Thanks but no thanks: Most states pass on their share of $5B in stimulus cash for welfare jobs

By Dionne Walker, AP
Friday, February 19, 2010

$3.8B in stimulus funds for welfare jobs untouched

ATLANTA — Desperate though they are to fill gaps in their budgets, more than half the states in the country haven’t touched a $5 billion pot of federal stimulus funds meant to find work for welfare recipients.

Leaders in most states have hesitated to pony up the matching funds the program requires to create jobs that might not last after the federal subsidy’s Sept. 30 sunset date.

The Department of Health and Human Services has handed out $1.2 billion of the emergency cash to 22 states, including $124 million to help them ease caseloads by paying employers to hire low-skilled, low-income workers. The rest has gone to help states pay for general welfare programs.

States such as California, Tennessee and Georgia — where officials have seen unemployment rates spike among recipients of Temporary Assistance of Needy Families — are eagerly tapping the fund to subsidize the creation of thousands of jobs they say keep these workers from sinking further into poverty.

The short-term appeal is plain, at least for those on welfare rolls: In Georgia, for instance, an unemployed mother of two earning $270 a month in TANF support could earn three times as much in a subsidized, minimum-wage job.

Still, critics contend states could suffer in the long run, as employers are encouraged to focus on creating cheap, disposable positions rather than long-term job growth.

States should “offer incentives to businesses to hire more qualified people, since there is a better chance these people will be retained once the incentives are removed,” said Don Sabbarese, director of the Econometric Center at Kennesaw State University in Georgia.

The federal infusion does little to get people permanently off welfare, while draining money that could be used to make long term economic repairs, he said.

“If these jobs are not in areas of sustainable demand and growth, they will not lead to sufficient, marketable skills,” Sabbarese said. “And the money spent on these programs will be wasted.”

The emergency fund created by the American Recovery and Reinvestment Act of 2009 is designed to help states that have seen a rise in TANF costs as more families turn to the federally funded, state-operated aid program. States can use the cash to provide basic financial assistance to families, as well as to pay employers to create or fill low-level jobs with unemployed TANF recipients or low-skilled workers who might otherwise turn to the welfare program.

States have long been able to subsidize such jobs but have often balked at implementing programs that can be costly and hard to run. Typically, the federal government covers up to 80 percent of wages, with states paying the rest.

With Arizona still $700 million short of balancing its budget, “we’re just not in a position where we’re able to take on that challenge,” said Steve Meissner, a spokesman for the state’s Department of Economic Security.

“We’d have great difficulty coming up with the matching funds at the state level,” Meissner said, though he said the state may use other portions of the stimulus fund to offer aid to its more than 83,000 TANF recipients.

Other states say they can’t afford not to take advantage of the federal funds.

Georgia has received $7 million to subsidize entry-level jobs in green technology. California will fund at least 10,000 positions, such as park ambassadors, over the next year. Tennessee has funded 800 jobs in places such as Perry County, where layoffs contributed to a 21 percent unemployment rate, one of the nation’s highest, before the subsidies put many back to work.

“Our unemployment has come back down to 16.9 percent, so we’re still high, but much better,” Perry County Mayor John Carroll said a few weeks ago.

And more states likely will get on board, said Russell Sykes, chair of the National Association of State TANF Administrators.

Similarly, while the temporary nature of the has scared off some employers, others have gladly taken the extra help the program provides, even knowing it might not last.

David Richardson, a land developer in Linden, Tenn., said he’s been able to clear new properties with the two subsidized employees he recently added. He hopes to make the men part of his permanent team, though he made no promises.

“There’s no guarantee in life,” he said. “If things keep going the way they are right now, I’m going to retain my guys.”

Another employer in Linden, Armstrong Pie Co. owner Bert Patterson, has gained four subsidized employees.

“I’ll keep all of them if they’re still doing as good a job as all of them are doing,” said Patterson, who credits the new employees with helping boost the bakery with increasing production nearly tenfold over the past year.

The focus on employing poor workers intensifies just as the nation enters its second decade following welfare reform. Sweeping federal changes in the mid ’90s sought to gut the nation’s welfare program, which critics argued had become a warehouse for the unemployed, by setting time limits for government support, creating work requirements and making the program the state’s responsibility.

It also required that states keep at least 50 percent of welfare recipients employed or face a cut in federal block grants. That’s long been a challenge for states — in 2007, data showed only eight states above the 50 percent goal — and it’s become tougher as jobs grow scarce for even the most highly trained workers.

It makes giving the poor a leg up even more vital, according to Isabel Blanco, head of family outcome and practice standards at Georgia’s Department of Human Services.

The state will use federal emergency funds to subsidize an undetermined number of jobs focused largely on green technology, in hopes of creating opportunities for workers whose limited skill often dooms them to unemployment, Blanco said. Temporary or not, she said the jobs will create new opportunities for many.

“The employer wouldn’t touch these people otherwise,” she said. “It’s like a foot in the door — we will pay their salary for you to try them on.”

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