This issue brief contains a correction.
The American Rescue Plan (ARP), enacted in March 2021, is a unique, one-time resource for state and local governments to both facilitate emergency responses to the COVID-19 pandemic and address long-term social and economic goals—in particular, the goal of meaningful and secure employment. While the U.S. economy added 531,000 jobs in October, 4.2 million fewer people are employed today compared with prepandemic levels,1 and 2.4 million fewer women are employed.2 Women and other caregivers have borne the economic and social brunt of the pandemic:3 Many were unable to continue working due to lack of child care or other dependent care, and they have been unable to reenter employment for the same reason. This is particularly concerning for many single-parent households, for which women—often Black and Hispanic women—are the breadwinners.4
Through the ARP, the federal government has allocated $350 billion in direct, flexible funding to state and local governments.5 This funding is a portion of the $1.9 trillion total of ARP investments that more directly target food insecurity, child care, emergency rental assistance, and more.6 For governments looking to stimulate the local labor market and support job seekers, recent research shows that aggressive approaches such as cutting off pandemic unemployment insurance (UI) benefits do not result in significant employment gains and lead to large declines in consumer spending.7 To support lasting economic recovery and long-term employment, governments have an opportunity to identify varied barriers to employment that predated—but have been exacerbated by—the pandemic, such as child care, the ability to meet basic needs, occupational training, and career pathways in schools and postsecondary institutions, as well as to break through these challenges with strategic investments.
This issue brief reviews how state and local governments have allocated direct aid and targeted pandemic recovery investments to activities that can enable employment and suggests that policymakers take a broad and analytical view of how to deploy federal funding to support employment goals for residents.
Enabling recruitment and retention through training, work supports, and wages: Wisconsin, Massachusetts, and Washington
The pandemic has led many adults to search for employment in new fields. Some industries, such as leisure and hospitality, are still down 9 percent, or 6.6 million jobs, compared with February 2020—and it is unclear how many of those jobs will be coming back.8 The U.S. unemployment rate has declined, but this is partly due to individuals leaving the labor force.9 Women, and women of color especially, have faced significant disruptions to employment, as the jobs with the largest shares of women of color employed—such as manicurists and pedicurists, maids and housekeeping cleaners, and skin care specialists—were likely to have low demand during the height of the coronavirus crisis and continue to struggle.10 And exhaustion associated with the pandemic is high: In a recent survey conducted by Indeed, more than half of respondents reported significant burnout, and 67 percent say this feeling has worsened during the pandemic.11
Massachusetts' allocation to train 15,000 adults in critical industries such as advanced manufacturing, health care, information technology, and construction
Wisconsin's investment to support training and workforce development through skills training in the context of other barriers to employment
Some states are using ARP funds to enable training to support reentry into the workforce. Massachusetts has allocated $50 million to train 15,000 adults in critical industries such as advanced manufacturing, health care, information technology, and construction—and the potential for a much larger allocation is being debated in the state’s Legislature.12 As of August 2020, Massachusetts had 363,882 claimants across UI and pandemic unemployment assistance programs.13 Knowing that federal unemployment benefits were about to expire, the Massachusetts Executive Office of Labor and Workforce Development and the state’s public workforce system MassHire engaged job seekers and UI claimants through virtual job fairs, webinars, and targeted outreach throughout summer 2021.14 The ARP investment would leverage existing outreach structures and significantly expand the state’s capacity to offer training to job seekers through proven models.
Wisconsin is supporting training and workforce development through a multipronged $130 million investment that addresses skills training in the context of other barriers to employment.15 The state has designated $20 million to help subsidize employment and skills training, while $10 million will fund career coaches to support individuals seeking to reenter the workforce.16 The bulk of the investment, $100 million,17 funds the Workforce Innovation Grant Program, which allows regional teams to identify employment challenges for local job seekers—including equity and discrimination issues, broadband access, transportation, child care, skills training, and more—and propose an integrated solution tailored to local needs.18 For example, a municipality could propose a broadband solution to respond to challenges relating to remote work; a labor-management partnership looking to address child care shortages and attract workers to its region could propose a registered apprenticeship program that includes child care and work-enabling supports such as transportation. This framework centers the job seeker rather than a specific, predetermined activity and acknowledges that skills training is most impactful when paired with other supports and solutions.
Washington state, meanwhile, is continuing an approach that led to improved recruitment and retention in critical home care jobs at the height of the pandemic: increasing wages.19 Hazard pay of as little as an additional $2.50 per hour, now funded by ARP funds targeting home and community-based services, contributed to home care workers’ economic security and also improved their likelihood to stay in the job.20 In a recent case study, 41 percent of new workers said that higher wages encouraged them to enter the field, and 55 percent of workers who had been in the field longer than one year said the increase had a big influence on their desire to continue.21 Home care is already the fourth-largest occupation by volume in the United States;22 given that nursing and residential care facilities have lost the most jobs of any sector during the pandemic,23 investments that lead to recruitment and retention in home care are critical to the country’s economic and social welfare.
