-term funding, which hampered long-term planning and made it difficult to keep staff. He also wanted to use the information they had better to predict who was likely to succeed..

Visit to Thomas Jefferson University Hospital

Thomas Jefferson University Hospital was one of TWC's oldest and largest partners. It was a hospital, international research centre and medical college serving medical graduates and health professionals. It had 11,000 employees.

The Committee met Ms Linda Mitchell, Manager of Employee Selection and Placement, in the Department of Human Resources. She introduced staff who were involved in screening and matching potential TWC recruits and in managing and mentoring participants. The Committee also talked to a TWC participant, who was one of 25 people currently going through the work-based programme. Altogether Thomas Jefferson had taken 284 participants since 1998 (155 were hospital based and 129 university based), only108 had secured permanent jobs at the end of their placement. The large scale of the institution meant that they could offer participants a range of options - from clerical work to cleaning ('custodial work') and food service work. TWC worked through the Unions, and did not displace entry level labour. Once people were permanently in work, there were opportunities for training and advancement within the organisation.

Tuesday 18 June

Jewish Employment and Vocational Service (JEVS)/Orleans Technical Institute (OTI)

Ms Gail Zuckerman, Chief Operating Officer of Employment and Training for JEVS; Ms Jasmine Eaddy, Director of Clinical Services for the Maximising Participation Project; Ms Jayne Siniari, Director, OTI; Dr Jim Boyar, Director of Rehabilitation Services, OTI; and Ms Bonnie Kaye, Program Director, OTI.

The programmes at these Institutes were comprised of 20 hours per week (1 hour training, 7 hours work per day) all conducted on-site. If a student missed a day it had to be made up.

The Food Service and Hospitality courses concentrated on basic skills for non-academic people. The current system of funding was not considered ideal: the previous training-based system was better.

A self-sufficiency for women programme was aimed at assisting a return to work. The course included career training, IT skills and GED (General Equivalency Diploma). The employment adviser provided continuity and a bridge to work.

Case co-ordinators undertook home visits to sort out problems such as alcohol or drug dependency. Once the problems were assessed, goals were written leading to employment.

JEVS was a non-profit company which had 13,000 students per annum at a cost of $44m. The case loading for advisers was 1 to 18. The system depended heavily on case management. Sustainability was more important that obtaining a job.

Sanctions were rarely applied - when they were, the children suffered. People wanted help, but did not trust a state scheme. This could be overcome only by personal, individual contact.

Meeting with The Reinvestment Fund and Fred Dedrick, President of the Philadelphia Regional Workforce Partnership

The session was introduced by Jeremy Nowak, President and CEO of The Reinvestment Fund (TRF). The Fund was a community development financial institution dedicated to building wealth and opportunity for low-income communities and low and moderate income individuals. Now 16 years old, it managed around $130 million which it lent and invested in projects with social goals and social returns.

It had three pools of funds: loans; money from banks; and venture capital - where capital was invested in companies with growth potential, which were profitable, and which

invested in entry level jobs. (In terms of the money from banks, there was a community reinvestment obligation on banks laid down by law. Banks used The Reinvestment Fund as an intermediary to meet their responsibilities.) There were around 750 investors. Five hundred were individuals, the remaining 250 were institutions - religious groups, financial institutions, and corporate and civic organisations including hospitals and universities. The Reinvestment Fund benefitted from being able to build a network of relationships across these sectors. Investors were able to choose their rate of return. Less than one per cent of funds had been written off. They had a 14 per cent internal rate of return.

TRF had a "credibility of portfolio" with both the experience of being in the market, and knowledge of what worked in policy areas. TRF had a credibility with private sector investors, and brought innovation to areas traditionally dominated by high cost, highly regulated public investment. The average loan was $200,000-300,000, and TRF was often involved in helping to put an investment deal together.

Funds had gone into affordable housing, childcare provision for low-income families, schools (including so-called experimental "charter" schools), small businesses, community centres, and workforce development. They operated under market disciplines but with public, civic values.

Fred Dedrick, President of TRF's Regional Workforce Partnership, explained its work. The Regional Workforce Partnership was established by TRF in 1997. Its aim was to connect low wage workers to the regional economy by reforming the system of support they receive. Key recommendations it would make based on its work were:

  • to understand and involve employers

A key organising strategy was to listen to what employers actually wanted. It found that employers had no knowledge of public systems and little interest in policy. It would rather employ no-one at all rather than the wrong person. A survey of 150 companies with 100 or more employees who focussed on entry level hiring found that, on a scale of 1 to 7, with 1 being 'extremely easy' and 7 being 'extremely difficult,' 58% of respondents reported a 5 or higher in terms of difficulty in finding qualified candidates for entry level positions. Welfare or unemployed, skills mattered. Two areas the Partnership had developed to supply employer demand were customer service training and basic IT skill standards

Customer service was an area of work which went across industries. It was highly valued, and one where national standards applied. Good customer service gave an organisation a competitive advantage. The Regional Workforce Partnership, along with TRF, the National Retail Federation and the Jewish Employment and Vocational Service had set up a partnership to develop cross-industry skill standards for the customer service industry by surveying frontline workers in the banking, retail, hospitality, food and finance industries, and developing a large scale training programme leading to a nationally recognised certificate in customer service. Trainees obtained a portable credential. In its first year the 'Customer Service Training Collaborative had produced 100 graduates and an 88% placement rate with an average wage of $9.25.

