What’s the correct way to put people back to work? Republicans say that cutting federal spending and reducing taxes is the way to create jobs, and many have rejected the notion of government stimulus spending [while often taking the money anyway.] Many progressive Democrats think that the federal government should be the “employer of last resort,” channeling New Deal policies that put people to work in the Civilian Conservation Corps and other national programs. But there may be another way. A relatively unknown part of the stimulus package that helps private employers hire new workers is showing promise, and even a southern, Republican governor likes it. An Op-Ed by Bob Herbert in the New York Times explains it all. Here’s the entire article:
Is it possible that there is a federal stimulus program that is putting many thousands of struggling individuals to work and is getting rave reviews not only from Democrats but from officials in conservative states like South Carolina and Mississippi?
It may be hard to believe, but it’s true. The program, part of the American Recovery and Reinvestment Act, allows states to use federal dollars to temporarily subsidize the salaries of individuals placed in private- and public-sector jobs. More than 30 states are participating.
The program, though small, appears to be working exceptionally well. States expect to have placed more than 200,000 individuals by this coming autumn. Some of those workers would otherwise have landed on welfare.
The catch — there is always a catch — is that the program will expire at the end of September if Congress does not act to extend it.
The U.S. is trapped in an agonizing period of sky-high unemployment and the latest data from the Department of Labor offers no cause for optimism. A program that is actually putting people to work, and thus helping families fend off destitution, ought to be looked at closely for what it can teach us about employment expansion. It makes no sense to simply let it die.
States have embraced the subsidy program with tremendous enthusiasm. “It has been amazing,” said Linda Martin, director of South Carolina’s Division of Family Assistance. “I think at this point we’re kind of astounded at how well it’s working.”
The federal money is made available through the $5 billion TANF (Temporary Assistance for Needy Families) Emergency Fund. States can use the money in a variety of ways, and many have found the subsidized employment approach to be the most efficient and effective.
South Carolina uses the money to cover 20 hours a week of employment at the minimum wage for each individual who is placed in a job. The subsidy lasts for six months.
To the surprise of state officials, private employers across a wide front have welcomed the program. The employers sign an agreement to keep the workers on after the subsidy runs out if there are no serious problems with the workers.
“We are placing people in the kinds of jobs we were never able to crack before,” Ms. Martin told me. “They’re getting jobs with a large grocery chain, and with McDonald’s, Wal-Mart, CVS pharmacy. We actually have more employers asking for placements than we have eligible folks to be in those jobs.”
This is not the kind of job creation that will break the back of the nation’s employment crisis, but it has succeeded in bringing down the welfare rolls in South Carolina, which were heading straight up at the height of the recession. It is keeping food on the tables of seriously strapped families. And it is offering work experience to some people who have not had a lot of it.
Other states have adopted a different approach. Mississippi has made it a priority to find jobs at small businesses. The subsidy there covers the full salary for the first two months and then gradually declines to one-fourth of the worker’s salary in the sixth and final subsidized month.
Gov. Haley Barbour has called for an extension of the program, which he said has provided “much-needed aid during this recession.”
LaDonna Pavetti, who monitors the program for the Center on Budget and Policy Priorities, described it as the “best-kept secret” of the federal stimulus effort. Illinois, she said, is placing 500 people a day in jobs under the program. The crush of job-seekers trying to get in has been so great that state officials have had to stop taking applications.
In Los Angeles alone, 10,000 people have been placed. There have even been 600 job placements in Montana.
Ms. Pavetti’s worry is that without more attention being paid to this effort, it will vanish at the end of September. That, said Mark Zandi, chief economist at Moody’s Analytics, would be “particularly inopportune given that unemployment will likely still be in or near double digits, and more workers will have exhausted their benefits.”
He recommended extending the program for another year.
There has been a peculiar reluctance in this country to move full speed ahead on all feasible ways to increase employment, which is what is needed to get the economy back in shape, to begin reducing budget deficits, and, most important, to alleviate the suffering that so many individuals and families are enduring.
I asked Ms. Martin of the Division of Family Assistance in South Carolina what would happen in her state if the job subsidy effort were allowed to lapse. She didn’t hesitate: “It would really just kill us if we had to shut this down,” she said.