While the recently implemented Hiring Incentives to Restore Employment Act may propose it will seek to improve the U.S economy by introducing incentives that will help expand the job market, some are wondering if it will only help consolidate the debt of some at the expense of others.
Passed by the Senate last week, the HIRE Act is an attempt to reward employers who hire workers who have been unemployed for longer than 60 days between February 3 and January 11, 2011 exempting them from each worker’s 6.2 percent payroll tax.
The HIRE Act also proposes a $1,000 tax credit for employers for each worker hired due to the act who remains at the position for one year.
However, John H. Bishop, a professor at the ILR School at Cornell University, claims the hiring bill will not do much to increase the overall workforce. Instead, he said the bill would simply promote filling the positions of newly vacated positions with workers who have been unemployed long enough to trigger the benefit. As a result, employment figures will not expand and instead simply remain stagnant as the unemployed essentially replace each other.
One could say its 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?, Bishop added.