In policy discussions about getting back to full employment, I often make the point that if the market fails to create the needed quantity of jobs, there’s a role for policy to help make up the difference. Many find that a radical idea, or at least one that perhaps made sense in the 1930s, but is antiquated by now.
What if I told you that, in fact, there recently was such a program—a temporary one that was an unheralded part of the Recovery Act—that in its heyday placed “more than 260,000 low-income adults and youth in temporary jobs in the private and public sectors…?”
Well, there was. The above quote comes from a post on the CBPP blog yesterday by my colleague Donna Pavetti. She, in turn, is citing a new evaluation of the TANF (Temporary Assitance for Needy Families) Emergency Fund, a program wherein state employment programs worked with employers, mostly in the private sector, to create jobs where, for a limited time, the wage is mostly paid by the federal government. Most states—39 in all—joined in and used $1.3 billion to subsidize job creation. That comes to $5,000 a job, which in this business is known as big bang-for-the-buck.
Here’s a summary of the findings from the new study:
- Participation in subsidized employment programs led to significant increases in employment and earnings. Participants in four of the five programs covered by the study 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 findings from Florida are especially noteworthy because researchers could compare participants with applicants who were eligible for the program but didn’t receive a subsidized job. There, participants earned an average of $4,000 more in the year after the program than in the year before it, compared to a $1,500 increase for people in the comparison group (see figure below).
- The programs were especially effective for the long-term unemployed. In Mississippi and Florida, average annual earnings of the long-term unemployed rose by about $7,000 after participating; in Los Angeles and Wisconsin, they rose by about $4,000. In all four sites, earnings rose much more among the long-term unemployed than among people who had been unemployed for shorter periods.
- Employers reported hiring more workers than they would have otherwise and workers with less experience than their usual hires. Two-thirds of the employers interviewed for the study said that they created new positions for subsidized workers. [This is important, because there’s always concerns about job displacement in these subsidy programs—i.e., replacing an unsubsidized workers with a subsidized one, thus gaming the system and not creating a new job—JB.] Over half said they hired people with less work experience than their usual hires.
- Most participating employers reported multiple benefits from the program. These included expanding their workforces, serving more customers, and improving their productivity.
OK, you’re saying…that was then, this is now. Surely nobody wants to keep this going.
Wrong again! According to Donna: “…at least five states — Nebraska, Colorado, California, Minnesota, and Rhode Island —expanded state funding or provided new funding for subsidized employment for TANF recipients or other disadvantaged individuals.”
So, yeah. Rep Paul Ryan isn’t going there anytime soon, but if we plot the path forward based on the constraint called “House Republicans” will we get nowhere fast. If we instead recognize that in a society that wants to poverty reduction through work, there must be jobs—then we have a rationale for scaling up efficient programs like this one.
Source: Economic Mobility Corporation