Work Opportunity Tax Credit Coalition

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Model Letter to Congress

Model Letter To Your Congressman And Both U.S. Senators

(Pick and choose from this letter the points for your short letter)

____ ____, Date
The Honorable (name)
House of Representatives
Washington, DC 20515


____ ____, Date
The Honorable (name)
United States Senate
Washington, DC 20510

Dear Representative______________: or Dear Senator_________________:

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 had proven its worth and should be made permanent. There's much evidence to validate this judgment, and WOTC can be even more effective as Congress turns to dealing with problems of persistent poverty via place-based policies like Opportunity Zones. WOTC's availability helps attract capital to an area. The synergy between capital investment and the labor of those who most need work can increase productivity and purchasing power, and more opportunity to escape poverty.

Evidence-based results speak for themselves: more than two million unemployed public assistance recipients (TANF, SNAP, SSDI, SSI), veterans, disconnected youth, and residents of high-poverty neighborhoods of cities and counties find jobs annually by checking a box on a one-page form accompanying their job application. State workforce agencies 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, with 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 is more than twice WOTC's ten-year cost estimated by the Joint Committee on Taxation at $19 billion.

Workers hired using WOTC are mostly under 30, with low skills or poor education, including the twenty percent each year 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 is 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 decile of workers with the lowest average weekly wages—11 million altogether, and 2 million single parents, we find that WOTC hires account for 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 the 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 foodservice and hospitality sectors. As healthcare is a growing sector with good jobs, this data shows WOTC should be available to private non-profit employers.

Moreover, WOTC is the only jobs program, of the many models Congress has studied, that's demonstrated an 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, including life-skills advice, have produced quality results. Still, these programs are labor-intensive, requiring a staff of case managers, counselors, trainers, and others. As a result, their size and output are invariably small and cost-per-graduate many times that of WOTC, where individuals start with a job and advance with education. WOTC is often used to obtain jobs for graduates of special training programs. City and county welfare and economic development agencies, which are at the cutting edge of training TANF and other low-income populations, say they need WOTC for job placement after training.

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 it's an extension to residents of depressed areas via empowerment zones and several hundred designated 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 those 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 job applicants outnumber the disadvantaged by 2:1 to 4:1 in local labor markets; WOTC levels the playing field. It acts as a magnet to pull disconnected youth and other discouraged workers off the sidelines.

Nor does a low national unemployment rate mean WOTC is unnecessary. Governors have identified thousands of high-poverty areas for designation as Opportunity Zones. By lowering the cost of a job to employers and boosting demand for labor, WOTC complements investors' capital, and the synergy of the two can raise productivity and boost prospects for the success of renewal projects.

Thank you for the opportunity to bring this important matter 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.

Your Name