Governmental incentives to combat long-term unemployment
Credits & Incentives talk with Deloitte
"Credits & Incentives talk with Deloitte,” is a monthly column by Kevin Potter of Deloitte Tax LLP, featured in the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication. This edition will take a closer look at the trends and highlights various federal and state programs that provide tax-related benefits to companies that act to hire people within the long-term unemployment population.
The federal government and state authorities have created many types of incentive programs to address the issue of long-term unemployment, which is currently at a high level. Statistics show that following the recession of 2007–2009, the rate of long-term unemployment (LTU) skyrocketed relative to pre-recession averages and continues to remain persistently high today, representing more than 25 percent of the current overall unemployment rate. Although the overall rate of unemployment is now hovering near 5 percent, the percentage of those people who have been unemployed for six months or longer is almost twice as high as the pre-recession average LTU rate.1
These US Bureau of Labor Statistics understate the full scope of the problem, however. Many long-term unemployed people stop looking for jobs or become "underemployed," with the result that they are no longer included in the unemployment figures reported by the US Bureau of Labor Statistics.
Companies may be more inclined to reach out to this population for their hiring needs, given the incentives that are being offered to mitigate this problem. Adding employees at a reduced cost while providing valuable employment may be more attractive for many employers to mitigate their employment risk.
For a complete list of references, download the PDF.
1 US Bureau of Labor Statistics, "Trends in Long-Term Unemployment," Karen Kosanovich and Eleni Theodossiou Sherman, March 2015, http://www.bls.gov/spotlight/2015/long-term-unemployment/pdf/long-term-unemployment.pdf