Subsidized jobs: Key to an equitable economic recovery

Our nation’s post-pandemic success hinges on an economic recovery targeting those hit hardest by the recession and overlooked by the pre-pandemic economy: children, youth, and their families, particularly in communities of color.

Before the pandemic, children and young adults had the highest poverty rates of all U.S. age groups — with disproportionately high rates among children and young people of color. Young workers, particularly Black youth, faced extraordinarily high pandemic unemployment rates: Job loss peaked at over 30 percent in May 2020, when most young workers would typically pick up summer jobs. Women, Black and Latinx workers, who are overrepresented in the low-wage workforce, already faced economic insecurity before the pandemic. Forty percent of this workforce was raising children, and nearly a quarter was under age 25. 

Unemployment is but one way the pandemic has strained families. Research shows the harm of unemployment can linger, hindering reemployment and career advancement, hampering short- and long-term economic security, and creating other long-term issues for entire families.

Healing requires strategies to turbocharge reemployment and prioritize families and young people most affected. Those strategies must include a permanent large-scale national subsidized employment program, which is included as a component of Biden’s proposed American Jobs Plan, to tackle long-term unemployment and underemployment. Congress and the administration should seize this moment of opportunity, as the president’s American Jobs Plan moves ahead in the legislative process, to go big on an investment in subsidized employment programs targeting the hardest-hit communities.

Subsidized employment (SE) programs create jobs for individuals that have been shut out from work opportunities due to discrimination, disinvestment or economic downturns. Well-designed SE programs connect people to quality jobs, supportive services, educational advancement and career pathways. Subsidized employment is good policy at the individual and national level: it can support families; create opportunity for youth and adults impacted by the criminal justice system; reduce racial and ethnic economic disparities; buoy communities; and build local economies. 

We’ve learned three lessons while implementing and advising on subsidized employment:

First, subsidized employment can be implemented at scale and in a range of contexts. While subsidized employment goes back to the New Deal and the Great Depression, it hadn’t been used at a large scale for several decades before the American Recovery and Reinvestment Act of 2009. Subsidized employment proved its value during the Great Recession recovery: red and blue states used the federal Temporary Assistance for Needy Families (TANF) Emergency Fund to place over 250,000 workers — including young workers, long-term disconnected, and newly unemployed — into jobs in the public sector, nonprofit organizations and large and small businesses. In leading the implementation of this program by the Obama administration, David, one of the co-authors of this piece, saw first-hand how it put people back to work quickly and responsively nationwide. 

Second, for the greatest impact, subsidized employment should target workers who have been systemically sidelined by the U.S. economy’s deep inequities. Studies show that SE works well for people facing structural barriers to employment, increases incomes even after the placement ends — particularly for those who had been out of the workforce longer or lacked high school diplomas — and reduces recidivism. A successful SE program will intentionally ensure equitable access, participation, and outcomes for historically oppressed communities, including people of color, youth and young adults, women and people impacted by the justice system. 

Third, subsidized employment programs should be sustained beyond the immediate crisis. They play an important role in improving outcomes for those experiencing persistent unemployment and injustice, even when overall unemployment rates are low.  Subsidized employment can prioritize equitable employment outcomes and good quality jobs in emerging sectors like the green and care economies as part of a federal portfolio of job-creating initiatives. That’s crucial if we are to grow a recovery that works for families and for young people. And having programs in place means we won’t start from scratch to rebuild capacity to create subsidized jobs each time the economy falters. 

The good news is we have the research to demonstrate that subsidized employment provides immediate economic relief and places families and historically marginalized communities at the center of the recovery. The next step is to provide funding so states and communities can begin bringing programs to scale.

We call on Congress and the Biden administration to champion a large-scale, national subsidized employment strategy, as the American Jobs Plan progresses legislatively. Such an investment will address families’ and young people’s immediate needs for economic security and support an equitable recovery. Investing federal funds to create good public and private jobs for struggling Americans is good for all of us. 

David Hansell is the commissioner of the New York City administration for Children’s Services and former acting assistant secretary at the U.S. Department of Health and Human Services (2009-2011), where he implemented President Obama’s ARRA subsidized jobs program, creating over 250,000 jobs for low-income families and youth across the United States. 

Olivia Golden is the executive director for the Center on Law and Social Policy (CLASP) and former assistant secretary at the U.S. Department of Health & Human Services (1997 – 2000).