Subsidized Employment a Key Strategy in President’s Budget

Mar 07, 2014

By Elizabeth Lower-Basch

President Obama’s FY 2015 budget proposal includes several provisions to expand the availability of subsidized employment for unemployed and disadvantaged workers.  This is critical, because unemployment remains high, with 3.8 million workers unemployed for 27 weeks or more.  Youth face particularly high unemployment rates, 21.4 percent in February 2014.  Subsidized employment was shown to be an effective and well-received strategy when funding was available under the TANF Emergency Fund.

The proposals in the President’s budget include:

  • A proposed $2.5 billion for Summer Jobs Plus, of which $1.5 billion would be distributed by formula funding to local communities to support summer and year-round jobs for an estimated 600,000 youth.  The remaining $1 billion would support innovation grants aimed at improving skills and career options for disadvantaged youth.
  • A recommendation to shift $602 million from the TANF Contingency Fund to a new Pathways to Jobs program, which would support state-subsidized employment programs for low-income individuals.  Participants could either be eligible for TANF cash benefits or have incomes below 200 percent of the federal poverty level and facing other barriers to employment. The program could cover 100 percent of wages, benefits and training costs for up to the first 90 days of employment.  Because the Contingency Fund is included in the budget baseline, this proposal would not require new funding.
  • Allowing funding under the Health Professions Opportunity Grants, which supports job training and supportive services for TANF recipients and other low-income individuals, to be used for subsidized employment to help workers transition from training to unsubsidized jobs in the health field.
  • Supporting training and work opportunities for youth and veterans to improve and maintain parks as part of the National Park Service’s Centennial.
  • Extending and revising the Work Opportunity Tax Credit (WOTC), which provides tax incentives to businesses that hire members of certain targeted groups, including welfare and SNAP recipients, veterans, and individuals with disabilities.  The reforms would focus the credit on businesses that expanded their hiring from these groups compared to previous years.

This budget builds on steps the Administration has already taken, such as prioritizing funding for subsidized employment and other work-based learning for long-term unemployed workers under the competitive Ready to Work grants supported by revenues under the H-1B visa program.

CLASP believes that subsidized employment is a valuable way to enable disadvantaged adult and youth workers to develop real work skills and experience while earning money to support themselves and their families.  

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