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If It's Working, Keep it Going!

Jared Bernstein, Chief Economic Advisor to the Vice President, writes on the need for Congress to renew a successful program that lets states use Recovery Act dollars to pay for part of a new employee’s wages, giving employers a strong incentive to hire unemployed workers.

At a time like this, when there are still far too many Americans out of a job, policy makers might consider this simple rule: when a program is successfully and efficiently creating jobs, don’t eliminate it.

This rule should especially be observed when the assertion that it’s working is widely agreed upon by both Democrats to Republicans, by economists and business owners and governors.

But unless the Senate acts soon to preserve the Temporary Assistance for Needy Families (TANF) Subsidized Jobs program, this simple rule will be broken and this great program will be taken down.

We’ve highlighted this jobs program before, and a quick look at the reasons it’s so effective explains our enthusiasm.  It lets states use Recovery Act dollars to pay for part of a new employee’s wages, giving employers a strong incentive to hire unemployed workers.  And we’re not talking about bureaucrats here, folks – these subsidized workers are being placed at private-sector businesses and non-profits in addition to state government agencies.

It’s a two-fer as well, because while the program helps folks get out of their homes and into jobs, it’s also helping them get off public assistance like unemployment insurance and welfare.

So it’s no surprise that everyone from this administration to Mississippi’s Republican governor, Haley Barbour, wants to see the program extended.

Importantly, it’s not just government officials who recognize the importance of subsidized jobs right now.   Back in May, we heard first-hand how this program is helping small businesses to take advantage of new opportunities while making a difference in the lives of workers.  With many businesses still struggling, these subsidies for new employees can make the crucial difference between small business owners hunkering down or deciding to expand their businesses and create new jobs.

The latest research shows that the subsidized jobs initiatives running in 35 states so far will have helped to put nearly 200,000 workers into new jobs by September.  The Illinois program, which just started a few months ago, has already placed 14,000 workers; the program has ramped up so fast that they’re now placing 500 workers every day. 

Let me assure you, as someone who has spent decades studying job creation programs, to reach these kinds of numbers this quickly is nothing short of remarkable.  It shows that, like our Cash for Clunkers program of a few months back, the subsidized jobs program has hit a policy sweet spot in the current economy, something that’s all too rare in this policy space. 

But unless Congress acts to extend the program, that’ll be it; the program will expire on September 30th, and states will eliminate these successful jobs programs that are already up and running (btw, the extension currently on the legislative table is paid for, meaning it doesn’t add to the deficit).

Moreover, the looming expiration will prevent states from setting up and expanding programs.  Over the last year, more and more states have established subsidized jobs programs, and that progress will end well before the program’s scheduled September expiration as states avoid getting involved in a program they know will end.

Fortunately, this success story is starting to get some more attention.  I only hope, for the sake of the million of job seekers out there trying to do the right thing, trying to get off the couch, off the unemployment rolls, and into the job market, that their efforts won’t be ignored by policy makers who now control the fate of this extension.  

It’s working great, and we need the work.  So let’s keep it going.

Jared Bernstein is Chief Economic Advisor to the Vice President