Myth of Failure:
Promising Findings from Ten Public Job Creation Initiatives
by Clifford M. Johnson and Ana Carricchi Lopez
Public job creation the use of public funds to create wage-paying jobs in the private nonprofit and public sectors for individuals who otherwise would be shut out of the labor market has received little attention in the 1990's. The conventional wisdom is that public job creation has been tried and proven ineffective, a view shaped in large part by media reports of alleged fraud and abuse in the CETA public service employment program during the late 1970's. The actual record of public job creation initiatives, however, is far more promising. Research findings from a wide range of program evaluations and data collection efforts provide substantial evidence that publicly-funded jobs can be effective in boosting employment and earnings for disadvantaged populations, increasing the supply of entry-level jobs, and responding to pressing community needs.
This paper summarizes promising findings from studies of ten past and current public job creation initiatives. Some of these initiatives have been the subject of rigorous evaluations that leave little doubt as to their effectiveness. Others have generated data on program outcomes that, while less conclusive, also underscore the potential of public job creation as an important tool for aiding disadvantaged workers and depressed communities. Taken together, they shatter the myth that public job creation represents a "failed policy of the past."
The initiatives described in this paper vary considerably in their goals and populations served. Some have focused explicitly on transitions into unsubsidized employment, relying upon close supervision, time-limited work assignments, intensive job search or placement activities, and support services to help participants move into the regular job market. These programs have placed a heavy emphasis on skills development, frequently combining paid work with education or training to boost participants' employability. Other initiatives were designed primarily to put people back to work quickly in times of high unemployment and to increase the overall supply of jobs available to low-skilled workers. While virtually all of these efforts have sought to assist relatively disadvantaged individuals, some have been targeted exclusively on longer-term welfare recipients or unemployed youth.
For those familiar with only the oldest and largest federal job creation programs, such as the CETA public service employment program and the Depression-era Works Progress Administration (WPA), the variety of approaches to public job creation summarized in this paper may be surprising. Popular perceptions of public job creation continue to be shaped by CETA and WPA, which were intended largely to stimulate a faltering economy. Smaller and more recent innovations, however, have demonstrated that public job creation is a more flexible tool that can overcome employ-ment barriers faced by disadvantaged individuals even in times of relative prosperity.
The research findings summarized in the following program profiles focus primarily on the impacts of these initiatives on participants' future employment and earnings, although in several instances data also are presented on other positive outcomes. Each profile begins with a few key findings and then provides information on the program in a standardized format intended to facilitate comparisons of key features or results across programs while offering a reasonably complete portrait of each initiative. The profiles begin with several current initiatives (a reminder that public job creation is alive and well), and then describe past programs that used publicly-funded jobs either to promote skills development and transitions into unsubsidized employment or to create jobs for individuals in areas or times of high unemployment.
While these ten public job creation initiatives are quite varied in program design, the research on their effectiveness yields important lessons that can guide the develop-ment of a next generation of job creation efforts.(1) These lessons include:
Public job creation programs can be an effective tool in boosting the employability of very disadvantaged individuals, including but not limited to longer-term welfare recipients who now are the focus of federal and state welfare reform efforts. "Sheltered workshop" models may be the only feasible way to create work opportunities for highly disadvantaged indivi-duals who function at levels well below those required in the regular job market. Yet publicly-funded jobs also can provide much-needed work experience and skills for a broader range of hard-to-employ individuals who cannot find unsubsidized employ-ment. These efforts are most likely to succeed when publicly-funded jobs are understood to be "stepping stones" to permanent employment and are accompanied by strong job search and job placement activities. Milwaukee's New Hope Project and Saint Paul's TRANSITIONS program offer two interesting examples of public job creation programs with an explicit transitional focus.
Initiatives that combine paid work with substantial training or education activities appear to have the greatest impact on participants' future employment and earnings, producing gains well beyond those achieved through traditional "workfare" programs. Past research on a broad array of employment and training programs for both disadvantaged youth and adults suggest that combinations of work and learning are particularly effective in promoting skill development. The long-term employment effects of the AFDC Homemaker-Home Health Aide Demonstrations and the National Supported Work Demonstration are much larger than those documented for unpaid work experience programs in a variety of states during the 1980's. Current programs such as YouthBuild and the youth service and conservation corps now operating in many states also are deeply rooted in this concept of integrating work and learning to boost participants' future employability.
creation programs, if launched in a timely fashion, can add to
the net supply of jobs available to low-skilled workers during
recessions or in depressed geographic areas.
In 1978, the CETA public service employment program provided jobs for more than 700,000 disadvantaged adults. While some of the work performed by CETA partici-pants no doubt would have been undertaken in the absence of the program, field studies conducted between 1977 and 1980 suggest that between 80 and 90 percent of CETA public service employment expenditures contributed directly to net job creation. The Minnesota Employment and Economic Development (MEED) program demon-strated that states also can mount effective countercyclical job creation efforts. By offering targeted wage subsidies to small businesses, MEED placed 19,000 individuals in jobs during a period of relatively high unemployment in the mid-1980's. The State of Minnesota concluded that more than half of the jobs created through MEED would not have existed if the MEED subsidy had not been available.
Public job creation programs can be operated at substantial scale, although models that emphasize skill development pose greater implementation challenges and must be expanded incrementally over time. One of the nation's oldest public job creation programs, the Works Progress Administration (WPA), achieved remarkable scale by putting more than three million unemployed Americans back to work at its peak in 1938. The experiences of WPA and CETA, however, are not the only bases upon which to conclude that public job creation initiatives can be operated at substantial scale. When the Youth Incentive Entitlement Pilot Projects extended a job guarantee to low-income youth in 17 communities across the nation in the late 1970's, about 76,000 youth were hired in fully subsidized jobs by 11,000 private for-profit, nonprofit, and public employers. More recently, YouthBuild and youth corps programs now are providing paid work experience for thousands of young people through focused attempts to replicate smaller-scale projects in dozens of states and local communities nationwide.