Employers also wanted basic skills in IT. Ninety per cent of the demand was in non-IT companies and therefore the downturn in the IT industry as a whole was not relevant here. The Partnership had developed IT skill standards for eight occupational clusters. Four key entry level clusters were: technical support, digital design, network design and administration, and web design and administration. Through a programme of internships they gave trainees a track record of work experience whilst reducing the transaction costs for employers in taking on new entry level staff.

  • to understand labour market dynamics

The Regional Workforce Partnership had compiled a detailed report on Greater Philadelphia's Labour Market, which it updated on an annual basis. The aim was to understand the labour market; supply and demand and key gaps; the demographics; industry clusters; and cross cutting occupations. In Philadelphia, of 2.4 million jobs, 2 million were in service producing areas including (in descending order) retail, government, health, education, finance and social services. Regional challenges arising were to increase the supply of skilled workers; to retain and attract skilled workers; to provide a steady supply of entry level workers with basic and "workplace success skills" and to provide sufficient quality childcare. The Partnership had therefore developed strategic initiatives to train workers to world-class standards; to expand the labour pool; to improve educational outcomes; to become "the best region in America for childcare" and to insist on accountability for workforce investment programmes.

  • to connect to economic development

In a competitive labour environment, employers must be confident that their current and future workforce needs will be met in Greater Philadelphia than elsewhere. This required investing in talent not relying on cheap labour; it required civic and social amenities and services which made the area attractive to companies who could go anywhere; it required adaptability; and it required partnerships between the public and private sectors. The Regional Workforce Partnership, as part of TRF, had become a very good intermediary - it had a knowledge of workforce and employer needs based on companies who came to them for financing.

  • to analyse public interventions - what works

There were a vast array of programmes arising from welfare reform and the Workforce Investment Act. Pennsylvania spent $1.2 billion on workforce development yet provided little overall performance information. Programme results from different state programmes were scattered throughout many departments. There were little comparative data making it difficult to compare performance. Individual programmes had performance measures but there was no consistent set of standards and/or impacts measurement used by the entire system. TRF and the Regional Workforce Partnership had lobbied candidates for Pennsylvania's next Governor suggesting an annual performance scorecard looking at workforce investment. The scoring would focus on number of job placements, wage and benefit levels, training cost per placement, overhead cost per placement, retention after six months, skills advancements etc. There was little connection at present between workforce development and the economic development needs of Greater Philadelphia. The performance evaluation would also assess the wider long-term economic impact of workforce investment - were companies getting the quality labour they needed? Were higher skilled workers leading to gains in productivity? Were more workers able to find jobs at family sustaining wages? Were Pennsylvania's workers prepared for the jobs for the future? This led to the final recommendation:

  • to "measure, measure, measure"

Measurement can transform performance; and clear performance outcomes can differentiate organisations and allow investment in success.

Wednesday 19 June

Visit to the Oregon Department of Human Services (DHS)

Mr Ron Taylor, Project Manager of the Project Management Team, Ms Ramona Taylor, Mr Jim Neely, and Mr Michael Buckly, of the Children, Adults and Families Division of Oregon DHS.

Ms Foley explained that the Department had undergone a process of organisational change, designed to integrate public assistance, child welfare and work. They had found that welfare families being assessed for work programmes had multiple problems and, under the former regime, could end up with multiple case plans - for drug rehabilitation, for getting into work, and for child welfare. The reorganisation was intended to refocus services around the individual with one common case plan for TANF recipients and a lead case manager, usually a child welfare case worker.

Oregon was one of the most successful states in getting families off welfare. Ninety-three per cent of those who had left TANF for employment were not receiving TANF benefits 18 months later. In Oregon, the first forays into placing people in work started in the late 70s under the WIN ('work incentives') programme. This allowed single mothers whose youngest child was aged six or more to be referred to the Employment Department where they were registered in a 'waiting pool'. Few got job placements. Typically they were referred for training - but with no job at the end. Under President Reagan in the 80s, welfare departments could take back job placement activity for welfare recipients, which Oregon did. They were allowed to introduce a mandatory work rule for welfare mothers whose youngest child was aged three. However, little work-related training or transitional support was offered. The result was that people got jobs but they would drop out and end up back on welfare. There were substantial financial disincentives to getting a job, with the loss of food stamps and medical coverage.

TANF paid only 60 per cent of the federal poverty level. In theory, it included housing costs, but in practice housing costs were too high. There had been no increase in levels since 1991, with the purchasing power being steadily eroded.

