Subsidized Jobs a Good Strategy, But Comprehensive Jobs Creation Strategy Still Needed

Mar 09, 2012

By Elizabeth Kenefick

Unemployment remained stable this month, and is now down 0.8 percentage points since August 2011, according to Bureau of Labor Statistics data reported today. Despite this improvement, less educated workers continue to struggle and have unemployment rates significantly higher than the national average. Workers without a high school diploma or with only a high school diploma have respective 12.9 percent and 8.3 percent unemployment rates, compared to 7.3 percent or 4.2 percent for workers with some college or bachelor's degrees.

One strategy to address the ongoing jobs crisis among low-skill workers is transitional jobs, which combine temporary subsidized jobs with case management, job readiness and skills-building activities. Earlier this week the Social IMPACT Research Center released its evaluation of Chicago Neighborhood JobStart, a transitional jobs program funded in part through the American Recovery and Reinvestment Act (ARRA).

JobStart was a temporary transitional jobs program that operated during the summer of 2010 through a partnership between the Illinois Department of Human Services and the 2016 Fund for Chicago Neighborhoods. After Chicago lost its bid for the 2016 Olympic Games, the 2016 Fund redirected $2 million in remaining funds to this initiative. The bulk of the support, $20 million came from the TANF Emergency Fund, which was created through the Recovery Act to enable states to provide more assistance to low-income families during the recession. As CLASP has previously reported, before the Emergency Fund expired in September 2010, 39 states received approval to use $1.3 billion of the $5 billion fund to create or expand subsidized employment programs. Businesses employed almost 260,000 low-income adults and youth through this program.*

The Chicago Neighborhood JobStart was a small program that specifically targeted low-income youth and adults from 13 neighborhoods with historically high unemployment and provided them with supportive services such as transportation assistance to help them succeed in their job. Two-thirds of the 1,518 participants placed in employment were adults and the remainder were youth (average age 17). Regardless of age, very few participants had education above a high school degree or GED. 

The program had a major impact on family incomes during the period of the subsidized jobs. The average monthly wages per adult participant in the transitional job were more than double the average monthly household income prior to JobStart. Participants who responded to a survey overwhelmingly reported that because of JobStart they were able to support their families or pay their bills but they might not have been able to otherwise. Moreover, a majority of the youth who participated in the program enrolled in school or another employment program at the end of the job. However, due to the disadvantaged population served, the poor economy, and the short duration of the program, relatively few adult participants were employed after the end of the subsidized job. 

JobStart was one of many programs across the nation created from the TANF Emergency Fund within small timeframe. It experienced challenges common to many of these program as it made decisions on issues such as administration, data collection and employer outreach. Nevertheless, it greatly benefited from the the grantees selected to implement the program that had prior experience operating job readiness or transitional jobs programs. 

Low-skill workers have some of the highest rates of unemployment and continue to struggle most to get back to work. Policymakers should look at a wide array of solutions to ensure the economy creates jobs at a more rapid pace. Transitional and subsidized jobs for low-skill workers also are rightly part of the solution.


*Illinois also created general subsidized employment programs for adults and youth, Put Illinois to Work (PITW) and Youth Employment for the Summer (YES). Combined with JobStart, Illinois placed over 30,000 jobless workers, one of the largest amounts in the nation.

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