The value of work performed and services provided through public job creation initiatives is quite significant, particularly when project development and worksite selection is closely linked to community needs. Past research on public job creation initiatives has focused more on outcomes for participants than on the value of the work that they perform, but these additional benefits should not be ignored. For example, the AFDC Homemaker-Home Health Aide Demonstrations yielded net social benefits ranging from $2,200 to $13,000 per participant at least in part because of the value of homemaker services that participants provided to elderly and other functionally impaired individuals. Milwaukee's New Hope Project and many local youth corps encounter few difficulties in developing appropriate worksites or work projects because nonprofit groups and public agencies often are eager to reap the benefits of participants' labors. Some YouthBuild and youth corps programs even have launched income-generating projects that allow them to capture payments or fees for the work performed by participants.
Public job creation does not have to be an exclusively federal domain. State, county, and community innovations can play important roles, particularly in tailoring programs to meet specific state or local goals and needs. During recessions, only the federal government is likely to have the resources necessary to finance large-scale job creation programs that alleviate widespread joblessness. Yet states, counties, and local communities are playing increasingly important roles in the design and implementation of programs to help hard-to-employ individuals gain a foothold in the regular labor market by creating wage-paying jobs in private nonprofit and public agencies. Welfare reform efforts provide a particularly promising context in which public job creation initiatives can be developed by state and local governments.
Much remains to be learned about the design and implementation of public job creation programs. No single model or approach described in this paper emerges as obviously preferable for all labor market conditions or target populations. The challenge now is to launch a new generation of initiatives that test promising and innovative approaches to public job creation, building upon the lessons emerging from past research while also responding to the realities of today's labor markets.
Goals of the program: Youth corps fulfill multiple needs in the communities in which they operate. Corps provide paid, full-time employment for mostly at-risk young adults, accomplish service projects of substantial societal benefit that would otherwise go undone, and provide their participants with the education and job preparation they need to succeed in the workforce.
Dates of operation: State-based youth conservation corps have been operating since the 1970's, but many of today's state and local corps were established during the past decade. The inspiration for youth corps arose in many respects from the accomplishments of the Depression-era Civilian Conservation Corps (CCC).
Program design: Youth corps combine paid work on community service projects with education, job preparation, and leadership and life skills training to promote the development of young adults between the ages of 18 and 25. Program designs vary widely across youth corps, but the most common approach offers 32 hours per week of work on a wide range of environmental improvement and land management, human service, and community improvement projects, and eight hours per week of the other developmental activities described above. Most corps employ participants for terms lasting between nine and 12 months.
Scale and scope: About 120 youth corps now are operate in 37 states, enrolling an estimated 30,000 participants each year. Although most youth corps are initiated and managed locally, 21 states have established statewide programs. Youth corps receive support from a wide variety of sources, including federal and state grants as well as fees generated through work performed by the corps.
Participant characteristics: In a recent evaluation of corps programs, 70 percent of corps members reported a household income of $15,000 or less in the year prior to program enrollment. Slightly less than half of all corps members in these sites received some from of public assistance at the time of the enrollment. About three in five enrollees were high school dropouts. Four in five participants did not work at all in the year before they joined the corps. At the evaluation sites, the majority of participants were young people of color; nationwide, about one-half of corps participants are white and one-fourth are African-American.
Type of evaluation: An evaluation of the impact of four large, well-established youth corps programs and four newer, smaller programs was conducted in 1993-94 by Abt Associates, Inc. with funding from the Corporation for National Service. This evaluation used random assignment of applicants to treatment and control groups to discern corps' impact on their participants, and site visits and surveys to determine the value and community impact of their work projects.
Program outcomes: By providing stable employment for disadvantaged youth, youth corps substantially increase participants' employment and earnings. The Abt evaluation found that corps members worked nearly 40 percent more hours during the 15-month period following enrollment (including the time spent working in the corps) than their peers in a control group. In addition, arrest rates were nearly one-third lower for participants than for the control group.
The most dramatic positive impacts associated with youth corps participation were among young black men. Compared to their control group peers, black males in youth corps had higher employment rates (91 percent vs. 62 percent), increased earnings (50 percent higher), and greater educational achievement.
Abt Associates also found that the value of work performed by corps averages $13.63 per participant per hour. This work output, coupled with participant employment and education gains, yields a net benefit to society of roughly $600 over and above costs for each participant.
Lessons for the future: The prospect of paid work alone would attract many disadvan-taged youth in low-income communities to youth corps. These programs appear to be effective, however, because they provide far more than a paycheck. By organizing corps members into work teams to foster peer support, encouraging them to pursue further education, helping them gain access to informal job net-works, and providing positive and caring role models, youth corps successfully prepare participants for the workforce. At the same time, youth corps build broader public support (and in many instances develop a more stable financial base) by completing work on visible projects that respond to community needs.
For further information, contact:
Matt Calderone, National Association of Service and Conservation Corps
666 Eleventh Street, N.W., Suite 1000
Washington, DC 20001-4542
THE NEW HOPE PROJECT
Goals of the program: New Hope is a demonstration project in Milwaukee, Wisconsin that seeks to help poor individuals and families escape poverty through work. Community service jobs are designed to give participants a chance to gain valuable work experience and provide needed income while they continue their search for permanent employment.
Dates of operation: August 1994 to present; demonstration scheduled to continue through December 1998.
