No Job Subsidies for Companies That Discriminate Against the Unemployed

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Should taxpayers subsidize companies that refuse to even interview unemployed workers? Of course not!

Yet despite the fact that tax breaks are invariably justified in the name of reducing unemployment—not to mention the fact that more Americans have been unemployed for longer periods of time in this Great Recession than any downturn since the 1930’s—it’s legal for companies getting subsidies from states, cities or Uncle Sam to turn away applicants just because they are currently unemployed.

This callous treatment of the unemployed is outrageous but true: as the National Employment Law Project (NELP) documented recently (confirming news reports), dozens of companies and some of the nation’s most prominent job-search websites are routinely posting job ads that explicitly say applicants “must be currently employed.”

NELP rightly emphasizes how many job seekers there are for every job opening. We would add that, given higher rates of unemployment among people of color and younger workers, excluding unemployed applicants can only worsen discriminatory patterns.

If major economic development subsidies were reformed to prohibit this practice, it would greatly benefit millions of unemployed Americans. That’s because federally funded programs such as Industrial Revenue Bonds, Workforce Investment Act grants, and Community Development Block Grants are ubiquitous—as are state-enabled subsidies such as property tax abatements and investment tax credits.

Another federal remedy has also been proposed: House and Senate versions of the Fair Employment Opportunity Act of 2011 (already with 35 House co-sponsors) would prohibit companies and employment agencies from refusing to consider applicants solely because they are unemployed. In a recent radio talk show, President Obama endorsed the legislation.

As Good Jobs First documented in 2008 in Uncle Sam’s Rusty Toolkit (co-published with NELP and others) five of the most common federal job subsidies lack many of the taxpayer safeguards that are becoming increasingly common at the state and local level, such as online disclosure of company-specific costs and benefits, money-back guarantee clawbacks, Job Quality Standards, location efficiency and green building standards.

To that list for both the states and the feds, we would add: no discrimination against applicants just because they are unemployed!

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