The voices of Urban Institute's researchers and staff
October 19, 2012

One-Time Funding Increase Not Enough to Shrink High Unemployment

October 19, 2012

The last in a four-part series about the response of America's public workforce system to the Great Recession. Read the first post, the second post and the third post.

The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily increased public workforce program resources during the Great Recession. What happened to those programs and how did they serve unemployed workers? State workforce agencies responded rapidly to the receipt of funds appropriated in February 2009 and to the exhortation by the federal government to spend the funds quickly—helping workers right away and getting the money flowing into the U.S. economy. Expenditures increased sharply in the second half of 2009 and during 2010, but the funds were mostly exhausted by end of 2010.

For example, Workforce Investment Act (WIA) Dislocated Workers and Wagner-Peyser Act Employment Service (ES) program resources grew by approximately 50 and 30 percent, respectively, during the two years that new funds were available. Many more unemployed workers were served, and program participation increased more than funding. The WIA Dislocated Worker program increased training services sharply, with three-quarters of states reporting that the number of customers enrolled in training had gone up by at least 10 percent.

Wagner-Peyser Act programs served 14.6 million participants in 2006 and 22.4 million in 2009, an increase of over 50 percent. At the same time, the number of participants receiving staff-assisted services grew by half during this period. The percentage increase in individuals served and in services provided was much greater than the percentage increase in funding from ARRA. Workforce staff worked harder, more efficiently, and for longer hours to achieve these results.

The expenditures per participant for WIA and ES programs were inadequate to provide the services needed by unemployed workers. Expenditures per participant had already declined sharply before the recession and continued to decline soon after ARRA’s temporary funding had been exhausted.

By 2011, expenditures per participant were between $30 and $40 for the ES program, far below the $300 to $400 needed to provide a comprehensive set of reemployment services. Funding for the WIA Dislocated Workers program (roughly $500 per participant) could only cover training for a tiny number of clients. Adequate training costs would run about $4,000 per person.

Until last month, unemployment remained over 8 percent, while workforce funding has fallen to pre-recession levels, when need for assistance was much lower. While all unemployed workers who come to local workforce offices are served, many are receiving inadequate services.

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