Last Friday, Hillary Clinton released the details of her Economic Revitalization Initiative to expand opportunities in “communities left behind.” We asked several of our experts what the evidence says about different elements of her plan.
On jobs programs:
“Clinton’s jobs agenda focuses on the right problem: the weak employment and career outcomes of millions of American youth. The proposals to create jobs and apprenticeships can not only help young people today, but provide valuable work experience for future jobs.
“Two caveats are appropriate. First, job creation programs vary greatly in quality; while an experimental study of YouthBuild is currently under way, whether the program’s benefits exceed costs remains uncertain. Second, apprenticeships have a particularly strong record; they can help firms and lead to long-term success in rewarding careers, not simply short-term employment. But tax credits alone may not be enough; South Carolina’s Apprenticeship Carolina expanded apprenticeships by combining tax credits with extensive marketing at the state and firm level.”
On local infrastructure:
“Clinton’s economic opportunity agenda builds on an earlier $275 billion infrastructure plan by earmarking $50 billion to traditionally underserved communities.
“The plan echoes decades of research on place-based investments, although conclusions from this work are not always clear cut. Clinton tries to avoid some pitfalls by focusing on transportation investments and quality public services, which can enhance productivity and improve quality of life regardless of whether they promote economic mobility.
“Clinton would also reexamine transportation funding formulas that direct money to all the wrong places. Of course, incentivizing states and localities to pick the right projects may be easier said than done. In a 2010 GAO survey, only one of every five states said that conducting economic analysis of project costs and benefits was important.”
On jobs for the formerly incarcerated:
“Hillary Clinton’s plan includes a $5 billion investment in job programs for formerly incarcerated individuals, less than half of whom will find stable employment after release and most of whom will earn less than their non-formerly incarcerated counterparts. Given that nearly 30 percent of US adults have a criminal record, will $5 billion be enough to address this large and growing problem?
“If so, it is critical that Clinton support reentry programs with a proven track record. Comprehensive programs like the Center for Employment Opportunities (whose efforts have proven promising, particularly among high-risk individuals) are more successful at improving outcomes. They focus not just on job readiness skills but also on other barriers to employment that formerly incarcerated individuals face, including housing restrictions, loss of public assistance, substance abuse, and mental health issues.”
On credit availability:
“Clinton proposes a few steps to address limitations on access to mortgages that have grown since the recession. The Housing Finance Policy Center’s Credit Availability Index (HCAI) shows that mortgage credit continues to be far tighter than it was pre-bubble. Dodd-Frank and the Consumer Financial Protection Bureau have helped risky products disappear. Nevertheless, the HCAI demonstrates that even without risky products, the market is taking just over half the credit risk it was taking in 2001.
“Over the next 15 years, housing demand will be driven by minorities, as will all growth in homeownership. Income, wealth, and credit gaps between whites and minorities challenge this growth; the alternative is stagnation of the housing market. The government, Fannie, and Freddie can help make homeownership growth possible by giving lenders greater clarity on their responsibilities for loan and servicing quality—which Clinton calls “clarify[ing] the rules of the road.” Clinton would also help responsible homeowners save for a downpayment, support counseling programs to help borrowers become sustainable homeowners, and update underwriting tools—including credit testing tools.”
On small business and economic development:
“Clinton’s plan proposes five steps to help support small businesses and encourage economic development in areas of need. Evidence supports much of this agenda –the New Markets Tax Credit has had generally positive results, and the State Small Business Credit Initiative has led to exciting recent innovations. But the Community Reinvestment Act desperately needs to be modernized, not just enforced, to match today’s lending realities. And Community Development Financial Institutions have yet to figure out how they will fit into the evolving financial landscape—though in an intriguing new partnership, the Opportunity Fund (a CDFI) will work with loan applicants that Lending Club turns down.”