Program design: New Hope first attempts to help participants find unsubsidized employment offering at least 30 hours of work per week. Individuals who are unable to find full-time work during an eight-week job search are offered paid community service jobs (CSJs) in private nonprofit agencies. These jobs:
All participants working 30 or more hours per week receive wage supplements if necessary to ensure that their family incomes exceed the poverty line, as well as child care assistance and health insurance coverage.
Scale and scope: A total of 688 adults from two high-poverty neighborhoods in Milwaukee are enrolled in the demonstration, which is supported jointly by foundations and government agencies. At least 200 of these participants have worked in CSJs for at least some period; between 40 and 60 participants were employed in CSJs on a monthly basis during the program's first two years.
Participant characteristics: More than two in five New Hope participants do not have a high school diploma or its equivalent. Only one-third have held a full-time job in the last five years. Almost three-fourths received some type of public assistance in the 12 months prior to enrolling in the program.
A substantial majority of participants are women and between the ages of 25 and 44. Nearly half have three or more children in their households. Half of all participants are African-American; more than one-fourth are of Hispanic origin.
Type of evaluation: An evaluation of the New Hope Project utilizing random assignment is now being conducted by the Manpower Demonstration Research Corporation.
Program outcomes: While the evaluation of New Hope's impact on future employment and earnings will not be completed for several years, the early CSJ experience appears promising. The average length of stay in CSJs has been just over three months, about half the maximum period that participants could remain in such assignments. More importantly, nearly half of all former CSJ participants were employed in unsubsidized jobs in the fall of 1997, some moving directly from CSJs and others finding work after a period of job search. Given that individuals assigned to CSJs initially had tried but failed to find jobs on their own, this success in moving into unsubsidized jobs suggests that CSJs are an effective strategy for helping the hard-to-employ gain a foothold in the labor market.
Lessons for the future: Several elements of the New Hope design may be responsible for its success in moving CSJ participants into unsubsidized employment. The emphasis on job search, both prior to and during community service jobs, plays an important role in keeping participants and staff focused on transitions into permanent jobs. Careful attention is paid to the quality of worksite supervision in an attempt to enhance the work readiness of CSJ participants. Regular communication with worksite supervisors enables New Hope's case managers to identify and address problems of poor performance at early stages.
The New Hope design also recognizes that low-wage employment in itself may be insufficient to lift families out of poverty. Its use of wage supplements, child care assistance, and health insurance coverage to aid participants who work at least 30 hours per week breaks new ground in efforts to combat poverty and promote self-sufficiency among highly disadvantaged groups.
For further information, contact:
Julie Kerksick, Executive Director
The New Hope Project, Inc.
623 North 35th Street
Milwaukee, Wisconsin 53208
Goals of the program: YouthBuild programs throughout the nation seek to give disad-vantaged teenagers and young adults the chance to do important work in their communities while acquiring basic academic, vocational, and leadership skills.
Dates of operation: The first YouthBuild program was established in New York City under the auspices of the Youth Action Program in East Harlem in 1978. YouthBuild USA was founded in 1988 to stimulate the development of similar programs nationwide.
Program design: While there are many variations of the YouthBuild model across the country, participants typically spend half of their time building or renovating affordable housing on construction sites in low-income communities. The other half of participants' time is devoted to educational activities in YouthBuild alternative schools. YouthBuild programs also emphasize leadership develop-ment. Participants are involved in virtually every aspect of the operation and governance of local YouthBuild programs and undertake a wide range of other community service projects.
Scale and scope: A total of 108 YouthBuild sites were operating in 34 states during 1996-97, serving more than 4,600 young people. These programs rely upon diverse public and private funding sources. In October 1997, 41 sites received federal funds directly through the YouthBuild program administered by the U.S. Department of Housing and Urban Development. Many other YouthBuild sites receive federal funds through the AmeriCorps program administered by the Corporation for National Service, and raise remaining funds from public agencies (including welfare, employment, community development, education, and criminal justice agencies) and private foundations and other charities.
Participant characteristics: YouthBuild programs reach a highly disadvantaged segment of the young adult population. Participants are drawn almost exclusively from low-income households. Three-fourths of all participants are male, and three-fourths also are either African-American or Latino (groups underserved by many other employment and training programs). The average participant is 20 years of age and reads at the 7th grade level at entry. Four in every five partici-pants have no high school or general equivalency diploma (GED). Two in five participants receive public assistance, one in three has been adjudicated or convicted of a felony, and two in five already are parents.
Type of evaluation: Current data on program outcomes are from YouthBuild USA's management information system. A process evaluation of five sites also was conducted in 1991-94 under the leadership of Philip Clay of the Massachusetts Institute of Technology (MIT), in cooperation with Ronald Ferguson of Harvard University and Public/Private Ventures in Philadelphia, to assess the replica-bility of the original New York City YouthBuild model.
Program outcomes: Program data collected by YouthBuild USA from its affiliates for 40 program cycles ending in 1996 or 1997 are very encouraging:
Nearly two-thirds of all enrollees graduated from the program; the average length of stay for all participants was 8.7 months.
81 percent of all graduates subsequently found jobs at an average wage of $7.53 per hour or went on to postsecondary education.
40 percent of those participants who had not completed high school earned their equivalency diploma (GED) in the program.
Recent follow-up surveys of more than 400 YouthBuild graduates from 14 sites six months after graduation showed that 84 percent were still working at an average wage of $7.66 per hour or were enrolled in school.
Lessons for the future: YouthBuild's combination of work, skills training, education, and leadership development provides a comprehensive response to the employment barriers faced by highly disadvantaged young people. The program's focus on paid work that addresses pressing community needs is an integral part of this intensive approach, attracting young people to YouthBuild and contributing greatly to its high graduation rates. The program's leadership development components also play a key role in fostering the strong decision-making and team-building skills that often are essential ingredients of success in the labor market.
