December 2, 1998

Frequently-Asked Questions About Public Job Creation
by Clifford M. Johnson

What is public job creation?

The term "public job creation" typically refers to the use of public funds to create wage-paying jobs in public or private non-profit agencies. These jobs often are temporary and usually are available only to individuals who cannot otherwise find employment in the regular job market.


How do public job creation programs help participants?

Participants gain much-needed work experiences, marketable job skills, and additional income to help support themselves and their families. The skills that parti-cipants acquire can include both "soft skills" (e.g., the ability to work effectively with customers and co-workers) and vocational skills taught on the job or in the classroom. Paid employment in a temporary, publicly-funded job can allow participants to demonstrate that they are reliable workers, and the references provided by supervisors can help to overcome the barriers to employment posed by long spells of joblessness or criminal records. The wages earned through such jobs also enable participants to qualify for the federal Earned Income Tax Credit, giving them an extra income boost.


How do public job creation programs help communities?

Communities increase their stock of job-ready individuals, thereby bolstering both individual self-sufficiency and private-sector economic development efforts. At the same time, the work performed by participants in public job creation programs can address a broad range of community needs, providing valuable services and improving the quality of life for the entire community. Participants can tackle a wide variety of jobs, working in areas as diverse as child care/after-school programs, community support, construction, education, environmental/conservation, food service, health services, office/clerical support, public safety, and social services.


Why invest in public job creation at a time when overall unemployment rates are low?

Even when jobless rates are low, hard-to-employ individuals and hard-pressed communities are often left behind. Residents with few skills and little or no recent work experience frequently are considered "unemployable" even in communities with low unemployment rates and tight labor markets. Chronic joblessness also remains a major problem in depressed areas even when overall economic conditions improve.


Do publicly-funded jobs last forever? What incentive is there for participants to move from these jobs into regular, unsubsidized employment?

The current generation of public job creation programs typically limit the amount of time that individuals can remain in such jobs. These limits range from six to 24 months, with most set at a year or less. Because most public job creation programs pay wages equal to or slightly above the minimum wage and provide less than full-time work, participants have incentives to move into the regular job market as quickly as possible in order to earn higher wages or work additional hours. Many public job creation programs also attempt to identify public and non-profit agencies that are willing and able to move at least some participants into regular, unsubsidized jobs within their own agencies when those individuals are able to handle the responsibilities associated with permanent positions.


How do we know that these programs lead to real jobs? Hasn't this approach been tried in the past and failed?

Most of our nation's past job creation efforts have focused on placing the unemployed as quickly as possible into publicly-funded jobs in order to help pull the economy out of a serious recession or depression. Those efforts have yielded mixed results. When public job creation has been used explicitly as a "stepping stone" to help disadvantaged individuals acquire skills and move into the regular job market, the results have been quite promising. Past experience suggests that they can be run efficiently, at reasonable cost, and in ways that benefit both participants and the communities in which they live. Perhaps most importantly, public job creation programs provide an alternative to welfare that is focused explicitly on work.


Are there specific elements of public job creation programs that improve the chances of success?

Combinations of work and learning — including those that link publicly-funded jobs to education or vocational training — seem particularly effective in helping hard-to-employ individuals acquire marketable job skills. Close supervision at the work site and intensive job search and placement assistance also play key roles in promoting successful transitions into unsubsidized employment. Many innovative models are designed to prepare individuals for jobs in growing sectors of the local or regional economy (e.g., home health care and office technologies). Finally, the most effective programs are carefully targeted to serve individuals who cannot otherwise find employment and allow participants to remain in the program long enough to acquire significant new skills and work experience.


Won't publicly-funded jobs put other public or private employees out of work?

While there always is a risk that public job creation participants will displace other workers, these dangers can be avoided by careful selection of work sites and projects within public and private non-profit agencies. Consultation with representa-tives of organized labor represents an essential step in identifying and managing displacement risks. A number of labor unions remain concerned about these displace-ment risks but support public job creation initiatives as a positive approach to today's welfare reform challenges, one that can address the needs of hard-to-employ welfare recipients (and other chronically unemployed individuals) while also preserving labor standards that protect all workers.


If they don't displace other workers, aren't these programs just creating "make work" rather than undertaking useful work?

Absolutely not. In every community, many pressing needs go unmet due to inattention or lack of funding. With the ability to pay wages for work performed in public or private non-profit agencies, public job creation programs can be the catalyst for responding to many of these unmet needs. Youth corps and other initiatives that undertake community improvement projects quickly discover that the problem often lies in choosing among proposed projects rather than in finding useful work that needs to be done in their communities.


Are participants in public job creation programs treated like other workers? Do they pay taxes? Are they eligible for employee benefits?

