WASHINGTON (FNS) -- The expiration of a federal jobs tax credit last week could make it more difficult for retailers to operate in urban areas and cause their companies financial hardship.
John Motley, the Food Marketing Institute's senior vice president for government and public relations, told SN last week that many retailers utilized the Work Opportunity Tax Credit, which allowed companies to claim as much as $2,400 annually for each person they hired off the welfare roles.
The credit, known as WOTC, was a centerpiece of 1996 welfare reform law. It expired June 30 after Congress failed to renew it.
Motley explained that the credit was particularly important to retailers operating in urban areas, or contemplating doing so.
"One reason business has withdrawn from urban areas is the poor quality of the work force, particularly in underdeveloped and underprivileged areas of the city," he said.
Both food and general merchandise retailers have come under fire in some large cities for expanding suburban operations while shuttering in-city stores. Retailers have noted in response that it often is difficult to assemble land parcels needed to construct larger stores in cities due to high costs and zoning restraints. Retailers also have said some urban areas' crime rates and poor labor markets mitigate against major store expansion there.
"One of the problems you have in opening stores in urban areas, particularly those where school systems are under assault, is getting employees of the caliber you want," Motley said. The FMI official said some of its "largest members operating in urban areas" have utilized the tax credit to do pre-employment training of people who had been on public assistance.
"For companies located in urban areas or trying to go back to these areas, [the tax credit] is an important incentive for them to do this" training, Motley said. He added that some FMI-member firms "are set up to use the credit and expecting to use it."
Congressional leaders have said the tax credit will be renewed and made retroactive to July 1, but have not said when, or for what duration, Motley said.