For further information,
58 Day Street
P.O. Box 440322
Somerville, Massachusetts 02144
ST. PAUL'S TRANSITIONS PROGRAM
Goals of the program: The TRANSITIONS program was established in St. Paul, Minnesota to boost the employability of disadvantaged city residents and help them move into regular, unsubsidized employment.
Dates of operation: March 1987 through June 1990.
Program design: TRANSITIONS placed jobless residents in publicly-funded jobs in private nonprofit and government agencies. Participants were paid between $4.50 and $5.35 per hour for up to eight months of full-time work. Several key program elements including intensive job placement activities, periodic job search requirements, counseling, and peer support explicitly reinforced the program's transitional focus. Other aspects of the program emphasized skills development: participants without a high school diploma or its equivalent were required to enroll in adult basic education classes; others were permitted to spend up to 10 hours per week with pay in education or training activities.
TRANSITIONS' open-admissions policy required only that participants were residents of the city and had been unemployed for at least 90 days. Unlike many other employment and training programs, no minimum eligibility criteria were used to screen out more disadvantaged or harder-to-employ applicants.
Scale and scope: With funding from the McKnight Foundation, 617 low-income residents of St. Paul participated in TRANSITIONS during the program's three years of operation. When this period of foundation support ended, the City of St. Paul was unable to identify other public or private funds to continue the program.
Participant characteristics: TRANSITIONS served a highly disadvantaged population in St. Paul. More than half of all participants (58 percent) had received some type of public assistance prior to enrollment and nearly one-fourth (22 percent) had not completed high school. Roughly two-thirds of the participants were minority; two-thirds were younger than 30; and the proportion who were female rose from one-third to more than one-half during the course of the program.
Type of evaluation: An independent evaluation of TRANSITIONS funded by the McKnight Foundation was conducted by the Center for Human Resources at Brandeis University. The evaluation was based on program data collected by the St. Paul Department of Planning and Economic Development as well as interviews of participants, staff, and worksite supervisors.
Program outcomes: Half of all TRANSITIONS participants were placed in unsubsidized jobs. In addition, one in seven participants enrolled in school, vocational training, or the military, bringing the program's overall "positive termination" rate up to 64 percent. This degree of success is particularly impressive because the program made no attempt to turn away highly disadvantaged applicants and was funded for only three years, leaving little opportunity to make adjustments based on early experience that might otherwise be expected to boost program outcomes.
The success of TRANSITIONS also was reflected in appraisals of the work performed by participants. More than four in five worksite sponsors who responded to follow-up surveys reported that the work of TRANSITIONS participants was a necessary part of their agencies' day-to-day operations. Nearly all of the sponsors viewed participants as valuable additions to their agencies, and nine out of 10 reported that they would recommend hiring of their most recent TRANSITIONS worker by another public or private agency.
Lessons for the future: TRANSITIONS demonstrated that public job creation programs can preserve a focus on movement into unsubsidized employment through strong job placement and case management activities. The program also illustrated the potential for combining publicly-funded jobs with a comprehen-sive service plan that included education, training, and rehabilitation referrals when necessary. The co-location of the program with agencies offering key support services at a single site also facilitated effective referrals. Finally, carefully structured worksite agreements helped to ensure that participants did not displace regular employees in sponsoring agencies.
For further information,
Lawrence Bailis (Brandeis evaluator)
5 Fieldmont Road
Belmont, Massachusetts 02178
AFDC HOMEMAKER-HOME HEALTH AIDE DEMONSTRATIONS
Goals of the program: The AFDC Homemaker-Home Health Aide Demonstrations were designed to test the feasibility of combining formal training and subsidized employment to enable AFDC recipients to provide homemaker-home health aide services to functionally impaired persons in their own homes. The program's goals were both to reduce welfare dependency and to reduce institutionalization rates among elderly and other functionally impaired individuals.
Dates of operation: January 1983 through June 1986.
Program design: The demonstrations provided four to eight weeks of formal training that included classroom instruction as well as close supervision in work settings. This training was followed by up to a year of full-time, subsidized employment as homemakers and home health aides. Participants generally worked in established public and private nonprofit home care agencies such as those certified under Medicare. Wages and benefits during this period were paid entirely by the demonstration projects, and wages were set at levels paid to other workers performing the same tasks.
Eligibility requirements for the demonstrations were relatively broad and participation was on a voluntary basis. Individuals were eligible if they were currently receiving AFDC, had received AFDC continuously for the preceding three months, and were not employed as homemaker-home health aides during that time. Some states also required access to a car, a driver's license, and/or a minimum level of education or reading ability, and demonstration staff were allowed to screen out applicants who were judged to be less promising candidates for employment as homemakers or home health aides.
Scale and scope: Financed by federal grants from the Health Care Financing Administration, the AFDC Homemaker-Home Health Aide Demonstrations operated in 70 sites across seven states, including: Arkansas, Kentucky, New Jersey, New York, Ohio, South Carolina, and Texas. A total of about 4,000 AFDC recipients participated in these programs during the demonstration period.
Participant characteristics: The average individual in the demonstration sample was a woman in her early thirties who had two children and who had not worked in three years. Nearly three in four participants were minority. More than two in five lacked a high school diploma or its equivalent. Local labor markets in demonstration sites posed additional problems: the average unemployment rate across all sites was 8.2 percent.
Type of evaluation: A rigorous evaluation utilizing random assignment was conducted by Abt Associates, Inc. under contract with the federal Health Care Financing Administration.
