IV. Economic Analysis
SCSEP had a budget of $448.3 million for fiscal year 2012 (Napili & Colello, 2013, 4). The Department of Labor (2013) reports that approximately 78 percent of SCSEP’s budget goes to non-profit agencies, which are required to compete for grants every four years (DOL, p. 9). Approximately 22 percent of its budget is distributed to the fifty states, the District of Columbia, and Puerto Rico; the allocation here is based on the number of low-income individuals over the age of 55 living in those jurisdictions (DOL, pp. 9-10). As much as 1.5 percent of the program’s budget is spent by the Secretary of Labor on “pilots, demonstration, and evaluation projects” of his or her choosing; another .75 percent is given to Guam, the Virgin Islands, Samoa, and the Commonwealth of the Northern Mariana Islands; another small portion is given to agencies serving Native Americans and Pacific Island/Asian Americans (DOL, p. 10). Federal law stipulates that no more than 13.5 percent of SCSEP’s budget can be spent on administrative “expenses” (DOL, p. 10). The law also states that 75 percent of its budget “must be spent on wages and benefits to participants, with the remaining funds for other participant costs, with an option to use up to 10 percent of these funds for training” (DOL, p. 10).
The more immediate economic effects of SCSEP are easy to see. SCSEP aims to reduce the unemployment rate for low-income individuals over the age of 55, and it undoubtedly does this. First, the program provides temporary subsidized jobs for participants. In 2011, SCSEP provided 46,309 such jobs for 85,113 program participants (Napili and Colello, 2013, p. 17). (Since the jobs are temporary, it follows that there are more participants than jobs.) Bby providing “training, physical examinations, personal and job-related counseling, transportation for employment purposes (under certain circumstances), and placement assistance,” the program also helps participants land subsidized jobs once leaving (Napili and Colello, 2013, p. 17). In 2010, 47 percent of SCSEP participants landed jobs within the next quarter; of these, 70 percent “remained employed through the next two quarters” (Napili & Colello, 2013, p. 17).
Not all of these jobs are high-paying, of course. Agencies employing SCSEP participants usually do not pay much more than the minimum wage, although employing agencies are required to pay “no less than the highest of the federal minimum wage, the state or local minimum wage, or the prevailing wage paid by the same employer for similar public occupations” (Napili & Colello, 2013, p. 17). And the average SCSEP “exiter” earns an initial salary of just $9.89 an hour (DOL, 2012, 5). Nonetheless, this is real money going into the hands of program participants and exiters, and multiple parties benefit as a result. (Whether these benefits outweigh the program’s costs will be discussed in turn.)
First, SCSEP benefits taxpayers. Simply put, SCSEP makes older working Americans more economically self-sufficient; consequently, they go on to pay more in taxes and take less from social welfare programs. The wages earned by program participants are “subject to federal, state, and local taxes” (O’Shaughnessy & Napili, 2006, p. 21). Participants contribute to Social Security, and their wages “are counted when determining eligibility for certain income-tested programs, such as the supplemental security income (SSI) program,” although they are “exempted in determining eligibility and level of benefits for the food stamp program and for federal housing programs” (O’Shaughnessy & Napili, 2006, p. 21). Needless to say, many SCSEP participants go on to find permanent employment and stop using social welfare programs entirely.
Second, SCSEP benefits businesses. By redistributing $448 annually from mostly wealthy Americans (for they are the ones who pay the majority of taxes) to lower-income individuals, SCSEP ensures that more of this money is going to be spent on local businesses, at least in the short-run. Numerous studies have shown that providing government subsidies to low-income individuals it the most immediate way to help local businesses. Moody’s, for instance, concluded in a 2008 study that expanding SNAP (Supplemental Nutrition Assistance Program) and unemployment benefits provides far more “bang for the buck for the economy” than cutting taxes (Bolduan, & Jansen, 2008). As one economist explained, “If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need—groceries, to pay the telephone bill, to pay the electric bill” (Bolduan, & Jansen, 2008). That dollar goes on to have a “ripple effect.” A dollar spent at the grocery store, for instance, “helps to pay the salaries of the grocery clerks, pays the truckers who haul the food and produce cross-country, and finally goes to the farmer who grows the crops” (Bolduan, & Jansen, 2008). By contrast, the wealthy have already provided for their immediate needs, and if they were to receive a tax break, which is essentially what would happen if SCSEP were cut, they would be less likely to put the money back into the economy, at least in the short-term.
