More on the TANF Emergency Fund

July 30, 2010 at 10:29 am

A front-page story in yesterday’s New York Times emphasized that the TANF Emergency Fund, which states and localities are using to help create some 240,000 subsidized jobs in the private and public sectors, has helped many businesses as well as jobless workers weather the recession. That’s an important point that Congress should keep in mind as it decides how to help small businesses weather the recession.

The Senate is considering a small business bill and should use this opportunity to extend the fund — which has already proven its ability to benefit small businesses — beyond its scheduled September 30 expiration.

Here are a few additional points worth considering:

  • Allowing the fund to expire on September 30 would hurt small businesses and low-income parents when the nation can least afford it. The subsidized jobs that states and localities have created with the fund help people who would otherwise be jobless and help small businesses stay afloat and expand. In a survey of some businesses participating in San Francisco’s program, 80 percent said it has made them more efficient and led to higher sales. Eighty percent also say that they wouldn’t have made any hires without the wage subsidy.
  • The fund is helping parents with the worst employment prospects. To qualify for a subsidized job, parents must be caring for a child and must meet the program’s income criteria. In most cases, that means income below $36,620 for a family of three (200 percent of the poverty line).Many subsidized jobs programs target recipients of welfare cash assistance with limited work experience and skills; the jobs enable them to support their families through work rather than receive a monthly cash grant. San Francisco is one example: since the city implemented its program, the number of families who no longer qualify for cash assistance because their incomes are too high has increased by a whopping 350 percent. That would be quite an accomplishment even in a good economy; it would never have been possible during a serious downturn without the jobs created by the TANF Emergency Fund.
  • Most of the jobs pay entry-level wages. Each jobs program sets the maximum wage it will subsidize through the fund. Some, like South Carolina’s, only reimburse employers for the minimum wage of $7.25; employers that wish to pay above-minimum wages cover the additional cost themselves. Other programs, like those in Illinois and Los Angeles, pay $10 per hour. Even when programs pay the full amount of the wage that the employer would pay any other worker for the position, average wages are relatively low — $14.80 in San Francisco, for example.
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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 | Blog Archive | Research archive at CBPP.org

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