Minnesota Subsidized and Transitional Employment Demonstration (MSTED)

MSTED’s primary goal was to improve employment outcomes for recipients of Minnesota’s TANF program, MFIP. The program sought to provide subsidized employment to MFIP recipients unable to obtain employment in the local labor market. MSTED included two tracks of subsidized employment based on the job readiness of eligible MFIP recipients:

• Paid work experience. Participants who were not job ready, as determined by MFIP job developers, were placed in a job at a public agency or nonprofit where they earned fully subsidized wages of $9 per hour up to 24 hours a week for up to eight weeks. Employment was expected to conclude at the end of the eight-week subsidy period.
• Subsidized employment. Participants who were more job ready, as determined by MFIP job developers, were placed in a job at a private employer where they earned subsidized wages up to $15 per hour for up to 40 hours a week. MSTED subsidized 100 percent of participant wages for the first eight weeks and 50 percent of wages for another eight weeks. MSTED required employers to place participants on their payroll for the second eight weeks with the hope it would allow for a smooth rollover to unsubsidized employment at the end of the subsidy period.

In addition to the subsidized wages, MSTED provided job readiness training and case management services before and concurrently with paid work experience and subsidized employment to help participants obtain their employment goals. Participants could participate in both paid work experience and subsidized employment tracks (not concurrently) as long as the total subsidy period did not exceed six months. The program model intended for most participants to initially be placed into subsidized employment, with paid work experiences reserved for participants who were not as job ready. However, as program implementation unfolded, MSTED job developers placed more people in paid work experiences as they found difficulties finding private employers to agree to subsidized employment placements.

Participation in MSTED was voluntary and was not required of individuals referred by MFIP employment counselors. For those who did decide to participate in the MSTED study and were assigned to the program group, their participation counted toward MFIP recipients’ required work activity hours.

MSTED providers successfully implemented most of the key elements of the program model; however, the three providers varied in how they delivered services. The primary variation was in how providers balanced the tradeoff between teaching participants job skills to prepare for subsidized employment and getting them placed quickly before they became disinterested and left the program. Some providers required that participants attend a two-week workshop at the beginning of the program, whereas others offered optional workshops over a longer period. Providers also varied in their use of paid work experience to build skills and provide immediate employment to increase engagement with the program. Two of the three providers used paid work experience in this manner, whereas the third provider did not.

Study authors also identified several challenges related to MSTED implementation:

• MSTED job developers reported difficulties meeting enrollment targets because of an improved economy that resulted in lower MFIP caseloads and because of MFIP employment counselors’ reluctance to refer people to the MSTED program due to doubts about the benefits and effectiveness of MSTED relative to the employment services the employment counselors provided. This required MSTED job developers to spend more of their time recruiting and enrolling people into the program instead of identifying potential private employer placements and preparing participants for work placements.
• MSTED service providers reported challenges in finding a balance between (1) providing job search assistance and soft-skills training like developing a résumé, interviewing, and job searching and (2) quickly placing participants in paid work experience or subsidized employment.
• MSTED sites reported only 34 percent of program group participants were placed and employed in a paid work experience placement, a subsidized job, or both one year following enrollment. The challenges with lower-than-expected placement rates were caused by the first two challenges above and difficulties MFIP job developers had finding private employers to host placements for MSTED participants.