A House bill introduced today 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.
The Improved Employment Outcomes for Foster Youth Act would for the first time include foster youth as 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.
Under the new bill, an employer could claim the credit for up to $2,400 for hiring any youth or young adult who was in foster care on his or her 16th birthday. The credit can be claimed for a hire between the ages of 18 and 27.
WOTC is claimable on an annual basis. So under the bill introduced today, each foster youth in care at age 18 carries a claimable value of $21,600 between then and age 26.
The idea to legislate current and former foster youth into the WOTC was sparked in part by a partnership forged last year between the nonprofit iFoster and Raley’s, a California-based supermarket chain. The program has expanded to include Starbucks and manufacturer Mondelez International as partners.
“We pursued this path and the creation of this bill because when we talked to employers, they were not interested in the subsidized work internships or subsidized employment,” said Serita Cox, the co-founder and executive director of iFoster, who has helped develop the legislation. “Instead, they felt strongly about the tax credit offered to veterans.”
The iFoster program worked with transition-age, kinship and crossover youth ages 16 to 24 in a seven-step program that involves a screening and interview process. iFoster completes a pre-employment phase with a cohort of potential employees before they interview and start working at the company.
“The caliber of the youths and the success they’re having on the job has been tremendous,” said iFoster co-founder Reid Cox. “One of the key issues here is that none of this is trying to offset that these kids are bad employees. It’s just to level the playing field.”
Sean Hughes, a child welfare consultant who helped develop the legislation, said “at least” 100,000 youths and young adults who spent time in foster care would be WOTC eligible. The number might be far higher, based on federal foster care data from 2014.
There were 22,392 exited foster care due to “emancipation” in fiscal 2014, according to federal data. Assuming that is about average, approximately 201,000 workers would be eligible in any year.
The bill leaves it to the Department of Labor to determine how employers would verify the foster care experience of a worker, and then document that for the tax credit.
In addition to unemployed military veterans, current groups eligible for WOTC claims include ex-felons, teens seeking summer employment, people receiving welfare benefits or food stamps, or workers referred from a vocational rehabilitation program.
The bill has been introduced by five members of the House Ways and Means Committee: Democrats Jim McDermott (Wash.), Danny Davis (Ill.) and Lloyd Doggett (Texas); and Republicans Dave Reichert (Wash.) and Tom Reed (N.Y.).