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It's a rare event these days when a business can accomplish social good while it serves its profit interests by cutting labor costs. This happy result can be achieved by hiring welfare recipients and the disabled, especially at the unskilled level; taking advantage of federal tax credits and associated program benefits.
What appears to be unknown by the majority of the labor intensive industries is that if they remove individuals from the welfare rolls they are entitled to a Federal income tax credit equal to 20% of the employee's first year compensation under the Aid to Families With Dependent Children (AFDC) or the Work Incentive Program (WIN). This credit is a direct deduction of income taxes and is unlike the tax deduction for the employee's salary. The program which was originally established in 1967 has been liberalized by the Tax Reduction Act of 1975. AFDC employers, after certification, are allowed this tax credit after a new employee has been on the job for one month, instead of the year as required in previous WIN regulations. Unlike the WIN program there is no loss of credit if an employee is terminated. Previously paid wares retain their status. The AFDC program is on a temporary basis through July 1976 and if successful should be extended. Few companies apparently took advantage of the tax credits prior to 1975 since the one year employment requirement was not a likely prospect when hiring unskilled laborers. The AFDC program has been designed to get people off welfare rolls and is an inviting proposition for any labor intensive organization. The new law has also reduced the amount of paperwork required. The credit involved can be substantial since it is only limited to your tax liability up to 25,000 plus 50% of the tax liability over $25,000. For example, if an employer pays a WIN employee $5,000 for the year, the employer gets a $1,000 tax credit. If the employer hires 25 WIN workers at the same yearly wage his tax credit would amount to $25,000. In addition to the tax credit, many states reimburse certified employers for training costs equal to 50% of the employees salary considered to be on the job training. The following is an actual case of a specific employment program that demonstrates the variety of potential benefits to employers of welfare recipients and the disabled. Excessive turnover was reduced among dishwashers, porters, and bus boys at a major metropolitan complex of airport restaurants and productivity increased when former psychiatric patients were hired. The program was begun, with considerable apprehension, by management 4 years ago with the hiring of one former mental patient; twenty are now employed. The operator who sought new employment sources was approached by a psychiatric rehabilitation center, to participate in its Transitional Employment Placement program. Under the program, formerly hospitalized persons who are receiving welfare would be employed as dishwashers, porters, and bus boys. They would also undergo daily counseling sessions at the psychiatric rehabilitation center before and after their work assignments. To induce acceptance of the program, the psychiatric rehabilitation center guaranteed that if one of the workers failed to appear for his shift a replacement would be sent, even if this meant sending a supervisor. Management was fearful of its legal responsibilities in hiring formerly hospitalized psychiatric patients, envisioning workers throwing fits and injuring themselves and others. Management was also concerned that productivity would suffer. Its worst fears were not at all realized. Problems which did arise were minor in nature and easily handled on the spot without disrupting other workers. Production, far from suffering, had increased. Management learned from experience that the halfway house workers were more productive and less troublesome employees than unskilled labor hired through routine channels. Having been hospitalized, these workers, seemed beneficial to many former mental patients, providing a controlled situation with a minimum of stress. Some of the workers were well-educated but unable to withstand the competitive and social pressures of a normal environment. After the transitional employment period, many remained as full-time employees. Published in the Personnel Journal |
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