The blog of the Urban Institute
April 3, 2020

How Policymakers Can Plan Now for a Jobs Recovery Program

We don’t know how long the COVID-19 public health crisis will last nor when the economy will fully recover. We can be pretty sure, though, that not all businesses and jobs will come back right away.

Before the pandemic, when the nation’s February 2020 unemployment rate was 3.5 percent, more than 5 million people were out of work. The March unemployment rate had risen to 4.4 percent, based on the regular monthly survey taken mid-month before the pandemic surge; April will undoubtedly be much higher. We don’t know yet how high the rate will go in coming months, but if it increases to 7 or 10 percent or higher, we could see 10 or 20 million or more people unemployed across most sectors of the economy.

In just the two final weeks of March 2020, more than 10 million people applied for unemployment insurance (PDF). Some may be out of work for a short period of time, and some may be unemployed for many months.

The special payments to individuals and families and financial assistance to businesses enacted through the first three Congressional stimulus bills are critical, but we may need more federal action for workers if the economic crisis continues into the latter part of this year or beyond.

Publicly subsidized jobs and large infrastructure spending have been used during some economic downturns. Congress may again decide to fund a large jobs program in addition to infrastructure investment. If so, now’s the time to carefully plan a program for workers who may have a hard time getting a job after the public health crisis.

Subsidized jobs programs can provide useful community activities

Though some of the demand for consumer services may not be restored after the COVID-19 crisis, demand for many public and social services will likely increase to help people and communities recover.

But many public, community, and nonprofit organizations that normally provide those services may not have the budget to expand hiring or even recall or replace all their former workers. A federal jobs program could help fill those gaps, as it has during other economic downturns.

During the Great Depression, the Works Progress Administration provided unemployed workers with jobs in public works, the arts, and community development. Some of their output is still visible today in bridges, parks, dams, and other projects.

In the 1970s, nearly a million public service jobs authorized by the Comprehensive Employment and Training Act supplemented strained schools, hospitals, tribal governments, community public safety agencies, social services and youth agencies, rural development agencies, and other critical supports.

During the height of the Great Recession in 2009, public jobs programs subsidized hundreds of thousands of unemployed workers in private companies, as well as public and community-based organizations.

National jobs programs can be complex, so planning early is critical if the program is to begin as soon as health experts say it’s safe to return to work. During the Great Recession, the federal government requested lists of “shovel-ready” projects from state and local officials that could begin when the multibillion-dollar investment in infrastructure was enacted. Hundreds of public works and infrastructure projects, such as transportation improvements and environmental projects like weatherization, began quickly, and most jobs created were in the private sector, and not formally subsidized.

A separate emergency transitional jobs program directly subsidized public, private, and nonprofit jobs, mainly for low-income and unemployed workers. States designed and implemented the programs and subsidized more than a quarter million jobs from 2009 to 2010.

This time, the federal government could consider asking state and local officials to identify “service-ready” community, nonprofit, and even small-business projects for subsidized jobs.

A longer-term jobs program might be needed to get unemployed people back to work

If the economy recovers slowly or officially enters recession, a publicly subsidized jobs program could supplement or support important community services, provide income to unemployed workers, and train and retrain people for new or better jobs.

For workers displaced from jobs permanently or those in rural communities with few available jobs, subsidized employment could help provide important community and social services, such as in libraries, schools, and community centers that state or local governments may be unable to fund if their revenue sources decline during the crisis.

As was done during the Great Recession, jobs in the hardest-hit private industries, such as retail and food service, and small businesses in nearly every sector could receive a subsidy for all or part of a worker’s wages. Jobs could be targeted to unemployed and lower-income workers and new high school or college graduates unable to find a job in the regular labor market.

Growth in some fields during the pandemic—remote work, telehealth, virtual activities, “gig” platform jobs, data analytics, artificial intelligence—could lead to new types of jobs in a postpandemic market. Training and retraining combined with subsidized jobs could expand the supply of skilled workers in a rapidly changing economy.

The necessary components of a federal public jobs program

Past experience suggests that a federal jobs program could be an important piece of the nation’s recovery, if carefully planned in advance, keeping in mind that:

  • jobs should not displace existing workers,
  • wages should be set high enough to support workers and families, but not so high that people might not seek or accept a regular job, and
  • guidelines should be in place to avoid any misuse of federal funding (such as substituting federal funds for what a state or local government would have otherwise funded).

Jobs could begin quickly by identifying work projects that will be ready to go when legislation is passed and funded, deciding on a rapid-funding mechanism to distribute funds to state and local communities, and establishing a reporting system to accurately track employment, expenditures, and results.

None of this will be easy, but early planning could bring economic security to workers, help businesses, and provide useful services to communities as the nation recovers.

Jessie Morancy uses her computer to fill out the application for unemployment benefits after being laid off from her job at the Fort Lauderdale–Hollywood International Airport on March 27, 2020 in Hollywood, Florida. Morancy said she lost her job as a wheelchair and customer service agent. She is joining roughly 3.3 million Americans nationwide who are looking for financial help as restaurants, hotels, universities, stores, and more shut down in an effort to slow the spread of COVID-19. (Photo by Joe Raedle/Getty Images)

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