Proponents of a federal tax credit to incentivize the hiring of current and former foster youth will likely look to connect their bill to tax reform legislation that is likely to move through the Republican-led Congress.
The Improved Employment Outcomes for Foster Youth Act, which was introduced in the waning months of the last Congress and will likely be reintroduced in a few weeks, would provide tax credits of up to $2,400 to employers who hire current and former foster youth between the ages of 18 and 27.
This is achieved by making youth who were in foster care at age 16 an eligible category under the federal Work Opportunity Tax Credit (WOTC), which incentivizes the hiring of certain groups who struggle with barriers to employment. The credit began 20 years ago as an incentive to hire veterans, but its scope has widened to include citizens with certain hiring challenges.
WOTC is claimable on an annual basis. Each foster youth in care at age 18 carries a claimable value of $21,600 between then and age 26.
“As we talk about tax reform, we hope this bill becomes part of the conversation,” said Jeff Newton, vice president of business development for Freight Handlers, Inc.
Newton is among the business leaders who worked with California nonprofit iFoster to develop an employment program at the heart of this new legislation.
The organization has prepared current and former foster youth for entry-level jobs and placed hundreds of them with partners including several major grocery store chains, Starbucks and CVS.
iFoster continues to check in with the employees after placement. The program has placed 250 foster youths into jobs, with a 90 percent retention rate and an average of 3.2 months until promotion.
iFoster expects to add another 500 placements in 2017, and is expanding from California to Nevada and New York.
Advocates are hoping that a corporate tax break will be attractive to Republicans, and also seem poised to pitch it as a contributor to lower safety net burdens for states.
The WOTC is already a proven commodity in that vein: The 1.9 million WOTC credits claimed annually project to savings of about $180 billion in federal and state welfare spending over the next 10 years.
Adding foster youth to WOTC could bolster those savings. Approximately half who age out of the system are unemployed, and 70 percent will end up on government assistance.
“Many things in child welfare are difficult to solve. This is not one of them,” said Serita Cox, founder and CEO of iFoster. “This is a solvable problem. It’s simply about matching supply and demand.”