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Two issues of central importance will be presented in this chapter. It begins with a look at the extent to which employers offer employment to participants after the subsidy expires. Then it moves to an investigation of "incrementality," that is, the amount of hiring that would have taken place in the absence of Compass. It is the opposite of job displacement.

A key objective of Compass was to increase the economic self-sufficiency of participants. It was hoped that many clients would stay on with the placement employer after the subsidy ended: indeed this was a condition of receiving government subsidies under the TTO component. According to client survey respondents, however, only about 45% of TTO participants continued to work with the placement employer after the subsidy ceased. On the other hand, about 26% of WEO respondents stayed with the placement employer after the subsidy ended, a decided bonus of the program.

This issue was also explored in the employer survey, and the findings are similar to those from the client survey. According to this source, 51% of TTO employers and 43% of WEO employers hired some or all of their Compass workers after the placement ended. Because some employers hired only a portion of their Compass employees, the percent of employees hired after placement is a little lower (Table 5.1) - 47% of TTO employees and 37% of WEO employees were kept on after the wage subsidy ended. The figure for WEO is somewhat higher than that derived from the client survey (although within the margin of error for the surveys), but the TTO figure is very close, giving us confidence in the findings. Both figures are somewhat surprising considering that employers were supposed to hire TTO workers after the subsidy expired, but there was no such condition for WEO employees.

Table 5.1 Percent of Employees Hired After Placement Ended

Hire Person after Placement Ended?	Work Experience	Transitional Training
Yes	36.5%	47.3%
No	63.5	52.7
N	63	91

Most participants who were not hired believed the reason was that there was no position available or no money to hire (Table 5.2).

Table 5.2 Reason Participants Gave for Not Being Hired After Placement Ended

REASON FOR NOT BEING HIRED	% of WEO Clients	% of TTO Clients
No positions available/no money	65.1%	55.7%
Not qualified for available position	4.1	5.2
Not interested in working for this employer	1.4	3.5
Other	19.1	25.2
Don't know	10.3	10.4

The same issue was investigated in the employer survey. Their reasons as to why they did not hire after the subsidy expired are listed in Table 5.3, and they are quite different from those reported by the employees. Nearly half said there was no money or position available to keep the person on after the subsidy expired.

Table 5.3 Reasons Employers Gave for Not Hiring After Placement Ended

REASON FOR NOT HIRING	% of WEO Employers	% of TTO Employers
No positions available/no money	45.0%	48.8%
Person had a poor work attitude	27.5	14.6
Offered job but person said no	10.0	9.8
Person not qualified for job	0.0	12.2
Person left before placement ended	17.5	9.8
Person went back to school	0.0	2.4
Person still in placement	0.0	2.4

Job developers confirmed that sometimes, when employers undertook to hire the TTO participant at the end of the placement, they had no intention of following through. As soon as the funding ended, so did the job. "We've been burned a couple of times. There is no way to foresee it." The other main reason for not hiring the client, according to the job developers, was that he or she simply didn't work out. Perhaps the client wasn't working hard, missed too many days, or had a poor attitude toward work and the employer refused to hire her/him. At other times the client quits as soon as he/she has "enough weeks to open a claim." One job developer estimated that half the time it was the employer's financial situation, the other half it was clients with poor attitudes who quit or were fired; this is fairly close to the picture portrayed in Table 5.3.

According to the client survey, of participants who were initially hired after the subsidy ended, about 57% were still with the same employer as of late 1996. This did not differ significantly by option. According to the employer survey, nearly three-quarters of the TTO employees hired after the placement ended were still with the employer as of late November, 1996. Only 61% of WEO clients who were initially kept on were still with the employer at that time²⁴. Employers gave two main reasons for continuing to employ these clients: they were good workers (48%), or they were now trained for the job (41%).

Participants no longer with their placement employer were asked why not. Mentioned most often were temporary lay off and seasonal employment (Table 5.4). Also noteworthy, WEO clients were over twice as likely to quit their job as TTO clients. The picture presented by employers is much different²⁵. They said that almost half these clients quit (46%); another 23% were laid off. Two clients (15%) were fired, one (8%) was seasonal and one (8%) was let go when the company went bankrupt or moved. Thus, employers were much more likely than employees to say the person quit (although the small number of cases suggests caution in placing too much faith in these results).

