The Nitty Gritty on the American Jobs Act
The American Jobs Act uses a variety of mechanisms to help get disadvantaged Americans working again--tax credits, economic stimulus, assistance finding a job, opportunities to get training or work experience, preventing job discrimination, and flexible funding to support innovative initiatives. The size of the bill and the scope of its strategies will hopefully prove sufficient to move the country forward to end the unemployment, disillusionment, and real deprivation that so many of us are experiencing. We have the opportunity to make meaningful investments in our future prosperity while putting people back to work.
Here’s a roadmap to the provisions of the American Jobs Act (AJA) that will help low-income individuals and the long-term unemployed. The draft bill, sent by President Obama to Congress, also includes many other provisions, many of which would create jobs. The White House has a 20-page summary of the whole act, which includes the reasons for the various provisions, and evidence of their bipartisan support. At this time, the House has not scheduled any hearings on the bill. If you’d like more information, read our longer article on these provisions.
1. Tax credits make up half the total cost of the bill, and there are many targeted at businesses and employees. In addition to a payroll tax cut (from 6.2 percent to 3.2 percent) for businesses on the first $5,000,000 in wages, there is a complete payroll tax holiday for hiring new workers or raising wages, up to a limit. Employers can also receive a tax credit for hiring a worker who has been unemployed at least six months in the last year, or who is unemployed veteran.
2. Mandatory reemployment services for recipients of Emergency Unemployment Compensation (EUC is generally weeks 26-79 of unemployment insurance). The federal government will reimburse states for providing services including career and labor market information, individual assessment, career one-stop orientation, and job search counseling. It’s important that the federal government, and states, reduce the burden on individuals by, for example, providing virtual services, flexible scheduling, and supportive services (such as transportation allowances and child care) for individuals at 200 percent or below of the federal poverty line to attend these programs. Additionally, the state may set up an optional self-employment assistance program for recipients of EUC.
3. Reemployment Now Program. States have flexibility to use their share of this $4,000,000,000 allocation on: individual counseling, job search skills training, and case management; innovative programs; wage insurance; administrative costs of the self-employment program; and/or Bridge to Work. Wage insurance partially compensates individuals over age 50 who were receiving EUC when they accept a new full-time job with lower earnings than their previous job. Bridge to Work is a voluntary program where individuals can work for eight weeks at a short-term job placement. Their pay is their unemployment benefits and an additional amount so their total payment equals the minimum wage (a state may also require employers to pay more beyond this amount). Additionally, the state may spend the funds on supportive services, additional wages beyond minimum, and administrative expenses. For employers to stay eligible to receive placements, they must offer at least one participant a full-time job within 24 weeks, and states may (and should!) add conditions for employer participation.
4. Short-Time Compensation Programs. Many states currently have a work-sharing unemployment insurance program in place, and under this statute those states may continue their program, and new states can create a program with the federal government. Employees who lose 10-60 percent of their hours (or state can lower the 60 number), at participating employers, receive a pro-rata share of their unemployment insurance.
5. Pathways Back to Work Fund. This fund will provide workforce development funds, often delivered through the Workforce Investment Act (WIA) infrastructure, but with different outcome measures. The changed measures will hopefully address the tendency of the current WIA outcome measures to discourage service of those individuals who face the greatest barriers to work or school, while still providing accountability and transparency.
a. $2,000,000,000 to “subsidized employment to unemployed, low-income adults.” The funds may also be used for supportive services for participants, such as transportation and childcare.
b. $1,500,000,000 to provide summer and year-round employment opportunities to low-income youth. The funding must be used for “summer employment opportunities for low-income youth, ages 16 through 24, with direct linkages to academic and occupational learning, and may include the provision of supportive services, such as transportation or child care, necessary to enable such youth to participate” and “year round employment opportunities,” for out of school youth. The priorities for funding are employment opportunities in either emerging or in-demand occupations in the public or nonprofit sector, and “linking year-round program participants to training and educational activities that will provide such participants an industry-recognized certificate or credential.”
c. $1,500,000,000 of “competitive grants . . . to local entities to carry out work-based training and other work-related and educational strategies and activities of demonstrated effectiveness to unemployed, low-income adults and low-income youth to provide the skills and assistance needed to obtain employment.” Some examples from statute are: on-the-job training; apprenticeships; other activities combining work and skills training; sector-based training; subsidized employment; and integrated basic education and training. The priority for the funding will go to proposals in areas of high poverty and high unemployment.
6. Fair Employment Opportunity Act of 2011. Would prohibit discrimination against the unemployed in advertizing, considering candidates, and hiring.
7. Transportation Job Training. $50,000,000 in competitive grants for transportation jobs training. Of the total $10,000,000 would go to assist minority businesses in competing, on an equal basis, for contracts and subcontracts.
The recent census numbers show the number of Americans living in poverty is at an all time high. The national unemployment rate stands above 9%, with no new jobs created last month at all. This country needs a strong push to help unemployed workers find jobs and get the economy moving. This plan offers help to strapped communities and states by making investments in our future prosperity.
