TANF ECF Expires and 240,000 People Could Lose Their Jobs Today
Today a popular and relatively affordable portion of the stimulus package that put 240,000 people to work expires. The Emergency Contingency Fund (ECF), an extension of Temporary Assistance for Needy Families (TANF) funds, failed to win approval in the Senate on several occasions, with Republicans stonewalling the measure over concerns the program unnecessarily adds to the deficit. The price tag for reauthorizing the funds ranged from $1.5 to $2.5 billion.
On Tuesday, Senate Democrats again tried to slide a continuation of the program past GOP objections, but Republicans wouldn’t budge.
The end of the program comes with little surprise but much frustration for city and state authorities who relied on the funds to put out-of-work parents on government and private company payrolls. Bipartisan state and local groups have urged Congress for months to renew the program.
In Los Angeles County, Transitional Subsidized Employment (TSE), the local name given to TANF ECF, connected more than 10,000 adults with employers, and another 16,000 young adults with summer part-time jobs. Nick Ippolito, Social Services Deputy to Los Angeles County Supervisor Don Knabe, predicts 7,000 of those adults will be unemployed starting today, with the remainder to be let go later next month or hired as permanent staff.
TSE operated on a $160 million budget, paying employers 80 percent of a TSE employees’ $10-an-hour wage, with the employer filling in the rest. For a more detailed look into the mechanics of the program and its bi-partisan state and local support, read previous Campus Progress reports here and here. With the TSE program in Los Angeles County expiring, that places greater pressure on regional public assistance programs and businesses to absorb the financial impact the end of the program brings.
Dustin Stevenson, Business Development Coordinator for the South Bay Workforce Investment Board (SBWIB), says local governments need “an extension from Congress to transition people off the program, rather than having everyone term off at the exact same moment.” SBWIB is a local government-funded organization that the county hired to connect workers with employers for the subsidized jobs program. LA County is now “put in a position to find  new jobs on Friday,” the day after the program expires, Stevenson says.
It is unclear how many TANF ECF jobs translated into permanent positions. While SBWIB had a success rate of roughly 70 percent before it was charged with managing TSE, current projections are more modest. Ippolito says at least several hundred TSE employees were hired full-time. But Elizabeth Lower-Basch, a Senior Policy Analyst at the Center for Law and Social Policy (CLASP), says figuring out the numbers are beside the point. “Obviously, it's terrific when people get permanent jobs out of this. But even when they don't, they still get work experience and skills, and have earned income to support their families. And businesses have gotten some help they might not have been able to afford.”
Stevenson says many TSE workers offered businesses necessary help that either expanded the company or offset the burden an understaffed business endured. “It depends on how you use the person, he says, “if you use them as a custodian, that wouldn’t necessarily generate additional revenue for the company.” But if a subsidized employee adopts a sales role or develops content that generates revenue, “then yes,” Stevenson says, “you’re creating growth.”
Sometimes that growth persists even after the subsidized worker is gone. V-Cube, a web-based broadcasting company with an office within LA County, brought on two TSE workers who were hired permanently elsewhere. The growth those two workers brought to V-Cube allowed the company to hire a permanent employee of its own.
Employees who took part in the TANF ECF program are not eligible for unemployment benefits, meaning many of them will rely on cash allowances handed to them by the state. Ippolito says the time it takes to receive aid varies: “It depends on the individual situation. If someone comes in and says they’re on the street with their kids, they can get some assistance immediately.” In less extreme situations, provided that the individual has all the correct paper work, Ippolito says he or she can receive aid within a matter of days.
Yet other states have different requirements for those in need of public assistance. “It varies by state how quickly they can come onto [it],” says Lower-Basch of CLASP, “some states also require people to engage in job search or other activities before they can get cash assistance.” The Urban League in 2008 wrote a comprehensive breakdown of each states’ aid package. As an example, a family of three with no income in California is eligible for a maximum benefit of $723 to $800 per month. Alabama offers a maximum monthly benefit of $215.
Economists are tepid in their assessment of TANF ECF. Christopher Thornberg, a founding principal of Beacon Economics, says the program is helpful in that it provided families with necessary cash and some know-how. “It’s obviously important to get people skills,” he says. “One way to gain skills is through educational investment. Another way is through experience in the work place.“ But he says TANF ECF created far fewer jobs than advertised.
Brad Kemp, an economist also at Beacon agrees. “Programs like this offset costs of labor for employers in the local area,” but they do not add many new jobs because few positions become permanent. To Kemp, meddling too much with the labor market is counter-productive. Recovery will come; what governments have to do is assure a minimum standard of living for people who have fallen by the wayside until the labor market recovers. “Unemployment is a natural process after an unnatural build-up in housing and construction,” Kemp says. The economy is now paying the price for a consumption binge, “like a hangover.”
Kemp supports a reauthorization of TANF ECF funds, however. He says businesses are on the upswing, but their progress is not consistent. A program like TANF ECF “adds to that upswing, and also emboldens the employer to take some risk,” Kemp says. “It’s a win-win for everyone.”
But for a public official like Ippolito, the program was more than just a stopgap measure to offset labor market peculiarities. “It focused dollars that would have been used for welfare benefits into a program that put thousands of people to work on a temporary basis, he said. “A job is better than a welfare check any time.”
Sometimes in Washington if a program isn't renewed, future efforts to get it off and running are less enthusiastic. If a policy prescription as popular as TANF-ECF can't be reauthorized, does that demoralize the campaign to develop a new job subsidies program?
Not according to Lower-Basch: “I actually think the positive experience that many states had with the Emergency Fund makes it more likely that we'll see subsidized jobs programs again in the future.” For now though, she is “very disappointed and saddened” that the program ends today.
Mikhail Zinshteyn is a staff writer for Campus Progress. You can e-mail him at firstname.lastname@example.org.
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