Our Workers Need More Than Band-Aids
The proposal by Congressman Tom Reed and the Problem Solvers Caucus to make permanent The Work Opportunity Tax Credit (WOTC) sounds like a good idea. The WOTC is intended to induce employers to hire individuals from groups who have historically had a difficult time finding work; among these are recipients of Temprary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) benefits, veterans and ex-felons. But how effective is it really?
The WOTC is a replacement for the Targeted Jobs Tax Credit (TJTC) passed in 1978 that was largely discredited because, according to a study in 2013 by the Congressional Research Service, it “appears to have largely subsidized firms for doing what they would have done in the absence of the program. TJTC also was criticized for the degree of assistance it provided individuals for whom the credit was claimed.”
The WOTC was intended to fix these failings. But, per the CRS study, “since the WOTC’s inception…changes have been made that make it more closely resemble the TJTC (e.g., the retention period was reduced from 400 hours or 180 days to 120 hours).”
Furthermore, Congress does not know how many people are actually helped because no one is tracking how many certifications are claimed on tax forms. CRS: “Studies of federal employment tax credits have been limited in purpose or scale.” The results from the few studies done are not good:
A 2001 study undertaken for the Department of Labor by Westat and Decision Information Resources, Inc., entitled Employers’ Use and Assessment of the WOTC and Welfare-to-Work Tax Credits Program, looked at 16 firms in five states and found that “the tax credits play little or no role in [the 16 employers’] recruitment policies,” adding the recommendation that a larger more representative study be conducted because “these observations do raise a question about the extent to which the tax credit is serving the purpose for which it is intended-to serve as an economic incentive to encourage employers to hire individuals from specified target groups whom they would not have hired in the absence of the credit.”
A 2002 analysis of participation rates, “The Work Opportunity Tax Credit: Participation Rates Among Eligible Workers,” published in the National Tax Journal, found that for the WOTC’s two largest eligible groups-TANF and SNAP- “relatively few eligible new hires have the credit claimed for them. In 1999, employers were estimated to have claimed the WOTC for less than one-third of newly employed persons from the TANF group and for less than one-fifth of newly employed persons from the food stamp youth group.”
The WOTC legislation has probably done a little bit of good and I applaud Mr. Reed’s attempts at helping these groups. However, making a temporary tax credit permanent after it has been found to be largely ineffective since 1978 is hardly a solution to a problem.
We need representation in Congress that does more than offer good sounding band-aids to the very real and very difficult problems the people of the Southern Tier face. Rather than give handouts to corporations to encourage them to do some of the work of government would it not be better to work on the problems that led to these groups being difficult to employ in the first place.
If we want to help veterans trying to re-orient themselves into society perhaps, we should cut the defense spending and stop sending so many of our young men and women into endless wars. Re-orientation by veterans could be eased if, rather than having a professional, voluntary army representing less than 1 percent of the population, we re-instituted a draft and shared national service among a larger portion of the population.
We could take those savings from defense and invest them to improve the education and opportunities for our youth so there are fewer TANF and SNAP recipients dependent on federally subsidized employers providing less than living wage jobs. Good public education was a unifying force in this nation that is now being outsourced to private corporations that in effect make our children opportunities for profit.
Rather than providing tax credits to hire ex-felons struggling to re-engage in a civil society we should stop building for profit prisons that ensnare the Departments of Justice and Homeland Security into the dictates of supply and demand, investing instead in rehabilitating those individuals so they are able to be productive once they have paid their debt to society.
Re-hashing old, ineffective ideas and re-packaging them as bi-partisan problem solvers is just plain inadequate. Our nation and the people of the Southern Tier deserve better.
Tom Meara is a Jamestown resident.