Oregon's JOBS Plus program started in 1994. Already, by the time of the 1997 TANF reforms, Oregon's welfare rolls were falling. Between 1995-97, they had achieved savings of $144 million, rising to $230.3 million in 1997-99 and $256.3 million in the two years to 2001. Oregon received a block welfare grant, as a result of the 1997 reforms based on its 1994 caseload. In terms of expenditure in the Adult and Family Services division, expenditure on cash assistance through TANF had dropped from 75.5 per cent of expenditure in the two years 1993-95, to 38.6 per cent in 1999-2001. Much of the savings had been transferred to supporting people in job programmes and in work: Employment Related Daycare (ERDC) had accounted for 9.9 per cent of expenditure in 1993-95, whereas by 2001 it had risen to 23.2 per cent. Expenditure on support to people actually in work (of which 60 per cent was childcare) had risen from 11.5 per cent in 1993-95 to 34.2 per cent by 1999-2001. Each biannual budget was slightly larger, although the latest, from 2001-2003 was smaller.

Child poverty

Child poverty had reduced from 13 per cent two years ago to 11 per cent today, but Mr Neely thought that was not directly as a result of the state's active labour market policies. The vast majority of poverty was not to do with receipt of TANF but affected pensioners and teenagers. A lot of energy had gone into working with teenage parents and sub-teen parents - requiring then to attend school or lose benefits, and in giving sex education starting in middle school.


Employment related daycare was a crucial part to the results they were achieving in getting families off welfare. Childcare was paid direct to the provider on a monthly basis. The parent chose the childcare, which could include informal arrangements. There had been debates about the inclusion of informal childcare within the state payment scheme, but this was what parents preferred. There was regulation, although it tended to concentrate on safety and child protection, rather than quality. Payment was higher if informal childminders underwent training. Different rates of childcare allowance were paid, depending on the type of care given. Participants in jobs programmes got 100 per cent of their childcare costs up to a maximum. Once a job started, there was "co-payment" to the provider, where the state paid less and the worker more as her earnings increased. The minimum a parent would be asked to pay was $25 per month per family. At around twice the federal poverty level, the parent would be paying the whole bill.

Relation between welfare rolls and the labour market

There had been little correlation in the past between welfare caseloads and unemployment rates ie. the wider economy. This reflected the fact that, in the past, there had been little connection between work and welfare. In Oregon, even in the recession, they still had growth in entry level jobs. Some of the most depressed areas had done best in getting people into work. What had changed had been the type of jobs available. Until the 70s, Oregon had depended primarily on lumber for its industry. The 70s and 80s had seen diversification into hi-tech industries, now in recession. Oregon's recession had preceded slightly the national recession and was worse. The state had the highest unemployment in the country. However, they were still getting people into jobs, although at a slightly lower rate.

Jobs in Oregon

In Oregon a large proportion of jobs paid between $7.25 and $10 per hour ie good for entry level jobs. Jobs were in office work, retail, and service industries. There was then a gap before jobs advertised paying $15 per hour. The hole between $10 and $15 per hour jobs was problematic, especially for families needing a family wage. Employers also tend to hire from within for the higher paid jobs. Therefore the strategy in Oregon was to get people into entry level jobs, and concentrate on employers who give workers a future. The employment programme design therefore did not end at job entry; it was one element of the whole package designed to ensure retention and wage progression.

Oregon's employment programmes took the view that the employment market was the best judge of who was employable. Everyone entering the welfare to work programmes was required to test the market first before having access to welfare. Predictions of who would get jobs were not always accurate.

The role of training

Originally, Oregon had gone for a 'training first' approach, where people could choose the courses they did and hopefully would get work at the end. The results were poor in people going into jobs, and it was also expensive, with people doing one- and two year courses. An employer survey had showed that employers preferred to do on-the-job training themselves. They wanted people who were job-ready - that was, they were reliable; they could get along with colleagues and work as part of a team; they had good communication skills and an ability to learn. The people on welfare tended to be those who were hardest to help; those who had the soft skills had gone into work. Therefore employment programmes now concentrated on giving these skills. They had found that the classroom was not the ideal setting to acquire work-related skills. People learn faster when placed in a work environment.

A snapshot of participants in Oregon's employment programmes

A snapshot of participants by what component of the programme they were in showed:

  • 5 per cent in 'assessment,' a two-day intensive assessment of work-readiness, health and family issues and possible barriers to work. (Assessment accounted for 27 per cent of service expenditure);
  • 35 per cent on TANF with mental or physical issues. These could include depression, substance abuse, or learning disabilities (ten per cent of support service expenditure);
  • 3 per cent in adult basic education (on TANF)*;
  • 4 per cent undergoing classroom training (on TANF);
  • 12 per cent undergoing work preparation (on TANF);
  • 2 per cent doing work search only (on TANF);
  • 18 per cent doing work experience (on TANF);
  • 20 per cent in work, being supported in work retention and wage progression (post TANF).

Altogether roughly 38 per cent had "work attachment" at any one time. Expenditure on work experience accounted for 28 per cent of support service expenditure, and support whilst in work, a further 14 per cent.


* Jobs of $10 or less required an ability to read instructions - around 9th grade standards. People were therefore tested for reading skills at the assessment stage, and sent for adult basic education if they fell below. There were not big numbers of people without basic reading skills - despite Oregon having one of the highest high school drop-out rates. Factors behind this were thought to be the relevancy of the curriculum; the issue of parental responsibility; and the high number of homeless young people (with Oregon acting as a magnet due to its drug tolerance policies).


