Association for Public Policy Analysis & Management

Securing unsubsidized employment in a competitive labor market can be difficult for job seekers with limited education or work experience, especially if they are caring for young children, doubly so if they are single parents. Some public assistance programs — state Temporary Assistance for Needy Families (TANF) programs, for example — attempt to make recipients more employable by temporarily providing subsidized employment to people who cannot find them in the regular labor market, using public funds to pay all or some of their wages. These programs may teach participants basic work skills, provide them with work experience that can be used on future résumés, or help them get a foot in the door with employers.

MDRC is conducting a random assignment evaluation of two approaches to subsidized employment for TANF recipients in Los Angeles County. The first approach, Paid Work Experience (PWE), subsidizes the wages of individuals placed at nonprofit or public-sector employers. The second approach, On-the-Job Training (OJT), offers wage subsidies to for-profit, private-sector employers who agree to place employees onto their payrolls after an initial two-month tryout period; if they do, the wage subsidies can continue up to an additional four months. The study is part of a broader evaluation being funded by the Administration for Children and Families in the U.S. Department of Health and Human Services, called the Subsidized and Transitional Employment Demonstration (STED).

Over 2,600 TANF recipients enrolled in the study and were randomly assigned to one of the two subsidized employment approaches (the two program groups) or to a control group who did not have access to these subsidized job opportunities but who could receive other services in the community or through TANF. The MDRC team is following the program and control group members for 30 months using surveys and government records to assess whether the subsidized employment approaches led to better outcomes for the program groups compared with the control group.

The presentation will touch on findings from implementation research, but it will focus primarily on new impact findings at 30 months after random assignment. The implementation study finds that sample members assigned to the program groups had substantially different experiences: Compared with OJT group members, PWE group members were more likely to work in a subsidized job and worked substantially longer in their subsidized jobs. The impact analysis examines the two approaches’ impacts on an array of outcome domains, including employment and earnings, TANF receipt, SNAP receipt, total combined income, and overall well-being. Taken together, the impact findings suggest substantial impacts on employment and earnings during the first year after random assignment, with few impacts observed in the last year of follow-up. However, there were some caveats to the long-term findings: there is some evidence that PWE group members may have attained employment that was of higher quality in the long-term, compared to the control group. Policy implications will be discussed.