Newswise — John H. Bishop, a professor at Cornell University’s ILR School, says the federal hiring bill approved by the Senate on March 17 is less effective than the subsidy proposed by President Barack Obama.
He says:
“The hiring subsidy bill, expected by some to produce $15 billion in tax breaks for businesses, will not prove to be the job creation engine as advertised by its proponents.
“The jobs bill exempts employers from the 6.2 percent payroll tax on earnings through 2010 for workers hired after being unemployed for at least 60 days. For every one of those workers who completes a full year on the job, the business also receives a $1,000 tax credit.
“It subsidizes filling vacant positions with unemployed people, rather than rewarding a business for increasing the number of jobs. In contrast to the president’s original proposal, it doesn’t incentivize employment expansion. It’s a very inefficient way of stimulating the economy. Most of the companies that receive this subsidy will be replacing someone who left a job or who was fired. “One could say it’s particularly lucrative for high-turnover businesses such as restaurants. But, will businesses take the government tax credit as extra profit, use it to pay down debt or to expand total employment?”
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