The nation’s welfare system, after more than 60 years in existence, is undergoing a total overhaul, and small business owners are being asked to lend a hand by doing what they do best: create jobs.

Legislation passed by Congress and signed by President Clinton in August 1996 abolished the Federal Aid to Families with Dependent Children (AFDC) program, which provided open-ended cash payments to more than four million low-income families. Under the new system, recipients generally will have to find jobs within two years of first receiving benefits, and most will be unable to receive more than five years of future benefits in their lifetime.

The new federal law also requires states to move 50 percent of their welfare recipients into jobs or short-term training programs by 2002.

That’s where small business comes in. Burdened by the budget deficit, the federal government is in no position to launch massive public-works programs. Many states and cities have their own fiscal problems. Some corporations are still cutting jobs in the process of restructuring their companies to stay competitive. So welfare reformers are pinning their hopes on small companies—which already create most of the jobs in the U.S.

"I challenge every business person in America who ever complained about the failure of the welfare system to hire somebody off welfare and try hard," said President Clinton after the legislation was signed. "I believe the business community’s response will be overwhelming."

In response to President Clinton’s challenge to the private sector, and to help meet the goals of the new welfare law, the CEOs of United Airlines, Burger King, Sprint, Monsanto and UPS joined together to form a nonpartisan, nonprofit organization to help move people on public assistance to jobs in the private sector.

The Welfare to Work Partnership, which has expanded since its inception in May 1997 to include hundreds of companies, concentrates on energizing the business community to hire welfare recipients without displacement of existing workers. It provides information, technical assistance and support for firms of all sizes and sectors, from all industries and all areas of the country.

Vigorous efforts are also in place at local levels. San Francisco, for example, is considered a leader with its Placement Partnership Initiative that is designed to move people off welfare and into full-time jobs. Funded primarily by the U.S. Department of Labor (with additional financial support from the Mayor’s Office of Economic Development, Pacific Bell, PG&E and Home Savings), the Initiative was organized by the California Small Business Association (CSBA), with 187,000 members, and the Small Business Network (a coalition representing 15,000 local businesses), which will partner with nonprofit groups to provide training and support to people coming off welfare.

During its one-year pilot program, due to begin in June 1998, the goal is to place 200 low-income individuals (who undergo a five-week training program beforehand) with approximately 75 target businesses.

According to Scott Hauge, who serves on the Initiative’s Steering Committee, the program is the only one of its kind nationwide. "Key differentiating features include an emphasis on placement and retention, as well as training, and the provision of after-placement support. This is critical," Hauge emphasizes, "because with logistical and other issues addressed, individuals are able to stabilize their lives to the greatest degree possible and can better focus on success on the job."

In addition, after people are hired, they remain on the payroll of the participating nonprofit organizations that, in turn, reimburse the small businesses. "This arrangement absolves the businesses from potential workers’ compensation and unemployment claims," explains Hauge.

To encourage business owners to hire people from public assistance, the federal government and many states offer various financial incentives. They include:

Tax credits. When Congress raised the minimum wage in 1996, it added a variety of tax breaks for businesses. One, the Work Opportunity Tax Credit, allows employers to claim an income tax credit equal to 35 percent of the first $6,000 paid to new employees from seven targeted groups, including welfare recipients. At least five states—Connecticut, Georgia, Maryland, Massachusetts and South Carolina—offer similar tax credits.

Wage subsidies. Federal rules already allowed states to divert all or part of a welfare recipient’s monthly benefit check—and the cash value of what the person otherwise would receive in food stamps—to an employer for use in paying wages to the recipient. Such programs exist in at least 22 states and are likely to be created in several more.

Enterprise zones. Many states grant various tax breaks to companies that locate factories or offices in economically depressed areas. California, for example, has designated 35 areas for special treatment, including favorable depreciation schedules, preferences on state contracts, and a tax credit of up to 50 percent for wages paid to enterprise zone residents who are on welfare.

As paraphrased from The Welfare to Work Partnership’s Web site (www.welfaretowork.org/about.html): "Finding workers to sustain the growth of American businesses is becoming a crucial concern. The large pool of workers within the welfare system can be recruited and trained to fill many entry-level jobs as well as other currently empty positions.

"With job readiness training, placement opportunities and follow-up retention services, individuals formerly receiving welfare assistance can become productive and valuable employees-further expanding the nation’s economy."

