Cost Analysis of the Minnesota Subsidized and Transitional Employment Demonstration. The Subsidized and Transitional Employment Demonstration. MDRC Working Paper. OPRE Report 2019-108

The Minnesota Subsidized and Transitional Employment Demonstration (MSTED) is testing the effectiveness of subsidized employment for individuals enrolled in the Minnesota Family Investment Program (MFIP), Minnesota's Temporary Assistance for Needy Families program, who were unable to find employment after participating in the state's existing welfare-to-work program. To learn about the program's effects and costs, the Administration for Children and Families in the U.S. Department of Health and Human Services funded a random assignment evaluation of MSTED, in which individuals were randomly assigned to a program group that had access to MSTED services or to a control group that did not have access to MSTED services but could receive other welfare-to-work services. The purpose of the cost study is to determine what it cost to provide MSTED services to a single program group member once MSTED had reached a steady state of operation. The analysis estimates the costs per sample member in three categories: (1) MSTED costs; (2) MFIP costs; and (3) education and training costs. In the first year after random assignment when program group members who had been placed in subsidized employment were still receiving subsidized wages, program group members were more likely than control group members to have been employed. However, by the end of the second year after random assignment when subsidies had ended, program and control group members were employed at similar levels. This study is part of a larger demonstration funded by the Administration for Children and Families in the U.S. Department of Health and Human Services, called the Subsidized and Transitional Employment Demonstration (STED), which is testing various subsidized employment strategies in several locations across the country.