Oregon's programmes were overwhelmingly aimed at mothers due to their TANF entitlements. They were trying to develop the same employment opportunities for non-custodial parents, but it was very hard to recruit them. The original objective had been to target fathers not paying child support - to give them the means to pay. More recently, they had focussed on giving fathers the means to participate in family life - a more holistic approach. Reasons suggested for fathers' non-participation were depression, substance abuse, or learning disabilities. There was limited leverage in selling the programmes to fathers: they were not on welfare therefore could not be threatened with withdrawal; and if they moved into visible employment they would have child maintenance plus arrears taken directly off their wages.


Sanctions were applied in less than five per cent of cases. It was a staged process: for the first two months of non-compliance, $50 per month was deducted. For the next two months, children's needs only were met. In the fifth month, full family sanctions were applied. Around one to two per cent of cases reached this stage. Prior to 1997, Oregon had operated the standard federal policy of sanctions against the individual only, not the children. The number of sanctions and the time on sanctions increased. Welfare recipients adjusted to living on reduced levels. Having full family sanctions as an ultimate weapon created a climate; it was a clear message from the state (and one endorsed by all elements including child protection) that work and self-sufficiency was important. Oregon did not have a five year cut-off from welfare unlike other states, having negotiated a waiver based on its success in reducing the welfare roll by other means. Under TANF reauthorisation, a Bill before the Senate included a waiver for Oregon enabling it to postpone welfare cut-off to seven years.

Oregon's minimum wage

Oregon's minimum wage of $6.50 per hour was higher than the federal level. States wanted the right to choose their minimum wage. There was no evidence that employers had been effected adversely.

Meeting with Ms Kim Freeman and Ms Pamela Murray, Managers of STEPS to Success Programs at Mount Hood and Portland Community Colleges

Mount Hood and Portland Community Colleges were lead contractors with the Oregon's Adult and Family Services Division for the delivery of one of four workforce development pilot schemes in Oregon. Ms Freeman commented that a positive feature of the Oregon arrangements was the decision to establish a "lead contractor" for each geographical service area in the state. (They had 15 sub-contractors). This meant that they had overall management responsibility for delivery of the contract. It had created a good partnership relationship with the Department, with both bearing risk and responsibility. The arrangement minimised the risk of fragmentation and buck passing.

Workforce development had been "work in progress" since around 1988, when they had started with a 'human capital investment programme'. In that first year they had placed 53 people in work; in comparison, in 2001 they had placed 5,000. Oregon had outperformed other states in reducing its welfare caseload.

Originally, in the early days, they had focussed on clients they saw as most likely to succeed in education or to get jobs. Clients were in class for 15-20 hours each week. The programme did not model the world of work. There were no sanctions. People without a high-school diploma were encouraged to get their GED; and they ran one to two year college programmes giving training. Over half of participants failed the college courses.

By 1993-94 they had decided they needed to change. An examination of employer needs showed that most did not need staff to have degrees. The colleges switched to offering shorter courses for longer hours, designed to train people for the entry-level jobs available. They tried to model the workplace environment. Essentially, they moved to a labour attachment ('work first') model, where the aim was to serve employers and to help more people on the welfare roll - not just the most immediately job-ready.

The re-design involved 40-50 per cent of their staff engaged in the contract moving into the welfare branches so that there could be a better connection with the welfare case manager. They also created training 'hubs'.

At the initial two-day assessment, people with alcohol, drug and mental health problems were identified. All attendees undertook a 'SASSI' test (Substance Abuse Subtle Screening Inventory), designed to identify substance abuse. People could be referred at this stage for further assessment to decide whether treatment was necessary. Treatment was compulsory. The assessment process also allows identification of family issues, for example, a disabled child or a partner with a substance abuse problem or domestic violence. There was an attempt to put people in their wider family context when identifying barriers which needed to be overcome and suitable job placements. It might not be just the welfare mother who needed a job, but a partner or grandmother. Having a disabled child might require a parent to work locally or might make a community service placement in the nursery where the child attends a good idea.

Following the initial two-day assessment, for the first 30-45 days after a claim they worked with clients simply on jobsearch. People were offered a week's intensive 'workforce development' training for 35 hours, focusing on job search techniques including 'cold calling', completing an application and a résumé, in-work support and assistance, interview skills, work ethics, goal setting and action plans, and the basics of Microsoft Word and using the Internet. After that, people were expected to work from a 'careers centre' on job search, keeping a weekly jobsearch log. The centres were staffed by community college staff who reviewed the Job Log and conducted weekly networking classes, where outside speakers such as recruiters were brought in to discuss what they

looked for, or to give useful advice. At the centre there was access to computers, newspapers, etc. Students came in every day and discussed the employer approaches they had made. They were given new job leads which they then followed up. The philosophy was that the labour market should first determine whether people were jobready and employable. Until the economic downturn, around 80 per cent of people found a job during this period; currently the figure was down to 60 per cent.