Strengthening K-12 and postsecondary student-to-career pipelines: Colorado, Maine, and Minnesota
The past year has been a uniquely difficult one for students in both high school and postsecondary settings, with the pandemic necessitating remote learning and leading to building closures, constant disruptions and unpredictability, health risks, and tolls on socio-emotional learning and academic achievement. In the K-12 and post-secondary system, this impact has been particularly negative for students of color, students with disabilities, English language learners, and LGBTQ+ students.24 In the higher education system specifically, the pandemic forced many students to put off postsecondary classes due to financial, safety, or caregiving constraints, and challenges accessing the technology necessary for online learning were especially acute for Black and Hispanic households.25 While some schools and career-readiness programs have been able to shift their offerings online, many summer youth employment or internship programs have had lower than average participation,26 and programs that require in-person work—in fields such as health care or manufacturing—have been difficult to operate. Career planning has been challenging to prioritize over the logistics of operating a virtual classroom.27
Some states have sought to address this shortfall in student-to-career pipelines. Colorado, for example, has allocated $51 million to initiatives that facilitate credential attainment for students who have disengaged from the postsecondary system: The Colorado Opportunity Scholarship Initiative (COSI) provides financial assistance and supportive services to students who have attained some college credits but did not attain a degree or to first-time students who were admitted to an institution but did not enroll during the pandemic.28 Under the same umbrella, the Colorado Re-Engaged Initiative (CORE) allows four-year institutions to grant associate’s degrees to students who earn at least 70 credit hours but have not been granted a degree.29 The state is also strategically addressing both labor shortages and public health goals by allocating $9 million to tuition support for low-income students seeking degrees in behavioral health, prioritizing rural areas of the state.30
Colorado has allocated $51 million to initiatives that facilitate credential attainment for students who have disengaged from the postsecondary system.
Legislation in Maine aims to address the reality that most high school students have not had the opportunity for paid, in-person work experiences during the pandemic. The Legislature has allocated $25 million to the Maine Career Exploration program, which will include a paid internship between a student’s junior year of high school and the year after they graduate.31 In Minnesota, the state will provide $1,000,000 in grant funding to schools to target students with disabilities who lost vocational or life skills instructional time during the pandemic and are preparing to transition into the workforce or into the community.32 The proposal funds approaches such as Project Search, which aims to secure competitive employment for people with disabilities through internships, systematic instruction, and assistance navigating complex work environments.33
Meeting basic, immediate needs as a prerequisite to employment: Austin, St. Louis, and New Hanover County
While getting back to work is important for millions of individuals and families who have been adversely affected by the pandemic, a critical prerequisite is ensuring that their most basic needs—food and shelter—are met. At best, an unemployed individual worried about the roof over their head may find immediate employment in a low-wage, high-turnover occupation rather than pursue training or other pathways to well-paid, high-quality employment that breaks the cycle of housing instability. Housing instability—often a result of eviction, foreclosure, or condemnation—increases the likelihood that a worker will lose their job by as much as 22 percent.34 ARP funds are helping millions of individuals and families stabilize their basic needs so that they can seek and retain quality employment that pays living wages and offers benefits.
Several cities are planning to use direct, flexible support from the ARP to address challenges facing low-income communities and individuals disproportionately affected by the pandemic. For example, Austin, Texas, is putting $107 million in ARP funds toward housing for 3,000 individuals and stabilization for another 2,300 households.35 Thanks to this infusion of funding, along with private and philanthropic dollars, the city hopes to end homelessness, ensuring that safe housing allows marginalized populations to find and keep a job and build their financial security.36 Similarly, facing 3,000 pending evictions,37 St. Louis has committed nearly $72 million—or around 16 percent of its total allocation—to help low-income communities address housing insecurity through shelter and services for the homeless, funds to prevent eviction, and programs for young people.38
Facing 3,000 pending evictions, St. Louis has committed nearly $72 million—or around 16 percent of its total allocation—to help low-income communities address housing insecurity through shelter and services for the homeless, funds to prevent eviction, and programs for young people.
The pandemic forced too many families to choose between paying bills, affording child care, and putting food on the table, at a time when incomes are strained due to job loss or underemployment. In New Hanover* County, North Carolina, for example, 1 in 5 children experience food insecurity, and more than 16,000 people in the county live in food deserts, meaning they do not have convenient access to affordable, healthy food in their communities.39 Community leaders and service delivery practitioners have been working to address food insecurity in the county over the past few years. ARP funds allowed the city of Wilmington in New Hanover County to use $200,000 to bring a grocery store and mobile farmer’s market to underserved communities in the city.40
Flexibility in state and local investments also complement ARP-funded expansions in the maximum Supplemental Nutrition Assistance Program (SNAP) benefit, established in the December 2020 pandemic relief legislation,41 making a real difference in the lives of millions of people struggling to afford their basic needs. In Massachusetts, SNAP participation went up by nearly 100,000 households during the pandemic.42 The increased federal investment in SNAP benefits ensured that these households were able to access the benefit, while state flexibility ensured that people could safely use their SNAP benefits for online grocery deliveries. Furthermore, the child tax credit (CTC)—an important cash assistance benefit expanded under the ARP—has helped millions of families weather the worst of the pandemic by providing monthly cash assistance to offset the cost of raising a child. According to new research, 91 percent of families with incomes of less than $35,000 used the CTC to survive at a time when the economy was not recovering for many,43 including women.44 Eighty-eight percent of families earning just $35,000 used their CTC payments on food, clothing, rent, mortgages, or utility bills.45 After stabilizing their basic needs, individuals with employment goals are then much better-positioned to find and keep a job.
