When President Obama convenes a White House forum next month to consider ways to create jobs, he should consider a program that worked successfully for Minnesota in the 1980s, a noted labor economist says. The Minnesota Emergency Employment Development program, known by its acronym, MEED, was in place from 1983-1989. About 45,000 people enrolled in the program, which provided a wage subsidy of up to $4 per hour ($10 in 2008 dollars) for employers to hire new workers, many of whom were low-skilled or among the long-term unemployed.
Following their MEED experience, more than 20,000 of those workers succeeded in staying on with their employer or finding other permanent, unsubsidized employment, according to a report by the Corporation for Enterprise Development.
|Timothy Bartik addresses a forum in Minneapolis on “The Jobless Pandemic.”|
MEED was “one of the most innovative employment programs done anywhere in the U.S. in the last 50 years and it deserves to be revived,” said Timothy Bartik, senior economist for the W.E. Upjohn Institute for Employment Research. Bartik spoke recently at a program in Minneapolis on “The Jobless Pandemic: Prescription for a Cure,” organized by several organizations including the JOBS NOW Coalition.
Most economists believe that while the recession has ended, employment will remain flat for the next two years. Bartik has been researching various options for addressing this “jobless recovery.” He has championed a job creation tax credit to spur growth, but said it alone would not be enough.
“It needs to be complemented by something that targets the group with the severest employment problems” – a program such as MEED, he said.
The situation for many unemployed workers is dire, said Jane Samargia, executive director of HIRED, a community organization that helps disadvantaged people and other job seekers prepare for and obtain employment.
“It can now take 18 months or longer to find employment, if at all,” she said. “There’s a lot of disillusionment out in our community about the American dream.”
Programs such as HIRED have been so overwhelmed they’ve been forced to turn away thousands who need their help. And it’s difficult to find employers who are offering jobs, she said.
Cierra Adams, a young woman who participated in the “Connections to Work” program sponsored by Project for Pride in Living, is one of the lucky ones. She is currently working as an office assistant for Northpoint Health and Wellness Center.
The job was created with the help of a wage subsidy. “The position was only supposed to last three months, but I treated it as an audition and got the part,” Adams said.
Wage-subsidy programs such as MEED provide valuable work experience for participants and contribute to a more-trained workforce, Bartik said. They also provide incentives for businesses to create jobs – sorely needed today because of tight credit markets.
The MEED program was very cost-effective compared to other job creation strategies, Bartik said. In today’s dollars, it would cost $33,541 to create a job through MEED, compared to the $112,000 cost of jobs created under the recently passed federal stimulus program or the $145,000 cost of indirectly spurring employment through tax cuts.
The MEED program compares favorably to the $28,000 to create one job through a job creation tax credit and the $32,000 cost of a new government public service job.
Unlike other strategies, MEED keeps on giving, Bartik noted. Many employers retain workers after the wage subsidy ends and expand their hiring. Every increase in the training level of the workforce also encourages business growth, he said. These developments are paralleled by a decline in the need for food stamps and other social services.
By the 10th year of the program, MEED actually makes money for the government, he said.
“This program keeps on increasing employment year after year,” Bartik said. “The bottom line argument for this program is that it works.”
Share the risk
Jim Glowacki couldn’t agree more. Twenty-five years ago, he was struggling to start his own business on the recession-wracked Iron Range. With the help of MEED, he hired his first employee. Today JPG Communications has several offices and employs 20 fulltime staff.
“From an employer’s perspective, the program helped share the risk,” Glowacki said. “Today I would strongly support the program.”
In the last legislative session, Rep. Tom Rukavina, DFL-Virginia, and Sen. John Marty, DFL-Roseville, introduced legislation to resurrect MEED.
For a program like MEED to succeed on a national scale, the federal government would need to spend $30 billion to create 1 million job slots with a wage subsidy of $10 per hour, Bartik said.
If continued for 10 years, nearly 2.3 million jobs would be created in the final year, with the cost dropping from $33,541 per job to $13,056.
Bartik said he did not know if the Obama administration will consider wage subsidy programs when making job creation proposals to Congress early next year.
“Now is the time for people to make the case” for programs like MEED, he said.
For more information
To read the Corporation for Enterprise Development report, go to the CFED website and search for MEED
11/19 – Correction: Tom Rukavina is a DFL representative from Virginia, MN.