If, at the end of this period the person had not obtained work, there was a discussion as to why. A series of 'strength building' options were then available from a menu designed to suit the individual. People could be engaged in further activity for anything up to a year. The menu included adult basic education and GED; English as a Second Language; Jobs Plus (subsidised employment) and Community Service. In programmes lasting ten weeks, people spent six weeks learning 'soft skills' and one of four 'clusters' of technical skills linked to employer needs:

  • 'Workplace Basics';
  • 'Medical Track';
  • 'Office Occupations (including a four-week work placement)'; and
  • 'Call Center/Customer Service'. Teen parents had a special programme linked to completion of their education.

In terms of sticking with people, an individual was assigned a college member as an adviser to work with both before and after they got a job - in a way which allowed a relationship of trust to be established. If people were to lose their jobs, it tended to happen in the first three months. They were moving towards a system of intensive engagement for three months, and up to six months if necessary. Their statistics showed that 18 months after getting a job, 80-85% of people were still in employment.

A fairly new aspect of their work was wage enhancement and career development. Early on, they stressed to participants that it was not just about getting a job, it was about thinking in terms of a career. Advisers worked with people to think about what skills they needed in order to progress. Advisers would stick with participants to see if their career plan was working, and could offer funds to pay for additional training or education.

Visit to East Portland DHS STEPS office

This was an opportunity for the Committee to visit a site running some of the employment programmes of Portland Community College. The STEPS office was co-located with the welfare department, allowing instant liaison and a co-ordinated approach.

The point was made by Karen Krackowiak, the Human Resource Manager, that the success of the STEPS programme had to be seen in the wider context of other Oregon policies, notably, the Oregon Health Plan - which allowed subsidised access to health care for low paid workers; the extensive subsidy of daycare provision for people in work; and the fact that welfare levels were low enough that people were better off in work, even with the minimum wage (which was higher in Oregon than the federal level).

For people with multiple barriers (their main client group) the problem was often not so much getting a job as keeping it. A new class they had developed with funds from DHS was a 'Career Builders Class' aimed at hard to place people and designed to help them keep a job. It was an intensive course over a year designed not only to identify barriers but also strengths. One element was encouraging participants to "have a dream," then work with them to provide some realism, for example, getting a placement in the right environment so that they could perhaps see the type of job close up. They might have had to take a "survival job" but they helped people plan a route to better achieve what they wanted. The goal was to work intensely and holistically to develop and implement a career ladder which would provide long term self-sufficiency and independence from welfare.

Additional information given:

  • The intensive Work Force Development course given to new welfare recipients was intended to teach techniques of jobsearch including "tapping into the hidden jobmarket" ie jobs not advertised and informal networks, and an introduction to the STEPS website where jobs were posted. Staff worked with participants and produced résumés for them, giving each client a disc.

  • The module 'Balancing work and family', given as part of the Workplace Basics programme stressed the need for parents to have second and third back-up systems for childcare. The message was that they should not expect employers to accommodate their childcare arrangements. Childcare was mostly available during the day; people working outside normal work hours faced more difficulty. Children with special needs did get an extra childcare allowance.

Thursday 20 June

Dr Sylvia Mundy, Commissioner of the Employment Security Department, Washington State

The common theme of state employment initiatives was partnership.

A Committee of Employers had recently been formed. Both federal and state resources were used in Community Colleges. There were 12 workforce development areas, 25 one-stop shops with 38 affiliates linked electronically.

There were 350,000 clients of whom 200,000 had found jobs. Access could be by phone or internet as well as personal interview. A "mystery shopper" approach to check on service delivery would start shortly.

Mr Jim Shober, Deputy Assistant Commissioner for Washington WorkFirst

Mr Jim Shober, Deputy Assistant Commissoner for WorkFirst in the Employment Security Department introduced the session. WorkFirst was Washington State's welfare-to-work strategy. Key goals were helping people move from welfare to work; retention of those people in work; and encouraging wage progression through moving up a career ladder. Washington initiated the WorkFirst programme in 1997. A key element was partnership. Partners included the Employment Security Department and the 'Worksource' system as a whole (of which, WorkFirst was a subset); the Department of Social and Health Services; the State Board for Community and Technical Colleges and the Office of Trade and Economic Development. Work was co-ordinated by a member of the Governors's Office, and representatives from each Department met weekly. The overriding principle was that work was the best means out of poverty.

They had concluded that training on its own was not enough to get low-income families into work. Clients needed to develop a strong attachment to the labour market. Therefore training had to be in that context. As a result, they had developed customised training with employment opportunities at the end of it; the expectation of work was upfront. The State was also concerned to give former welfare recipients the opportunity to go to college whilst in work. Colleges now ran courses in the evenings and at week-ends, with childcare provided.

Childcare: more money was now spent on childcare than allowances for people on welfare. Childcare funding was income-related, tapering away as income rose. Unlike Oregon, they did not pay for informal childcare arrangements. They insisted on licensed childcare for insurance liability purposes. Mr Shober thought there probably was enough childcare, although advocates would argue differently. His view was that there was no evidence that scarcity was a problem. Part of the State's job was to facilitate the start-up of childcare places and to train childcare staff. This was done via the colleges, with initiatives to give education to childcare workers so that they could get licensed. There were also grants and loans available and training in small business administration to assist people to set up in business doing childcare.

