The Honorable Amo Houghton Chairman
Subcommittee on Oversight
House Ways and Means Committee
Washington, DC 20515

Dear Chairman Houghton:

On behalf of the Food Marketing Institute, your neighborhood supermarkets, I submit this statement as part of the hearing record for the July 1 Subcommittee on Oversight hearing regarding extension of the Work Opportunities Tax Credit (WOTC) and the Welfare-to-Work (WWTC) tax credit.

We strongly support legislation making the credits permanent and retroactive to July 1, 1999. For the labor-intensive food retailing industry, the WOTC has helped integrate economically disadvantaged Americans into the national work force and often in grocery stores within their own neighborhoods. Our industry believes these credits are an effective approach for encouraging private sector employers to hire individuals from groups that otherwise would have difficulty securing employment in either good or bad economic times.

We also support the improvements to the programs proposed in H.R. 2101, authored by you and Rep. Charles Rangel to consolidate the WOTC with the WWTC. With more individuals entering the workforce from welfare, our neighborhood supermarkets are increasingly training and hiring those who are less skilled and more costly to train.

Supermarkets play an important role in creating and maintaining strong neighborhoods. Our members are significant employers in many inner city and rural communities across America. They provide basic products and services essential to life and health. They are places where neighbors gather and interact in productive ways. Many young people find their first job in a supermarket. They provide flexible work schedules, with many stores open 24 hours a day, 365 days a year. These characteristics provide supermarkets with the unique opportunity to play a leadership role in developing programs to address the social and economic challenges of the neighborhoods and communities they serve.

The WOTC program has provided incentives for employers to take a risk they might not normally have taken. For employees, it has taught skills, helped to develop good work habits, established independence, created a positive job profile and helped with employment

history. New hires have started as cashiers, baggers, deli, grocery or produce clerks and over time remain with the store, gaining experience and receiving important benefits, such as health care coverage.

Since WOTC was first enacted in 1996 on an experimental basis, with WWTC following a year later, hundreds of thousands of welfare recipients have moved into the productive work force. The credits offset a portion of the higher costs of recruiting, hiring, training and supervising those with few job skills and little or no work experience. Unfortunately, the one-year extensions granted in the past two years have limited the program's effectiveness. Last year's 3-1/2 month hiatus prompted some companies to stop participating, while others reduced their hiring efforts. Also, if the minimum wage is increased, there will be less of an incentive to hire the hardest-core unemployed.

By making these credits a permanent part of the tax code, companies will have a longer planning horizon, better outreach to eligible workers and the ability to develop more cost effective recruitment and training programs. Thank you for considering FMI's views.

Sincerely,
John J. Motley III
Senior Vice President
Government and Public Affairs

cc:Congressman Bill Archer, Chairman
Congressman Charles Rangel, Ranking, Ways and Means Committee
Congressman William J. Coyne, Ranking, Subcommittee on Oversight