This paper provides insight into the effectiveness of the Federal Government's response to the dramatic labor market changes during the Great Recession of 2007 to 2009 by examining labor market conditions and public employment policies in the United States.

The authors document the dramatic labor market changes that rapidly unfolded when the rate of gross domestic product growth turned negative, from the end of 2007 through early 2009. They discuss:

  • A review of the resulting stress on labor market support programs and the broad federal response;
  • Modifications to existing occupational job skills programs and the introduction of new mechanisms to help Americans cope with job loss and protracted unemployment; and
  • Procedures for evaluating the effectiveness of public reemployment efforts.

(Abstractor: Author and Website Staff)

Major Findings & Recommendations

The American Recovery and Reinvestment Act (ARRA) doubled the amount of money available to train and retrain workers. This injection of funds into the existing workforce training system increases the capacity of the system, both to help displaced workers adjust to the restructuring taking place in the economy and to help marginally attached workers acquire the skills necessary to gain a foothold in the job market.

Studies of the effectiveness of training programs suggest that training helps; it increases both employment rates and earnings. However, training appears to help displaced workers less than the economically disadvantaged. Of course, skills alone are not enough to help the millions of unemployed find jobs. Additional jobs must be created. The training component of ARRA is only one of many facets of the stimulus effort. By equipping workers with the skills that businesses demand now and in the future, the training initiative is intended to help speed up the recovery and provide the talent that businesses need as investments to sustain a productive economic expansion. (p. 32) (Abstractor: Website Staff)