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Stimulus In a Parallel Universe: What America Can Learn from ‘Put Illinois to Work’

Tonya Grisby, a 39 year-old grandmother who lives in Chicago’s predominantly black and mostly poor Austin neighborhood, worked at a warehouse until December 2009. But the person Grisby carpooled with to work got laid off and, without a ride, Grisby was soon laid off as well.

Grisby had few prospects for employment until last May when she was hired by Chicago’s Westside Health Authority thanks to Put Illinois to Work – a government subsidized job program. Uncle Sam paid for Grisby to work a 40 hour-a-week front-desk job that paid $10 an hour.

Federal money for the jobs program expired, but luckily for Grisby, her four daughters, and one granddaughter, the state twice used its own money to extend the program. Then Westside Health Authority permanently hired Grisby as a case manager after Put Illinois to Work ended.

“I was blessed with the program,” Grisby said. “I was so grateful that they hired me on because otherwise I’m not sure what I would do.”

Grisby’s success was due to the American Reinvestment and Recovery Act, and the stimulus program that helped Grisby has now expired following a U.S. Senate decision not to extend it.

However, Put Illinois to Work was vastly different from other stimulus programs. Unlike most economy recovery programs, it helped people in Grisby’s economic and employment situation earn a living wage.

Creating jobs by creating jobs

Put Illinois to Work stems from a $5 billion Temporary Assistance for Needy Families, or TANF, state grant contained in the $787 stimulus bill that became law in February 2009. Thirty-seven states used TANF emergency grants to subsidize temporary jobs in both the public and private sector. But this was no Roosevelt-era Works Progress Administration or Civilian Conservation Corps, nor was it on the scale of the Job Corps program started during the Johnson administration.

The TANF money and a $1.2 billion Department of Labor summer youth jobs program were the only parts of the stimulus bill that created government-subsidized jobs, making these measures $6.2 billion of the $787 billion stimulus.  Not only that, the program took a long time to get started. Health & Human Services took months to draft rules on acceptable uses of TANF stimulus money –  a major problem since TANF stimulus money expired Sep. 30, 2010.  A number of state-subsidized employment programs never advanced beyond the planning stage. And Illinois Gov. Pat Quinn did not unveil Put Illinois to Work until April 2010, saying that it would create 15,000 “good-paying jobs that will help support families and strengthen communities.”

The workers had to be 200 percent below the poverty level and, unless they were 18 to 21 years of age, had to be supporting at least one child. Otherwise, the program was open to all comers:  there were no limitations on what employers could apply, and they included everyone from private companies from 7-Eleven to Harold’s Chicken to TJ Maxx, to social service agencies like the Westside Health Authority, to government agencies like Chicago Housing Authority. The pay was not that good: like Grisby, most workers got $10-a-hour, but most of the jobs were for 40 hours a week, making Put Illinois to Work a real lifeline for long-unemployed workers

Certainly, the program was a boon to employers, who not only paid these workers nothing, but were under no obligation to keep workers on when stimulus money ran out. Critics of Put Illinois to Work like Christine Radogno, the Republican leader in the Illinois state senate, said that the program should be judged by whether these temporary subsidized jobs became permanent non-subsidized jobs. But the Quinn administration’s expectation was more modest and immediate: temporary pay for people to have jobs in this terrible economic time.

“Obviously it was free labor,” says R.J. Mack, a manager of Chicago’s Akira shoe store, who hired two Put Illinois to Work participants. “So it was a win-win situation for me and the workers.” Employers tried to capitalize by placing ads for the program everywhere. For example, Idalia Papia, a previously unemployed mother, got a subsidized front desk job at Great Lakes Dental in Lindenhurst, Illinois because she saw a posting on Craigslist.  By summertime 60,000 people had applied for a Put Illinois to Work job and the program was expanded. By the time Put Illinois to Work ended, nearly 4,300 employers and more than 27,000 employees had participated.

No state created as many temporary subsidized jobs as Illinois – California was 2nd in the nation with about 20,000 jobs created, Texas third with 14,000.Unlike most states, Illinois almost entirely focused on employers who could quickly use unskilled workers. For this breathtakingly simple program, the press praised the often-beleaguered Quinn. “It suggests efficiency and creativity by a much-maligned state administration,” wrote James Warren in the New York Times. “You can chide Governor Quinn for not getting any traction for his tax program, but you’ve got to give him credit for putting some people back to work.”

So when federal money ran out, Quinn extended the program twice with the second extension funding it through Jan. 15, 2011. The state ended up spending $200 million to keep Put Illinois to Work going, or about the same amount of money the stimulus bill gave Illinois to get the program started. As recently as Dec. 1 Quinn said that a federal extension was coming. “I remain hopeful that Congress will extend the funding for the Put Illinois to Work program,” he said then, “I am extending this program today to keep thousands of people in Illinois at work through the holiday season.”

