Awarding Companies for Hiring Workers
Is Not a Good  Answer to Jobs Problem

By Harry Kelber
 

The U.S. Senate’s $35 billion jobs bill passed its first legislative hurdle with the support of five Republican senators. The bill, approved by a vote of 70-28, contains two major provisions. First,  it would exempt businesses that hire the unemployed from  the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 tax credit if each new worker stays on the job a full year.

Second, it would extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the spring construction season. The money would make up for lower-than-expected gasoline tax revenue. In addition to the tax incentives, the Senate bill would extend a tax break for small businesses buying new equipment up to $250,000 and expand an initiative that helps state and local governments pay for infrastructure projects.

Supporters  say that the new hiring tax  credits for  business could generate about 250,000 new jobs, but this would be only a fraction of the 8.4 million jobs lost since the recession began in  December 2007.

However, it does not seem likely that many companies will hire more workers just to get the tax breaks. Before businesses start hiring, they need increased demand for their products, more work for employees and more income to pay those workers.

Many employers  don’t mind the enormous pool of unemployed workers, since it makes it a lot easier to cut wages and benefits and boost the productivity of their employees. Even when businesses are beginning to see an increase in demand, they are hiring temporary workers whom they can discard if the demand fades.

If Tax Cuts  Won’t Provide Millions of Jobs, What Will?

The Obama administration  expects its $787 billion stimulus package to save and create 3.5 million jobs by the end of 2010. Reaching that goal would be very  helpful, but it could still leave at least 11 million unemployed without work.   As of this January, employment has actually dropped by 3.4 million jobs.

 The Washington Post reports that the nation will add an average of 95,000 jobs a month this year,  a bit below what economists say is needed just to keep up with  population growth. Unemployment is expected to stay high throughout 2010 and well into the following year, even if there is a pickup in business activity.
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AFL-CIO President Richard Trumka keeps  calling for the creation of ten million jobs, emphasizing they are urgently needed, and that Wall Street  should pay the bill. But lawmakers in Washington are not taking him seriously in the absence of   massive demonstrations by the unemployed to attract their attention.

With long-term unemployment continuing to  rise (now at  an all-time high of 40 percent), unemployment insurance (UI) benefits need to be extended for at least one year. Both UI benefits and COBRA health benefits  for the jobless are due to expire on Feb. 28, but unless the Senate acts before the deadline, 1.2 million people will lose their UI and health-care benefits.

Realistically, there is no possibility that Washington will create the 10 million jobs that Trumka has called for. At the very least, we have to insist on the government sending UI checks indefinitely to the unemployed to keep them alive until decent jobs are available

But are millions of Americans doomed to being permanently unemployed? And in the richest country in the world.?---Harry Kelber