ACF is Funding Research to Strengthen Subsidized Employment Efforts

Mark GreenbergBy Mark Greenberg, Acting Assistant Secretary

Last week, ACF released “Testing the Next Generation of Subsidized Employment Programs: An Introduction to the Subsidized and Transitional Employment Demonstration and the Enhanced Transitional Jobs Demonstration.” This new report provides background and early implementation information on a set of subsidized employment efforts around the country for which ACF and the Department of Labor (DOL) are funding a rigorous evaluation.

We hope to learn much from the evaluation, and that it will help states and localities use and expand subsidized employment strategies for Temporary Assistance for Needy Families (TANF) recipients, non-custodial parents, disconnected youth and other low income and at-risk young people and adults.

There are a number of models for subsidized employment. “Transitional jobs” strategies typically use case management, graduated responsibilities, and placements at community organizations or government agencies. Other programs primarily use wage subsidies with private employers to encourage employers to give a chance to individuals they might otherwise hire. Our evaluation seeks to learn about these and hybrid models that combine elements from both approaches. 

With our partners at DOL, we’re evaluating 13 programs in 10 locations around the country, with a set of innovative features. Among them:

• The Bridges to Pathways Program in Chicago is combining education, social-emotional learning, community service and paid internships for young people involved in the justice system
• Los Angeles County is testing the relative effectiveness of transitional jobs and private sector wage subsidies.
• RecycleForce in Indianapolis is using a social enterprise approach for formerly incarcerated individuals. 

You can see the participating sites and the range of approaches in the report.

In this Administration, ACF has strongly supported efforts to implement and expand subsidized employment strategies. In 2009-10, under the American Recovery and Reinvestment Act (ARRA), states were allowed to use TANF funds for subsidized employment, and we encouraged all states to do so. We viewed this as a way to help families, communities, and businesses, and to provide work-based assistance to unemployed families and youth. States responded to the ARRA opportunity by creating about 280,000 subsidized employment slots --- the largest use of subsidized employment since the 1970s --- and across the country, we heard positive stories of what was accomplished.

While the stories were encouraging, we recognized that we had not been able to evaluate the ARRA efforts, and had been able to collect only limited data. Moreover, existing research indicated that earlier models of transitional employment often were successful in raising employment levels while people had a subsidized job, but the programs had not shown sustained employment effects after the subsidy ended. So, we decided to initiate a research effort to test a range of approaches, and that’s what’s described in the new report. The first impact findings will be reported in 2016. 

While we look forward to the research findings, there’s more that states, tribes, and communities can do now, under current law with current resources. States and tribes are free to use TANF funds for subsidized employment, and engagement in a subsidized job counts toward the TANF “participation rates” requirement as long as the family continues to receive TANF assistance. Similarly, TANF funds can be used for summer jobs for youth --- and we encourage states to do so. We’ve proposed that Congress redirect the TANF Contingency Fund to subsidized employment.  But, even without new legislation, states drawing down contingency funds can use some or all of those funds for subsidized employment efforts. 

While some states actively make use subsidized employment now, most do not.  Last month, we released the most recent TANF participation rate numbers and know that a number of states may be reexamining their strategies and expanding their work-related efforts in light of their work rates. And, all states want to strengthen the effectiveness of their efforts to connect families at work. So, we hope that the release of this new report will spur additional discussion in states and communities about the potential for increased use of subsidized employment as one key part of a strategy for supporting efforts to help families succeed in work.