Privatization in the implementation of social welfare programs represents a relatively unexplored administrative strategy and little remains known of its origins and consequences. After briefly exploring the antecedents of welfare contracting across the American states, this research utilizes multi-level modeling techniques to examine the consequences of privatization on the employment outcomes of welfare clients. The quantitative findings indicate that privatizing welfare services is not an administrative panacea in that the quality of client-level employment outcomes are seldom improved under private sector arrangements. There is also scant evidence of predatory behavior among private sector welfare providers. Historically disadvantaged African American and low-educated welfare clients are no worse off under profit seekers and are potentially achieving superior outcomes under non-profit administration.