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October, 2000, Vol. 123, No. 10

Public-service employment programs 
in selected OECD countries

The enactment of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996 transformed the U.S. welfare system into a work-based one. The Act requires most recipients to either find work or lose welfare benefits after not more than 2 consecutive years on welfare. Many former welfare recipients are finding jobs in the private sector; one study of nine States found that between 50 percent and 70 percent of former welfare recipients are working.¹  However, a number of experts have highlighted two potential problems: the low employability of those remaining on welfare and the negative impact of an economic downturn on the ability of many welfare recipients to find jobs. An article in one publication asks whether today’s welfare success could be tomorrow’s crisis and expresses concern as to what will happen to former welfare recipients when the jobs dry up and the safety net provides limited support for the jobless poor.² 

The possibility of a future job crisis for those coming off of welfare has prompted numerous researchers to examine the job creation potential of public-service employment programs.³  Researchers at the Jerome Levy Economics Institute of Bard College suggest establishing a program whereby the Federal Government would "buy" all unemployed labor at a fixed wage and "sell" it—that is, allow the program’s labor force to be reduced—when the private sector needs labor and offers those workers a higher wage.⁴  The Center on Budget and Policy Priorities in Washington, DC, examined public-service employment initiatives in a number of States and cities and developed a checklist to help guide community leaders preparing to launch new public job creation initiatives.⁵  And in a study of public-service employment in the United States, researchers from the Kennedy School of Government of Harvard University concluded that "public service employment and mandatory work programs can provide a legitimate way out of the dilemmas one faces when jobs are scarce but the public and policymakers want to insist on work."⁶ 

While recent U.S. experience with large-scale Federal public-service employment programs is limited (the last significant effort toward that end was the Comprehensive Employment and Training Act (CETA) program in the 1970s and early 1980s⁷ ), a number of countries from the Organization for Economic Cooperation and Development (OECD) have maintained such programs as an important labor market policy tool over the past two decades. This article examines trends in public-service employment programs in several European countries in which programs of that nature continue to be, or in the past few years have become, one of the main labor market tools for moving the long-term unemployed into employment.

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Footnotes
1 Jack Tweedie and Dana Reichert, "Tracking Recipients After They Leave Welfare: Summaries of State Follow-up Studies," National Conference of State Legislators, based on paper presented at conference of American Public Welfare Association and National Governors’ Association, Falls Church, VA, Feb. 26–27, 1998.

2 Aaron Bernstein, "Will Today’s Welfare Success Be Tomorrow’s Crisis," Business Week, Dec. 6, 1999.

3 The term "public-service employment" refers to the public funding of jobs in public or nonprofit agencies.

4 Dimitri B. Papadimitriou, Full Employment Has Not Been Achieved, report no. 53 (Annandale-on-Hudson, NY, The Jerome Levy Economics Institute of Bard College, 1999); on the Internet at http://www.levy.org/.

5 Clifford M. Johnson, Checklist for Identifying Quality Work Sites for Public Job Creation Programs (Washington, DC, Center on Budget and Policy Priorities, 1999); on the Internet at http://www.cbpp.org/12–23–99wtw.htm.

6 David T. Elwood and Elisabeth D. Welty, Public Service Employment and Mandatory Work: A Policy Whose Time Has Come and Gone and Come Again? (Cambridge, MA, Harvard University, Kennedy School of Government, Mar. 6, 1999).

7 Evidence regarding outcomes of CETA’s public-service employment program was mixed, and throughout the effort, the local delivery of Federal public-service employment was beset with administrative problems. (See Robert F. Cook, Charles F. Adams, and V. Lane Rawlings, Public Service Employment, the Experience of a Decade (Kalamazoo, MI, W. E. Upjohn Institute for Employment, 1985).) As a result, since those findings, U.S. policymakers have not given serious consideration to reintroducing large-scale Federal public-service employment as a tool to combat economic recessions.

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