Introduction of the Reducing Long-Term Unemployment Act

Floor Speech

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Ms. NORTON. Mr. Speaker, today, I introduce the Reducing Long-Term Unemployment Act, to address one of the lingering workforce tragedies in today's economy--our long-term unemployed--and to keep the economy growing. Although the overall unemployment rate has fallen below 5 percent, Americans who have remained unemployed for longer than 27 weeks have not enjoyed a similar recovery. In January 2016, the number of long-term unemployed (those jobless for 27 weeks or more) was 2.1 million, which accounted for 26.9 percent of the total unemployed population.

To make matters even worse, the long-term unemployed now face employment discrimination as employers show reluctance to hire job- seekers because of the length of their unemployment. Therefore, my bill provides a necessary incentive to hire the long-term unemployed--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 the hiring and wages of those who have been unjustifiably left behind, while ensuring that the economy benefits from their participation. 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 in order to take advantage of the incentive.

For some time, it has been clear that targeted policies are necessary to address today's stubborn long-term unemployment rates. Without significant targeting, the long-term unemployed are in danger of becoming permanently unemployed. This group of competent and experienced Americans deserves better.

I urge my colleagues to support this bill.

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