Program outcomes: About 85 percent of participants assigned to the treatment group (as opposed to the evaluation's control group) initiated training, and 72 percent eventually entered subsidized employment. In five of seven states, estimated gains in annual earnings ranged from more than $1,200 to nearly $2,600 (in 1984 dollars) in the second year following subsidized employment. As a result of these gains, participants' earnings during this second year were one-and-a-half to two times greater than those of similar individuals who did not participate in the program. The earnings gains for participants were generated primarily through increases in employment rates and numbers of hours worked.
When increased earnings in unsubsidized jobs as well as the value of services provided by participants during subsidized employment were compared to overall costs, the evaluators concluded that the AFDC Homemaker-Home Health Aide Demonstrations produced net social benefits in six of the seven states that ranged from $2,200 to $13,000 per participant.
Lessons for the future: On-the-job training programs have been found in numerous studies to have greater impacts on future earnings than other forms of vocational skills training. Similarly, some research suggests that publicly-funded jobs are more effective in enhancing participants' employability than unpaid work experience. The AFDC Homemaker-Home Health Aide Demonstrations combined these two elements on-the-job training and publicly-funded jobs in a manner that appears to have been particularly potent.
For further information,
Abt Associates, Inc.
Hampden Square, Suite 600
4800 Montgomery Lane
Bethesda, Maryland 20814-5341
NATIONAL SUPPORTED WORK DEMONSTRATION
Goals of the program: The National Supported Work Demonstration was designed to test the effects of a structured, paid work experience on four groups with severe barriers to employment: long-term AFDC recipients, ex-addicts, ex-offenders, and young high school dropouts. Supported Work also sought to produce marketable goods and services that provided some social benefit and to reduce welfare dependency, criminal behavior, and drug use among participants.
Dates of operation: February 1976 through March 1979.
Program design: Supported Work provided subsidized jobs lasting 12-18 months in highly supportive work environments in nonprofit agencies. Participants received intensive supervision with graduated increases in workplace expectations and associated stress similar to those associated with "sheltered workshop" models in an attempt to improve work habits and job skills. The program also was structured to give participants the chance to develop employ-ment credentials while providing job search counseling and other job placement assistance. Peer group support was encouraged by using worksites that enabled participants to work in small crews averaging three to five workers.
Women receiving AFDC were eligible to participate in the program only if they had been on welfare for 30 months out of the previous 36 months, had no children under the age of six, were unemployed, and had little or no work experience. Most of the subsidized jobs provided for AFDC recipients through Supported Work were in the service sector, most commonly in clerical positions. Wages in Supported Work were set at levels deemed to be slightly below those that participants could be expected to earn in the regular labor market.
Scale and scope: In the portion of the demonstration focused on AFDC recipients, seven sites (New York City, Newark, Atlanta, Chicago, Hartford, Oakland, and two counties in Wisconsin) enrolled a total of 1,620 long-term AFDC recipients in Supported Work. The demonstration was financed by the U.S. Department of Labor, the U.S. Department of Health and Human Services, and several other federal agencies as well as by the Ford Foundation.
Participant characteristics: Most of the AFDC participants in Supported Work had been out of the labor market for extended periods: nearly three-fourths had not held a full-time job at any point during the two years prior to enrollment. As a group, they had received welfare benefits for an average of 8.5 years at the time of enrollment. Fewer than three in 10 AFDC participants had a high school diploma, and 95 percent of all participants were either black of Hispanic.
Type of evaluation: As part of a broader evaluation of Supported Work by the Manpower Demonstration Research Corporation, an impact evaluation utilizing random assignment was conducted under subcontract by Mathematica Policy Research and the University of Wisconsin's Institute for Research on Poverty.
Program outcomes: While Supported Work failed to yield significant gains for ex-offenders or young high school dropouts, it produced impressive results for AFDC recipients. At the end of a three-year follow-up period, AFDC partici-pants earned an average of $1,076 (or 23 percent) more than control group members. Researchers projected that the lifetime earnings of these participants would increase by more than $9,000 and that taxpayers also would reap a net gain (after accounting for all costs) of $9,000 per AFDC participant because of complementary declines in welfare receipt attributed to the program.
Supported Work's effects on earnings appear to have been sustained over a long period. A recent re-analysis of the earnings of AFDC participants who were tracked for eight years after exiting the Supported Work program showed that their annual earnings remained on average $900 higher than they would have been without program participation.
Lessons for the future: Supported Work's success in boosting the employment and earnings of longer-term welfare recipients underscores the potential effective-ness of strategies that combine paid work with close supervision and an explicit goal of moving participants into unsubsidized employment. When compared to many other welfare-to-work programs, the Supported Work model was quite expensive. Its net cost was nearly $14,000 per participant in 1985 dollars. Yet the program produced gains far more substantial than other welfare-to-work initiatives that have been evaluated over the past two decades.
For further information,
Manpower Demonstration Research Corporation
Three Park Avenue
New York, New York 10016
EMPLOYMENT AND ECONOMIC DEVELOPMENT
Goals of the program: The Minnesota Employment and Economic Development (MEED) program was created by the state of Minnesota in the mid-1980's to address two goals: to expand the supply of jobs available to unemployed residents in the wake of a deep and prolonged recession; and to help small businesses that had the potential to expand their operations but lacked the "working capital" they needed to hire additional employees and tap potential new markets.
Dates of operation: July 1983 through December 1988.
Program design: MEED offered wage subsidies of up to $4,680 ($4.50 per hour for six months) to small businesses with 50 or fewer employers that agreed to hire MEED participants. After several years of operation, the state legislature broadened the use of MEED wage subsidies to include temporary jobs lasting six to 12 months in private nonprofit agencies. Individuals were eligible to participate if they had resided in the state for at least one month prior to enrollment, were currently unemployed, either were ineligible for or had exhausted unemployment insurance and workers' compensation benefits, and were available for work for the duration of the program.