According to Aida Alvarez, head of the SBA, these local and national initiatives could be the answer to the labor shortage facing the nation’s small businesses. "It’s potentially a win-win situation, with small business being the ‘work’ part of the welfare-to-work equation," she notes.

A political refugee from Laos stripped of all possessions except the clothes on his back, You Soukaseum (accompanied by his wife and three children) arrived in Hawaii in 1976 in search of a better life. Without money, friends or knowledge of the language, he enrolled in an 18-month program sponsored by the Department of Labor to train refugees and new immigrants.

Deciding to become a farmer after recognizing the strong demand for fresh produce in the local markets, Soukaseum applied himself to learning everything he could about this new field. After four months, he voluntarily removed himself from the government assistance, thankful for the aid but determined to be self-sufficient.

Working on two farms before starting out on his own, with he and his wife routinely putting in 18-hour days, Soukaseum acquired a reputation for his industriousness and innovative agricultural ideas (such as rotating crops to restore the nutrients in the soil).

Impressed by his achievements, one of the larger land owners on Oahu, Campbell Estate, offered to lease Soukaseum 445 acres of land in Kahuku. Using his personal resources to obtain the master lease, Soukaseum then sub-leased the land to 24 refugee families he brought with him from Waimanalo.

In addition to providing the individual farmers with a parcel of land, Soukaseum made available all necessities such as startup capital, equipment and supplies (including seed, fertilizer and pesticides). He also freely shared his expertise, advising the families on what crops to plant, how to prevent disease, and techniques to improve their yield.

Frustrated with a lack of access to market his crops, in 1982 Soukaseum started You’s Produce, a wholesale operation. Managed by his son, this centralized outlet enabled him to consolidate produce from each farm and sell directly to supermarkets.

As the business grew, Soukaseum leased additional land from Campbell Estate and provided opportunities to even more Asian families. To date, he has helped more than 200 Chinese and Laotian refugees become independent farmers.

Soukaseum’s concern for others extends well beyond the perimeter of the farm. He was one of the founders and past president of the Association of Chinese from Vietnam, Cambodia and Laos (ACVCL), an organization that helps members become productive contributors to society.

Convinced that education is the key to socioeconomic progress, Soukaseum proudly supports the Laotian-American Scholarship Fund of Hawaii, which provides training and support to young Laotian-Americans, and offers them the opportunity of attending college.

He has also persuaded many in the Chinese and Laotian community to become involved in the election process, and uses his many contacts in the Far East to stimulate demand for local produce.

In his nomination for the SBA’S 1998 Minority Advocate of the Year, submitted by the Bank of Hawaii, Soukaseum is described as "making his American dream a reality through his entrepreneurial spirit and hard work. The most outstanding quality about him is his desire to continually create opportunities for success for those with less access."

The nomination continues: "Soukaseum’s ongoing efforts in the minority community are numerous, and his unconditional desire to improve the lives of others has truly made a difference. He is generous with both his time and money, and is known in the Laotian community as the ‘Godfather’ of farming. Because of his assistance, hundreds of minority individuals have become successful and realized their own American dream."

Carolyn Stradley, founder and president of C&S Paving in Marietta, Georgia, is an American success story in the truest sense. Orphaned at age 11, a working wife and mother by 17, and a widow at 26, she has persevered throughout years of struggle and found ways to prevail—becoming, in the words of Georgia governor Zell Miller, "an inspiration to us all."

"I’m a scrapper," Stradley admits. "My mama taught me never to give up. I’ve never backed down from a challenge"—from entrepreneurship to piloting a small plane, scuba diving and climbing Mt. Kilimanjaro.

Stradley, who started out professionally as a teenage secretary for a construction firm, left in 1979 with her boss’ blessing to found her own paving company. Joined by her brother and sister-in-law, partly because it was impossible to get a bank loan to launch a "man’s" business, Stradley set up shop in her garage on a shoestring.

Armed with only a pick-up truck, rented tools and three employees, she tackled the rough, disagreeable jobs her more established competitors didn’t want and soon gained a reputation as a problem-solver. In one project, when her trucks could not get on-site because of clearance restrictions, Stradley simply had their roofs cut off.

Her business continued to grow, though conditions hardly improved as others felt a woman had "no place" in construction. Dealing with rudeness and indifference, and worse, Stradley was once locked in a portable toilet by male co-workers, who proceeded to shake it back and forth.

