How Government Jobs Programs Could Boost Employment
Update: Listen to our May 7 Critical Value podcast about addressing historic unemployment rates.
The COVID-19 pandemic has thrown the US into a jobs crisis. Efforts to limit the spread of the virus, although critical for public health, have led to record-setting unemployment as tens of millions of workers face layoffs, furloughs, and reduced hours. Many of these jobs will come back as people return to more normal life, but new and expanded federally funded programs could drive a faster and more robust economic recovery by creating and subsidizing jobs.
Urban Institute experts highlight evidence-based recommendations for effective and inclusive programs that could boost employment and help workers and businesses across the nation recover from this crisis.
Revive the Works Progress Administration
By Gregory Acs
The Works Progress Administration (WPA) created during the Great Depression showed how a large-scale, federally funded, locally administered jobs program could address an employment crisis. Through a similar program today, state and local governments could use federal resources to help job centers, public schools, nonprofits, and private companies hire workers to address critical needs during and after the COVID-19 pandemic. These could include public health department staff, teachers’ aides in schools, child and elder care providers, and construction workers for housing and infrastructure projects.
“This type of jobs program could avoid the bleak forecasts of 2021’s employment landscape: 16 million Americans out of work and searching for jobs that simply don’t exist.”
At its peak, the WPA provided jobs for up to 40 percent of unemployed Americans. If Congress funded a program that employed a similar share of the number of workers the Congressional Budget Office projects will be unemployed in 2021, that program would create 6.5 million publicly funded jobs in 2021 and reduce next year’s projected unemployment rate from 10 percent to 6 percent. If these jobs paid $15 an hour for a 32-hour work week, each worker could earn almost $25,000 a year, about the federal poverty level for a family of four. The direct wage costs plus additional costs for equipment and materials would bring the total program cost to $195 billion.
Establishing a large-scale public employment program is daunting, but the WPA was up and running in four months. And only six months after its creation through executive order, the WPA employed almost 2.7 million people. This type of jobs program could avoid the bleak forecasts of 2021’s employment landscape: 16 million Americans out of work and searching for jobs that simply don’t exist.
Improve Unemployment Insurance to help workers stay in the labor force
The federal-state Unemployment Insurance (UI) program can be a powerful tool to help workers stay in the labor force. Reforming current UI program features and adding new ones could benefit more workers, including those who lose their jobs during the COVID-19 pandemic.
Expanding and strengthening short-time compensation programs (also known as work sharing) would allow employers to retain workers on schedules with fewer hours while still providing them prorated UI benefits and avoiding severing their employment relationships. Short-time compensation programs already exist, but participation is limited among states and employers. Research on the Great Recession estimates that if every state had had an intensive short-time compensation program, over 200,000 layoffs would have been prevented. States could leverage current federal support to adopt and promote short-time compensation programs, and the federal government could fund further study on how to best design and expand the programs.
The federal government could also improve UI by introducing a form of wage-loss insurance and by creating more automatic and longer extensions of UI benefits during recessions. States could expand and promote the use of partial UI claims, which allow qualifying workers to claim a reduced benefit while working part time. These steps could promote employment among displaced workers; encourage labor force attachment; stabilize the economy; and provide substantial benefits to eligible workers, their families, and their communities.
Subsidize private-sector employers to hire workers
A federal jobs program that subsidizes private-sector employers to hire unemployed, formerly low-wage workers could benefit employers that are struggling during the recession and could help workers earn an income and establish a long-term job. This program could offer staggered federal payments of a full subsidy for the first three months of employment costs and a half subsidy for the next three months; the employer would guarantee to keep the worker on the job for at least another three months with no subsidy.
This approach is similar to one used by some state and local programs run with federal funding under the American Recovery and Reinvestment Act of 2009 (ARRA) in response to the Great Recession and by pilot programs funded and evaluated by the Department of Health and Human Services and the Department of Labor. To assist a broader group of low-wage workers than those Great Recession programs and help those workers move to permanent jobs, this new program would focus on private-sector business and not be limited to workers who are eligible for federal safety net benefits. Programs could follow Florida’s example under ARRA and reach out to employers who have already expressed interest in publicly funded on-the-job training, which would hasten program startup and participation.
This type of federal jobs program should (1) ensure it is creating new jobs rather than displacing existing workers, (2) set wages high enough to support families but not so high that workers won’t accept an unsubsidized job, and (3) implement guidelines to avoid any misuse of public funding. Because the program would be flexible, federal policymakers could scale it to create as many jobs as the private sector is willing to sustain.
Mobilize a federal workforce to trace and contain the novel coronavirus
To safely restart the US economy, the public sector needs infrastructure in place to effectively trace and contain the spread of COVID-19. And doing that will take hundreds of thousands of workers. Expanded federal programs could hire more temporary and permanent workers to help people connect with the critical resources they need, such as food, testing, and health information, and to help conduct contact tracing to track down people who might have been exposed to someone with COVID-19. Ideally, these programs would hire residents of communities most affected by COVID-19 and provide other benefits, such as sick leave.
