Subsidized employment is a proven, promising, and underutilized tool for lifting up disadvantaged workers—particularly those in or at risk of poverty or with serious and/or multiple barriers to employment. These job programs can provide income support, an opportunity to engage in productive activities, and, in some cases, labor market advancement opportunities. They can also offer a platform for connecting people to other needed services, resources, and networks. A number of models have shown positive impacts according to the highest standards of evidence; there are also a number of innovative models that appear promising for improving outcomes—even for groups not previously helped by these programs. In addition to promoting work among adults struggling in the labor market, subsidized employment programs can also help strengthen disadvantaged families. Yet, despite their significant potential, at the state and local level program administrators often must cobble together modest public resources to fund these programs. Though this report takes a balanced and careful look at the evidence, it makes clear that policymakers should devote more attention and dedicated resources to take full advantage of subsidized employment as a tool for reducing poverty and expanding opportunity.
This report represents findings from an extensive scan of evaluated or promising subsidized employment programs and models1 spanning four decades that target populations with serious or multiple barriers to employment in the United States.2 It includes a framework aimed at helping practitioners develop more innovative and effective programs by outlining critical elements of program design and implementation; a review of relevant models from the past 40 years, including key findings; and a set of recommendations for policymakers and practitioners for further utilization of subsidized jobs programs.
The goal of this paper is to highlight and promote policies and programs that are likely to increase quality subsidized and supported paid work opportunities for adults with multiple barriers to employment. This report is not primarily about job creation strategies, though subsidized employment can be a useful tool in broader job creation efforts.3
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. These personal and institutional barriers reflect a complex mix of socioeconomic dynamics, which can manifest as skill limitations; physical and behavioral health issues, including disabilities; criminal justice system involvement; family obligations; limited resources; lack of education; limited work experiences; and discrimination based on characteristics such as race, gender, and age, among others.
Keeping in mind that integrating disadvantaged populations into mainstream programs and services may be the most effective strategy in many cases, many of the models profiled in the report directly or indirectly target nine overlapping categories of people who are particularly likely to need subsidies and wraparound services and supports—some temporary and some ongoing—to succeed in the labor market. The nine groups are as follows:
- Disconnected youth;
- People with work-limiting disabilities;
- Single mothers and non-custodial parents;
- People with criminal records;
- Older workers who have been pushed out of the labor market due to economic dislocation;
- Disadvantaged immigrants, especially refugees and asylum seekers;
- Long-term unemployed workers;
- People in areas of particularly high unemployment; and
- People experiencing homelessness.
While aggregate labor demand policies—both fiscal and monetary—that ensure high levels of employer demand for workers in the overall economy are essential to helping low-income workers secure and maintain sufficient employment, additional policies and programs would be valuable throughout the business cycle for those with serious or multiple barriers to employment.4
Research suggests that some workers with serious and/or multiple barriers may benefit from transitional subsidized jobs, but others (such as a portion of those with behavioral health challenges, the most limiting disabilities, or substantial family responsibilities) might require ongoing subsidies and other supports and services for successful job placement and retention in competitive or other meaningful work environments. Depending on the barriers, subsidized jobs may not be the most suitable initial strategy for some individuals. For example, someone with extremely limited education or skills may require other interventions and support well before a subsidized employment placement.
This report examines several types of programs. The main focus is subsidized employment programs that offer subsidies to third-party employers for providing work opportunities to eligible workers. As shown in Figure 1, 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. They may be temporary and countercyclical, temporary and part of a strategy to help people get jobs that do not entail extra subsidies (regardless of the macroeconomic situation), or long-term for people who continue to need a subsidy. The experiences offered by these jobs—in terms of what is expected 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 does not attempt to exhaustively categorize all programs of this nature that have been implemented in recent decades. Rather, it focuses on those programs targeting disadvantaged workers that have been (or are being) rigorously evaluated or have been identified by experts as showing promise. As a result, the report focuses particularly on the second and third strategies, though the first strategy can provide important opportunities for disadvantaged workers, even if it is deployed more broadly.
In addition, this report examines some notable paid work experience and community service programs. These types of programs may provide some compensation for training or work activities, but may not conform to typical experiences in competitive employment.5 Finally, the report reviews selected unsubsidized employment programs that target disadvantaged groups, as well as intensive youth-only employment programs that may offer relevant lessons for subsidized employment programs.
Figure 1. Three Overarching Subsidized Employment Program Strategies
Duration of Subsidized EmploymentTiming in Business CycleTarget PopulationPrimary PurposeDemands on Workers
| Duration of Subsidized Employment | Timing in Business Cycle | Target Population | Primary Purpose | Demands on Workers | |
|---|---|---|---|---|---|
| Strategy 1 | Transitional Employment | Anti-recessionary* | Long-term unemployed; low-income | Income support; increasing employment | Identical to unsubsidized employment |
| Strategy 2 | Transitional Employment | Permanent | disadvantaged workers with serious or multiple barriers | Increasing employment | Eventually approximating unsubsidized employment |
| Strategy 3 | Long-Term Employment | Permanent | Disadvantaged workers with serious or multiple barriers | Income Support | Significantly less than subsidized employment |