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POLICY INSIGHT
BEYOND THE NUMBERS

Recovery Legislation Should Provide Employment Opportunities for Those Left Behind

Even in good economic times, persistent barriers prevent some people from finding jobs. That means that even as the economy begins to recover from the COVID-19 pandemic-induced recession, some people will face challenges getting back to work. President Biden’s American Jobs Plan calls for a robust subsidized employment program, which would help people facing barriers to employment, including discrimination, find jobs and reduce labor market inequities. As the economy recovers, subsidized employment can ensure that no one is left behind, so Congress should include funding for it in any recovery package it considers.

Subsidized jobs programs can help quickly employ people with limited employment opportunities due to barriers such as discrimination or other labor market disadvantages. It is a proven tool to quickly provide employment, needed wages, and a bridge to unsubsidized employment. Decades of evidence find that subsidized employment rapidly increases employment and earnings for participants in the short term. And recent evidence shows potential for employment and earnings benefits to last for years after the program ends. Studies have also found additional benefits for participants, such as reducing recidivism for individuals involved in the justice system and improving child support payments.

Policymakers must not allow people who face disadvantages in the labor market to be left behind in the economic recovery. Despite encouraging economic headlines, there are still 6.8 million fewer jobs than at the start of the recession in February 2020. Long-term unemployment as a share of total unemployment remains elevated near its Great Recession peak. Further, racial and ethnic disparities in employment persist, with higher unemployment rates for Black (9.2 percent) and Latino (7.4 percent) workers compared to white workers (5.2 percent) – and the greatest employment deficits for Black and Latina women. In previous economic recoveries, Black and Latino workers faced higher unemployment rates that recovered more slowly than for white workers.

Due to employment discrimination and other barriers, some people struggle to find jobs no matter the economic conditions. Well before the pandemic disrupted the economy, millions of Americans faced limited employment opportunities. Even in the historically strong pre-pandemic labor market, 5.8 million people were looking for work in late 2019. A disproportionate share of those who were unemployed were Black or Latino, or faced labor market disadvantages such as low levels of education or having a disability. Some other common barriers to employment include criminal records, intensive caregiving responsibilities, or age (both youth and older people face challenges in the labor market). Barriers to employment compound, leading to significant employment challenges for certain groups. For example, individuals returning from jail or prison, who are disproportionately young Black men, face racial discrimination by employers and a complex web of legal and social exclusion that make it very difficult for them to get jobs.

Subsidized employment programs have supported people who face barriers to employment through economic ups and downs – some for decades. For example, the New York City-based Center for Employment Opportunities (CEO), which operates transitional work crews in 12 states, has, since the 1970s, supported individuals after their release from incarceration. Evaluations of the program found that it significantly increased employment when subsidized jobs were provided and reduced recidivism over the long term. One randomized control trial of CEO’s New York program found that the highest-risk individuals, who had recently exited incarceration, saw the greatest improvements in recidivism and employment: on average, they were 49 percent more likely to have worked consistently (for six or more consecutive quarters) in the second and third year after the program than similar people who were not in the program..

Recognizing its important role in creating an equitable recovery, President Biden included subsidized employment in his American Jobs Plan. Now, Congress must include it in its recovery package. Any program should be permanent and scalable so that it can respond to economic need, stabilizing the labor market during recessions and supporting individuals with barriers to employment during good economic times.