Table 5.4 Reasons For Leaving the Job After Being Hired

REASON FOR LEAVING THE JOB	% of WEO Clients	% of TTO Clients
Temporary lay off	22.2%	23.7%
Seasonal employment	20.0	14.5
Quit	22.2	10.5
Company moved/went out of business	4.4	9.2
Fired	0.0	1.3
Other	31.2	40.8
N	45	76

On average, those who were initially hired by their placement employer but were no longer working there at the time of the survey left the job after about half a year: 24.8 post-placement weeks for WEO, and 29.4 weeks for TTO participants (not a significant difference). This did not differ across regions. Findings from the employer survey are much the same.

To get at the incrementality of Compass, we asked employers a series of questions regarding the role of the wage subsidy in their decision to hire. First we wanted to establish whether the organization had a job opening or skill requirement to be filled before learning of the wage subsidy: 81% of our sample said that they did. Then we asked those with an opening if they would have filled this position (or these positions) in the absence of the wage subsidy. Half said yes. This is a very important finding. Assuming it is safe to generalize to the population²⁶, half the employers that participated in Compass would have hired anyway. Checking further, there was no significant difference in the number of employees hired through Compass between employers who would have hired and those who would not have. Thus, although it is important to note that in all likelihood most employers would not have hired a SAR in the absence of Compass, it appears that half the participants in Compass may have displaced others who would have been hired without a subsidy.

Those who would have hired without the subsidy were asked whether the subsidy spurred them to hire sooner than they otherwise would have: 58% said yes. Therefore, even though half the positions would have been filled without the subsidy, most of these jobs were filled sooner because of Compass.

To get at the matter even more directly, we asked whether a position was created specifically because a wage subsidy was available. Just under half (49%) stated that this was the case²⁷. This supports the finding that only about half the jobs created under Compass were incremental (again, there was no difference in the number of Compass participants hired by whether or not the job was created just because of the subsidy).

Besides the wage subsidy, there were other reasons employers gave for hiring through Compass (see Chart 5.1).

A related issue of importance is whether the subsidy was needed by job-ready clients to land a job. Two provincial informants thought that a focus on the job-ready might have been wasteful in one important respect: many would likely have found employment on their own (although Compass may have sped up the process). Thus, although job ready clients might still need the job developer, they might not need the wage subsidies. One person suggested allowing the job ready clients to job search through the ERCs, use the Job Finding Clubs and use the job developers only if needed. This would free up the job developers to focus their work on the more difficult clients (who under Compass did not receive service unless they were youth).

Chart 5.1
Reasons For Hiring Through Compass

Another interesting participant survey finding bearing on incrementality, is that 9% of Compass participants had worked for their placement employer before becoming involved in the Compass Program. One-third of these individuals had been laid off by the employer. This does not necessarily imply that these employers were abusing the program, but it certainly raises the question.

Two crucial findings emerged from the analysis presented in this chapter:

1. Up to one-third of employers offered their WEO client a position after the placement although that was not a condition of the program; but over half the TTO employers did not follow through on their commitment to hire the Compass client after the subsidy ended. The primary reason for not hiring after the placement ended was that there was no money or position available. This is a reasonable excuse for WEO participants, since the employer did not undertake to hire the client after the placement. On the other hand, it does not seem to be an acceptable reason for TTO participants, unless the employer's financial situation changed after making the commitment to Compass. There are good grounds to be suspicious that a substantial proportion of the TTO employers - likely 20% to 25% - never intended to keep their commitment to hire the Compass client.

2. Most employers would not likely have hired a SAR in the absence of Compass, and most hired earlier than they otherwise would have. But, half the participants in Compass may have displaced others who would have been hired without a subsidy. To the extent that those not hired were turned down (and perhaps applied for UI or welfare) because someone else came with a subsidy, the impact of Compass will be overstated. Unfortunately, this phenomenon is impossible to quantify.

Footnotes

24	Part of the reason for the difference between options is that (for this sample of employers) most WEO clients were placed in 1994 or 1995, but most TTO clients were placed in 1996.
25	Note that N = 13 for the following percentages.
26	The standard error was .056: thus the proportion saying yes was 50% ± 11%, 19 times in 20.
27	The standard error was .056: thus the proportion saying yes was 49% ± 11%, 19 times in 20.