The Legacy of the TANF Emergency Fund

February 16, 2011 at 11:58 am

We and the Center for Law and Social Policy (CLASP) issued a major assessment today of states’ use of the TANF Emergency Fund to create subsidized jobs.  Two years ago, amidst the worst downturn since the Great Depression, Congress created the fund as part of the 2009 Recovery Act to help states assist the growing number of low-income families hit by the recession.  Thirty-nine states and the District of Columbia used $1.3 billion from the fund to place more than 260,000 low-income unemployed adults and youth in temporary jobs in the private and public sectors (see map).

While the fund expired last September 30 and most of those jobs have ended, they provided a bright spot in what was an otherwise dismal time for many low-income Americans.  They enabled families to pay their bills, small businesses to stay afloat, and government agencies and nonprofits to respond to increased demand for services.  They also put much-needed resources into local communities, including many with especially severe unemployment.

Our study drew the following lessons from states’ experience with the fund:

  • It is possible (though challenging) to get large-scale, countercyclical job creation programs up and running relatively quickly and to engage the private sector in creating job opportunities. While not all states used their funds to develop large-scale countercyclical job creation programs, the ones that did showed that it is possible to launch subsidized employment programs quickly and to provide meaningful employment for large numbers of individuals who would otherwise be employed.
  • Subsidized jobs targeted to disadvantaged individuals benefit not only participating workers and businesses but also entire communities and society at large. The subsidized jobs programs were targeted to disadvantaged families and paid relatively low wages.  Because low-income individuals have few reserves on which to draw, they generally spend all the money they earn to meet their day-to-day expenses.  This means that their earnings go quickly back into the local economy, helping to keep other businesses afloat and other people employed.
  • Flexibility makes success possible in many different environments. A key distinguishing feature of the fund was its flexibility.  This made it possible for small rural communities and big cities to implement successful programs.  While some of the subsidized programs contained common elements, no two were exactly alike.
  • New targeted funding can provide the catalyst for innovation and increased collaboration. States had little or no experience operating subsidized employment programs and had limited examples upon which to draw.  The availability of new funding brought together agencies that had not collaborated in the past to pursue a common goal: providing employment opportunities for low-income parents.
  • Subsidized employment programs can be implemented at reasonable cost. States adopted a number of strategies to contain program costs.  In some cases, they shared costs with employers; in others, they capped the hourly wage or the number of hours that could be subsidized.

The TANF Emergency Fund has ended, but the need for jobs remains.  The fund’s accomplishments — most fundamentally, in showing that unemployed individuals in large numbers will seize the opportunity to work when given a paying job — should not be ignored until the next recession hits.  Rather, policymakers should use these lessons to create the next generation of public-private initiatives that will help restore the country’s strength and build tomorrow’s labor force.

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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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