Small businesses were required to pay MEED participants wages equal to those paid others performing the same work, to prevent displacement of existing employees, and to retain participants in unsubsidized jobs for a year after the subsidies ended. Employers who failed to retain a participant (or to hire another participant to replace one no longer on the job) were required to repay the state up to 70 percent of the subsidy received, with the exact amount based on the length of time the participant remained employed after the subsidy ended. jobs.
Scale and scope: The MEED program operated in all areas of the state and was financed through direct appropriations by the Minnesota legislature. State funding was discontinued following improvements in the state economy in the late 1980's.
Participant characteristics: More than four in five participants were eligible for public assistance, were in farm households with severe economic need, and/or were in households with no source of income. The proportion of participants who were minorities peaked at 25 percent in 1987, reaching this group more effectively than many other programs in a state with a relatively small minority population. Nearly two in five participants were women, and 87 percent of participants had a high school diploma or its equivalent.
Type of evaluation: Program data was collected and reported by the Minnesota Department of Jobs and Training. Analyses of MEED's economic impact were undertaken by the Minnesota Department of Trade and Economic Development with assistance from the Minnesota Department of Revenue. The private, non-profit Jobs Now Coalition, with support from several area foundations, produced a series of reports on MEED's effects on participants and overall employment levels but without the benefit of a rigorous evaluation design.
Program outcomes: MEED placed 12,900 participants in private-sector jobs and another 6,100 in public-sector jobs between July 1, 1985 through December 31, 1988. Follow-up surveys of participating employers suggest that MEED also added large numbers of new jobs to the Minnesota economy. More than half of the employers surveyed (55 percent) reported that they would not have expanded without the MEED subsidy, and others indicated they would have had to delay expansion in the absence of MEED. Many employers stated that MEED helped with the initial cost of training a new employee and covering wage costs until that employee's productivity could justify retention in an unsubsidized job.
Analyses of these estimated impacts of the MEED program undertaken by the state of Minnesota concluded that state revenues generated by the new jobs created through the program significantly exceeded the program's costs.
Lessons for the future: MEED appears to have been successful for a number of reasons. First, local agencies administering the MEED program kept in close contact with local employers to reassure them that their needs were being addressed. Second, the relatively broad eligibility criteria used in MEED minimized the stigma associated with "welfare" programs, even though a majority of participants were eligible for public assistance. Finally, by financing temporary jobs in private nonprofit agencies for the hard-to-employ, MEED gave local officials an impor-tant tool for working with individuals who were not job-ready and needed additional work experience before moving into unsubsidized employment in the private sector.
For further information,
Cliff Johnson, Senior Fellow
Center on Budget and Policy Priorities
YOUTH INCENTIVE ENTITLEMENT PILOT PROJECTS (YIEPP)
Goals of the program: The Youth Incentive Entitlement Pilot Projects (YIEPP) were established to provide urgently-needed jobs for disadvantaged youth in high-unemployment areas and to test the feasibility and impact of a job guarantee for such youth that was conditioned on their willingness to return to and/or remain in school.
Dates of operation: Spring 1978 through summer 1980.
Program design: YIEPP guaranteed minimum-wage, full-time summer employment and part-time work during the school year to all youth ages 16 through 19 living in targeted communities provided they stayed in or returned to school and met attendance and performance standards. YIEPP forged partnerships with local private and non-profit employers as well as public agencies to create jobs for participating youth, providing large wage subsidies to help defray employer costs. About one-fifth of the young people employed through YIEPP were placed at for-profit firms in the private sector; the remainder were assigned to work sites provided by public and non-profit sponsors.
Scale and scope: YIEPP operated in 17 urban and rural sites across the nation, enrolling a total of about 82,000 youth. The projects were financed by the U.S. Department of Labor as part of a broader series of demonstrations authorized under the federal Youth Employment and Demonstration Projects Act of 1977.
Participant characteristics: Even though YIEPP's job guarantee was extended to all teenagers in targeted communities, participants typically came from highly disadvantaged backgrounds. Only three in 50 participants had ever held an unsubsidized job prior to enrollment in the program. Two in five youth came from families that received some form of cash assistance. The great majority of participants had not dropped out of school, but more than half were performing below grade level in school and about one-fourth had skills that were two grade levels below the norm.
Type of evaluation: A comprehensive evaluation of the feasibility, cost, and effectiveness of YIEPP was done by the Manpower Demonstration Research Corporation under contract with the U.S. Department of Labor. Data collection and analysis related to the impact of the program on participating youth were undertaken by Abt Associates, Inc. under subcontract to MDRC. As part of this impact analysis, youth outcomes in four of the 17 demonstration sites were compared with data from closely-matched comparison sites.
Program outcomes: About 76,000 young people were hired by nearly 11,000 employers, including 6,000 private firms, as a result of YIEPP's wage subsidies and job guarantees. Employment rates in YIEPP sites were twice as high as in comparison sites (40 percent vs. 21 percent), a dramatic difference achieved during a relatively brief period of program operation. YIEPP's impacts on employment opportunities were particularly pronounced for black youth, who comprised two-thirds of all program participants:
The program virtually eliminated large gaps in employment rates between white and black youth.
Labor force participation rates among black youth increased by more than 50 percent.
Black youth had post-program earnings that were almost 40 percent higher than similar youth in comparison sites.
Some jobs subsidized through YIEPP would have been created in the absence of the program. Nonetheless, evaluators concluded that every one and two-thirds jobs funded by YIEPP resulted in one new job for eligible youth. A large majority of employers (86 percent) reported that worksites were of adequate or better quality and did not constitute unproductive "make-work."
