Targeted Jobs Tax Credit:

Employer Actions to Recruit, Hire, and Retain Eligible Workers Vary

HRD-91-33: Published: Feb 20, 1991. Publicly Released: Feb 20, 1991.

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Pursuant to a congressional request, GAO reviewed the Targeted Jobs Tax Credit (TJTC) program, focusing on: (1) characteristics of employers who used the program and the individuals they claimed tax credits for; (2) efforts employers made to identify, hire, or retain eligible workers; and (3) differences in the participants' earnings before and after their involvement in the program.

GAO found that: (1) 45 percent of the 60 employers interviewed made a special effort to recruit, hire, or retain TJTC-eligible workers; (2) 55 percent of the employers took advantage of the tax credit, but made no special effort to attract TJTC workers; (3) 60 percent of the firms and 68 percent of the certifications from the top 50 users of the program were retail stores and restaurants; (4) in 1988, disadvantaged youth accounted for 60 percent of all TJTC certifications and welfare recipients accounted for 25 percent; (5) most positions filled by TJTC workers required minimal skills and paid a median hourly wage of $3.75; and (6) employers tended to hire TJTC-eligible ex-felons and Vietnam veterans for more skilled positions paying higher hourly wages. In addition, GAO found that, following the TJTC work experience, the average quarterly earnings for 300 workers: (1) was $830 for the 105 participants with no prior work experience; (2) increased by 153 percent to $801 for the 150 workers with some prior work experience; and (3) increased by 17 percent to $1,706 for the 45 workers with prior average quarterly earnings of more than $1,000. GAO also found that average quarterly earnings for TJTC-eligible workers who did not participate in the program also showed an overall increase in earnings the quarter after they were certified.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress is currently considering legislation to extend the TJTC indefinitely. However, the current proposals do not contain any new requirements that employers must meet to qualify for the tax credit.

    Matter: If Congress wishes that a higher proportion of employers using the TJTC program take special actions that benefit members of the targeted groups, it should modify the program by imposing new requirements. For example, program requirements might involve employer outreach efforts to eligible populations, prescreening to determine eligibility prior to hiring decisions, or providing additional training or supervision to eligible workers to increase the likelihood of retention.

 

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