Homeless Hiring Tax Credit Originally Proposed by Sen. María Elena Durazo & Asm. Richard Bloom Included in 2021-2022 California Budget

The 2021-2022 budget set to be signed by Governor Newsom will include a groundbreaking California Homeless Hiring Tax Credit that would simultaneously confront the homelessness crisis facing California, address the job losses stemming from the COVID-19 pandemic that have disproportionately harmed low-income communities, and ease the significant financial strain that many small businesses are currently experiencing.

Originally introduced in the legislature this year by State Senator María Elena Durazo (D-Los Angeles) and State Assemblymember Richard Bloom (D-Santa Monica) through a package of legislation - Senate Bill 424 and Assembly Bill 675 - the concept became a budget priority in both the State Senate and Assembly, reflected in the Joint Budget Proposal sent by the State Legislature to Governor Newsom earlier this month.

Establishing a tax credit between $2,500 and $10,000 per qualified homeless individual hired will create access to meaningful employment and pathways to careers for as many as 3,000 individuals. Under this plan, a qualified employer can claim $30,000 in tax credits annually, thereby assisting both individuals experiencing homelessness in addition to businesses that need additional support to recover from the economic impacts of the pandemic. 

“In a joint response to the ongoing homelessness crisis and elevate both the workforce system and business community, this California Homeless Hiring Tax Credit is a carefully crafted program that includes stringent job creation requirements where partnership with prospective employers and coordination of services with their local workforce development boards and centers of continuum care our goal is to hire and retain employees from the homeless population that are utilizing social programs and looking for an opportunity to get their lives back on track. This tax credit is going to help revitalize our economy with good jobs,” said Senator Durazo. “This tax credit is a cost saving mechanism, investing $30 million for this credit can offset the tens of millions of dollars spent annually on safety net programs. The credit is also sound investment for the state, as many as 3,000 people will get a chance at employment that will help them turn their lives around. California will not spend a dime unless and business will not get the credit until someone is hired to a good job.” 

To qualify to receive the credit, an eligible employer will need to pay wages subject to withholding under the Unemployment Insurance code, pay family-supporting wages, and be certified as a “high-road” employer by the Labor and Workforce Development Agency.

“Creating this pathway for purposeful employment in a way that positively incentivizes our local, small businesses to hire our unhoused neighbors is a huge step in the fight to end homelessness,” said Assemblymember Bloom. “By establishing this tax credit, we will not only help revitalize our local businesses across the state, but move further towards housing all Californians. My team and I are honored to be part of the solution.”

“The Homeless Hiring Tax Credit is all about commonsense and will help change lives,” Senator Mike McGuire (D-Healdsburg), Chair of the Senate Government & Finance Committee said. “SB 424 will help residents experiencing homelessness enter the workforce and support small businesses as they recover from the economic impacts of our Covid-induced recession. Senator Durazo and Assemblymember Bloom have been incredibly innovative in their approach to this bill. This legislation will lift up countless residents in every corner of California,”

“Today, California took a giant step forward in addressing homelessness at the local level through the community-based service providers and those that they serve by encouraging and incentivizing connecting those individuals experiencing homelessness with the employers in their community looking to hire,” Bob Lanter, Executive Director of the CA Workforce Association said. “This will be an important tool for our workforce boards across the state to use when providing crucial help and services to the homeless. The CA Workforce Association appreciates all of the hard work that Senator Durazo and Assembly Member Bloom put into this effort and commend the State of California for their ongoing efforts to address homelessness.”

According to a study released by the Los Angeles Homeless Services Authority (LAHSA) in 2020, over 66,000 individuals were experiencing homelessness on any given night in Los Angeles County. Additionally, the Los Angeles Economic Development Corporation reports that LA County lost 437,000 jobs in 2020, will have 354,000 fewer living wage jobs in 2021 compared to the pre-pandemic economy, and that 738,672 living wage jobs need to be created for the entire LA County workforce to achieve a satisfactory standard of living. Moreover, at least 25% of people experiencing homelessness have no prior employment experience; of those who did have employment experience prior to COVID-19, two of the top four employment industries were retail and food service – which have been heavily impacted by COVID-19. To support small businesses and ensure an economic recovery that works for Californians most in need, it is essential to prioritize our homeless neighbors who have experienced historical barriers to employment and even steeper barriers over the last year due to the pandemic.

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