Put Unemployed Jobs Program to Work

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Margy Waller
Margy Waller Visiting Fellow, Economic Studies and Metropolitan Policy, The Brookings Institution

January 22, 2002

We have a great hat trick to suggest to Mayor Michael Bloomberg. He can correct one big mistake of the former mayor, help the many unemployed and provide new community services—all in one act. The mayor can provide a model for other cities by creating a community service jobs program for low-wage workers displaced by the events of Sept. 11 and welfare recipients hitting time limits.

Former Mayor Rudolph Giuliani is proud that New York City’s welfare caseload dropped by nearly 60 percent between 1995 and the summer of 2001. The new mayor will have to deal with the fact that the story is different today.

Between September and November, 2001, the welfare caseload increased by 5,539 people to 469,142—the first time the rolls rose for two consecutive months since 1995. In the previous year, the numbers were dramatically different during the same time period: The caseload went down by more than 7,000 to 549,039. The figures dropped slightly this December, but that appears to be the result of welfare families hitting time limits. Because thousands of them are expected to reapply for the state aid, the city’s Independent Budget Office projects that caseloads will continue to grow over the next eight months.

Nearly two years ago, the City Council mandated the creation of a transitional jobs program for welfare recipients who were unable to find work in the regular labor market. This jobs program is still waiting to be implemented. And there’s federal money for it sitting unspent, so far, in Albany.

A transitional jobs program would employ workers in a public agency or nonprofit organization for a short term. The workers would support community services and would not displace existing employees.

Supporters of the legislation point out that the jobs would replace a welfare check with a paycheck, and workers would be eligible for earned income tax credits. Transitional workers would continue searching for an unsubsidized job and over time gain experience and references that are important to employers.

Giuliani vetoed the legislation in 2000, saying there were plenty of unsubsidized jobs already, so it would be a waste of public funds. Despite an overwhelming veto-override vote in the council, Giuliani simply refused to implement the program during his term. He seems to have missed the point: Transitional jobs are for people who can’t get hired into existing jobs, often because they lack experience and references. In today’s economy, transitional jobs could also benefit the recently unemployed who haven’t gotten rehired.

Besides job losses and caseload increases, Mayor Bloomberg and his new Human Resources Administration Commissioner Verna Eggleston face yet another challenge. More than 81,000 welfare recipients have received the full 60 months of assistance permitted with federal welfare funds. Last month, the state and city began sharing the cost of continuing benefits to those families. Research indicates that recipients hitting time limits face barriers to work, such as limited education, physical health problems, depression, learning disabilities or domestic violence – and most have more than one of these characteristics.

Still, many experts believe that time limits can be an effective motivating tool in the kit of welfare reform policy. But, in a way no one would have predicted a year ago, time limits are now hitting at the worst possible moment since the welfare reform law went into effect. Welfare recipients with long years on the rolls and recently laid off workers are competing for work in a downturn exacerbated by the events of Sept. 11.

If ever there were a moment to put a transitional jobs program in place, that moment has come.

A transitional jobs program could be a partial solution to this unfortunate confluence of events hitting the low-wage labor market. The Community Service Society of New York, one of the oldest anti-poverty nonprofit groups in the city, and other organizations recommend the creation of transitional jobs to help those out of work since the terrorist attacks, in addition to long-term welfare recipients hitting time limits.

There are now more than 30 transitional work programs across the country. Mayors and governors of both parties have seen the benefits of community service jobs. Transitional workers perform services that were not provided before they joined the workforce. Usually administered by private agencies, transitional jobs programs hire workers for positions such as health care and teacher’s aides, computer technicians, carpenters, library assistants and child-care workers. Workers have a good chance of getting a permanent job placement in the regular labor market after a short period in a wage-paying transitional job. In Washington State, nearly 70 percent of the transitional workers got permanent jobs and then doubled their earnings within a year after leaving the program.

Mayor Bloomberg can be a national leader by implementing the law now on the books. This smart and proven plan would benefit the unemployed and the city, as well as provide a model for every community that does not have a job for every willing worker.