Lessons for the future: While the program's job guarantee was not sufficient to convince school dropouts to re-enroll in school, YIEPP's publicly-funded jobs greatly increased employment opportunities for disadvantaged youth and underscored their willingness and motivation to work. Particularly for black youth, the program demonstrated that inadequate availability of jobs is a major cause of low labor force participation and employment rates. Finally, the evaluation results from YIEPP offer further evidence that publicly-funded jobs may yield earnings gains by boosting the skills and employability of highly disadvantaged youth who otherwise would be shut out of the job market.
For further information,
Manpower Demonstration Research Corporation
Three Park Avenue
New York, New York 10016
CETA PUBLIC SERVICE EMPLOYMENT
Goals of the program: CETA's Public Service Employment (PSE) program was designed to create publicly-funded jobs in public and private nonprofit agencies during periods of high unemployment. The PSE program was a major element of the Carter Administration's efforts to reduce joblessness and stimulate economic growth in the wake of the 1973-75 recession.
Dates of operation: The PSE program was initially authorized under the Comprehensive Employment and Training Act of 1973 (CETA) and expanded dramatically in 1977-78. President Reagan successfully pushed for elimination of PSE funding in 1981, and the authorization to create publicly-funded jobs was repealed when CETA was replaced by the Job Training Partnership Act (JTPA) in 1982.
Program design: Federal PSE funds were allocated to local jurisdictions on a formula basis. Local communities initially were given relatively broad flexibility to select participants, set wage rates, choose work assignments, and design other elements of the PSE program. After several years, however, concerns about abuses of PSE at the local level prompted Congress to adopt numerous restric-tions on individual eligibility and wage rates. The Carter Administration also sought to increase the proportion of PSE participants assigned to community-based organizations rather than public agencies.
The stricter eligibility requirements adopted in the late 1970's focused the PSE program on individuals with more significant barriers to employment. As of October 1978, PSE eligibility rules required participants to be unemployed at least 10 of 12 weeks prior to program enrollment. In addition, participants had either to reside in a household with income below the Bureau of Labor Statistics lower living income standard or be a member of a family receiving AFDC or SSI or receiving public benefits themselves.
Scale and scope: At the PSE program's peak in 1978, more than 700,000 individuals were employed nationwide at an annual cost to the federal government of $4 billion.
Participant characteristics: More than three-fourths of all PSE enrollees in fiscal year 1980 earned less than $4,000 during the previous year. Half of these enrollees had been unemployed for more than 13 weeks, and two in five were receiving some form of public assistance. One in every two enrollees was a minority, and one in three lacked a high school diploma.
Type of evaluation: An extensive series of reports on CETA, including but not limited to the PSE program, were produced between 1977 and 1984 under contract with the U.S. Department of Labor. These reports were based on a longitudinal survey of a nationally representative sample of CETA enrollees, referred to as the Continuous Longitudinal Manpower Survey. Analyses of the post-program effects of the PSE program were conducted by Westat Inc.
Program outcomes: Average annual earnings for those who were enrolled in fiscal year 1980 more than doubled, climbing from $2,260 in the year prior to enrollment to $5,240 in the second year following termination from the program. More than half (53 percent) of these participants were employed two years after they left the program, and their average hourly wage in the second year following termination was $4.90 per hour (compared to an average wage of $4.04 per hour in the year prior to enrollment).
These findings for FY 1980 enrollees do not include an analysis of the extent to which factors other than PSE participation may have contributed to subsequent earnings gains. More rigorous research on an earlier cohort of participants, however, suggests that the program probably had a substantial net impact, particularly for women. The annual earnings in 1978 of female PSE participants who enrolled in fiscal year 1976 were $1,100 higher than those of matched control groups. Earnings gains among white men enrolled that year were more modest, and no gains were found for minority men.
Lessons for the future: CETA's PSE program operated under conditions that were far from ideal. Pressures for rapid expansion in 1977 and 1978 seriously compromised attempts to maintain program quality. Shifting goals and eligibility criteria gave local administrators little chance to set clear objectives and be held accountable for results. Success was defined initially by the speed with which new PSE slots were created to combat widespread joblessness, but within the span of a few short years the program's effectiveness was measured by a far different standard: the extent to which participants moved into unsubsidized jobs. Under these circumstances, it is remarkable that evaluations of the PSE program found lasting impacts on participants' earnings.
For further information: See attached list of references.
WORKS PROGRESS ADMINISTRATION
Goals of the program: The Works Progress Administration (WPA), later renamed the Work Projects Administration, was the largest public job creation program launched during the Great Depression. Its goal was to put the unemployed, in particular men receiving cash assistance (then referred to as "direct relief"), back to work and provide a subsistence income for them and their families.
Dates of operation: August 1935 through June 1943.
Program design: To create jobs for the unemployed, the WPA used federal funds to finance work relief projects that were administered at state and local levels. WPA projects included both construction projects and service activities, although the former provided the most enduring legacy of the program. The WPA limited the proportion of federal funds that could be spent on non-labor costs in an attempt to conserve funds for more on-site employment. State and local governments were required to provide materials, supplies, and equipment as "sponsor contributions," although it is clear that they also reduced their own spending on construction projects and direct relief in response to WPA initiatives.
Eligibility criteria used to certify individuals for WPA employment varied widely across communities, but a ceiling on hiring "non-needy" workers was first set at 10 percent and subsequently lowered to 5 percent in 1937. Only one adult per household could participate in the WPA. Initially, there were no time limits on program participation. In 1939, however, federal legislation required that anyone in the program for more than 18 months exit for at least 30 days, a step intended to encourage participants to search for private sector employment.
Scale and scope: At its peak in 1938, the WPA provided employment for 3.3 million individuals. Federal WPA expenditures over the course of its eight-year history totaled $10.6 billion the equivalent, of course, of a sum many times larger in today's dollars.
