The Subsidized Transitional Employment Demonstration or STEP Forward Program was a voluntary initiative in San Francisco that sought to connect low-income job seekers to the labor market by using public funds to temporarily subsidize individuals’ wages, known as subsidized employment, with the goal of ultimately increasing permanent unsubsidized employment among this population.

The purpose of the study is to determine what it cost to provide STEP Forward services to a single program group member once STEP Forward had reached a steady state of operation. The analysis estimates the costs per sample member in two categories: STEP Forward program costs and non-STEP Forward costs, which include remedial education, postsecondary education, vocational training, and job skills services.

This resource is a random assignment evaluation of STEP Forward, in which individuals were randomly assigned to a program group that had access to STEP Forward services or to a control group that did not have access to STEP Forward services but could receive other services in the community. A total of 837 adults were enrolled into the STEP Forward study between November 2012 and March 2015.

This paper presents the one-year costs of STEP Forward, including the subsidized portion of wages provided to program group members, and the cost of providing education, training, and job skills services. It begins with a description of the services offered through the program and a discussion of the program’s impacts, followed by a review of the data sources and a description of the methodology used to estimate the costs. It then presents an estimate of the cost of services for the program group and the difference in the cost of services provided to program group members relative to the control group.

Major Findings & Recommendations

The cost of STEP Forward was assessed using program expenditure reports, program survey data, and public data sources. The cost of STEP Forward program services were estimated by summing direct program expenditures from July 2013 through June 2014 and dividing by the number of program group members enrolled during that period. To estimate the cost of non-STEP Forward program services, the research team first determined the unit cost, or the cost of serving one person for a specific unit of time (for example, one month). Multiplying the unit cost by the average length of time sample members received each service gives the average cost incurred per sample member.

Major findings from the study are presented below:

  • The cost of STEP Forward program services averaged $2,646 per program group member. Program group members received an average of $1,038 in subsidized wages.
  • The cost of non-STEP Forward services, which both groups received, averaged $1,751 per program group member and $2,355 per control group member.
  • The net cost, the difference between the total program group costs and the total control group costs, averaged $3,080 per program group member.
  • In the first year after random assignment, program group members were more likely than control group members to have been employed and had higher average earnings. Impacts on earnings continued into the fourth year.