As America works hard to bring down its budget deficit, it is important to support the critical role businesses play in creating jobs and contributing to workforce development. At this time of limited resources, Congress must take a hard look at current tax policies that reward capital investment at the expense of investment in human capital. Tax policy that focuses on developing human capital should be made a top priority because doing so will help close the skills gap, in turn making America more competitive and its people more prosperous.
Although we are experiencing high unemployment and joblessness, employers continue to have trouble finding skilled entrylevel employees. In too many cases, secondary and higher education have failed to provide a workforce necessary to propel 21st-century business growth. Private workforce development initiatives that directly link business needs with untapped talent are essential for businesses to pull the nation out of recession and toward ongoing prosperity, and tax policy should favor such initiatives.
The economy would benefit from a tax credit that rewards private companies for delivering talent into the skilled workforce. This would benefit companies by helping them strengthen and grow, it would benefit government by allowing reductions in public workforce program spending and public assistance, and it would benefit young Americans by putting them to work.
We think Congress should consider the following principles and forge a public-private
partnership on the workforce, including a targeted tax credit:
- Reward programs that target young adults, aged 16–24, not employed, not in school full-time. The US currently has over 5 million of these young adults, all representing untapped talent and who—with a correctly structured investment—can help meet employersʼ talent needs and drive economic growth.
- Encourage Enterprising Pathways. Partnerships between non-profits and private sector employers are often outside the traditional workforce training system, but are often more effective because they quickly close the gap between business needs and potential employee skills—particularly among the growing population of unskilled but talented young adults. Such programs train untapped talent in workplace skills that match workforce needs—providing greater opportunity for employees and employers.
- Make sure the correct metrics are in place to focus tax benefits on program effectiveness, not on political preferences. Metrics include matching training to local and regional business needs, direct participation or input by business on skills to be trained, and the quality of training as evidenced by increased employment and on-the-job performance. Essential components for accessing training, education, and sustainable careers:
− Internships, experiential learning, work-based learning
− Ongoing training post-hiring
− Support for high school completion
− Ongoing post-secondary education attainment post-hiring
- Base tax credit eligibility on outcomes. A company should be able to prove within three years after the initial investment in untapped talent that: 1) valuable skills have been attained, and 2) hired talent is on a sustainable career path and/or is pursuing postsecondary education. These criteria recognize that long-term investment is crucial in delivering untapped talent into the skilled workforce, and would delay the creditʼs impact on revenue.
- Provide simple credits for productive hiring. Expand the coverage of existing credits to encourage hiring young adults who have the potential to drive economic growth. For example, the Work Opportunity Tax Credit should include a category that rewards every hire of a disconnected young person with untapped talent.
- Make sure human capital contributes to reducing the deficit and creating economic growth. Even in dire recessions, smart businesses continue to invest in workforce development initiatives that produce results. Congress can leverage these investments with effective tax policies, providing an incentive for Enterprising Pathways, which offers efficient and results-oriented workforce programs that mean business. In our experience, Enterprising Pathways programs are the quickest way to employ more Americans today and achieve greater prosperity tomorrow.