Subsidized Employment Helps Long-Term Unemployed Reconnect to Workforce

September 12, 2013

By Elizabeth Lower-Basch and Neil Ridley

Last Friday, the U.S. Bureau of Labor Statistics reported that in August 2013, 4.3 million workers were long-term unemployed, meaning that they had been jobless for 27 weeks or more. Even as the overall unemployment rate is slowly falling, these workers are finding themselves shut out from job opportunities. Others are giving up on ever finding employment and are retiring early, despite still being fit for years of productive work. As has been well established, long-term unemployment has lasting negative consequences for the workers, their families and communities, and society as a whole.

Stimulating Opportunity, a new report from the Economic Mobility Corporation, highlights the role subsidized employment programs can play in reconnecting long-term unemployed workers to the workforce. This report examines in depth the experiences of workers and employers who participated in subsidized employment programs in five sites under the Temporary Assistance for Needy Families (TANF) Emergency Fund. As CLASP documented, between 2009 and 2010, 39 states used TANF Emergency Funds to support subsidized employment opportunities for more than 260,000 workers.

Stimulating Opportunity finds that, even after the subsidy period has ended, subsidized employment can have a significant positive impact on low-income job seekers’ employment and earnings. These effects were largely concentrated among those job seekers who had been unemployed for more than six months prior to starting the program. While comparison group data was only available for one site, Florida, the pattern of employment in other sites appears consistent with these findings. This suggests that, in a period of limited resources, subsidized jobs programs may wish to target participants without recent work experience.

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Source: Anne Roder and Mark Elliott, Stimulating Opportunity: An Evaluation of ARRA-Funded Subsidized Employment Programs, Economic Mobility Corporation, September 2013, http://economicmobilitycorp.org/uploads/stimulating-opportunity-full-report.pdf. 

Earlier this summer, Rep. George Miller (D-CA) and Sen. Richard Blumenthal (D-CT) introduced the Pathways Back to Work Act, which would greatly expand the number of subsidized employment programs available to long-term unemployed workers and low-income adults and youth. Of the total $12.5 billion under the Pathways Back to Work Act, $8 billion would be available for subsidized employment and supportive services for adults; $2.5 billion for summer and year-round employment opportunities for the nearly 7 million youth ages 16-24 who are neither employed nor in school; and $2 billion for a competitive grant program that would help low-income adults and youth obtain education and training leading to credentials and jobs. This short-term federal investment would boost promising programs cited in Stimulating Opportunity, as well as other opportunities for those still struggling to find work in a slow-growth economy.

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