Bill seeks tax credits for boosting minimum-wage worker pay

January 3, 2018

An Indiana Senate Republican wants to reward businesses with tax credits when they raise pay for their minimum-wage workers.

State Sen. John Ruckelshaus of Indianapolis has introduced a bill that would provide a credit against state tax liability for employers of minimum-wage workers that give raises to their workers after those workers complete a training program that would improve their education level or skills.

The Indiana General Assembly's 2018 session kicked off Wednesday.

Ruckelshaus said Senate Bill 15 is designed to incentivize businesses to help their minimum-wage workers move up the economic ladder.

“They’re trapped because they don't have the skills to move up the ladder,” Ruckelshaus said. “The whole concept is it’s a two-way street between the employer and employee. It’s a tax credit to employers. For the worker that receives an increase in pay, they’re able to raise their skills up and be more attractive in the workforce, and be able to make more than a minimum wage.”

Under the plan, employers would be eligible to participate if they employ at least one employee in Indiana who has worked for the employer for at least 12 months and is not a student at the time they begin a career-enhancement training program.

The employee would then embark on finishing a high school equivalency, get an industry certificate or credential, or get a college degree. Ideally, Ruckelshaus said, they would be eligible for grants or another benefit to pay for the program.

“I want these workers to get this [training] at no cost,” he said, suggesting one option could be the governor’s new Next Level Jobs initiative, which offers both Employer Training Grants to companies and Workforce Ready Grants to those in training for certain high-demand, high-wage fields.

After a worker completes Ruckelshaus' proposed program, the employer would need to increase the employee’s hourly wage rate and retain them for at least 12 months after the pay increase.

The employer would then be able to recover half of the amount of the the raise in a tax credit.

Indiana in 2016 had 69,000 workers making at or below the minimum wage, according to the Bureau of Labor Statistics, accounting for about 3.6 percent of the state’s 1.89 million hourly paid workers. Nationally, those paid at or below the federal minimum wage account for 2.7 percent of all hourly paid workers, according to the BLS.

Those making less than the minimum wage could include jobs that are exempted, such as farm workers, certain seasonal employees, workers with disabilities, students in specific programs, and others.

And education level tends to correlate with wages. Five percent of those without a high school diploma earn the federal minimum wage or less, compared with 2 percent of college graduates, according to the BLS.

Ruckelshaus said the minimum wage issue has become so polarized in recent years that many aren’t familiar with the fact that “they either shut down or perk up” at the mention of it. But he said he wants this to be bipartisan legislation.

Ruckelshaus said he is working to try to secure a hearing from Sen. Phi Boots, the chairman of the labor committee.

The chairman's spokesman did not immediately reply to IBJ’s request for comment about his position.

“When I explain this, there’s a lot of interest,” he said. “It all ties in with the workforce development issue we’re working on right now.”


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