Formerly, there had been a sharp cut-off of support when people left welfare for work - financially and in terms of the loss of fringe benefits such as free health care. Now, for every dollar earned, the State subsidised by fifty cents: half their earnings were not counted as income against cash assistance. Medical care was paid for up to a year after starting work for adults, and indefinitely for children on low income. The State also supported a general basic medical health service.

Pre 1997, the welfare rolls were steadily increasing. As a result of WorkFirst, rolls dropped from 97,000 to 37,000 by the start of the recession. In the previous month, 1,500 clients alone went off welfare. The unemployment rate in Washington was currently around 7.1 per cent. However, there was no direct relation between the numbers on welfare and unemployment rates. They had found that, even in a recession, there were lots of entry-level jobs. One effect of the recession was that they had tightened the work search requirements for welfare recipients. People were required to sign in every day and to make 15 employer contacts per week. Staff were expected to greet clients and offer them job referrals. This compared to people receiving unemployment insurance, who were only required to make five employer contacts per week.

The welfare population, unsurprisingly was mostly female (85 per cent). By definition they had dependent children. The system also included around 30,000 'looked after' children (ie being looked after by people other than their parents), where welfare was paid for them alone. Thirty per cent of recipients had limited English.

Sanctions: In Washington there was no five year cut-off. Sanctions were graded - first two weeks, then four, then eight weeks. The maximum sanction was 40 per cent of the grant indefinitely. Mr Shober's considered view was that sanctions were not really needed. They were there more for the staff's benefit, to make them feel that they could have an ultimate sanction. His view, based on experience, was that the vast majority of people really wanted to work.

Services provided to WorkFirst participants included:

  • assistance finding work, indentifying career goals, and staying on the job;
  • help paying childcare whilst participants looked for jobs, received training or were working;
  • short-term, customised training to prepare participants for specific occupations and free tuition whilst participants were working;
  • paid, temporary jobs that prepared the hardest-to-employ participants for permanent, unsubsidised work;
  • extensive support services to overcome obstacles, including funding for transport, work clothing, professional fees and testing;
  • intensive support for the toughest cases including families who had been on welfare for three years, resisted participation, or who required special intervention; and
  • continuing contact with WorkFirst staff once in work to keep participants in touch with the services available to keep them employed and moving ahead. Research showed that participants who received post-employment services had higher rates of employment and higher earnings and worked more hours.

Mr Gary Jackson, International Association of Machinists Union, Boeing

The quality of life was important to youth, but there was now no long-term job security.

The Union had introduced various training programmes starting in 1989 with Health and Safety. The Quality Through Training Programme covered members of the Machinists Union. It received $14m of state funding with the possibility of carry over.

The programme was aimed at career and personal development, industry based IT skills and English. Up to $2,000 per annum was paid for tuition fees.

Boeing had experienced 30,000 lay-offs of whom approximately 20,000 were in Washington State. A Re-employment Programme had been started.

Ms Annette Copeland, Assistant Commissioner for Unemployment Insurance

Overview of the System

Unemployment Insurance (UI) was another partner serving the workforce.

Full partner in the Workforce Investment Act (WIA)

Income support for those unemployed through no fault of their own

In the United States, UI was an insurance premium paid by employers.

  • Nothing appropriated out of general revenues
  • No tax taken from worker paychecks
  • An employer's tax rate was calculated each year, the rate was dependent on that employer's experience using benefits - this means the amount of benefits paid to that employer's former employees and the economy. (Most employers pay a set insurance tax on all their workers, no matter how much or how little those workers may use UI benefits.)
  • Some employers reimburse the system for all benefits paid out to their workers.

It was a federal/state system administered by the US Department of Labor. (Similar to Parliament and local governments.)

  • Federal law provides some oversight and eligibility requirements.

  • US Department of Labor provides many of the programme's quality standards.
  • Otherwise, states had great flexibility regarding service and eligibility.

UI Benefits were only a piece of the puzzle:

  • Provide a simple income support (intended to replace half of a person's wage).
  • Not needs-tested (not just for low income workers).
  • No health insurance included.
  • Not intended to last forever. Typically never more than six months (in WA State, seven months maximum).

Eligibility Requirements

Amount of benefits:

  • High enough to survive, low enough to be an incentive to get back to work!
  • Should be a corollary to prior earnings (50% of wages replaced).
  • Recent work experience required (within last 18 months).
  • Minimum WBA: National average $42, WA State $106 (highest), 16 states had a minimum WBA of $30 or less (as low as $5 per week).

UI paid ONLY to workers who were unemployed through no fault of their own:

  • Not working due to lack of work or redundancy.
  • Quit work but with good cause.
  • Fired from work but not for misconduct at work.
  • Indirectly involved in a strike or lockout.

Situations that would pay or deny benefits vary from state to state:

  • Family responsibilities
  • Illness of a worker or a family member.
  • Criminal misconduct connected to work.
  • Dependents - extra payment for children.
  • Leaving work to escape domestic violence.
  • Pay or not pay benefits to seasonal workers during their regular season.

