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At the height of the Great Recession, when the unemployment rate reached 10 percent, at least 40 states used federal funds under a special emergency program to put more than 250,000 adults and youth to work, often in private businesses that received subsidies to cover their wages. Governors from both parties hailed the program.
At the broadest level, all subsidized employment programs use public funds to create jobs for the unemployed. The granddaddy of subsidized employment programs, the Works Progress Administration (WPA), created public works jobs for 8 million people during the Great Depression and left a lasting legacy: thousands of roads and bridges, schools and parks, even murals and photographs. These “counter cyclical” programs aim to stimulate the economy and assist the unemployed — by providing wage-paying jobs rather than welfare benefits — during periods of high unemployment.
The wages earned circulate through the system, helping to prop up demand for goods and services. Such programs also allow workers to keep exercising their employment muscles rather than letting them atrophy.
Over the past few decades, starting with the National Supported Work Demonstration in the 1970s, a number of transitional jobs programs have been rigorously evaluated. These studies assigned people, at random, either to a program group that had access to transitional jobs and other services, or to a control group that did not. A few of these programs produced lasting improvements in participants’ employment rates and earnings, but most did not.
In particular, studies of five TJ programs for people returning to the community from prison, conducted between 2005 and 2012, found that the programs substantially raised employment rates initially, but the gains were driven by the transitional jobs themselves and did not last — though one program, run by the NYC-based Center for Employment Opportunities, was able to reduce recidivism and save money for taxpayers.
These mixed results suggest that innovative, new approaches are needed to help very disadvantaged people prepare for permanent employment. Indeed, two large federal projects, one sponsored by the U.S.Department of Health and Human Services (HHS) and one sponsored by the U.S. Department of Labor (DOL), are currently testing a next generation of transitional jobs models, and very early results show some trends worth watching.