Many place-based policies have been unsuccessful, failing to deliver cost-effective benefits to disadvantaged communities. At the same time, the prevalence of extreme poverty areas—areas with a poverty rate of at least 40 percent—has been rising, as have the concentration of poor people in extremely poor areas.
David Neumark proposes that the federal government subsidize employment in places that are struggling. This would entail a two-phase subsidy, administered by local nonprofits in partnership with local employers and community groups. Job subsidies in the first phase of RCJS will cover 100 percent of wages at or somewhat above the relevant minimum wage for an 18-month period. The jobs must both have the potential to quickly build skills that lead to good jobs in the private sector and contribute to revitalizing and improving the disadvantaged areas where the jobs are subsidized. The second phase consists of a partially subsidized private sector job subsidized at a 50 percent rate for the first $30,000 of annual earnings.