Subsidized Jobs: Helping Americans Get Back To Work 

Introduction 

The Middle Class Task Force has always been careful to include those who aspire to rise into the 

middle class as an important target of our efforts. Upward mobility for families who work hard 

and play by the rules is a fundamental American value, and part of our mandate is to promote 

such mobility for less-advantaged families. 

Of course, how these families fare is in large part dependent on the jobs available to their 

working members. In this case, the fact that unemployment has been particularly elevated for 

low-income households means that as usual, the recent recession has been hardest on the least 

well off.1

One program from the American Recovery and Reinvestment Act that has been particularly 

effective at reaching these workers is the subsidized jobs program included in the Temporary 

Assistance for Needy Families (TANF) program. This program is helping tens of thousands of 

low-income families get back to work in what, even with recent gains, remains a tough job 

market. It is helping employers by offsetting the costs of hiring. And it is helping communities 

by putting more money in the pockets of folks who will spend their paychecks, creating ripple or 

multiplier effects leading to more economic activity and jobs. 

In the interest of building on the nascent jobs recovery in progress, extending this program, 

which sunsets at the end of this September, is an Obama Administration priority. As more states 

stand up these efficient programs to the benefit of workers, employers, and their communities, 

we encourage Congress to act quickly and take advantage of the positive momentum behind this 

subsidized jobs program. 

 

1

 See Andrew Sum et al, “Labor Underutilization Problems of U.S. Workers Across Household Income Groups at 

the End of the Great Recession.” Center for Labor Market Studies, Northeastern University. February 2010. 

Available at: http://www.clms.neu.edu/publication/documents/Labor_Underutilization_Problems_of_U.pdf. 
An Efficient Jobs Creator 

The central objective of the American Recovery and Reinvestment Act was to help America get 

back to work. The Act was passed just weeks into the Obama administration, when job losses 

were occurring at truly alarming rates—in the first three months of last year, the job market shed 

over two million jobs. 

We still have a very long way to go to repair damage of this magnitude, but we’re clearly on the 

right track. Employment is up, on net, in five of the last six months, and up by over 500,000 

over the past two months. Moreover, it is widely agreed upon that the Recovery Act played—

and continues to play—an instrumental role in this jobs turnaround. The Act has created or 

saved about 2.5 million jobs through the first quarter of this year and is on track to add another 

one million by the end of the year. 

The subsidized jobs program that is the subject of this brief is one lesser-known but highly 

successful part of the Recovery Act’s job creation policies. The Act created a $5 billion TANF 

Emergency Contingency Fund from which states can draw funds to reimburse 80 percent of 

increased costs in three areas: basic assistance, short-term benefits and services, and subsidized 

jobs for members of low-income families. The subsidized jobs can be with private-sector 

employers, non-profit organizations, or government, and can be for members of low-income 

families whether or not they’re receiving TANF assistance.2

 

While the law did not require states to create subsidized jobs programs, 31 states have chosen to 

do so thus far, and according to the most recent study, these programs will have placed 186,000 

people in jobs by the end of September.3

 The program’s momentum is also evident in the 

increased share of spending on jobs relative to the other uses of these funds. When the program 

began, subsidized jobs accounted for well under 10% of the spending from the fund. Most 

recently, jobs accounted for almost 60%. 

What kinds of jobs are they? Reports from the field find workers in clerical jobs, health care, 

auto repair, maintenance, landscaping, internet archiving, catering, dry cleaning, marketing, 

sales, and many other blue and white collar occupations. 

While states are not required to report on the characteristics of the jobs that recipients attain 

through this program, we are able to examine the characteristics of persons who have received 

TANF benefits. Their characteristics—income and education levels, gender, race and 

ethnicity—are likely to be similar to those with jobs through the subsidized jobs program. To 

 

2

 As anticipated, the principal uses of the Emergency Fund have been to help states meet increased costs for basic 

assistance and short-term help, but along with these, the Fund has led to a dramatic expansion of subsidized 

employment efforts in states and communities across the country. 

3

 The states with approved applications for SJ programs are Alabama, California, Colorado, Delaware, District of 

Columbia, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Michigan, Minnesota, Mississippi, Montana, New 

Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South 

Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin. 
improve the accuracy of the comparison, we weight the underlying data by the state spending 

shares of the subsidized jobs program, meaning that states with relatively larger programs are 

over-represented in the following comparisons. Still, while we refer to the subsidized jobs 

population in the following analysis, available data only refers to TANF recipients. 

Compared to the general population, the TANF subsidized jobs population has lower 

income. Almost 90% have family incomes below $25,000, compared to less than 10% of 

the total population. 

Women are over-represented in the TANF subsidized jobs population, which is 83% 

female, compared to 52% in the overall population. 

The subsidized jobs population is 37% African-American compared to 12% in the 

general population; Hispanics are slightly over-represented (18% of subsidized jobs 

population compared to 14% in the total population. Whites are under-represented, 40% 

of the subsidized jobs population versus 69% of the total. 

The TANF subsidized jobs population is younger, with 60% 20-40 years old, compared 

to 35% of the total. 

The Need to Extend 

Because the Recovery Act is a temporary stimulus designed to boost job creation through a 

period of great labor market distress, programs in the Act sunset according to a preset schedule. 

However, if a program is still needed after its assigned shutoff date—September 30, 2010 in the 

case of subsidized jobs—policy-makers can extend it. Given the effectiveness of the program, 

its benefits to its recipients, their employers, and their communities, along with the clear need for 

more jobs, the Obama administration strongly supports extending the program. 

In fact, as more states have learned about the subsidized jobs program, its use has increased 

significantly, as shown in the graph below. This is a testament to the program’s effectiveness 

and administrative simplicity, and to the benefits of linking people who need jobs with 

employers who benefit from a subsidized worker at a time of considerable economic uncertainty. 
But this trend also means that if funding ends, not only will these programs will shut down, but 

states that were on the verge of setting up programs will not do so. In fact, researchers report 

that states with subsidized jobs programs are already cutting them back, or planning to do so, 

based on the sunset date of September 30, 2010. According to one study of this phenomenon, 

“San Bernardino and Los Angeles counties plan to stop placing people in subsidized jobs on 

March 31 and May 31, respectively. New York State is planning to stop making job placements 

during the summer.”

4

 While some employers will take over the costs of these workers when the 

funding ends, surely many of these low-income workers will once again face joblessness. 

The economic case for keeping the program going is clear: employers are just beginning to hire 

and could use the break on labor costs; low-income workers still face disproportionately high 

unemployment rates; and communities still need the multiplier boost from the extra spending 

generated by these jobs. The fact that many states have the program up-and-running—and are 

preparing to take it down if funding expires—has led policy makers in the House of 

Representatives to include a one-year extension to the subsidized jobs program as part of their 

job creation initiatives (see H.R. 4213). 

As President Obama has stressed, we need to be doing more, not less, to promote job growth 

right now, to build off of the nascent jobs recovery and get Americans back to work. These 

subsidized jobs are an important part of that jobs agenda, one that reaches some of our more 

vulnerable citizens. 

 

4 Center for Law and Social Policy, “Job Creation: Extending the TANF Emergency Fund Creates Jobs Now.” 

Available at: http://www.clasp.org/admin/site/publications/files/Emergency-Fund-Extension.pdf.