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PAD-81-73 1 (1981-06-05)

handle is hein.gao/gaobabbzu0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 PROGRAM ANALYSIS NJUN 5 W1981 B-203090 The Honorable John Heinz 114I7 Chairman, Subcommittee on Economic Growth, 115427 Employment and Revenue Sharing Committee on Finance United States Senate Dear Mr. Chairman: Subject: Comments on Employment Tax Credits7(PAD-81-73) As agreed with Mr. George Pieler, Senate Finance Committee, we are submitting the following information and analyses for the record of your April 3,' .1981, hearings on employment tax credits. Our observations and comments on the Targeted Jobs Tax Credit (TJTC) program and several other related credit programs are drawn from an ongoing project in this area. For this project we surveyed 1,000 firms, interviewed interested parties, re- viewed numerous studies on the effects of changes in the min- imum wage on employment, and developed appropriate economic and empirical analyses. The results of the project are intended to be a report to the Congress. We hope that our observations will be of use to you at this time. When we complete our report later this year, we will provide copies to you. Our comments are in two parts: a brief, non-technical statement of our major findings, and a more detailed technical statement in the form of an appendix to this letter. In our study we are analyzing three issues. First, we identify the factors that determine whether wage subsidy pro- grams have a chance of being successful. Will businessmen re- spond significantly to a reduction in labor cost? What type of workers will be helped most? The evidence suggests that business would respond to an extent that would significantly lessen, but by no means eliminate, unemployment among inexpe- rienced and low skill but otherwise job-ready w~rkers. There is no evidence available that workers with severe employabil- ity problems, for example the lack of basic reading skills, can benefit from the wage subsidy approach. (972251)

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