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 designed to build rigorous evidence on the effectiveness of the latest generation of subsidized employment models. The projects recently finished random assignment studies of 13 subsidized employment programs. This report summarizes findings from the studies and discusses the implications for practitioners, policymakers, and researchers.
This report focuses on findings from the impact studies. Each impact study used a randomized controlled trial design in which individuals eligible for services were randomly assigned to a program group who had access to the subsidized jobs program or to a control group who did not, but who may have sought out other services.
The research questions asked were as follows:
- Do subsidized employment programs get people into subsidized jobs?
- Do subsidized employment programs improve participants’ employment outcomes in the first year after they enrolled?
- Can subsidized employment programs achieve sustained employment and earnings impacts beyond the first year after participants enrolled?
- Can subsidized employment programs improve non-employment outcomes, for example, by reducing recidivism or increasing child support payments? (In this report, “recidivism” refers to the rate at which people with criminal records are rearrested, re-convicted, or re-incarcerated.)
- Do subsidized employment programs work better for certain subgroups of participants?
- How much do subsidized employment programs cost, and do the benefits outweigh the costs?
Major Findings & Recommendations
- Overall, the evaluations found that subsidized employment programs can improve employment, earnings, and other outcomes under some circumstances, and for a variety of populations. However, the pattern of results makes it difficult to draw firm conclusions about which type of program works best and for whom.
- Though participation in subsidized employment varied widely across the 13 programs studied, almost all the programs improved employment and earnings in the first year after study enrollment, and about half maintained those impacts through the second year. Four programs sustained earnings improvements beyond the second year.
- Programs that used a transitional jobs model (offering temporary, subsidized jobs not intended to become unsubsidized jobs) generally had higher participation rates and larger employment and earnings impacts through the first two years than wage-subsidy models (which offer subsidized jobs that are intended to turn into unsubsidized jobs) and hybrid models (which offer a mix of both approaches). However, none of the three model types studied stands out as the best approach to improving employment and earnings outcomes beyond the second year.
- Programs serving noncustodial parents (those without custody of at least one of their children) and formerly incarcerated adults often improved child support and recidivism outcomes, respectively, particularly in the short term, and sometimes even when there were few earnings or employment impacts.
- Improvements in employment, earnings, and recidivism were typically concentrated among people who were less employable (that is, those who had been out of the workforce longer when they enrolled in the study, were at higher risk of recidivism, or did not have high school diplomas or equivalents).
- One program’s benefits outweighed its costs from society’s perspective — that is, taking into account benefits and costs to the government, participants, and in this program’s case, the victims of crimes committed by study sample members. Three other programs resulted in earnings increases that persisted throughout the extended follow-up period and exceeded the programs’ net costs, so those programs’ benefits may have also outweighed their costs from society’s perspective. However, it is unlikely that any of the programs saved the government money.