Weekly Legislative Update - June 10, 2019
Situation As Congress Returns From Recess
The House returned last week from a two-week Memorial Day Recess and District Work Period.
So far, the list of co-sponsors of H.R. 2213, "To Amend the Internal Revenue Code of 1986 to make the work opportunity tax credit permanent," stands at eleven (not counting principal sponsor Mike Thompson (D-CA), chairman of the Select Revenue Measures Subcommittee):
If every WOTC advocate asked their representative in the House to co-sponsor H.R. 2213, we can surely add many more to this list.
In Ways and Means it's well known that EITC and Child tax credit expansion will headline the chairman's mark-these programs require funding, so there will be offsetting revenue. To persuade the chairman to include permanent WOTC we need maximum support of Ways and Means Democrats, and so far only 3 of 25 Ways and Means Democrats have co-sponsored H.R. 2213.
Understand, Chairman Richard E. Neal will consult privately with Democratic members and assure their support of his chairman's mark in advance of the formal meeting of Ways and Means to vote on the mark. We must assure that in those private meetings all committee Democrats will hold out strongly for permanent WOTC, thus limiting the tendency to treat all extenders the same-they are not the same! Some extenders can be granted short-term extensions, others like WOTC which has proven merit should be made permanent-this is the case we want each Ways and Means Democrat to argue when they speak to the chairman about their priorities to gain his assurance that permanent WOTC will be in his mark, the bill he'll present to the full committee for approval.
We must get to work to assure all Ways and Means Democrats are on board with permanent WOTC in their discussions with Chairman Neal on the extenders, which will be at a high point the next two weeks.
The situation in the Senate is that Senator Rob Portman has introduced a bill, S. 978, "Work Opportunity and Jobs Act," to make WOTC permanent. There are 15 Republican members of the Senate Finance Committee, and it's chairman, Senator Charles Grassley (R-IA), will be the deciding vote on permanent WOTC because the position he takes will invariably be supported by the Republican majority on the committee.
So far, only two Finance Committee Republicans are supporting S. 978: Senator Rob Portman (R-OH), the principal sponsor, and Senator Bill Cassidy (R-LA), a co-sponsor. Senator Roy Blunt (R-MO), a member of the Senate leadership, is also a co-sponsor.
Now is the time to be working hard to get other Finance Committee Republicans to co-sponsor the Portman bill to make WOTC permanent. The more GOP members co-sponsoring, the greater the likelihood Senator Grassley will decide for permanency. This isn't an easy decision. Permanent WOTC must be fully funded by offsetting revenue, and with eyes now turning to the Federal budget and debt, the easy route is to opt for a short-term extension, which doesn't require offsetting funding. Besides that, Senator Grassley has long been committed to ethanol and wind energy credits, so WOTC isn't the highest of his priorities.
Here are six uncommitted Republican Finance Committee members who've supported, or leaned toward supporting, WOTC in the past. It's important that the month of June be devoted to urging them to co-sponsor S. 978, the Portman bill to make WOTC permanent.
If all the above co-sponsor S. 978, we'll have a bare majority of Finance Committee Republicans supporting permanent WOTC!
Bi-Partisan Discussions May Block Permanent WOTC Unless We Act Now
At the Members' Hearing last Tuesday in Ways and Means, Republicans repeatedly tipped their hats to Chairman Neal for promising he'd work "in a bi-partisan manner" with GOP members in writing tax legislation.
The ranking Republican on Select Revenue Measures Subcommittee, Congressman Adrian Smith, noted discussions were underway for a bi-partisan tax extenders bill and he hoped "they will be successfully concluded."
Ordinarily, WOTC advocates would have no problem with bi-partisanship, but in this case it's a major cause of concern. Chairman Neal's giving the top Republican on Ways and Means, Kevin Brady, a voice in deciding permanent WOTC is like feeding little-red-riding-hood to the wolf.
The fact that Congressman Brady is adamantly opposed to WOTC is well known. Chairing the markup of TCJA in December, 2017, he produced a bill terminating WOTC and, when Democrats moved to restore it, he made sure every Republican-even those who support WOTC-voted with him against restoration.
As a result, WOTC went to the Senate and barely won extension, at the cost of multinational corporations and banks-who account for 40 percent of US employment, losing their WOTC credits to a new BEAT tax.
We are concerned that Mr. Brady will have Chairman Neal's ear in determining the shape of the final package. We see him going along with a short-term extension-thereby blocking WOTC-a large part of which aids Democratic constituents-from being permanently anchored in law.
We mustn't falter in our commitment to permanent WOTC. It'll take rousing committee Democrats to weigh in with Chairman Neal, find where he's leaning, and make every effort to persuade him for permanency.
The plan is to persuade a handful of senior Ways and Means Democrats to reach out soonest to Chairman Neal, press him that permanent WOTC has long been a major goal of Democrats but has eluded us for 22 years. The opportunity is here if Mr. Neal will grasp it, Democrats must press their chairman to find a way to get it done.
Most members will have already completed their "wish lists" and submitted to the chairman, so they may be sitting tight awaiting the chairman's decision. They may not be focused on WOTC, which is another reason for a final effort to get members to zoom WOTC, given the prospect that Mr. Brady can have the chairman's ear at any time.