Participant characteristics: Little is known about the demographic characteristics of WPA participants. It seems clear, however, that the vast majority of participants had received direct relief prior to enrollment. Most WPA participants also are likely to have endured substantial periods of unemployment because they typically were not eligible to participate until they had exhausted any unemployment benefits and depleted their assets to levels specified in WPA need criteria.
Type of evaluation: Many descriptions of the WPA and its legacy have been written that draw upon information from government documents and reports produced during its operations, but no formal evaluation of the program was conducted.
Program outcomes: The most enduring legacy of the WPA is found in its contributions to the nation's infrastructure. The WPA built or reconstructed 617,000 miles of new roads, 124,000 bridges and viaducts, and 35,000 buildings. It also financed a wide array of other labor-intensive work projects, including the construction of sidewalks, street curbs, school athletic fields, parks, playgrounds, and landing fields as well as national landmarks such as the Philadelphia Art Museum and New York City's Central Park Zoo and LaGuardia Airport.
Little is known about the impact of the WPA on participants beyond its obvious role in helping to meet their basic subsistence needs. Several follow-up surveys of WPA participants conducted in the late 1930's found that most individuals leaving the program voluntarily secured private employment, but those terminated from the program typically were unemployed without other income or receiving direct relief.
Lessons for the future: For many older Americans, the WPA symbolizes the appropriate role of government in offering dignity and sustenance to its citizens during times of extreme hardship. The vast scale of the WPA no doubt represented an extraordinary response to the challenges of an extraordinary time challenges quite different in many respects from those confronted in current labor markets. Yet the WPA's emphasis on useful work in communities and its commitment to work for wages as a preferable alternative to cash aid and idleness have a common-sense appeal that is as strong today as it was more than 60 years ago.
For further information:
See attached list of references.
American Youth Policy Forum. 1997. Some Things DO Make a Difference for Youth: A Compendium of Evaluations of Youth Programs and Practices. Washington, D.C.: American Youth Policy Forum, Institute for Educational Leadership.
Bailis, Larry N. 1991. Evaluation of the McKnight TRANSITIONS Program: Year Three Report. Waltham, Massachusetts: Brandeis University Center for Human Resources.
Bell, Stephen H.; Burstein, Nancy R.; and Orr, Larry L. 1987. Overview of Evaluation Results: Evaluation of the AFDC Homemaker-Home Aide Demonstrations. Cambridge, Massachusetts: Abt Associates Inc.
Bell, Stephen H. and Orr, Larry L. 1992. "Is Subsidized Employment Cost Effective for Welfare Recipients? Experimental Evidence from Seven State Demonstrations", The Journal of Human Resources, Vol. XXIX, No. 1.
Brock, Thomas et al. 1997. Creating New Hope: Implementation of a Program to Reduce Poverty and Reform Welfare. New York: Manpower Demonstration Research Corp.
Cook, Robert F; Adams, Charles F., Jr.; Rawlins, V. Lane. 1985. Public Service Employment: The Experience of a Decade. Kalamazoo, Michigan: W.E. Upjohn Institute for Employment Research.
Farkas, G.; Olsen, R.; Stromsdorfer, E. W.; Sharpe, L. C.; Skidmore, F.; Smith. A.D.; Merill, S.; and Abt Associates. 1984. Post-Program Impacts of the Youth Incentive Entitlement Pilot Projects. New York: Manpower Demonstration Research Corp.
Gueron, Judith M. 1984. Lessons From a Job Guarantee: The Youth Incentive Entitlement Pilot Projects. New York: Manpower Demonstration Research Corp.
Gueron, Judith M. and Pauly, Edward. 1991. From Welfare to Work. New York: Russell Sage Foundation.
Jastrzab, J.; Blomquist, J.; Masker, J. and Orr, L. 1997. Youth Corps: Promising Strategies for Young People and Their Communities. Cambridge, Massachusetts: Abt Associates Inc.
Levitan, Sar A. and Gallo, Frank. 1991. Spending to Save: Expanding Employment Opportunities. Washington, D.C.: George Washington University Center for Social Policy Studies.
Manpower Demonstration Research Corporation. 1983. Findings on Youth Employment: Lessons From MDRC Research. New York: MDRC.
Manpower Demonstration Research Corporation. 1980. Summary and Findings of the National Supported Work Demonstration. New York: MDRC.
Palmer, John L. (ed.). 1978. Creating Jobs: Public Employment Programs and Wage Subsidies. Washington, D.C.: The Brookings Institution.
Rode, Peter. 1988. MEED Means More Business: Job Growth through Minnesota's Wage Subsidy Program. Minnesota, Jobs Now Coalition.
Taggart, Robert. 1981. A Fisherman's Guide: An Assessment of Training and Remediation Strategies. Kalamazoo, Michigan: W.E. Upjohn Institute for Employment Research.
U.S. Department of Labor, Office of the Chief Economist. 1995. What's Working (and what's not): A Summary of Research on the Economic Impacts of Employment and Training Programs. Washington, DC :Government Printing Office.
Westat. 1984 Continuous Longitudinal Manpower Survey: CLMS Follow-up Report No.13: Post-Program Experiences, with Pre/Post Comparisons, for Terminees Who Entered CETA During FY 1980. Rockville, Maryland: Westat.
YouthBuild USA. 1996. YouthBuild: Building Lives, Building Community. Somerville, Massachusetts: YouthBuild USA.
1. For a detailed discussion of design issues that should be addressed in the development of a next generation of public job creation initiatives, see A Layperson's Guide to Community Job Creation (Center on Budget and Policy Priorities, Washington, D.C.: November 1997).