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Sunday, November 23, 2014

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Publicly Funded Jobs: An Essential Strategy for Reducing Poverty and Economic Distress Throughout the Business Cycle
Clifford M. Johnson, Amy Rynell, Melissa Young

April, 2010

The need for direct public job creation efforts is greater today than at any time during the past seven decades. With a national unemployment rate that recently exceeded 10 percent and severe economic distress in hard-hit communities and population groups, a new federal initiative that puts jobless individuals immediately to work must be a central element of any strategy for restoring economic growth and responding to pressing human needs in 2010 and beyond. Public service employment (PSE) and transitional jobs (TJ) programs that use time-limited, paid work as the centerpiece of efforts to assist the unemployed offer tested and urgently needed models for combating the current recession and advancing longer-term workforce development goals.

The absence of recent experience and a corresponding program infrastructure to support the large-scale creation of publicly funded jobs presents daunting challenges, particularly in light of the rapid implementation necessary to improve employment conditions over the next year. Nonetheless, the history of federal job creation programs since the 1930s suggests that these challenges are not insurmountable. In many respects, the reluctance of key policymakers to launch a new PSE program this past year was rooted in a fundamental misreading of past research. Past experience provides ample evidence that public job creation can be undertaken quickly and effectively, with acceptable costs, manageable levels of substitution or displacement, and clear benefits to participants and their communities (Briggs 1981).

This paper makes the case for a multiphase approach to public job creation, beginning in early 2010 with “fast-track” efforts to support specific PSE projects launched by local governments and developing in 2011 and succeeding years into a more sophisticated strategy for combining publicly funded jobs with education or training for individuals facing major barriers to labor market entry. Innovative TJ programs now operating throughout the nation can provide key building blocks for, and guide the development of, a permanent public job creation program, one that can respond to changing economic circumstances while addressing the serious employment problems that persist throughout the business cycle.

To quickly ramp up program capacity and develop program infrastructure across the nation, a coherent federal strategy and focused investment are needed. In addition, to avoid a repeat of the current policy conundrum in future economic downturns (i.e., limited program capacity or infrastructure at times of greatest need), the policy goal should be to create a permanent PSE program that responds to changing needs across the business cycle. During recessionary periods, the program would play a countercyclical role. As labor markets tighten during periods of recovery, the program would support transitional jobs with a greater focus on hard-to-employ individuals who would otherwise be shut out of the labor market and have a goal of placing participants as soon as possible into unsubsidized employment. Appropriations levels for the public job creation initiative could be adjusted annually in response to changing levels of need, but it is essential that a program authorization and some local capacity remain in place over time.

The full report is available in PDF format.



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