Subsidized Employment: A Strategy to Improve Employment Prospects for American Indians and Alaska Natives

Even in the best economic times, unemployment among American Indian and Alaska Native (AIAN) people is higher than the national average. The pandemic exacerbated existing health, infrastructure, and economic disparities, and partially as a result of these disparities, COVID-19 has disproportionately sickened and killed AIAN people and worsened already elevated unemployment. But forthcoming recovery legislation provides an opportunity to implement innovative solutions that will improve AIAN people’s employment and wages. Subsidized employment, include­­­­d in the American Jobs Plan and the President's fiscal year 2022 budget, is a proven strategy for providing income to people facing barriers to employment while creating jobs that can help meet community needs.

Subsidized employment is a beneficial tool for those who struggle to earn steady wages, such as families with low incomes, youth, and individuals with criminal records. It can be particularly beneficial for people of color, who, due to racial discrimination and structural racism, are more likely to earn low wages and face barriers to employment, such as hiring discrimination.

Targeted subsidized employment programs can be especially beneficial for AIAN people, who generally report barriers to employment like mental and physical health issues, low education levels, and workplace discrimination. These inequities are due in part to the federal government’s historical failure to support AIAN communities and uphold treaty and trust obligations to tribes.

AIAN people live in diverse communities across the United States, from urban centers to extremely rural areas. On reservations, people with low incomes, especially in more rural areas, may struggle to access reliable transportation and child care.

Partially due to these disparities and barriers to employment, even in the pre-COVID-19 economy, the unemployment rate for AIAN people in 2019 was significantly higher (6.1 percent) than the national rate (3.7 percent). The AIAN poverty rate in 2019 was double the national rate, and 30 percent of American Indian children lived in poverty. Despite a persistent lack of data collection for AIAN people, the available evidence suggests that the pandemic hit Native employment especially hard, with the unemployment rate reaching more than 26 percent in April 2020 — the highest among any racial group measured. COVID-19 also disrupted tribal enterprises and tribal governments that employ many AIAN people who live on or near reservations.

Subsidized employment can connect unemployed AIAN people with jobs, providing needed wages and work experience. For those living on tribal lands, many tribes already operate small, subsidized employment programs through their Temporary Assistance for Needy Families (TANF) programs. A 2018 federal study of eight tribal TANF subsidized employment programs found that the programs provided income and work experience for AIAN individuals with barriers to employment, with a goal of full-time, unsubsidized employment for all. These programs reflect the unique economic and cultural context of each tribal community, support critical tribal operations, and help small businesses reduce costs or even expand.

In various communities, subsidized employment has been successfully used by governments, nonprofits, and social enterprises for decades. Decades of evaluations have found that subsidized employment significantly increases wages and employment in the short term. And some recent evaluations have found long-term employment benefits for participants. For example, in a 2020 federal evaluation of 13 subsidized jobs programs, four improved employment outcomes for at least two years. And one program in San Francisco, STEP Forward, improved earnings relative to a control group for four years.

President Biden has called for a national subsidized employment program, and Congress now must include funding for such a program in any recovery legislation. A national subsidized employment program should provide broad flexibility so states, localities, and tribes can develop programs that address their economic and cultural circumstances. It is particularly important to ensure that any program targeted to AIAN communities provides flexibility and the ability for them to administer their own programs.