In the very tight labor market of the late 1990s, employment among some of the most disadvantaged individuals reached levels never seen before. Even then, labor demand was not sufficient for everyone in the labor force to find work. A large-scale national subsidized employment program — in which the government creates jobs and pays the wages of individuals who are unable to find work in the regular paid labor market — may offer the best opportunity for filling this gap. The recent experience of states implementing subsidized jobs programs with funding from the Temporary Assistance for Needy Families Emergency Fund (TANF EF) demonstrates that, with adequate funding, states are capable of operating such programs and have the ability to get them up and running quickly. A recent study of several of the TANF EF subsidized employment programs provides evidence that these programs increased employment and earnings not only while individuals worked in a subsidized job but also after the program ended.
This policy proposal examines characteristics of effective subsidized employment programs as well as examples of how states can fund and implement such programs.