Analyzes two demonstration projects funded by the U.S. Departments of Labor and Health and Human Services to evaluate the effectiveness of subsidized employment. The authors describe different subsidized employment models; provide an overview of study methodology to evaluate the impact of the subsidized employment programs on participant employment, earnings, incarceration, public assistance receipt, and child support payments; and share early findings from the research. 

“In 2010, the U.S. Department of Health and Human Services launched the Subsidized and Transitional Employment Demonstration (STED) and the U.S. Department of Labor launched the Enhanced Transitional Jobs Demonstration (ETJD), complementary large-scale research projects evaluating the effectiveness of the latest generation of subsidized employment models. The ETJD and STED projects are evaluating a total of 13 subsidized employment programs in 10 locations across the United States, all of which aim to improve participants’ long-term success in the labor market. They target groups considered ‘hard to employ’ (recipients of Temporary Assistance for Needy Families [TANF], people with criminal records, young people who are neither in school nor working, and others), and they use subsidies to give participants opportunities to learn employment skills while working in supportive settings, or to help them get a foot in the door with employers… Each of the 13 program models is distinct, but it is possible to group them into three broad categories:

  • Modified Transitional Jobs Models place all or nearly all participants into fully subsidized, temporary jobs designed to teach soft skills and provide work experience. There is no expectation that host employers will hire participants permanently.
  • Wage Subsidy Models place participants directly into permanent positions. An employer receives a temporary subsidy covering all or part of an employee’s wages and, in return, is expected to move the individual into a regular, unsubsidized job if things go well.
  • Hybrid Models use a combination of modified transitional jobs and wage subsidies” (p.iii).

“The evaluation team will follow the groups for at least 30 months using government administrative records and individual surveys to measure a variety of outcomes such as employment, earnings, incarceration, public assistance receipt, and child support payments….The evaluations will carefully study the implementation of each program and will assess each program’s financial costs and benefits” (p.iii).

(Abstractor: Author)

Full publication title: Testing the Next Generation of Subsidized Employment Programs: An Introduction to the Subsidized and Transitional Employment Demonstration and the Enhanced Transitional Jobs Demonstration

Major Findings & Recommendations

“[T]he MDRC [research] team will carefully study the implementation of each subsidized employment program in the STED and ETJD projects. At this early point, a few cross-cutting findings stand out[:]” (p.19). • “Recruitment Challenges: Each of the programs agreed to a recruitment target. These targets were driven by the availability of funding for program services and by calculations regarding the sample size needed for the study to do a reliable analysis of program impacts. To date, each of the programs that has completed enrollment met its target, though many of them struggled to do so….[W]hile all of the programs did try to establish referral partnerships prior to joining the studies…those partnerships sometimes failed to materialize or deteriorated over time…[and] turned out to be smaller than projected” (p.19-20). • “Differences in Subsidized Job Placement Rates: Another early finding relates to the different program approaches....Although final figures are not yet available, it is clear that the percentage of program group members placed in subsidized jobs is much higher in programs that initially place people into transitional jobs than in programs that use wage-subsidy models….[T]ransitional jobs are typically at the program itself or in nonprofit organizations that can accommodate almost any worker, while wage-subsidy programs must persuade private employers that allowing participants to work for them will help their bottom lines” (p.20). • “System Context: A final cross-cutting issue involves the roles of the three key public systems or programs with which STED and ETJD participants are involved: TANF, criminal justice, and child support enforcement…. System rules and practices may affect the outcomes of both STED and ETJD participants and members of the studies’ control groups… [T]o varying extents all three systems urge, require, or assist their clients to find jobs. Thus, many control group members will likely receive assistance or support” (p.21). “In 2016, the ETJD and STED evaluations will begin to release interim study results. These reports will describe the implementation of each program and the characteristics of the full study sample, and present early results from the impact analyses” (p.21). (Abstractor: Author and Website Staff)