The generosity of the compensation package offered through the proposals would encourage some people who could have otherwise had low-wage jobs in the private sector to shift over. If the economy were to enter a recession, millions of unemployed might flock to jobs guaranteed by the federal government.
In the short term, these benefits and wages would be a boon to many of these participants. One of the major concerns is how people would fare while in these guaranteed jobs and whether they would ever be able to move out of the program to better employment in the private sector. In a recent meta-analysis, economists David Card of the University of Berkeley, Jochen Kluve of Humboldt University, and Andrea Weber of the University of Mannheim analyzed estimates of over 200 evaluations of active labor-market programs around the world. They found that while job-search assistance, sanctions, or subsidized private-sector-employment programs demonstrate some level of effectiveness, public-sector-employment subsidies generally have negligible or even negative effects across all time horizons.
The authors note that the poor performance of public-employment programs confirms their own earlier work and another study from University of Chicago professor James Heckman. They suggest that the consistently weak performance of public-jobs programs suggests that “private employers place little value on the experiences gained in a public sector program . . . and [programs] only serve to slow down the transition of participants to unsubsidized jobs.”