Norton Introduces Bill to Provide Employers with Incentives to Hire Long-Term Unemployed
WASHINGTON, D.C.—Congresswoman Eleanor Holmes Norton (D-DC) today introduced a bill that would help address the ongoing crisis of long-term unemployment by giving employers a $5,000 tax credit against their payroll tax liability for each new net person hired who has been unemployed for 27 weeks or longer. Although the overall unemployment rate has dropped to roughly four percent, the number of long-term unemployed in October 2017 was 1.6 million, which accounted for 24.8 percent of the total unemployed population.
“Too many long-term unemployed Americans face employment discrimination as employers continue to show reluctance to hire these job-seekers because of the length of their unemployment. Therefore, my bill provides a necessary incentive to hire those who have been unjustifiably left behind,” Norton said. “These workers often have impressive experience and backgrounds. They have enviable work records. The country cannot afford to discard them. Putting the long-term unemployed back to work will provide a boost to our economy.”
Norton’s introductory statement is below.
Statement of Congresswoman Eleanor Holmes Norton on the Introduction of the Reducing Long-Term Unemployment Act
Today, I introduce the Reducing Long-Term Unemployment Act to address one of the lingering workforce tragedies in today’s economy—our long-term unemployed—and to keep the economy growing. Although the overall unemployment rate has fallen to approximately four percent, Americans who have remained unemployed for longer than 27 weeks have not enjoyed a similar recovery. In October 2017, the number of long-term unemployed (those jobless for 27 weeks or more) was 1.6 million, which accounted for 24.8 percent of the total unemployed population.
To make matters even worse, the long-term unemployed now face employment discrimination as employers show reluctance to hire these job-seekers because of the length of their unemployment. Therefore, my bill provides a necessary incentive to hire the long-term unemployed—a $5,000 tax credit for employers against their payroll tax liability for each (net) new long-term unemployed person they hire. This tax credit is large enough to give employers an incentive to increase the hiring and wages of those who have been unjustifiably left behind, while ensuring that the economy benefits from their participation. The credit would be available to the broadest base of employers because every employer, including nonprofits, pays payroll taxes, and employers could claim the credit on a quarterly, rather than annual, basis. According to the independent, non-partisan Congressional Budget Office, the proposal would “increase both output and employment” through four mechanisms: (1) with lower employment costs, employers would reduce the costs of their products and services, which, in turn, would first boost sales and then hiring and hours worked; (2) employers would pass on some of the tax savings to employees in the form of higher wages or other compensation, which, in turn, would increase employees’ purchasing power; (3) higher profits would lead to higher stock prices for public companies, increasing shareholders’ wealth and therefore their willingness to spend; and (4) with lower employment costs, employers would increase hiring. The bill has safeguards to prevent employers from gaming the system, including denying a credit to an employer that fires one employee and hires a replacement in order to take advantage of the incentive.
For some time, it has been clear that targeted policies are necessary to address today’s stubborn long-term unemployment rates. Without significant targeting, the long-term unemployed are in danger of becoming permanently unemployed. This group of competent and experienced Americans deserves better.
I urge my colleagues to support this bill.