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Monday, November 7, 2011

American Jobs Act: Provisions for Hiring Targeted Groups, Preventing Layoffs, and for Unemployed and Low-Income Workers

Karen Spar, Coordinator
Specialist in Domestic Social Policy and Division Research Coordinator

In response to continuing high rates of unemployment and a weak economy, President Obama announced his American Jobs Act on September 8, 2011. As stated by the President, the proposal aims to “put more people back to work and more money in the pockets of those who are working.” The proposal was introduced, by request, as S. 1549 and H.R. 12. The Administration estimates the act would result in spending of $447 billion, to be offset by revenue provisions included in the bill or savings achieved by the Joint Select Committee on Deficit Reduction. Senate Majority Leader Harry Reid subsequently introduced the proposal with a different offset, as S. 1660 on October 6, 2011. Most recently, a subset of provisions were introduced as S. 1723.

This report describes provisions in the American Jobs Act that fall into three major categories: 

         provisions to promote hiring and prevent layoffs among teachers, law enforcement officers, firefighters, veterans, and the long-term unemployed; 
         provisions to assist unemployed workers through unemployment compensation and reemployment services; and 
         provisions to expand workforce opportunities for low-income adults and youth. 
The report does not discuss tax provisions (except for specialized tax credits intended as hiring incentives) or proposals related to infrastructure (except for School Modernization grants).

The American Jobs Act would aim to promote hiring and prevent layoffs of teachers, law enforcement officers, and firefighters, through formula or competitive grants to government entities totaling $35 billion. These specific provisions have been included in a freestanding bill, S. 1723, introduced on October 17, 2011. The full American Jobs Act would also promote hiring of veterans and long-term unemployed individuals through tax credits to employers, costing an estimated $8 billion. It also would prohibit employment discrimination on the basis of an individual’s unemployed status.

The act focuses on the income and reemployment needs of unemployed workers, particularly the long-term unemployed. In addition to provisions that would extend certain temporary compensation programs, the act would authorize a new Reemployment NOW program, to help states address the reemployment needs of eligible individuals, and would expand federal funding for state-administered short-time compensation (or “work sharing”) programs. In total, these provisions would cost an estimated $49 billion.

The workforce development needs of low-income adults and youth also are a focus of the act, which would provide a total of $5 billion for three grant programs collectively called the Pathways Back to Work Act. Formula grants to states would support subsidized employment for low-income adults and summer and year-round employment opportunities for low-income youth. Competitive grants would support strategies and activities of “demonstrated effectiveness” to provide unemployed, low-income youth or adults with skills that would lead to employment.

Although not discussed in this report, tax reductions for employers ($70 billion) and employees ($175 billion)—largely through payroll tax cuts—form the largest single category of spending under the American Jobs Act. Another $75 billion would go to infrastructure projects, including transportation ($50 billion), an infrastructure bank ($10 billion), and grants to rehabilitate foreclosed or vacant properties ($15 billion), in addition to $30 billion for school modernization.

Date of Report: October 2
0, 2011
Number of Pages:
Order Number: R4
Price: $29.95

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