Employers’ participation in the program was greatly influenced by such factors as the opportunity to obtain the credit, address a labor shortage, and be a good corporate citizen. Approximately 66 percent of the credit was earned by corporations with gross receipts of $1 billion or more. Most of the credit was reported by businesses engaged in nonfinancial services, such as hotel, motel, and other personal services, and retail trade. A Relatively Small Number of Employers Accounted for Most WOTC Hires in California and Texas

Our analysis of WOTC certification data in California and Texas for 1997 through 1999 showed that a few employers did most of the hiring in the WOTC program. Several Factors Influenced Participation in the WOTC Program

The employers that we surveyed in two states reported that the opportunity to obtain a tax credit was by far the factor that most influenced their decisions to participate in the WOTC program, followed by the opportunity to address labor shortages and be a good corporate citizen. Based on our survey, we estimate that for 71 percent of participating employers in those two states, retaining employees after the maximum tax credit has been secured is very important.
What GAO Found

In 1997, 4,369 corporations earned a total of $135 million in Work Opportunity Tax Credits (WOTC). The employers who earned most of the credit were large companies with gross receipts exceeding $1 billion and engaged in nonfinancial services and retail trade. GAO's analysis of state agency data for California and Texas from 1997 through 1999 showed that three percent of participating employers accounted for 82 percent of all hires of WOTC-certified workers. Many employers who participated in the tax credit program in those two states in 1999 say that, besides the opportunity to obtain the credit, their participation in the program was also greatly influenced by such factors as the need to address a labor shortage and the opportunity to be a good corporate citizen. The results of GAO's two state analysis indicate a low probability of replacing employees who were not eligible for the tax credit.