Many people struggle to compete in the job market even when unemployment is low. These individuals often have relatively low levels of formal education, training, or work experience, as well as other characteristics such as criminal records. For decades, organizations have created programs that aim to smooth the road to employment for them by offering job seekers temporary work experience, education, training, support services, or some combination of these opportunities. Subsidized and transitional employment programs are two such programs; they aim to offer participants temporary jobs in which wages are at least partially paid by public or philanthropic funds, often coupled with additional services to support the transition to unsubsidized work. Dozens of rigorous studies have tested the effects of subsidized and transitional employment models, finding strong evidence that these programs usually dramatically improve employment outcomes during the subsidy period, with some programs sustaining positive effects on employment and earnings long after the subsidized job ends.

In 2010, the U.S. Department of Health and Human Services launched the Subsidized and Transitional Employment Demonstration (STED), a large-scale research project designed to build rigorous evidence on the effectiveness of the latest generation of subsidized employment models. The project included random assignment studies of eight subsidized employment programs. This brief presents an extended analysis of effects on earnings—the changes in participants’ outcomes attributable to each program—over a follow-up period of up to eight years for seven programs included in the STED project.

Purpose

The eight subsidized employment programs evaluated as part of the STED project intended to help reconnect participants to work in order to improve their long-term economic prospects. MDRC conducted random assignment evaluations of these programs to determine whether they achieved their goals and improved participants’ outcomes, and found that three of those programs saw employment effects that lasted through the end of the available data, which was up to five years after people first enrolled in these programs. The present analysis examines whether STED programs’ earnings effects continued beyond the end of the earlier analysis, over an additional three years.

Primary Question

• Do subsidized employment programs improve earnings over an extended follow-up period?

Key Findings and Highlights

Three of the seven programs analyzed improved participants’ earnings more than three years after program enrollment, a notable feat given the short duration of these interventions, which lasted less than six months. Two programs maintained consistent, positive earnings effects through the end of the available data. Those two and a third saw positive, statistically significant effects on cumulative earnings. And although earnings effects tapered off after Year 4 for a fourth program, that program showed a positive pattern of earnings increases for six years after study enrollment.

Methods

STED included random assignment studies of eight subsidized employment programs in seven locations. In these studies, individuals were randomly assigned to either a program group who had access to the subsidized jobs program or to a control group who did not, but who may have sought out other services. Because of this random assignment, systematic differences in outcomes between the two groups can be attributed to the programs. This brief uses data from the National Directory of New Hires (NDNH) to extend earlier analyses through July 2022 for seven of those programs, examining how study participants’ formal earnings and employment are faring up to eight years after study enrollment.