In all states:

  • Must be able to work and available to take a job immediately if asked.
  • Must seek work

-  Re-employment Services at the WorkSource One Stop

-  Work Search was verified

  • Benefits were reduced by certain income.

-  Earnings from work

-  Some pensions

-  Sometimes dismissal payments

-  No deduction for non-earned income

  • Some denials were universal:

-  Professional athletes during the off season if contracted for following season

-  Illegal immigrants

-  School employees - during school breaks

  • Must make whatever work search that is customary for their occupation:

-  Referral Union Members - check in with hiring hall.

-  Employer-attached - not seek work but available to return to work ASAP.

-  Dislocated/Redundant Worker - may include retraining/relocation.

  • There were penalties for lying and cheating (misrepresentation and fraud).
  • Each decision to allow or deny benefits can be appealed by the claimant or by the affected employer.

Benefit duration:

  • Up to 30 times the weekly benefit amount in any one year period. (All states maximum was 26 times the WBA except WA and Massachusetts)
  • Average duration
  • Exhaustions

Additional Benefits Programmes and Training Benefits

Additional benefits available under certain circumstances:

  • During periods of high unemployment:

-  Extended Benefits: up to 13 weeks if state's unemployed rate was high.

-  TEUC: 13 weeks and 13 more! Ends 28 December 2002.

-  State additional benefits: states had flexibility to set up state-funded additional benefits payment programs for periods of high unemployment or for other reasons when the state finds need.

-  Worker retraining:

  • Federal programs include TRA, National Emergency Grants, and NAFTA (North Atlantic Free Trade Act).
  • TRA: As part of the Trade Act of 1974, a federal program called Trade Readjustment Assistance pays up to an extra year of benefits to redundant workers who were in retraining. The USDOL must certify that the business and its workers were adversely affected by trade imports or exports.
  • NEG: National Emergency Grants were also available to redundant workers affected by a structural dislocation.

-  State programmes:

Training Benefits: Many states had state-funded additional benefits for unemployed persons who need retraining in order to get a job. Washington's Training Benefits pay about six months more benefits to most dislocated workers, with up to 52 extra weeks for aerospace workers.

Other Economic Recovery Tool

Shared Work:

  • 17 states had "workshare" programmes that were very useful during downturns in the economy.
  • An employer who applies for 'Shared Work' can keep their employees working at reduced hours instead of letting workers go.
  • The employee receives partial wages, and partial unemployment benefits.
  • The plan must be agreed to by the employer, the union and the worker.
  • The employer must continue to cover their workers for fringe benefits such as health care.
  • This way, the employer keeps a skilled workforce, and the employee receives a better wage replacement than if they were totally unemployed and does not need to seek other work.
  • Shared work benefits were paid based on the proportion of work lost. One day off, for example, would pay 'Shared Work' benefits of one-fifth the regular weeks benefit amount. The standard deduction for earnings would not have allowed any payment in this circumstance.

Visit to Seattle Jobs Initiative, South Seattle Community College site

The Seattle Jobs Initiative (SJI) linked low­income residents to living wage jobs. SJI clients were not just former welfare recipients. They included a wider group facing many barriers to employment including unstable work histories, homelessness, criminal backgrounds, drug/alcohol backgrounds, mental health concerns, limited English proficiency, immigrant/refugee status, welfare status, and others. SJI provided training in three major career areas: office occupations, welding/manufacturing, and high tech (web development/design). SJI was funded with support from the Annie E Casey Foundation, the City of Seattle and other Seattle companies and foundations. Since 1997, SJI had produced the follow results:

  • placed 2,700 low income residents in jobs;
  • the average wage at placement was $9.75 per hour;
  • at one year, 60 per cent of the those placed in jobs had been retained on the job; and
  • at one year, 41 per cent reported a wage increase to an average of $13.02 per hour.

The Annie E Casey Foundation (AECF)

The Annie E Casey Foundation (AECF) was initially focussed on children and poverty. In 1995, AECF decided to extend its focus to parents ­ hence the Jobs Initiative. AECF visited 15 cities and in 1996 awarded the Jobs Initiative to Seattle and five other cities, each with very different types of local economy. The recipient in each city was different too: the city government in Seattle; a community­based organisation (CBO) in Milwaukee and New Orleans; a community development corporation (CDC) in Philadelphia; a regional transit authority in St Louis; and a local foundation (Piton) in Denver (which was no longer taking part in the initiative). Each city won a seven­year grant of $750,000 a year ­ in return, each had to raise at least $250,000 a year.

In Seattle, the then Mayor of Seattle, Norm Rice committed $5 million a year to the Seattle Jobs Initiative (SJI) ­ dwarfing the funding in the other five cities. Rice and the SJI were in large part an attempt to offset the effects of Clinton's welfare reforms. The 1995 Personal Responsibility Act imposed a five­year time limit on welfare recipients' benefits and many, including Rice, thought it and the WorkFirst scheme would result in welfare claimants being forced to move to low­paid jobs with little or no training. He seized on SJI, which aimed to provide clients with proper training, holistic support and living wages.

