Published: February 14, 2010
Philadelphia Inquirer

Where are stimulus funds for jobs?

States find the programs a hard sell as businesses think they may be too good to be true.

By Jane M. Von Bergen

In Washington, policymakers try to figure out how to use billions, even trillions of taxpayer money to stimulate the economy.

In Linden, Tenn., population 1,015, they make turnovers - the Bavarian creme is reportedly excellent, although some prefer the strawberry. Whether raisin or lemon, those turnovers expand the waistline, and the economy.

"Since we had more people, we were able to make more pies," said Dalyn Patterson, who owns Armstrong Pie Co. Inc. ("The South's Finest Since 1946") with her husband, Bert.

Federal stimulus dollars funneled through the state of Tennessee went into a job-creation program that provided 10 previously unemployed workers to Armstrong Pie and underwrote their salaries.

This same money, which totals $5 billion nationally through Temporary Assistance for Needy Families block grants, is available to all the states. TANF money usually funds welfare programs.

Pennsylvania and New Jersey are sitting on hundreds of millions of federal stimulus dollars that could be used to create jobs - $330 million in Pennsylvania and $195 million in New Jersey. Only Delaware, locally, has already created a similar program.

When the program ends in September, "we're keeping them," Patterson said of her workers.

Because her labor costs were low, she was able to increase annual production from 77,000 to 798,000 turnovers, expand Armstrong's distribution area to cover almost the whole state, and buy a packaging machine, among other equipment.

"Now we have a cookie line that we're introducing," Patterson said.

It sounds like a sweet deal, and easy as pie, but it's more complicated than that.

"I think there were a lot of technical challenges built into the funding," said Sharon Dietrich, who heads the Community Legal Services Inc. employment practice in Philadelphia and who has been among those pushing the state to set up a jobs program.

States thought, for example, that they needed to come up with a 20 percent match - a tough requirement when budgets were in a downward free fall, and even tougher in Pennsylvania, where there was a protracted battle over the most recent budget.

Now, it looks as if there is emerging clarity that the 20 percent can be in the form of supervision or training for these workers.

"We're working through these challenges," said Pennsylvania's newly appointed secretary of public welfare, Harriet Dichter, who started in January.

Right now, her department and the state's Department of Labor and Industry are close to developing a plan to put people to work. Similar talks are happening in New Jersey.

Another catch is that the funding is now set to expire by September, although there is legislation to extend it. Planning for a program that may soon end presents its own challenges, Dichter said.

In California, Dustin Stevenson ruefully calls the program the state's "best-kept secret."

So far, the Transitional Subsidized Employment program in Los Angeles County, administered through the South Bay Workforce Investment Board, has used stimulus money to subsidize salaries for 4,600 adults and 5,400 youths in a summer program, he said.

Stevenson's job is to sell the program to businesses.

South Bay's $160 million program was able to ramp up quickly and here's how, according to Stevenson:

The investment board already had experience placing welfare recipients into jobs, so a lot of the infrastructure was in place.

The investment board acts as a temporary staffing agency. All the people placed in jobs remain on their payroll, making various payroll and workers compensation benefits less complicated.

The companies themselves create the 20 percent match by providing supervision and training along a very carefully constructed formula based on the pay of the workers they receive.

The biggest obstacle?

"People think it is too good to be true," he said. "There is a deeply ingrained psychological issue. People think the stimulus is out there, but it is something ephemeral and nothing good will ever happen to me because of it. Maybe I'll read about something good in the newspaper."

Or in history books.

The most famous federally funded subsidized job programs occurred in the Depression when President Franklin D. Roosevelt created the Civilian Conservation Corps and the Works Progress Administration, employing millions of Americans.

A more recent example helped Osmond Ferguson, now a departmental inventory manager with the Philadelphia Police Department.

In 1973, Ferguson, 59, was 22 and unemployed. "Jobs were hard to find," Ferguson said, "especially for young people with limited experience." That was particularly true for young African American men like Ferguson who had no education beyond a high school diploma.

Ferguson learned about the federally funded Comprehensive Employment and Training Act, popularly known as CETA. Once he got his foot in the door, he was able to pass Civil Service tests and end up on the police payroll.

Now he owns a house and is ready to send his daughter off to college. "This has been my whole life."