“This temporary, immediate workforce could put hundreds of thousands of unemployed people back to work and accelerate a reduction in the spread of COVID-19.”
The US Department of Commerce is set to hire over 400,000 temporary workers this summer for 2020 Decennial Census field operations between June and October. The Centers for Disease Control and Prevention hopes to use census workers for contact tracing, and similar discussions are happening between the agency and the Peace Corps and AmeriCorps. The Centers for Disease Control and Prevention could leverage existing Census Bureau and national service program infrastructure to solicit, hire, and train a large temporary workforce. These efforts could be supplemented with funding from state and local governments. The federal government could also issue grants to community organizations to develop tailored, peer-to-peer communication and information-sharing systems for neighborhoods.
This temporary, immediate workforce could put hundreds of thousands of unemployed people back to work and accelerate a reduction in the spread of COVID-19. That in turn would permit a more effective, lower-risk restart of the economy.
Create a robust “green stimulus” jobs package
A federal green stimulus package of job investments could help meet the nation’s short- and medium-term employment needs while filling its infrastructure backlog and preparing for the disruptive effects of global climate change. Building on lessons from ARRA job programs following the Great Recession and adapting ideas from the Green New Deal framework, a green stimulus package could include “green job” training and apprenticeship programs, expanded weatherization assistance and state energy block grants, funding for green infrastructure and related capital investments, and tax credits for private investments in green infrastructure.
Many of these options are expansions of existing programs, but they could improve on previous green jobs efforts by offering employment opportunities in climate adaptation and other infrastructure upgrades (whereas ARRA focused only on climate mitigation) and by using evidence from evaluations of the ARRA green job components to improve implementation. Based on ARRA program spending, an expanded starting investment could cost the federal government $100 billion.
ARRA programs helped build momentum for green job equity efforts. But future jobs programs could make further improvements by reshaping the makeup of the construction, maintenance, and energy industry workforces to better reflect our national demographics and by equitably investing in communities that have historically seen underinvestment. As the US faces growing unemployment amid the COVID-19 pandemic, jobs-recovery programs should focus on strategies that help people get back to work safely, improve housing and community services, and improve our nation’s long-term sustainability and resilience.
Expand national youth service programs
Expanding and updating national service programs through AmeriCorps could give more young people of color (i.e., ages 16 to 24) the opportunity to further their education, gain work experience, and help their communities recover from the COVID-19 pandemic. Increasing funding for the Corporation for National and Community Service, the federal agency that funds AmeriCorps service-year programs such as YouthBuild, Opportunity Youth Service Initiative, and ServiceWorks, would create more positions for young people who are disconnected from work and school. Expanding these programs could also help meet communities’ critical needs by employing young people in nonprofits that support community development, senior services, youth services, and conservation and construction projects.
AmeriCorps programs provide full-time, paid service positions that combine community service work, skill development, and supportive services and mentoring to help young people transition into the labor market, pursue continuing education, and foster civic engagement after their program terms end. Research has shown AmeriCorps programs benefit people from a variety of backgrounds and people most commonly disconnected from jobs and school, especially Native American, Black, and Latinx youth.
National youth service programs cost $1.1 billion annually (including from federal sources and from other public and private matched funding) for approximately 80,000 youth-member service years. Expanding youth national service program funding to accommodate 250,000 total positions would cost an estimated $5 billion annually. As well as expanding these programs, the federal government could update them by increasing the AmeriCorps living allowance and eliminating the taxability of the AmeriCorps education award, both of which would benefit people from families with low incomes and those supporting their own families.
Relaunch a TANF Emergency Fund to subsidize jobs
By Heather Hahn
As part of ARRA during the Great Recession, Congress launched a Temporary Assistance for Needy Families (TANF) Emergency Fund that states could access to create or expand subsidized jobs programs. That successful model could be replicated now to help states create needed jobs during and after the COVID-19 pandemic.
State TANF programs already have authority to operate subsidized jobs programs, but in practice these are small. With the new TANF Emergency Fund Congress authorized in 2009 and 2010, states were reimbursed for increased spending on basic assistance, short-term nonrecurring benefits, and subsidized jobs. States quickly expanded existing subsidized jobs programs or created new ones because the fund gave them flexibility to design policy changes to meet their needs.
With $1.3 billion from the Emergency Fund, states and localities supported subsidized jobs for about 260,000 people living below or near the federal poverty level during the Great Recession (a disproportionate share of whom were people of color). Evaluations found that the Emergency Fund helped people increase their incomes and stay in unsubsidized employment. The program was especially helpful for supporting people experiencing long-term unemployment and for supporting struggling businesses. The success of the TANF Emergency Fund subsidized-jobs programs made possible through ARRA suggests that reviving this program would have a similar positive impact today.