Under the current Mayor, Paul Schell, City funding fell to $3.4 million in FY 2001-02, but

the current total of $4.15 million was still much more than in any of the other five cities. Another unique feature of SJI was its close links to the City government. Because SJI was run out of the City's Office of Economic Development, it had direct access to the City's social services and other departments. This had allowed SJI to provide holistic support to trainees (e.g., help with housing, childcare and transport costs). In addition, each trainee was entitled to a grant of up to $3,000 each from the state­run Career Investment Fund.

Seattle was culturally and ethnically diverse. Of SJI participants, 74 per cent were people of colour, and many had English as their second language. Although Microsoft loomed large and the hi­tech industry was prominent, Seattle was not a one­industry town. The cost of living was very high.

SJI operated out of a new­build, multi­occupancy office building in the International district of Seattle. The 15 full­time staff were all employees of the City's Office of Economic Development. SJI was an intermediary organisation that aims to bring together a whole range of delivery agencies. It operated a decentralised model, contracting out the recruitment, enrolment, programme delivery and monitoring to a number of community­based organisations (CBOs), consultants and colleges, whilst operating in partnership keeping partners to the core mission of getting people jobs.

  • CBOs included the YWCA, Asian Counselling and Referral Service and the Center for Career Alternatives. Each CBO had a case manager, responsible for a wide range of outcomes, including recruiting and enrolling clients; and dealing with clients' housing, transport and childcare needs. CBOs were paid an initial base fee, plus milestone payments depending on results. It was the CBOs who did the assessment of clients and provided a standard 20 hour course of job readiness training. They also identified client's readiness for further sectoral training, based partly on resolving transport/income/housing problems.

  • Consultants were brought in for example as business liaison officers and soft skills supervisors.

  • SJI used Seattle's three community colleges as the centre for its programmes.

SJI had four core values:

  • Long­term retention ­ trainees were placed in sustainable jobs and tracked for 2 years after placement.
  • Living wage jobs ­ the average wage for SJI jobs was $9­12 per hour (plus benefits), well above the minimum wage of $6.75.
  • Human service integration ­ SJI provided a holistic programme of support for trainees, including help with childcare, housing and transport (drawing on their strong links with the City government).
  • Dual customer focus ­ SJI focussed on the needs of the employer as well as the trainee.

Individual Placements

SJI first got off the ground in 1997 with its "Individual Placements" scheme ­ which was by far the largest of all the SJI programmes. SJI contracted with a number of community­based organisations (CBOs) to provide career advice, support and soft skill training to skilled and unskilled individuals who wanted a job relatively quickly (within 2­3 months), without having to go through lots of training. Since then 1,393 clients had completed the scheme ­ 1,150 of which had stayed in their job for at least three months; 932 for at least six months; and 653 for at least 12 months.

As the scheme went on, however, it became more difficult to place people in this relatively cheap and quick way. So SJI started to adopt a sectoral approach.

Sectoral approach

SJI commissioned the local economy, to find out where the available jobs were. They came up with four sectors: office occupations, manufacturing (especially welding and printing), autos and healthcare.

Between 1996­99, SJI prepared the ground for delivering training programmes in these four sectors, through capacity building, research and programme design. They finally decided to run three programmes: office occupations, welding & light industries and hi­tech (autos and healthcare were both abandoned early on). Each sector programme had employer boards to ensure that students developed good competencies, accepted by the industry. In the hi-tech option, the downturn had led to encouragement to students to branch out into other jobs apart from web design, such as software testing.

Participants underwent an assessment at a college of their reading/writing/maths/computer/typing skills. If they were suitable, they had a two day orientation course followed by 22 weeks hard skills training. The courses all involved at least five hours soft skills training per week as well as coaching in basic work expectations such as dress and punctuality. Each client has a case manager, a training supervisor and training instructor. There was a teamwork environment, with staff jointly evaluating students at intervals. At the end, SJI employment brokers worked intensively with students in interview techniques before the arrangement of three month internships with employers. Their job was to both sell the programme to employers (and be an advocate for individual students) and to teach students how to interview. The programmes were geared to meeting employers' needs; there was no attempt to get employers to lower their standards, just to consider hiring differently. Some internships were paid; in others, participants were able to obtain a credit towards a college associate degree. Students were also given a further three weeks jobsearch training, three hours a day, three days a week. They were entitled to job placement assistance and job retention support for two years.

People survived financially whilst doing the training in a variety of ways. They might be eligible for federal financial aid, they could be getting unemployment benefit, food stamps, working part-time, supported by a partner, or have money from the career investment fund accessed by a case worker.

SJI representatives at the college told us that they had also chosen to focus on a wider mission of systems reform ­ for example, trying to change the way community colleges deliver their training. Mr Martin Grothe, Dean of Professional and Technical Services at South Seattle Community College said that the SJI programme had implications for the college more generally. Unlike its other courses, the SJI programmes ran from 8am to 5pm five days per week; there were no vacations; and "wrap-around" services to students gave them support. The SJI initiative was also different in its connectedness to employers and the aggressive hard-sell of participants in the labour market. The SJI programmes were not cheap, but they did compress into 22 weeks the equivalent of what would be a normal year's college course. On this basis, they compared well on cost.

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