Undaunted, Stradley remained convinced that women can overcome the roadblocks to success in male-dominated situations. As this red-haired grandmother says in retrospect, "You have to learn how to turn life’s problems into challenges." And her stubborn persistence paid off handsomely.

Eventually, Stradley bought out her family’s interest in the business, and in 1984 met and married H. Leon Thompson, who had hired her to pave parking lots surrounding the shopping malls he was building. At his own insistence, Thompson owns no part of her company.

In 1988, C&S Paving, now 35 employees strong, was awarded a $744,000 contract by the U.S. Air Force, the largest single government contract ever given to a woman-owned firm through sealed competitive bidding. And then followed what will perhaps be Stradley’s foremost accomplishment and lifelong signature—a $1.5 million project to pave the lots and the surface under the track of Atlanta’s Fulton County Stadium, site of the 1996 Olympic Games.

With 1997 revenues topping $4 million, as well as a hefty $500,000 reinvestment in construction equipment, it appears C&S Paving is destined for even greater achievements. "You can only do this in America," contends Stradley. "Going from rags to riches is possible if you dream and set goals that become a bridge to your dreams."

Stradley started her own program wherein C&S Paving trains those on public assistance, providing uniforms and transportation as well.

As she explains, "I know the pain I felt as a woman starting out with nowhere to go and no place to turn. That’s why I want to help other people. We encourage anyone who chooses to try." Stradley, who has worked with President Clinton on the national Welfare to Work program, testified before the Senate Committee on Small Business in 1997, co-chaired Transportation 2000 for the State of Georgia, and was a speaker at the 1996 National Democratic Convention. Her numerous honors include: National Small Business Person of the Year (1996), Georgia Small Business Person of the Year (1995), and "Spirit of Life" Award from the City of Hope.

The youngest daughter in a family of 13 children, Rachel Hubka (fourth from left) learned from her parents to work hard, and to evaluate people on their own merit—principles that served her well as she pursued her own life and career.

After attending college on scholarship and relocating from Arkansas to Chicago, where she was married and divorced, Hubka raised three children while working from home as a telemarketer. In 1978, she joined a small school bus company as a dispatcher—moving up to general manager within 18 months.

After 11 years in the industry, and having established a good reputation with the Chicago Board of Education, Hubka founded Rachel’s Bus Company (located on Chicago’s West Side, in the depressed "inner city" Lawndale area) in 1989. Serving the Chicago Public School System and conducting a rapidly expanding charter business, the company garners nearly $5 million in annual revenues—up from less than a million its first year. It employs 25 full-time professionals and approximately 120 bus drivers (depending on the season), 99 percent of whom are minorities.

"I purposefully chose to locate my company in one of Chicago’s most distressed neighborhoods," says Hubka. "In utilizing the neglected labor pool of young people and adults in the area, I hoped to provide them with a ladder to success."

From the outset, she has hired many people considered unemployable, and instilled in all of them a newfound self-esteem, a strong work ethic, a sense of pride and an intense desire to excel.

Rachel’s Bus Company offers drivers comprehensive training, and a motivation program that helps them develop entrepreneurial skills and extra income. A strong proponent of promotion from within, Hubka guides employees into positions of increasing responsibility—and in some cases, into launching their own businesses.

She also challenges employees to achieve personal excellence, and shows concern for their personal safety and well-being by offering free shuttle service to and from work, and an activity center featuring workout, entertainment, relaxation and computer learning facilities.

Staff members are encouraged to be conscientious citizens and role models within the community—making appearances, for example, throughout the public school system to encourage students to stay in school and offer career counseling. In a similar vein, Rachel’s Bus Company frequently donates service for charitable and community-sponsored activities, including the Special Olympics, and transports senior citizens and others to and from the polls on election day.

A respected spokesperson for the small business community, Hubka has been invited to the White House to participate in discussions on welfare to work with President Clinton and other government officials. She serves on the Board of Directors of the national Welfare to Work Partnership, and is an active participant with the City of Chicago’s Welfare to Work Task Force.

Hubka was named the SBA’s Small Business Person of the Year for the State of Illinois in 1994, and won the 1995 Business Enterprise Award that recognizes individuals who combine social conscience with sound management practices. She is also featured in Stone Soup for the World, a book published in April 1998 that is a collection of stories about "ordinary people, doing extraordinary things, who are passionately committed to making the world a better place."

Excerpted with permission from Small Business Success, Volume XI, produced by Pacific Bell Directory in partnership with the U.S. Small Business Administration.