Target jobs programs to young people at risk of justice involvement
As state and federal policymakers develop new programs to boost employment, they should ensure those efforts preserve and build on the progress communities have made in creating jobs for young people at a high risk of justice system involvement. These young people were among the most likely to be left behind in past employment crises, and that harm will be replicated today unless the government funds programs that connect them with employment and supports that address their unique challenges. The federal government could fund local efforts to subsidize employment for these young people, especially those at a higher risk of involvement in violence.
These types of interventions (such as READI Chicago) offer employment and supports such as training, case management, and counseling to at-risk young people. A federally funded and administered multisite intervention could maintain and expand resources for this work while ensuring consistent implementation. Launching this intervention across 10 cities with a high incidence of violence would create thousands of jobs across the nation and cost the federal government between $30 million and $50 million a year, based on similar programs in Chicago and New York City.
Developing this program could have immediate and long-term benefits for participants’ employment and earnings, and it could reduce their involvement in violence. This type of employment intervention is critical because it focuses on a group of people who are already disconnected from the labor market and who are more likely to be left behind as the economic crisis unfolds, which would have long-lasting consequences for them, their families, and their communities.
Increase funding to states through the Workforce Innovation and Opportunity Act
Infusing federal funding to states through the Workforce Innovation and Opportunity Act could improve the public workforce system’s ability to connect workers with employers. Using lessons from ARRA during the Great Recession, states and localities could use the funding to speed up economic recovery after the pandemic. The public workforce system is designed to promote equitable recovery, and local systems can prioritize services for groups such as veterans and low-income people.
“The public workforce system already has the basic infrastructure in place to deploy these tools and services and rapidly and efficiently scale its capacity for reemploying millions of Americans.”
Under ARRA, the federal government nearly doubled funding to states and localities, providing $4.9 billion to boost their workforce system capacities. And by early 2011, the program for laid-off workers was helping about 80 percent of its participants find new employment by the time they left the program. A similarly large investment in the public workforce system that focuses on helping people in industries most affected by the economic crisis could ensure Americans return to jobs that offer steady wages and a long-term career path. This investment could also benefit employers by providing a pool of workers ready to fill positions as companies return to normal operations.
The public workforce system already has the basic infrastructure in place to deploy these tools and services and rapidly and efficiently scale its capacity for reemploying millions of Americans. A federal investment in response to the current crisis would need to account for social distancing measures, use technology to ensure equitable access to services, and create short-term and on-the-job training opportunities that help job seekers adapt to the structural shifts affecting what jobs are available as the economy recovers.
Invest in more federal registered apprenticeships
Rigorous apprenticeships can cost-effectively connect unemployed and underemployed workers back to the workforce. But registered apprenticeships in the US receive much less public funding than in other countries. Because apprentices are paid workers during their training, growing and modernizing our federal registered apprenticeship program could help workers displaced by the COVID-19 pandemic get quickly back to work and develop skills for the future.
Increased federal funding could help employers create new programs and expand existing programs to offer more apprenticeship slots. Employers looking to train apprentices amid the pandemic could also use these funds to partner with education and workforce organizations to develop and deploy virtual apprenticeships. About $3.15 billion a year could stimulate as many as 900,000 new apprenticeships in the US annually, responding quickly to the urgent need for jobs.
Investing in apprenticeships during the COVID-19 shutdown makes sense: Laid-off workers have more time to become active learners, and from the employer’s perspective, conducting training will not divert their skilled workers from production. Thus, the positive returns observed in normal times for apprentices, employers, and society at large are even more beneficial today. This approach would also complement learning in higher education, boosting the cost-effectiveness of the US education and training system at a time when traditional colleges and universities face dwindling resources.
Boost support for community colleges providing in-demand job training
As the economic crisis caused by the COVID-19 pandemic accelerates job loss trends that were already under way, more support for in-demand training at community colleges could help laid-off workers transition to new jobs in important sectors and prepare them for the future of work. A substantial investment in community colleges would help them provide in-demand training for more students and could ensure people can retool their skills to meet the nation’s changing labor demands as it moves toward recovery. This in turn could ensure businesses have the skilled workers they need to increase production and profitability.
Community colleges are well-positioned to respond to rapidly changing labor needs because they have strong links to businesses, experience providing sector-based training, and a track record training workers in critical times of high unemployment and economic shifts. The US Departments of Labor and Education could fund partnerships between community colleges and workforce development boards that offer evidence-based programs for training in targeted sectors and in occupations that are likely to be in high demand during and after the pandemic (such as transportation and logistics, health care, and online retail). A federal investment of $250 million to $500 million a year over the next four to five years could boost employment by growing the skilled workforce that can fill new in-demand jobs.
Investing in career-focused training at community colleges could increase employment and earnings for people who lose their jobs because of the COVID-19 pandemic and associated economic changes that lead to new skill demands; it could also help businesses stay competitive in the global economy by developing a workforce with the skills they need. Moreover, investing in community college training can promote racial and economic equity in the labor market because these schools have historically served low-income people and people of color.