More About LaDonna Pavetti

LaDonna Pavetti

Dr. LaDonna Pavetti is the Vice President for Family Income Support Division at the Center on Budget and Policy Priorities.

Full bio and recent public appearances | Research archive at CBPP.org


With Federal Funds Gone, States Take the Lead on Subsidized Jobs

January 30, 2014 at 3:09 pm

I highlighted yesterday the success of a 2009 Recovery Act program through which 39 states and the District of Columbia placed 260,000 low-income parents and young people in subsidized jobs, mostly in the private sector.  The federal funding for that program dried up a few years ago.  But several states — recognizing that these programs hold huge promise for the long-term unemployed and others who often have great difficulty getting hired — have decided to use their own funds to create or expand subsidized jobs programs.  Here are some examples:

  • Connecticut Governor Dannel Malloy this week proposed a $3.6 million initiative, targeted to the long-term unemployed, that will combine a job-readiness program, supportive services, financial coaching, and an eight-week paid work program.  He also proposed expanding a program that offers two incentives to employers to hire additional employees:  a six-month wage subsidy and grants to small manufacturers to train new workers.
  • Colorado is implementing a two-year, $2.4 million subsidized jobs program targeted to non-custodial parents, veterans, and displaced workers aged 50 years or older who are below 150 percent of the poverty line.
  • Nebraska, Minnesota, and California are starting or expanding subsidized programs for recipients of Temporary Assistance for Needy Families (TANF).  Nebraska plans to spend $1.1 million per year to operate a two-year pilot program.  Minnesota plans to spend $2.2 million each year over the next two years on a new program to encourage employers to hire long-term TANF recipients.  And California’s Governor Jerry Brown has proposed boosting funding for subsidized jobs by almost $100 million this year, to $134 million.

As their budgets rebound, states will have resources to make new investments.  More states should follow the lead of these states and some other local communities that have decided that providing subsidized jobs is a winning proposition for the unemployed, employers, and local communities.

Subsidized Jobs Work

January 29, 2014 at 3:04 pm

Eduardo Porter’s New York Times piece today on government investment to boost jobs and demand cites the success of a 2009 Recovery Act program through which 39 states plus the District of Columbia (see map) placed 260,000 low-income parents and young people in subsidized jobs, mostly in the private sector.  In House Budget Committee testimony this week on poverty and the safety net, CBPP President Robert Greenstein discussed that temporary initiative and recommended building on it.  Here are some excerpts:

[T]he Economic Mobility Corporation (EMC) studied what happened to participants in these subsidized jobs programs and found the programs did exactly what they were supposed to do — help disadvantaged jobless individuals find work during hard economic times.  The study also provides evidence that the jobs programs improved some participants’ chances of finding unsubsidized jobs when their time in the subsidized job position came to an end.  And the study indicated that the long-term unemployed benefitted most.

The EMC study looked at subsidized jobs programs established in five sites — Los Angeles, San Francisco, Wisconsin, Mississippi, and Florida — and produced the following findings:

  • . . . Participants in four of the five programs studied were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program. . . .
  • The programs were especially effective for the long-term unemployed. . . .
  • Employers reported hiring more workers than they would otherwise have hired and hiring workers with less experience than their usual hires.
  • Most participating employers reported multiple benefits from the program, including expanding their workforces, serving more customers, and improving their productivity.

Because of its success, state policymakers from across the political spectrum praised the program.  For example, Governor Haley Barbour of Mississippi noted that [his state’s program provided] “much-needed aid during this recession by enabling businesses to hire new workers, thus enhancing the economic engines of our local communities.” . . .

I recommend creating a subsidized employment program of this nature that would provide modest funding to states to create ongoing programs targeted on groups that face particular difficulties finding jobs.  Such a program could be structured to target hard-to-employ low-income individuals, such as long-term jobless workers and disadvantaged young adults.  It could provide funding for subsidized jobs for people who have difficulty finding employment and getting a toehold in the labor market even during good economic times — which could help them to overcome those barriers and get on a path to increased labor-market success.  Funding for these jobs could then be increased during recessions in order to temporarily increase the number of subsidized jobs that are created during periods when the economy is shedding jobs in large numbers.