Participants typically are treated to the greatest extent possible like other workers. Because they are paid wages, their earnings are subject to payroll taxes and enable them to qualify for the federal Earned Income Tax Credit (which can be as much as $3,756 in 1998). If they are placed in temporary positions, participants may not receive health insurance or other fringe benefits through their employers but they often will continue to be eligible for Medicaid and child care assistance. They usually earn at least some paid sick leave and vacation while working, and if their workplace is organized they have the same opportunity as other workers to join and be represented by a union.


What happens to other forms of public assistance that participants may receive to help them meet their families' needs?

The specific rules of the public job creation program — and of the county or state in which they reside — will determine whether participants can continue to receive other forms of public assistance and how much their benefits will be reduced. Many participants will no longer receive welfare benefits once they begin to earn a paycheck, although some parents (particularly those with larger families) may continue to receive some cash assistance to supplement their earnings. To the extent that participants earn more than they used to receive in cash assistance, they also may see their food stamp benefits decline. Even with these reductions in aid, most public job creation programs are designed to ensure that participants end up better off financially as a result of their work effort. As noted above, participants who were eligible for Medicaid and child care assistance prior to enrollment typically continue to receive these benefits while working in public job creation programs.


How are publicly-funded jobs different from "workfare"?

Individuals who work in publicly-funded jobs are paid wages and considered to be employees of the state, local, or non-profit agency administering the program. Welfare recipients who are assigned to "workfare" projects receive their regular welfare benefits in exchange for their work effort. They are not paid wages (and therefore do not qualify for the federal Earned Income Tax Credit), and they often are not granted the full rights — or treated with the full measure of respect — accorded to regular workers. Public job creation programs give participants the dignity and the financial rewards of a wage-paying job while enhancing their long-term employment prospects. Evaluation results suggest "workfare" programs do not yield the same positive results.


How are publicly-funded jobs different from VISTA or AmeriCorps placements?

While there are many similarities between publicly-funded jobs and VISTA or AmeriCorps placements, there also are some important distinctions. Public job creation programs focus primarily upon preparing participants for unsubsidized employment. They typically emphasize job readiness, skills development, and transitions into unsub-sidized employment. In contrast, VISTA and AmeriCorps projects are designed primarily to give individuals an opportunity to engage in service activities that benefit their communities. These projects respond to pressing community needs, but only some (such as YouthBuild and youth corps programs) also are structured to help parti-cipants acquire work-related skills and prepare for the labor market.


What funding sources can be used to support public job creation programs?

States and local communities have numerous opportunities to use federal funds to support public job creation initiatives. Federal welfare funds provided to states under the Temporary Assistance to Needy Families (TANF) program can be used to finance such efforts for individuals who meet TANF eligibility requirements. Separate federal welfare-to-work grants, the bulk of which go to local private industry councils (PICs), offer another potential funding source for programs serving hard-to-employ welfare recipients and non-custodial parents. Additional possibilities for federal funding include the Community Development Block Grant (CDBG) programs and grants to federally-designated Empowerment Zones and Enterprise Communities as well as a range of smaller federal programs which authorize grants to states and local communities. Finally, state TANF funds, state and local general revenues, and foundation grants or other private funds can be used to supplement these federal funds. These non-federal funds may be essential to preserve state or local program flexibility, which otherwise may be constrained in various ways by federal funding restrictions and program requirements.


Where are public job creation programs being developed today?

Increasing numbers of states, counties, and cities are operating, planning, or considering public job creation programs as part of their welfare reform efforts. Washington state and Vermont have state programs in place and already have created hundreds of wage-paying jobs for longer-term and harder-to-employ welfare recipients. Philadelphia and Detroit recently launched new public job creation initiatives following negotiations with state officials regarding the use of TANF and/or welfare-to-work grant funds, while Baltimore, Indianapolis, and San Francisco are finalizing plans for new programs that will begin in early 1999. Other cities in which discussions regarding public job creation strategies now are underway include Chicago, Memphis, Muskegon (Michigan), Oakland, Rochester, and Sacramento.


Who do I contact for additional information and technical assistance regarding public job creation strategies?

Several national groups are working collaboratively to assist policy makers, advocates, and community leaders who are interested in developing public job creation initiatives. Numerous papers on the topic can be found on the Center's web site (www.cbpp.org) or obtained by contacting Cliff Johnson at johnson@cbpp.org (202) 408-1080. Other organizations working on public job creation issues include:

In addition, an in-depth review of issues related to both unpaid work experience and publicly-funded job creation programs published by the Welfare Information Network can be found on the WIN web site at http://www.welfareinfo.org/newwork.htm or obtained by contacting WIN at (202) 628-5790.


Related reports: