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Subsidized Jobs Work

Eduardo Porter’s New York Times piece today on government investment to boost jobs and demand cites the success of a 2009 Recovery Act program through which 39 states plus the District of Columbia (see map) placed 260,000 low-income parents and young people in subsidized jobs, mostly in the private sector.  In House Budget Committee testimony this week on poverty and the safety net, CBPP President Robert Greenstein discussed that temporary initiative and recommended building on it.  Here are some excerpts:

[T]he Economic Mobility Corporation (EMC) studied what happened to participants in these subsidized jobs programs and found the programs did exactly what they were supposed to do — help disadvantaged jobless individuals find work during hard economic times.  The study also provides evidence that the jobs programs improved some participants’ chances of finding unsubsidized jobs when their time in the subsidized job position came to an end.  And the study indicated that the long-term unemployed benefitted most.

The EMC study looked at subsidized jobs programs established in five sites — Los Angeles, San Francisco, Wisconsin, Mississippi, and Florida — and produced the following findings:

  • . . . Participants in four of the five programs studied were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program. . . .
  • The programs were especially effective for the long-term unemployed. . . .
  • Employers reported hiring more workers than they would otherwise have hired and hiring workers with less experience than their usual hires.
  • Most participating employers reported multiple benefits from the program, including expanding their workforces, serving more customers, and improving their productivity.

Because of its success, state policymakers from across the political spectrum praised the program.  For example, Governor Haley Barbour of Mississippi noted that [his state’s program provided] “much-needed aid during this recession by enabling businesses to hire new workers, thus enhancing the economic engines of our local communities.” . . .

I recommend creating a subsidized employment program of this nature that would provide modest funding to states to create ongoing programs targeted on groups that face particular difficulties finding jobs.  Such a program could be structured to target hard-to-employ low-income individuals, such as long-term jobless workers and disadvantaged young adults.  It could provide funding for subsidized jobs for people who have difficulty finding employment and getting a toehold in the labor market even during good economic times — which could help them to overcome those barriers and get on a path to increased labor-market success.  Funding for these jobs could then be increased during recessions in order to temporarily increase the number of subsidized jobs that are created during periods when the economy is shedding jobs in large numbers.

Any such ongoing program should be coupled with an evaluation to identify its overall impact and, in particular, the approaches that are most successful. . . .

For more on the Recovery Act initiative, known as the TANF Emergency Fund, see this report.

Tomorrow, I will highlight actions that states are taking to build on the success of the TANF Emergency Fund.