With the U.S. nearly two years into the worst economic downturn since the Great Depression and nearly 850,000 New Yorkers out of work, U.S. Senator Kirsten Gillibrand today called for a tax credit for businesses that create new jobs. Ahead of Thursday's White House Job Summit, Senator Gillibrand is spearheading a letter with her colleagues in the Senate urging President Obama to propose a job creation tax credit as part of ongoing economic recovery efforts. The Economic Policy Institute (EPI) estimates that a job creation tax credit could create more than five million new jobs in two years.
READ Senator Gillibrand's county-by-county unemployment report.
"Families across New York have been hit hard by this economic crisis, leaving thousands without jobs and reduced income to pay bills and put food on the table," Senator Gillibrand said. "The job creation tax credit would encourage businesses to begin hiring now instead of waiting for the economy to stabilize further - a delay which puts the recovery itself at risk. It would create millions of new jobs at a time when unemployment is continuing to rise and nearly 850,000 New Yorkers are out work. Giving the private sector an incentive to create jobs is a good way to strengthen the economy, providing jobs for those hit hardest by this recession."
Senator Gillibrand believes that the job creation tax credit, with appropriate safeguards, is one of the most efficient ways to create a large number of jobs quickly. It would address what is perhaps the most persistent and harmful aspect of the economic downturn, namely unemployment. Such a measure not only is an efficient way to create a large number of jobs quickly, but also bolster long-term economic recovery investments from high speed real and health care information technology to rural broadband and a smart energy grid.
Additionally, Senator Gillibrand believes that any proposal should provide funds for enforcement and impose significant penalties against companies that attempt to engage in sham hires in order to claim a tax credit to which they are not entitled.
While the American Recovery and Reinvestment Act has created or saved more than 40,000 jobs in New York already, the job market is traditionally the last part of the economy to recover from a recession.
Unemployment started rising in the spring of 2007 and has now more than doubled to 10.2 percent nationwide. The underemployment rate, which includes people who are working part-time but want full-time work, is 17 percent, or 26.6 million people. Right now, the U.S. is experiencing an alarming rate of long-term unemployment - 5.4 million people have been jobless for more than six months, representing 3.5 percent of the workforce.
Since the recession began in December 2007, 8 million jobs have been lost, but with population increases, 127,000 jobs must be created each month just to keep unemployment from rising. To date, 10.7 million jobs must be created to get unemployment back to where it was before the recession started. In addition, high unemployment affects those with jobs too, since many workers are facing furloughs, reduced hours, and losses in benefits. Gallup reports that a third of workers fear their wages will be reduced and a survey by Hart Research Associated found that 44 percent of households have already experienced job loss or cuts to pay or hours.
* In New York City 413,800 people are unemployed - approximately 10.4 percent of the labor force.
* In Western New York 60,700 people are unemployed - approximately 8.2 percent of the labor force.
* In the Rochester/Finger Lakes Region, 49,800 people are unemployed - approximately 7.2 percent of the labor force.
* In Central New York people 39,000 are unemployed - approximately 7.6 percent of the labor force.
* In the Southern Tier 28,600 people are unemployed - approximately 8.6 percent of the labor force.
* Inthe Capital Region 42,800 people are unemployed - approximately 7.7 percent of the labor force.
* In the North Country 19,600 people are unemployed - approximately 8.2 percent of the labor force.
* Inthe Hudson Valley 86,000 people are unemployed - approximately 7.6 percent of the labor force.
* On Long Island people 105,800 people are unemployed - approximately 7.2 percent of the labor force.
Specifically, the job creation tax credit proposal from EPI would give businesses a credit of 15 percent of expanded payroll costs in 2010, creating nearly 3 million jobs, and 10 percent in 2011, creating more than 2 million jobs, generating an economic return of more than $2 per dollar of cost. The job creation tax credit would target businesses across economic sectors, regardless of size or profitability. Providing a larger credit the first year would incentive firms to begin hiring immediately. In addition, employers would receive the tax credit as part of their quarterly report to the Internal Revenue Service (IRS). Since the credits in this proposal are based on payroll increases from the fiscal quarter prior to the adoption of the credit, it removes the incentive to fire and re-hire employees, characterizing them as new hires.
In her letter to President Obama, Senator Gillibrand and her colleagues are writing, "We commend your leadership in holding a White House conference to address the situation of the millions of Americans who are struggling to find employment. We must take additional, immediate steps to create jobs. As you convene our nation's economic leaders to address the nation's growing unemployment, we write to urge you to include a jobs tax credit for businesses that create jobs in any package of proposals coming out of that conference. A jobs tax credit provides an effective way to rapidly generate job growth, and we strongly encourage you to include a jobs tax credit as part of any package you propose to turn our economy around and put Americans back to work."