Third, SCSEP benefits local communities, “providing a source of labor for various community service activities” (O’Shaughnessy & Napili, 2006, p. 20). Washko et al. (2011) point to a 2008 study by the Independent Sector estimating that one hour of volunteer work in the United States is worth $20.25 (p. 186). Washko et al. proceed to note that in that year SCSEP participants worked almost 50 million hours of community service, meaning that they “provided a total economic value of $989,899,116 worth of work to their host agencies and communities” (p. 186). They further note that once subtracting out the tax money spent to fund SCSEP, the program nets nearly $469 million, an investment return of 89 percent (p. 186).
Although these benefits are unarguable, any proper analysis must also consider SCSEP’s costs, namely, its opportunity costs. Many conservatives have argued that “spending money on welfare benefits depresses the economy” and that “if the money were available for investment instead, it would result in economic growth, which would make jobs and opportunities for advancement available for the poorest Americans” (Popple and Leighninger, 2011, pp. 89-90). A version of this argument was made in the recent presidential election when Mitt Romney contended that cutting taxes for the wealthiest Americans would result in massive job creation (Tyson and Zidar, 2012).
Economists Laura Tyson and Owen Zidar (2012) have reasoned that if this conservative argument is true, then the economic data should reveal the following two phenomena: first, cutting taxes on the high-income earners should be followed by employment growth, and, second, cutting taxes should be followed by especially high employment growth in areas with a disproportionately large number of high-income earners. Tyson and Zidar went back to the early 1970s and found “no link between income tax cuts for the top 5 percent and subsequent job creation.” Although “[s]trong employment growth followed the [1982] Reagan cut,” growth “following the [1993] Clinton tax increase exceeded the employment growth following the [2003] Bush tax cut, which was comparable in size to the Regan cut.” Tyson and Zidar also found that “[e]mployment growth in states with a large share of rich people” was “not much faster, on average, than it would have been otherwise after the Reagan and Bush tax cuts for the top 10 percent” and that it was not “much slower, on average, after the Clinton tax increase on this group.”
None of this, of course, means that SCSEP has no opportunity costs. All economic endeavors have opportunity costs. It seems clear, however, that, contrary to conservative critics, we can better provide employment and employment skills to older Americans by maintaining SCSEP and not by scaling it back and returning the savings to taxpayers.
V. Policy/Program Evaluation
As stated in the U.S. Code, SCSEP’s goal is to help “low-income persons who are age 55 or older, particularly persons who have poor employment prospects,” attain “economic self-sufficiency” and, ultimately, unsubsidized employment (Older American community service employment program). This statement is, of course, somewhat nebulous, as the code does not state how many people must be helped or to what extent they must be helped in order for the goal to be achieved.
Ever year the Department of Labor sets a specific employment goal, based on current economic conditions, for those leaving SCSEP. For instance, that department set goals that 47 percent of individuals leaving SCSEP would find employment in 2009 and that 43 percent would find employment in 2010 (U.S. Department of Labor [DOL] Employment and Training Administration Office of Policy Development and Research, 2012, VII-1). It turned out that 46 percent of SCSEP exiters found jobs in 2009 and 47 percent in 2010 (DOL, 2012, VII-1).
However it is not clear whether meeting the Department of Labor’s annual goal is proof that the program has achieved its goals. For it is theoretically possible for SCSEP to meet the Department of Labor’s goals while failing to meaningfully help older Americans attain economic self-sufficiency and find work.
In order to determine that SCSEP is accomplishing its goals one might want to compare SCSEP with similar job-training and job-placement programs. For if SCSEP were helping its participants find employment more successfully than comparable programs, then a case could be made that, at least on a relative scale, SCSEP is meeting its goals. For comparisons, one can look at, say, Michigan’s current job-training program, which has helped over 50 percent of those who completed the program to find employment (Johnson, 2011, p. 7), but such comparisons seems unfair since the average SCSEP participant is significantly different—namely, possessing fewer “employment prospects”—than the average participant in the Michigan program.
Since SCSEP’s primary goal is to help those who have “poor economic prospects,” another way to judge the program is to examine how well it serves participants with the poorest economic prospects. Put differently, one could say that SCSEP is to some extent meeting its goals if it is helping a substantial number of individuals whose needs are not being met elsewhere in society. Here the results seem fairly positive.
Just as could be expected, SCSEP exiters who could be expected to have especially poor employment prospects tended to have more difficulty finding employment. For instance, while 46 percent of SCSEP exiters in 2009 and 2010 found employment, this number was just 39 percent for those with disabilities, 39 percent for those lacking a high school diploma, and 36 percent for those over 65 (DOL, 2012, VII-3). Similarly, while the average SCSEP exiter earned an initial salary of $9.89 an hour upon leaving, this figure was $9.53 for those with disabilities, $8.79 for those lacking a high school diploma, and $9.37 for those over 65 (DOL, 2012, VII-5). But some groups with especially poor economic prospects did surprisingly well. For instance, although those with low literacy rates and those living in rural areas left for jobs with lower starting salaries than the average exiter (DOL, 2012, VII-5), people in these groups had more success finding employment (DOL, 2012, VII-3). Additionally, a recent study found that minorities exiting SCSEP have just as much success finding employment as non-minorities (Washko et al., 2011, 193). This latter fact speaks well of the program given that minorities in the general population have higher unemployment rates than non-minorities (Washko et al., 2011, 183).
