How ARPA Funding Has Improved the Labor Market

When President Biden signed the American Rescue Plan Act into law in March 2021, the United States was still in the thick of the Covid-19 pandemic. Most adults under 65 were not yet able to access vaccines. And unemployment levels and economic uncertainty were high. 

Nearly 18 months later much has changed. Unemployment is low, 3.7% in August. In fact, the labor market is so tight that private and public employers alike are finally feeling pressure to raise wages and offer benefits like flexible work schedules and remote or hybrid options to retain staff and recruit new employees to fill the glut of vacant positions. Workers are seizing this newfound leverage, organizing unions at a record pace. 

Yet, many Americans are unaware of the role ARPA has played in reducing unemployment and helping give workers the upper hand. For a year and a half, federal funding has flowed to states to keep critical public services intact and launch new public programs to support employment, housing, public education and more. 

Most of these programs are not making national, or sometimes even local, headlines. Yet,  many are making a difference in the lives of everyday Americans, particularly those facing the biggest barriers to upward socioeconomic mobility. And the most successful of these programs can serve as a blueprint for other states and cities seeking sustainable solutions to some of their most intractable challenges.

ARPA dollars have allowed states to address long standing problems for working families like shortages of affordable child care, high-quality preschool programs and home care services. It also has allowed states to invest in workforce development and support for people entering, re-entering, or seeking advancement in the job market. 

ARPA-funded initiatives are providing short-term and long-term payoff. They knock down barriers to employment and advancement, while simultaneously creating new jobs and improving pay for existing positions in essential, high-demand fields suffering from high turnover, such as child care and home care services. 

Those benefiting the most from these programs are economically disadvantaged communities that were hit hardest by both the pandemic and the resulting unemployment. For example, Michigan is using ARPA funding to reduce and prevent educational and economic disparities, before these gaps begin, by investing in a big expansion of its state-funded preschool initiative, the Great Start Readiness Program. The goal is to ensure that every eligible four-year-old—those from families with an income at or below 250% of the federal poverty level ($57,575 for a family of three)—is served. Long term, this will pay dividends by helping close achievement gaps. In the short term, it creates new jobs and enables many low- or no-income parents, especially single mothers, to enter or re-enter the workforce.

ARPA funding also has staved off and restored cuts to state and local public services across the country, preventing layoffs and creating new positions while ensuring continuity of services and maintenance of public infrastructure. The funds also have allowed for hazard pay and raises to essential workers put at heightened risk during the pandemic, providing a boon to individual employees and their families as well as local economies. 

States are also using ARPA funds to proactively improve the labor market for workers and employers alike. Wisconsin has dedicated ARPA dollars to a new workforce development grant program that encourages creative solutions to challenges that employers face in recruitment and retention of workers. The program also helps prospective workers when entering, re-entering or advancing in the job market. Eleven local workforce development boards—public entities under the statewide Department of Workforce Development—received grants to subsidize employment and skills training opportunities with local employers. 

Milwaukee County is launching a program to “provide individualized assessment of skills, experience, and job readiness,” along with job readiness training and paid work experience, with “specialized outreach to justice-involved individuals, veterans, homeless individuals, individuals with limited English language proficiency, individuals with disabilities, LGBTQ individuals, human trafficking survivors, and other traditionally underserved populations.” 

The Western Wisconsin Workforce Development Board is providing “paid work experience opportunities, hard and soft skills training in in-demand jobs, on-the-job training opportunities, and enhanced supportive services, including childcare, housing, transportation, and worker stipends.” The grantees are targeting high-demand industries, including construction, hospitality, healthcare, IT, transportation and direct care services.

The need to recruit and train workers to provide in-home care could not be more urgent. In Wisconsin, one in four direct home care worker positions is vacant, leaving the state’s most vulnerable residents and their families scrambling—and often failing—to meet their needs. To address its crisis of care for seniors and people with disabilities, Wisconsin has also invested ARPA funds in improving the quality of home and community-based service jobs. Its Medicaid rate reform initiative provided an immediate 5% reimbursement rate increase for providers to help them retain and recruit staff. 

While that is a meaningful number, it could be maximized if Wisconsin brought those HCBS positions back in-house so that home care workers are at least partially public employees, as they are in neighboring Minnesota, where unionized home care workers negotiated a $15.25 minimum wage in 2021. Public sector jobs usually offer better pay and benefits than their nonprofit and for-profit counterparts, while being more cost-effective in the long run than outsourcing.

These are just a few examples of what the big numbers from the 2021 federal stimulus package look like on the ground. They look like good public sector jobs not lost but improved. They look like pathways to employment and advancement for people who have faced enormous barriers—providing them with stability, more economic security, and a future, while helping public and private employers staff up. They look like children from disadvantaged families getting the benefit of high-quality preschool so they can start elementary school on a level playing ground. 

When we fully fund government programs and services, they can and do deliver. ARPA has indeed rescued individuals, families and communities through its historic investment in public services. Our challenge will be mustering the political will to sustain strong funding for these vital programs and services into the future.