How Locals Used Federal Pandemic Aid to Boost Employment and Labor

According to one expert, federal COVID policies and direct aid to states and locals helped improve the labor market by addressing short-term and longstanding challenges in the workforce.

Donald Cohen, executive director of the national nonprofit organization In the Public Interest and co-author of “The Privatization of Everything,” recently published commentary arguing that the federal government’s COVID-19 response — and especially direct financial aid — improved the labor market.

The American Rescue Plan Act (ARPA) was signed into law some 18 months ago. In that time, Cohen notes, the labor market has shifted dramatically for the better:

Unemployment is low, 3.7% in August [2022]. In fact, the labor market is so tight that private and public employers alike are finally feeling pressure to raise wages and offer benefits like flexible work schedules and remote or hybrid options to retain staff and recruit new employees to fill the glut of vacant positions. Workers are seizing this newfound leverage, organizing unions at a record pace.

Short-term aid with long term payoffs

Cohen attributes direct aid, while temporary, targeting historical impediments to workforce participation as part of the reason for what appears to being long term benefits:

For a year and a half, federal funding has flowed to states to keep critical public services intact and launch new public programs to support employment, housing, public education and more.

Most of these programs are not making national, or sometimes even local, headlines. Yet,  many are making a difference in the lives of everyday Americans, particularly those facing the biggest barriers to upward socioeconomic mobility. And the most successful of these programs can serve as a blueprint for other states and cities seeking sustainable solutions to some of their most intractable challenges.

They knock down barriers to employment and advancement, while simultaneously creating new jobs and improving pay for existing positions in essential, high-demand fields suffering from high turnover, such as child care and home care services.

He also notes specific targets of ARPA and other federal pandemic response programs that will have a long term impact, including:

  • Addressing shortages of affordable child care;
  • Expanding high-quality preschool programs;
  • Supporting home care services; and
  • Empowering states to invest in workforce development and support for people entering, re-entering, or seeking advancement in the job market.

Help for local governments

Importantly, Cohen stresses how federal relief programs have allowed local governments to continue providing critical services and maintain a qualified workforce:

ARPA funding also has staved off and restored cuts to state and local public services across the country, preventing layoffs and creating new positions while ensuring continuity of services and maintenance of public infrastructure. The funds also have allowed for hazard pay and raises to essential workers put at heightened risk during the pandemic, providing a boon to individual employees and their families as well as local economies.

Lessons from the locals

States and local governments around the country are making the best of their ARPA resources and are providing what Cohen suggests could be blueprints for successful recovery. Here are some of those initiatives:

  • Michigan is targeting early childhood education for low-income families. Michigan is using ARPA funding to “reduce and prevent educational and economic disparities, before these gaps begin, by investing in a big expansion of its state-funded preschool initiative, the Great Start Readiness Program.” That program’s goal is to “ensure that every eligible four-year-old—those from families with an income at or below 250% of the federal poverty level ($57,575 for a family of three)—is served.” According to Cohen, “long term, this will pay dividends by helping close achievement gaps. In the short term, it creates new jobs and enables many low- or no-income parents, especially single mothers, to enter or re-enter the workforce.”
  • Wisconsin is supporting work force development. The state has dedicated ARPA funds to a new workforce development grant program that “encourages creative solutions to challenges that employers face in recruitment and retention of workers.” It also helps prospective workers when entering, re-entering or advancing in the job market. Notably, Wisconsin also used ARPA funds to support local governments in similar endeavors: “Eleven local workforce development boards—public entities under the statewide Department of Workforce Development—received grants to subsidize employment and skills training opportunities with local employers.”
  • The Western Wisconsin Workforce Development Board is supporting apprenticeships and skill development in critical fields. The board is providing “paid work experience opportunities, hard and soft skills training in in-demand jobs, on-the-job training opportunities, and enhanced supportive services, including childcare, housing, transportation, and worker stipends.” Importantly, it is targeting high-demand industries, like construction, hospitality, healthcare, IT, transportation, and direct care services.
  • Milwaukee County is launching a program to asses job readiness. The program will provide “individualized assessment of skills, experience, and job readiness,” alongside job readiness training and paid work experience. It will strategically target “specialized outreach to justice-involved individuals, veterans, homeless individuals, individuals with limited English language proficiency, individuals with disabilities, LGBTQ individuals, human trafficking survivors, and other traditionally underserved populations.”

Read the full op-ed.