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Pascrell, Reed Bill to Assist Long-Term Unemployed Advances in Senate

Bipartisan legislation would extend Work Opportunity Tax Credit to incentivize hiring of workers that have exhausted their unemployment benefits

WASHINGTON – U.S. Reps. Bill Pascrell, Jr. (D-NJ) and Tom Reed (R-NY), both members of the House Ways and Means Committee, today praised the Senate Finance Committee for advancing their legislation that would incentivize businesses to hire qualified individuals that have been out of work for more than 26 weeks. The provision was included in the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, a package of “tax extenders” that have expired or will expire at the end of this year. The provision and its House companion, H.R. 3726, the Long-term Unemployed Hiring Incentive Act, would extend the successful Work Opportunity Tax Credit program to allow companies that hire long-term unemployed individuals to be eligible for a tax credit of up to $2400. The Senate amendment was sponsored by Senators Portman, Cardin and Warner.


"I'm pleased to see this legislation take a critical step forward and that we now have bipartisan, bicameral support for helping the long-term unemployed and creating jobs," said Pascrell. "This commonsense approach will help break the stigma suffered by so many of the long-term unemployed by offering employers incentives to get these folks back to work. I look forward to working with my Ways and Means colleagues to incorporate similar language in the House and make this important investment in our nation's workforce."

“Creating a fair environment for the long-term unemployed to get a job and support their families is a positive step toward breaking the cycle of long-term unemployment,” Reed said. “Today’s progress is good news for getting millions of Americans back on their own two feet and in a position to care for themselves and their families. This is a fair, common-sense approach and one I am pleased to see move in the right direction.”

The Long-Term Unemployed Hiring Incentive Act extends the Work Opportunity Tax Credit (WOTC) program to cover qualified long-term unemployed individuals. WOTC provides businesses who hire certain qualified individuals a general business tax credit equal to 40% of the first $6000 of their first years’ salary, meaning the maximum credit a business can claim per employee is $2400. The bill defines "long-term unemployed" as an individual who has exhausted their regular unemployment compensation (the first 26 weeks of unemployment benefits, or slightly over six months) since the economic crisis began in 2007.

According to the White House Council of Economic Advisors, the current elevation of the unemployment rate is entirely due to long-term unemployment. The 2014 Economic Report of the President shows that in December 2013, the unemployment rate for workers unemployed 26 weeks or less fell to lower than its average in the 2001-07 period, while the unemployment rate for workers unemployed 27 weeks or more remained higher than at any time prior to the Great Recession.

A recent Brookings Institute study also found that only 11% of Americans who are long-term unemployed find steady, full-time work a year later according to data from 2008 to 2012, with only 39% finding work at all during that year.

Although the unemployment rate has fallen to 6.7 percent in February of 2014, nearly the lowest rate measured by the Bureau of Labor Statistics since 2008, the unemployment rate for those out of work for 27 weeks or more has remained persistently high. About 3.8 million Americans fall into this category of “long-term unemployed”, or about 37 percent of the unemployed. While it has fallen from a high of four percent at the height of the recession, the current long-term unemployment rate of 2.5 nearly equals the highest rate on record prior to the current crisis.

The Federal Reserve Bank of Boston recently published research showing that job applications from those out of work for more than six months receive far fewer call backs from prospective employers. In fact, the study found that those out of work for six months or longer received fewer call backs for a job in the same industry they were previously employed than someone with no experience in that industry but who had only been out of work for a short period of time.

Original cosponsors of H.R. 3726 include Congressmen Jon Runyan (R-NJ), Alan Lowenthal (D-CA) and Tom Reed (R-NY).

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