Model Letter to Congress Supporting Permanent WOTC
TIA has sent the following letter to members of Congress:
Since 1997, Congress has used the work opportunity tax credit as an incentive to employers to hire workers from narrowly targeted groups of the disadvantaged, thereby expanding opportunity for those facing poverty, stigma, or other barriers to employment. We believe WOTC has proven its worth and should be made permanent. Evidence-based results speak for themselves: each year more than 2 million unemployed public assistance recipients (TANF, SNAP, SSDI, SSI), veterans, disconnected youth, and residents of high-poverty areas of cities and counties find jobs by checking a box on a one-page form accompanying their job application. State workforce agencies must verify each worker's eligibility before employers can claim the credit, making WOTC consistently free of fraud and abuse. WOTC has been proven to be the Federal government's most cost-effective jobs program, costing a maximum of $1,900 per job for most workers, private employers paying the rest, pumping income into local communities. A study by the University of Pennsylvania's Wharton School shows that saving on public assistance from WOTC is more than twice the ten-year cost estimated by the Joint Committee on Taxation at $19 billion. The credit is capped, and an employer can take it only once for the same worker.
Workers hired using WOTC are mostly under 30, with low skills or less education, including the 20 percent who don't graduate from high school. For many, family dissolution, homelessness, and discouragement contribute to a history of intermittent work and low earnings. The population most at risk of stagnating in high-poverty communities is daunting: nearly 20 million have poor job readiness or disabilities, according to BLS. Still, research finds most of the low-earning population are highly motivated to work. Every job is a critical lifeline for these workers because having a job, staying healthy, and studying has been shown to be the route to higher earnings. WOTC offers a better chance for a job, and in conjunction with the earned income and child tax credits, forms the cornerstone of the social safety net. Looking at the bottom rank of workers with lowest average weekly wages-11 million altogether, and 2 million single parents, we find WOTC hires account for an estimated 28 percent of those employed. WOTC reaches workers most in need of a job-those on welfare or living in depressed areas-and has a high take-up rate,
Department of Labor data for fiscal year 2013 (the last year available), when there were 1.6 million WOTC hires, show 600,000 hired above $9 an hour, the rest below $9. Thirty percent were in sales occupations, 22 percent in production including manufacturing, 19 percent in office administration, 17 percent in food preparation and serving, 5 percent in healthcare, and 2 percent in buildings and grounds maintenance. Overall, WOTC workers were distributed in 23 occupations representing all major sectors of the economy; WOTC jobs are not dominated by food service and hospitality sectors. As healthcare is a growing sector with good jobs, the data show that WOTC should be open to private non-profit employers.
Moreover, WOTC is the only jobs program, of the many models Congress has studied, that's demonstrated ability to reach a scale in hiring proportionate to the size of the disadvantaged population, without exploding the cost. Attractive models that rely on mentoring, testing, and training, often including life-skills advice, have produced quality results, but these programs are labor-intensive, requiring a staff of case managers, counselors, trainers, and others; as a result, their size and output is invariably low, and cost per graduate many times that of WOTC, where individuals start with a job and advance on their own with education. In fact, WOTC is often used to obtain jobs for graduates of special training programs. City and county welfare and economic development agencies that are at the cutting edge of training TANF and other low-income populations, say they need WOTC for job placement after training. These local agencies have some of the finest individual training programs, which are regularly re-evaluated and improved by adopting new and more cost-effective techniques. Because they never have enough money for training, they depend on WOTC for jobs for the majority of clients exiting welfare. The present system of community-based training for the disadvantaged, combined with WOTC for job development and placement, is effective and should be supported.
WOTC is adaptable to new labor market challenges, as demonstrated by the explosion of veterans' hires after enactment of the VOW To Hire Heroes Act, and its extension to residents of depressed areas via empowerment zones and several hundred rural counties. It's sometimes alleged that, because employers have a vacancy that must be filled, those vacancies will go to people on public assistance, disconnected youth, the disabled, or veterans without the need for WOTC. This doesn't square with the facts. Any job seeker can verify that he or she must compete for a job, often against people with more education, a stable home, and money for getting to work, compared to coming from poor schools, subsidized housing, and bus money that leaves less for food. Without WOTC, hiring managers will choose the most promising worker, and those on public assistance or stigmatized will lose the competition and often stop looking for work. Most often, non-disadvantaged applicants outnumber the disadvantaged by 2:1 to 4:1; WOTC levels the playing field. It acts as a magnet to pull disconnected youth and other disadvantaged workers off the sidelines.
Nor does a low national unemployment rate mean WOTC is unnecessary. Governors have designated thousands of low-income areas as Opportunity Zones to deal with persistent poverty and decline through location-based solutions. By lowering the cost of a job to employers and boosting demand for labor, WOTC can complement investors' capital and catalyze area renewal. WOTC's ability to increase employment in the zone helps attract capital, and the synergy between capital and labor can boost productivity and purchasing power, helping to restore a community's economic vitality.
Thank you for the opportunity to bring this important issue to your attention. Please work to assure WOTC is made permanent when it comes before you for renewal. Other components of the social safety net are essentially permanent; WOTC should be permanent too.