What the HIRE Act Giveth, the Rest of Obama Agenda Taketh Away
Aleksey Gladyshev /
The latest attempt by Congress to wrestle the high unemployment rate is the HIRE Act, which is little more than a tax holiday for companies who hire additional workers. Even if this Act works as intended and encourages businesses to hire more workers, which in and of itself is not a guarantee, then other measures undertaken by the Obama Administration have the opposite effect, by actually stifling hiring by business. Some of the measures that counteract intentions of the HIRE Act are the minimum wage increases of the last few years, uncertainty of pending legislation on healthcare and cap-and-trade, and the Davis-Bacon Act that requires government contractors to pay wages that are above the market rates.
The idea behind the HIRE Act is that the payroll tax holiday would reduce the cost of labor for participating companies by temporarily suspending the employer’s share of the Social Security payroll tax, thus coercing companies to hire new workers. However, the impact of such a measure is unclear, since the tax holiday will only be temporary and will have little impact – a qualified employer who hires a worker earning $51,000 annually will receive a subsidy equaling roughly $264 per month. However, these subsidies amount to lost revenue in the Federal Social Security Trust Fund – an institution that even without this additional burden is running a significant deficit. (more…)