The New Stimulus Package Leaves Out Some of the Nation’s Best Workforce Programs. There’s Still Time to Fix This.
By Kate Tromble
As the coronavirus pandemic spreads nationwide, the heaviest toll is falling on our country’s most vulnerable residents. Mass layoffs are compounding the devastating health effects of COVID-19 on low-income workers, communities of color and others who were struggling long before this crisis began.
That’s why it was disappointing that some of the nation’s most results-driven nonprofit employment and workforce training organizations — known as employment social enterprises (ESEs) — were largely left out of Congress’ new $484 billion emergency relief package and the recent $2.3 trillion CARES Act. These mission-driven organizations provide training, jobs and other services to individuals who face the highest barriers to employment, including Americans who are formerly incarcerated, recently homeless or who have struggled with addiction, as well veterans and opportunity youth.
The CARES Act offered a temporary lifeline to many small businesses and some nonprofits by creating the Paycheck Protection Program (PPP), which guaranteed loans of up to $10 million, and providing the Federal Reserve $600 billion for the Main Street Lending program to further assist businesses. While the new stimulus package adds more than $320 billion to replenish the Paycheck Protection Program, Congress has yet to fix a gaping hole that exists between these lending programs that threatens some of these successful and evidence-driven employment social enterprises.
Only businesses and nonprofit organizations of 500 employees or less are eligible to apply for the PPP loans. Moreover, as nonprofits, the Federal Reserve Board is indicating that they will also not be eligible for Main Street loans. But ESEs like Center for Employment Opportunities (CEO), Goodwill of Central Texas, and Goodwill of San Francisco, San Mateo and Marin surpass the employee threshold because they include on their payrolls participants in their workforce training programs in order to show job experience to future employers.
Many of these workforce organizations are facing a triple hit as fundraising slows, income from their revenue-generating businesses declines, and the private companies they partner with reduce the work available to ESE clients.
The Center for Employment Opportunities employs approximately 8,000 formerly incarcerated individuals in work crews that provide supplemental indoor and outdoor maintenance and neighborhood beautification services to more than 40 customers in 10 states, including some that have been hardest hit by COVID-19 such as New York, California, Michigan and Colorado. At the moment their work crews are operating at about 50 percent of their normal capacity, meaning almost 4,000 of their participants are without work.
Goodwill of San Francisco, San Mateo and Marin, a 104-year-old nonprofit ESE whose 19 retail stores and 26 donation centers remain closed because of shelter-in-place orders, has been forced to furlough its 600 workers, many of whom are formerly incarcerated or recently homeless. Goodwill Central Texas’s employment social enterprise, Goodwill Staffing Group, seeks to address high levels of unemployment among vulnerable groups by connecting them to jobs in local industries, but its services are also at risk without access to federal support.
Independent research by Mathematica Policy Research shows that ESEs provide a significant return on investment — $2.23 for every dollar spent by an employment social enterprise. In the study, 25% of the individuals served had never had a job, 70% had been convicted of a crime, and 85% had experienced housing instability. Despite these barriers, the ESEs more than doubled job retention and significantly increased wages and total incomes for these individuals.
With unemployment rising, the demand for the services ESEs provide will only increase. Keeping these organizations from closing or severely reducing services is critical for workers and the economic recovery of our communities.
There are two potential ways the government could help. First, the Federal Reserve could use its authority to open up the Main Street Lending program to nonprofits. House Speaker Nancy Pelosi has even indicated that Congress intended them to be eligible for the program. Second, Congress could use its next emergency relief measure to fix both the PPP and the Main Street Lending program and allow employment social enterprises to continue to train, employ and support workers.
“By making this fix, Congress enables organizations like CEO to continue focusing on creating jobs for people who need them most, extending critical support that will ensure those jobs are there today and into the future,” said Bill Heiser, Senior Director of State Policy at CEO.
The evidence tells us that well-designed employment and workforce training programs can make a big difference in the lives of residents. We hope policymakers will look closely at this data when determining how best to help individuals and families who face the greatest risks.
Kate Tromble is Vice President for Federal Policy at Results for America.