The governor finally said no to more extensions in December when the Obama administration and a lame duck Congress enacted a grand federal income tax/unemployment benefit compromise that did not include additional TANF stimulus money.

By that time, Put Illinois to Work had already lost some steam. Quinn’s political opponents said that a state with a $15 billion budget deficit should not subsidize jobs. Radogno, the Republican state Senate leader, argued that it was “cruel” to keep stringing these workers along when they could be looking for more permanent employment. According to a preliminary estimate by the Illinois Department of Human Services, employers have permanently hired about 1,700 of the 27,393 participants.

Direct job creation and its discontents

There were a few problems with hiring people in a hurry when Put Illinois to Work came on line.  Bob Andrews, owner of Pet Friend’s Pet Care in Chicago, said that he hired three people through Put Illinois to Work to walk dogs and care for cats. Andrews says that his first two workers were “nightmares; thieves, dishonest, possible drug use.” However, he adds, “My third worker has been awesome. Honest, reliable, customers love her.”

In addition, some employers appeared to use Put Illinois to Work to reduce their payroll by laying off non-government subsidized employees. In July, Catherine Rampell of the New York Times looked at Chicago’s Gallery Guichard art gallery, which hired three Put to Illinois Work employees. When these workers came on board, the gallery proceeded to lay off one worker and reduce the hours of three other workers – all of whom soon quit their jobs.

Tom Green, spokesman for the Illinois Department of Human Service, said that the state made sure that employers who participated in Put Illinois to Work did not then lay off, or reduce the hours, of current employees. The state has reported no instances of employers who broke these rules. None of the employers and employees interviewed for this story provided further examples of displaced workers.

Overall, however, Put Illinois to Work was a singularly good stimulus program, a “win-win-win” according to LaDonna Pavetti, of the liberal-leaning Center for Budget and Policy Priorities in Washington, D.C. Low-income families win because they got money that paid for their daily living expenses. Employers won because their productivity increased to at least some degree. And low-income workers according to Pavetti, received a paycheck that allowed them to pay for their living expenses, which means that government cash went right back into the economy.

The people who participated were definitely low-income.  According to a report by the Heartland Alliance, a Chicago non-profit that partnered with the state to implement to Put Illinois to Work, 32 percent of the participants had no household income the month before program enrollment. Thirty-nine percent of the 27,400 participants did not work at all in the entire two years prior to their Put Illinois to Work job.  The average household income of a participant was $710 a month.

So these were workers largely cut off from the American economy. Many participants already were using taxpayer money for programs like food stamps, Medicaid and unemployment benefits. In other words, whatever legitimate problems that state Senator Radogno alluded to – workers not knowing if they would be permanently hired, or mistakenly hoping  they would get a job – seemed to pale in comparison to the problems these people already were facing. “One degree of cruelty is being always unemployed and constantly having to fill out paperwork,” says David Marzahl, president of the Center for Economic Progress, a Chicago non-profit that used two Put Illinois to Work participants.

If these low-income workers did have jobs for a while, there’s one thing they didn’t have – and have never had:  clout in Washington, D.C.  In the end an extension of TANF stimulus money passed in the House but was filibustered in the Senate. Staunch supporters like liberal Illinois Sen. Dick Durbin were outnumbered not just by conservative opponents but also by  Democratic and Republican lawmakers hailing from states unwilling or unable to even try subsidized employment programs. Indifference, not fierce ideological opposition, squelched an extension of a program that provided 250,000 temporary subsidized jobs.

The program seemed to have found a second life during the lame duck Congressional session when the Obama administration and Republican leaders negotiated a compromise over the Bush tax cuts. Senate Republicans, in essence, agreed to not filibuster some temporary economic recovery programs if Obama agreed to temporarily extend tax cuts for the richest Americans. But what the Obama administration extracted was not subsidized employment programs but an extension of unemployment benefits. Pavetti notes that subsidized employment programs were small, “so they never had the constituency that other stimulus measures had.”

The Stimulus Next Time

Billions in unemployment benefits will help more people than a subsidized employment program that, nationwide,used only about $1 billion total of the $5 billion in TANF grant money. But this was a program that created jobs – which raises the question of why the Obama administration eschewed major direct job creation in the first place and continues to do so. The president is not shy about using taxpayer money to help the economy – even as he talks about a freeze in domestic spending, the administration has proposals to fund investment in a new energy economy. And the Obama administration as well as the Federal Reserve (which does not report to the president) has not pinched pennies when it comes to getting the financial sector back on its feet.

Bank bailouts, clean energy technology investments, small business tax credits, even across the board tax cuts – all these Obama administration policies can bolster economic recovery. But they are also all complex and indirectly related to the most simple, measurable and easily-understood aspect of economic recovery: jobs. Pat Quinn, of all politicians, had the insight that the economy remained so bad that the only sure way to help some citizens was to give them jobs. Barack Obama, and congressional leaders in both parties, have avoided policies that directly address the jobs crisis and help Americans alienated from their nation’s economy.

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