Congress has approved a jobs incentive bill that is aimed at curbing unemployment and stimulating job growth. Under the new spending bill companies that hire unemployed workers will get a temporary payroll tax holiday.
The bill which passed Wednesday contains about $18 billion in tax breaks and a $20 billion infusion of cash into highway and transit programs. Among other things, it exempts businesses that hire the unemployed from paying the 6.2 percent Social Security payroll tax through December and gives employers an additional $1,000 credit if new workers stay on the job a full year. Taxpayers will have to reimburse Social Security for the lost revenue.
But many employers may be wary of increasing their hiring because of the continued downward spiral of the economy. Credit markets are still tight and many consumers have drastically cut back on spending. For companies battling to avoid bankruptcy, job losses have become their most favored tool of choice. Implementing job losses allows struggling companies to remain afloat much longer while strategizing on how they can increase revenue and avoid bankruptcy. This latest spending bill designed to increase hiring and reduce unemployment may be utilized by companies still doing well during this recession, but it may not attract the interest of companies who are already planning to implement job losses and reduce their hiring levels for this year. And it is also doubtful that the job incentive bill will have much impact on the now lengthening time that many unemployed workers remain jobless. One of the biggest threats facing our economy is the long-term unemployment of workers which prevent them from maintaining their mortgage payments and other revolving debt payments. If we plan to make a serious improvement in the economy we must directly address the financial needs of the chronically unemployed during this recession.