How Employment Tax Credits Can Help Businesses Pay for Vital Worker Training
The gains we’ve made in our world through the centuries, we owe to men and women who doggedly pursued their goals. Undeterred by setbacks and roadblocks, if one path failed, they sought another - finding workarounds and alternate routes of forward motion until they found success.
Businesses today that are facing a shortage of skilled workers should look to these trailblazers for inspiration and emulation. Born of sustained economic recovery, mass baby boomer retirement, a warehousing upsurge, and rapid technological advancements, many industries across the nation are feeling the pangs of a qualified-employee drought. But these companies are finding that their path to replenishing those reserves is not without obstruction nor very direct.
Developments, such as artificial intelligence (AI) and automation evolutions, often out-pace college programs’ ability to educate in time with the technology; skills acquired during a four-year program may already be outdated by graduation.
Additionally, many of the unskilled workers willing to acquire skills, lack the means to attend expensive universities or trade schools. And though government programs exist to help, scores fall through the cracks due to stringent qualifying criteria and complicated processes.
Also, industries such as construction and manufacturing don’t entice younger workers to the degree as does the shiny, ‘trending’ bedazzlement of Silicon Valley.
The Manufacturing Institute highlighted the desperation of companies for qualified workers when it reported that a third of companies it surveyed claimed they were forced to turn away new business.
Finding the Route to Revenue
As much of the skilled-labor deficit lies within entry-level positions, some businesses have found the answer to this dilemma: partner with local educational institutions or develop internal entry-level training programs - or “academies.” But lack of funding for these projects often limits the quality of execution, particularly for smaller organizations and startups. So how can they find the funds?
The WOTC credit may offer them a way. The Work Opportunity Tax Credit offers $1,200 to $9,600 to companies for each new qualifying employee hired from a pool of 14 target groups. The exact credit amount is calculated based on the specific group, a percentage of wages, and the number of hours worked (at least 120 hours in the first year of employment).
When businesses look to these categories for new hires, the credits earned offset companies’ income tax liability, generating savings that can help subsidize the cost of training programs for those employees.
So, the WOTC awards the company income tax-savings, and they can acquire needed workers through neutralizing their training costs…and an eager employee gets a chance at a new start with a new skill. It’s a trifecta of triumph.
Doubling Up on the Dollars
Some states present additional tax-saving opportunities to capture “piggyback” hiring credits that may be applied for at the same time as the WOTC. And some also offer additional training program assistance and credits.
Compounding all potential state programs with the federal WOTC, puts you on a path towards the greatest cashflow replenishment and affords you the skilled labor to power your business.
Tax-Saving Tour Guide
For help navigating the complexities of all federal, state, and local incentives opportunities, look to a tax specialist to help you maximize your saving potential and power success for your business.