Supporting working parents and early childhood educators: New Jersey, Illinois, Alaska, and New Mexico
Early childhood education supports the healthy development of young children, allows families to have choices about their economic security, and enables employers to have access to a larger group of job seekers. Access to affordable, quality child care helps parents—especially mothers—participate in the workforce.46 State and local investments in child care infrastructure are therefore a critical piece of the process of enabling parental workforce participation.
One challenge ARP funding can target is child care workforce hiring and retention. Wages in this industry are low, despite the skills needed to nurture young minds with rich, interactive environments. Child care workers earn a median wage of $12.24 per hour, and 75 percent of the workforce—primarily women, and disproportionately women of color—earn less than $15 per hour.47 Turnover is high, and across the country, child care centers are struggling to find staff.48 A recent letter from the U.S. Department of Health and Human Services urged states to use their ARP dollars to support the early childhood workforce through the provision of increased staff wages, one-time incentives, benefits, scholarships, expanded shared-service models, and staff wellness supports.49
In New Jersey, the Legislature appropriated $100 million of state aid to create a first-of-its-kind Child Care Revitalization Fund.50 The appropriation will provide funding to licensed or registered child care providers through workforce development supports and a child care landscape study, facilities improvements, and funding for workforce retention and hiring—a critical activity, given that high turnover in child care settings can undermine quality outcomes for children.51
New Mexico is also using ARP funds to dramatically improve access for families, expanding child care assistance from families at 200 percent of the federal poverty line to families at 400 percent—the single largest expansion of child care assistance in the state.
States are also deploying targeted child care relief funds in strategic and innovative ways. To improve retention among educators, Alaska is awarding up to $2,580 to licensed early childhood educators working in a regulated child care or school-age program for personal or professional use.52 Illinois has applied funds to help support affordability concerns for families.53 The state also has taken a useful step toward supporting parents’ work by making searching for jobs for up to three months a qualifying activity for child care and helping families secure child care as they search for work.54 New Mexico is also using ARP funds to dramatically improve access for families, expanding child care assistance from families at 200 percent of the federal poverty line to families at 400 percent—the single largest expansion of child care assistance in the state.55
Moving forward, investments in operational capacity of labor market and unemployment systems are critical to meet employment goals
While investments in programs are critical to achieving positive economic and social outcomes, states and municipalities must also invest in two foundational elements: people and systems. As of September 2021, the private sector has significantly outperformed state and local governments in job recovery, and the public sector must not hamper economic recovery moving forward as it did after the Great Recession.56 Guidance from the U.S. Department of Treasury clearly shows that ARP funds can be used for both the costs of restaffing up to prepandemic levels and the cost of employees responding to the COVID-19 public health emergency and economic crisis, who include public safety employees, public health employees, and human services staff.57 State and local governments can also deploy these funds for the purposes of training and apprenticeships for public service jobs, which would allow them to meet their operational goals and upskill new and incumbent workers. To ensure that any of these proposed innovations and big ideas are actually executed, resume full capacity of basic services that were put on hold during the pandemic, and address the waves of retirements and voluntary exits,58 state and local governments must also replenish and expand their own workforces.
Finally, ARP funding is an opportunity to address serious shortfalls in technological systems that support employment and job seekers, such as UI and labor market information systems. At the height of the pandemic, states struggled to deliver UI payments due to frantic shifts to virtual workplaces, record-high caseloads, backlogs and delays in UI payments, and fraud.59 Outdated labor market information systems could not accurately capture and communicate the changing employment landscape, and as a result, could not drive needed policy responses.60 Operational investments in upgrading state unemployment and labor market information systems can prevent similar breakdowns in communication and service delivery in the future.
Pandemic recovery funding is not a solution to some of the United States’ most urgent systemic problems, such as lack of paid leave or chronically low wages in service sector jobs. But as America tries to right-size its labor market, and as state and local governments consider how to address the employment crisis brought on by the pandemic, ARP funding allows policymakers to invest in solutions that meet job seekers where they are, establish pathways to employment, and lay the groundwork for long-term, systemic change.
* Correction, November 29, 2021: This issue brief has been updated with the correct name of New Hanover County in North Carolina.
The authors would like to thank Lola Oduyeru, Laura Dallas McSorley, Karla Walter, and Rose Khattar for their significant input on this issue brief.