A new report sheds light on the hidden workings of the country’s welfare overhaul. In a word, it’s intermediaries.

Intermediaries–nonprofit and for-profit job search and placement agencies–are the linchpins of welfare reform, charged with the crucial responsibility of getting people off the dole and into work. It’s a service that governments pay handsomely for: New York City is preparing to spend nearly $500 million to put welfare recipients to work.

But not much is known about this business. So Mathematica Policy Research surveyed 20 welfare-to-work programs, generating a quick anatomy of the intermediary industry. Some interesting observations:

Although there are many more nonprofits than for-profits, the for-profits work on a much bigger scale. In urban areas, nonprofits make up 74 percent of the agencies, dominated by giants like Goodwill and the Urban League. While for-profits are only 15 percent of the total, they handle 45 percent of the clientele.

The going price for putting a welfare client to work ranges enormously, from around $1,000 to $5,000. A higher price doesn’t guarantee more services: At one site, the highest-paid contractor gets four times what the cheapest one does–even though they provide exactly the same services.

“It’s very useful to map out what’s happening in terms of welfare to work,” said Mark Elliott, executive vice president of Public/Private Ventures, a social policy organization. “The media focuses on [for-profit intermediaries like] Lockheed Martin and Maximus, but, on the whole, most places are relying on a network of nonprofit providers.”

Elliott also points out one telling lapse: The study didn’t look at what intermediaries do in terms of job retention or advancement–the follow-up to make sure that ex-welfare clients stay in their new jobs or are able to move on to better, higher-paying ones. Policy experts constantly point out that the jobs that people land when they leave welfare are usually unstable and badly paid, so helping people keep and improve their jobs is crucial for welfare reform to work over the long haul.

But study author LaDonna Pavetti said that Mathematica didn’t look at it simply because intermediaries don’t do much of it yet. “It’s something that is just starting to develop,” she said. “People realize it’s a direction they need to go in.”

The study is at www.mathematica-mpr.com/intermediaries.pdf.