Yet another measure of how well SCSEP achieves its goals can be found in the opinion of the program’s participants. Here the results are even more positive. Researchers from Social Policy Research and Mathematica Policy Research recently interviewed SCSEP participants and found that they were on average more satisfied with SCSEP than individuals who had used other federal and local government services (DOL, 2012, VIII-4). These interviews further found that those with especially poor economic prospects—e.g., non-whites, those over the age of 75, and those with limited English skills—tended to be the most satisfied (DOL, 2012, VIII-6). In fact, the older the respondent, the more satisfied: 88 percent of those over 75 said they were satisfied, compared to just 77 percent of those between 55 and 59 (DOL, 2012, VIII-7).
Researchers Ronald Aday and Gayle Kehoe conducted their own survey of SCSEP participants and received similarly positive feedback. Aday and Kehoe (2008) found that a majority of respondents believed that they had acquired new skills and attitudes about themselves that could be expected to improve their employment prospects (p. 136). “A large part of becoming employable for older workers,” they write, pointing to a 2002 study, “comes from regaining faith in their worthiness to compete for jobs with other workers” (p. 136). It is significant then that a majority SCSEP participants felt they now had “a somewhat more positive attitude about themselves as older workers” (p. 134). Most participants, for instance, believed that the program had helped them to “like themselves more” (72.2%), “have more self-respect (80%), look forward to the future more (84.1%), and feel that they are more in control of their own lives (76.9%)” (pp. 136-37).
Consequently, Aday and Kesko reported that a majority of participants felt more confident that they would be able to find and keep work in the future (76.9%) (p. 137). Although most remained afraid looking for work (63.5%), an even larger majority reported “feeling less afraid of failing now than they had before” (69.2%) (p. 139). Significantly, most respondents felt that SCSEP had enhanced their social skills (73.1%) and job skills (68.5%) (p. 137). And most felt that they had “made close friends through the program (88%) and believed they could rely on these friends if they needed help (82%)” (p. 140).
Aday, R.H. & Kehoe, G. (2008). Working in old age: Benefits of participation in the senior community service employment program. Journal of Workplace Behavioral Health, 23(1-2), 125-145.
Bolduan, K. & Jansen, L. (2008, January 29). Food stamps offer best stimulus—study. CNN Money. Retrieved from http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/
Johnson, F. (2010, July 30). Michigan job-training program offers lesson to nation. National Journal, 7.
Older American community service employment program. 42 U.S.C. § 3056.
Napili, A. & Colello, K.J. (2013). Funding for the Older Americans Act and other aging services programs. Congressional Research Service. Retrieved from http://www.fas.org/sgp/crs/misc/RL33880.pdf
O’Shaughnessy, C. & Napili, A. (2006). The Older Americans Act: Programs, funding, and 2006 reauthorization (P.L. 109-365). Congressional Research Service. Retrieved from http://www.nasuad.org/documentation/policy_priorities/OAAReauth2006_OShaughnessyCRS.pdf.
Popple, P.R. & Leighninger, L. (2011). The policy-based profession: An introduction to social welfare policy analysis for social workers (fifth edition). Boston: Allyn & Bacon.
Tyson, L.D. & Zidar, O. (2012, October 19). Tax cuts for job creators. New York Times. Retrieved from http://economix.blogs.nytimes.com/2012/10/19/tax-cuts-for-job-creators/?_r=0
United States Department of Labor. (2013). FY2014 Congressional budget justification: Employment and Training Administration community service employment for older Americans. Retrieved from http://www.dol.gov/dol/budget/2013/PDF/CBJ-2013-V1-06.pdf.
U.S. Department of Labor Employment and Training Administration Office of Policy Development and Research. (2012). Evaluation of the senior community service employment program (SCSEP): report from Social Policy Research Associates and Mathematica Policy Research, Inc. (DOL Contract No. DOLJ071A20545). Retrieved from http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_resultDetails&pub_id=2497&mp=y
Washko, M.M., Schack, R.W., Goff, B.A., & Pudlin, B. (2011). Title V of the Older Americans Act, the Senior Community Service Employment Program: Participant demographics and service to racially/ethnically diverse populations. Journal of Aging & Social Policy, 23(2), 182-197.
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