On the Introduction of the Reducing Long-Term Unemployment Actby Representative Eleanor Holmes Norton
Posted on 2013-12-12
of the district of columbia
in the house of representatives
Thursday, December 12, 2013
Ms. NORTON. Mr. Speaker, I rise today to introduce the Reducing Long-
Term Unemployment Act, to address one of the lingering workforce
tragedies resulting from today's economy--our long-term unemployed--and
to spur economic growth. While millions of Americans are unemployed, my
bill targets those particularly hard hit by unemployment. In November
2013, the number of long-term unemployed (those jobless for 27 weeks or
more) was 4.1 million, which accounted for 37.3 percent of the total
To make matters even worse, the unemployed now face employment discrimination and employers are reluctant to hire the long-term unemployed because of the length of their unemployment. Therefore, my bill provides a necessary incentive--a $5,000 tax credit for employers against their payroll tax liability for each (net) new long-term unemployed person they hire. The tax credit is large enough to give employers an incentive to increase hiring and wages, which would inject demand into the economy. The credit would be available to the broadest base of employers because every employer--government, non-profit and for-profit--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.
For some time, it has been clear that policies to address today's unusually stubborn unemployment need to be targeted in order to be effective. Without significant targeting, the long-term unemployed are in danger of becoming permanently unemployed. This group deserves better. The long-term unemployed are also at risk for losing their unemployment benefits without an extension of the Emergency Unemployment Compensation program before December 28, 2013. I ask the House of Representatives to support this bill because it targets this too-often neglected group of Americans.
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