The U.S. Economic Crisis and a Revised New Jobs Tax Credit

Authors

Timothy J. Bartik, W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-6238-8181

Issue Date

October 16, 2008

Abstract

An efficacious economic stimulus to help the U.S. economy recover from its current recession is the revival of the New Jobs Tax Credit. Unlike the original credit utilized by the federal government in 1977– 1978, the new version should be a refundable credit but at a lower current dollar value. My 2001 book, Jobs for the Poor: Can Labor Demand Policies Help? proposed a permanent version f the New Jobs Tax Credit that would be automatically triggered when the unemployment rate is high. My estimates, updated to 2008, suggest that such a revised credit might increase aggregate U.S. employment by 1.3 million jobs per year at a public cost of less than $20,000 per job. Prolonged unemployment poses a serious social problem that could be addressed with a revised New Jobs Tax Credit.

Series

Policy Paper No. 2008-003

DOI

10.17848/pol2008-003

Keywords

job creation tax credit, job creation, Great Recession, unemployment, economic crisis, labor demand policy, tax credit, wage subsidy, employment creation

Subject Areas

LABOR MARKET ISSUES; Wages, health insurance and other benefits; ECONOMIC DEVELOPMENT; Regional policy and planning; Business and tax incentives; Demand side programs