Based upon the work of Dr. Peter Cappelli, a labor economist at the Wharton School of Business at the University of Pennsylvania, the National Employment Opportunity Network (NEON) has been able to inform Washington policymakers that WOTC does what it is supposed to do – influences employer hiring practices. Dr. Cappelli's work demonstrates that WOTC is a cost effective way to encourage the private sector to hire those receiving public assistance.
According to Dr. Cappelli’s studies:
- Employers respond to the tax incentive and change their hiring practices by targeting WOTC eligible individuals.
- The average WOTC hire stays on the job 2.3 years
- WOTC saves states $4 B collectively each year in matching and administrative costs for welfare, food stamps, and Medicaid.
- The federal government receives an average net savings of $17,700 per individual just from TANF, SNAP, Medicaid and housing subsidies.
- WOTC is one of the most cost effective hiring programs ever enacted by Congress.
- Over a 10 years period, WOTC saves the federal government $144 B in TANF, SNAP, Medicaid and federal housing subsidies, and saves the states $40 B in TANF, SNAP and Medicaid payments.
How WOTC Works
Employers may qualify for a federal tax credit for hiring individuals ‘certified’ as a member of a WOTC "targeted group." The credit for most groups is up to $2,400. In addition there is a generous two year credit of up to $9,000 for hiring long-term TANF recipients as well as an up to $9,600 credit for hiring unemployed veterans.
By statute, WOTC requires participating employers to pre-screen job applicants for eligibility by having them complete an IRS Form 8850 on or before the day of a job offer.
Target Groups Include
- Qualified TANF Recipients
- Qualified Long-Term TANF Recipients
- Qualified Snap Benefit [Food Stamp] Recipients
- Designated Community Residents
- Supplemental Security Income [SSI] Recipients
- Vocational Rehabilitation Referrals
- Qualified Ex-Offenders
- Qualified Veterans
- Summer Youth Employees
- The Long-term Unemployed
Current WOTC Legislation:
H.R. 3562 to make the Work Opportunity Tax Credit permanent, Tom Reed (R-NY) and Joe Crowley (D-NY).
Past WOTC Accomplishments
At the end of 2015, NEON led the effort to get Congress to pass the PATH act which included a five-year extension that goes through 2019. The PATH act includes an expansion of WOTC to the Long-Term Unemployed defined as those who have been unemployed for 26 consecutive weeks or longer.
NEON also played a key role in the American Taxpayer Relief Act of 2012 which extended WOTC for 2 years plus a one-year extension of WOTC in 2014.
NEON worked with the Wayes and Means and the Finance committee to pass Veterans Opportunity to Work (VOW) to Hire Heroes Act of 2011: Signed into law on November 21, 2011 the legislation is designed to help veterans of war transition into civilian employment. The VOW act amends and expands the definition of the WOTC “qualified veteran” category, granting a tax credit to employers for hiring certain qualified veterans.
In February of 2018, Congress passed the Bipartisan Budget Act of 2018 which contained a retroactive extension through December 2017 of the Designated Community Resident hiring incentives as well as the Indian Employment hiring incentive. NEON played an active leading role in this effort.
In 2017, because of NEON’s efforts, the Social Security Administration (SSA), after a year and a half of work finally agreed to establish a system to provide the State Workforce Agencies (SWAs) with the information needed to determine eligibility for Supplemental Security Income WOTC hires. Prior to NEON’s efforts, SSA was insisting upon charging $35 per enquiry effectively resulting in SSI requests for certification not being processed.