Presents findings from an extensive review of subsidized employment programs in the U.S. from the early 1970s to the early 2010s and offers recommendations for policymakers that may improve the effectiveness of programs that aim to improve employment outcomes for individuals with multiple barriers to employment, including, among others, high school dropouts and/or formerly incarcerated individuals.

“The report [conducts a literature review of] several types of programs that address in an integrated way both labor supply and demand to directly increase paid work among disadvantaged workers. The main focus is on subsidized employment programs that offer subsidies to third-party employers—public, non-profit, or for-profit—who in turn provide jobs to eligible workers. [The report notes that] subsidized employment programs are versatile tools that, depending on factors such as the timing of the business cycle and the target population, can be adapted accordingly. The employment they provide may be temporary and countercyclical, temporary and part of a strategy to help people shift to unsubsidized employment (regardless of the macroeconomic situation), or long-term for people who need long-lasting subsidies. The experiences offered by transitional (not long-term) subsidized jobs—in terms of what they expect of employees, how well employees are compensated, and the employment and labor rules the employers must follow— conform to or closely mimic competitive employment.

This report focuses particularly on [transitional employment and long-term employment], though [transitional employment] can provide important opportunities for disadvantaged workers, even if it is deployed more broadly. In addition, this report examines some notable paid work experience programs, which may provide some compensation for training or work activities, but do not necessarily involve third-party subsidies, and may not conform to typical experiences in competitive employment.

The report also reviews selected community service models, which are often not intended to mimic competitive employment but instead provide opportunities for modest work activity and nominal stipends, where appropriate. Finally, the report profiles several unsubsidized employment programs, which do not offer funding for third-party employers, as well as intensive youth-only employment programs that provide relevant lessons for subsidized employment models” (p.vii-viii).

“The focus of this report is individuals with serious and/or multiple barriers to employment, which is often the target population of subsidized employment programs. For the purposes of this report, barriers to employment are broadly defined as limitations—real or perceived—that significantly reduce the likelihood of attaining competitive (unsubsidized) employment” (p.ix).

(Abstractor: Author and Website Staff)

Full publication title: Lessons Learned from 40 Years of Subsidized Employment Programs: A Framework, Review of Models, and Recommendations for Helping Disadvantaged Workers

Major Findings & Recommendations

The report shares the following key findings: • “The number of disadvantaged people willing to work consistently exceeds the number in competitive employment. The significant voluntary participation in sizeable subsidized jobs programs over the past 40 years underscores the fact that, regardless of wider economic circumstances, the labor market leaves out large numbers of disadvantaged workers desiring employment. • Subsidized employment programs have a wide range of potential benefits. First, these programs provide an important source of income to participating workers. Second, a number of experimentally-evaluated subsidized employment programs have successfully raised earnings and employment, with some programs providing lasting labor market impacts…. • Subsidized employment programs can be socially cost-effective. Of the 15 rigorously evaluated (through experimental or quasi-experimental methods) models described in this report, seven have been subject to published cost-benefit analyses….[A]ll seven showed net benefits to society for some intervention sites…and some target populations…. • Subsidized employment programs with longer-lasting interventions and/or complementary supports may be particularly likely to improve employment and earnings. This pattern of high rates of effectiveness for programs with typical interventions lasting longer than 14 weeks— among rigorously evaluated programs—suggests that the role of benefit duration merits experimental evaluation… • Subsidized employment programs require further innovation to more effectively target specific population subgroups. As this report documents, subsidized employment can help people with intellectual disabilities gain independence and earning power—and yet, the broader spectrum of disabilities remains understudied” (p.ix-x). The report then offers recommendations that may strengthen subsidized employment programs and policies, including: • “Make subsidized job programs a permanent part of U.S. employment policy…. • [Establishing] Substantial, Dedicated Funding Streams …. • Ensure Opportunities for Advancement…. • Promote Program Flexibility…. • Facilitate Greater Innovation…” (p.xi). (Abstractor: Author and Website Staff)