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Journal of Public Administration Research and Theory Advance Access published online on July 19, 2006

Journal of Public Administration Research and Theory, doi:10.1093/jopart/mul002
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© The Author 2006. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org.

Article

For-Profit Welfare: Contracts, Conflicts, and the Performance Paradox

Janice Johnson Dias 1 * and Steven Maynard-Moody 2

1 University of Michigan
2 University of Kansas

* To whom correspondence should be addressed.
Janice Johnson Dias, E-mail: janjohns{at}umich.edu


   Abstract

This article examines how financial inducements in performance contracts shape the inner workings of a for-profit welfare-to-work training program serving long-term recipients. Our work pays particular attention to how contract requirements shape relationships between manager and line staff and their treatment of clients. We argue that contract design, coupled with bottom-level management efforts to meet contractual obligations, leads to a performance paradox--the same actions taken to achieve contractual results ironically produce negative program practice and poor client outcomes. Thus, rigidly constructed legal agreements between the government and private service providers can distort incentive structures, causing programmatic conflicts between management and staff, and do little to reduce long-term welfare use and diminish recipients' poverty.


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