Any such ongoing program should be coupled with an evaluation to identify its overall impact and, in particular, the approaches that are most successful. . . .

For more on the Recovery Act initiative, known as the TANF Emergency Fund, see this report.

Tomorrow, I will highlight actions that states are taking to build on the success of the TANF Emergency Fund.

New Evidence That Subsidized Jobs Programs Work

September 9, 2013 at 3:31 pm

Thirty-nine states and the District of Columbia used $1.3 billion from the TANF (Temporary Assistance for Needy Families) Emergency Fund to place more than 260,000 low-income adults and youth in temporary jobs in the private and public sectors during the Great Recession.  Now, from the Economic Mobility Corporation (EMC), there’s new evidence that these subsidized jobs programs did what they were supposed to do:  help disadvantaged individuals during hard economic times to boost their incomes and improve their chances of finding unsubsidized jobs when the subsidized jobs ended.

The EMC study shows that these programs helped businesses as well as job-seekers weather the worst of the recession.  It found:

  • Participation in subsidized employment programs led to significant increases in employment and earnings. Participants in four of the five programs covered by the study were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program.  The findings from Florida are especially noteworthy because researchers could compare participants with applicants who were eligible for the program but didn’t receive a subsidized job.  There, participants earned an average of $4,000 more in the year after the program than in the year before it, compared to a $1,500 increase for people in the comparison group.
  • The programs were especially effective for the long-term unemployed. In Mississippi and Florida, average annual earnings of the long-term unemployed rose by about $7,000 after participating; in Los Angeles and Wisconsin, they rose by about $4,000.  In all four sites, earnings rose much more among the long-term unemployed than among people who had been unemployed for shorter periods.
  • Employers reported hiring more workers than they would have otherwise and workers with less experience than their usual hires. Two-thirds of the employers interviewed for the study said that they created new positions for subsidized workers.  Over half said they hired people with less work experience than their usual hires. 

  • Most participating employers reported multiple benefits from the program. These included expanding their workforces, serving more customers, and improving their productivity.     

We’ve called the TANF Emergency Fund, which expired three years ago, a “win-win-win” because of its benefits for unemployed people, businesses, and communities.  This new study provides hard evidence of the program’s accomplishments.  It’s not too late to build on that success.

This year, at least five states — Nebraska, Colorado, California, Minnesota, and Rhode Island —expanded state funding or provided new funding for subsidized employment for TANF recipients or other disadvantaged individuals.

Congress should follow their lead.  One place to start would be to redesign the TANF Contingency Fund as an employment fund that states could use to provide subsidized jobs or otherwise invest in evidence-based employment programs that significantly increase the job prospects of people receiving or eligible for TANF.  That would help redirect scarce resources to states with the greatest need for jobs and help create jobs for those whom the tepid recovery has left behind.

Welfare Reform’s No Model for SNAP

June 28, 2013 at 11:11 am

As House leaders consider next steps on the farm bill (which the House rejected last week), a key question is the fate of its punitive Southerland amendment, which would reward states that end SNAP benefits for unemployed families that want to work.

House Majority Leader Eric Cantor (R-VA) defended the amendment on the House floor by linking it to the 1996 welfare reform law, which created Temporary Assistance for Needy Families (TANF).  But, in reality, the amendment is not the same as the work requirements in programs like TANF, and the facts don’t support Rep. Cantor’s claim that the welfare law’s “results were nothing but a success”:

  • Fact #1:  Single mothers’ employment rose during the early years of welfare reform, but it started losing ground in 2000 and, now, nearly all of those gains have been lost. The share of poorly educated single mothers with earnings rose from 49 percent in 1995 to 64 percent in 2000 but has since fallen or remained constant every year.  By 2011, it had fallen to 52 percent — lower than in 1997, which was the first full year of welfare reform implementation (see first graph).
  • Fact #2:  Welfare reform contributed only modestly to the rise in employment for single mothers during the 1990s. A highly regarded study by University of Chicago economist Jeffrey Grogger found that welfare reform accounted for just 13 percent of the total rise in employment among single mothers in the 1990s.  The Earned Income Tax Credit (which policymakers expanded in 1990 and 1993) and the strong economy were much bigger factors, accounting for 34 percent and 21 percent of the increase, respectively.
  • Fact #3:  TANF, the centerpiece of welfare reform, helps many fewer poor families than its predecessor, Aid to Families with Dependent Children (AFDC). Welfare reform’s modest contribution to raising employment among single mothers came at a very high price.  TANF serves only 27 for every 100 families in poverty, down from 68 for every 100 families in poverty before welfare reform, as our report shows (see second graph).  Many children face bleaker futures as a result:  in 2005, TANF lifted just 650,000 children out of “deep poverty” (that is, raised their family incomes above half the poverty line); ten years earlier, AFDC lifted 2.2 million children out of deep poverty.
  • Fact #4: States did not respond to higher need during hard economic times. The Great Recession provided the ultimate test of whether states could do a better job than the federal government of providing a safety net for poor families, as welfare reform’s proponents suggested they could.  They failed.  While the number of unemployed Americans doubled during the early years of the downturn, the number of TANF recipients rose by just 13 percent and caseloads in 22 states rose little or not at all.  When the need for cash assistance rose during the recession, states responded by scaling back their TANF programs to save money — shortening and otherwise tightening time limits and further cutting already low benefit levels, leaving the poorest families poorer.  As a result, TANF is emerging from the downturn as an even weaker safety net.

TANF Provided a Weak Safety Net During and After Recession

March 4, 2013 at 2:13 pm

Temporary Assistance for Needy Families (TANF), which provides basic assistance to families with little or no income, responded only modestly to the severe recession that began in December 2007, exposing its inadequacy as a safety net, as we explain in a new paper.

We found that:

  • Nationally, the TANF caseload rose only modestly during the downturn and began to decline while need remained high. The caseload did not begin to grow until seven months after the recession started, and it rose only 16 percent before peaking in December 2010 (see chart).  In contrast, the number of unemployed individuals rose 88 percent over this period.  Over the course of 2011, the caseload fell 5 percentage points from that peak, while the unemployment rate remained at or above 8.5 percent throughout the year.

  • Changes in states’ caseloads varied widely. Forty-five states’ caseloads grew between December 2007 and December 2009 but by widely differing amounts, ranging from 2 to 48 percent; in more than half of these states, the increase was 14 percent or less.  After the recovery began, caseloads continued to grow in some states but fell sharply in others.  Between December 2009 and December 2011, 21 states’ caseloads rose from 2 to 56 percent; in 30 states, caseloads fell from 1 to 56 percent.  From December 2007 to December 2011, caseload changes ranged from Oregon’s 81 percent increase to Arizona’s 54 percent decline.
  • Variations in unemployment do not fully explain the variation in state caseload changes. There is no overlap between the ten states with the largest percentage increases in the number of unemployed workers and the ten states with the largest percentage increases in TANF caseloads.  The three states with the largest TANF caseload increases — Oregon, Colorado, and Illinois — ranked 28, 14, and 30, respectively, in the percentage increase in the number of unemployed.  Meanwhile, the three states with the largest TANF caseload decreases — Arizona, Indiana, and Rhode Island — ranked 5, 16, and 23, respectively, in the increase in unemployed workers.
  • In most states, TANF provides a weaker safety net now than it did before the recession. The number of families with children served by TANF for every 100 such families living in poverty fell in 35 states between 2006-2007 and 2010-2011, while it rose in just five states.
  • State actions had a significant impact on TANF caseloads. In response to budget pressures, several states cut TANF benefit levels, shortened or tightened time limits, or made other cutbacks during the recession, contributing to substantial caseload declines.

Our paper on which this post is based is the second in a series on changes in TANF caseloads since the start of the economic downturn.  Click here to read the paper in full, here to read the state-by-state fact sheets, and here to read the first paper in the series.