9/10/2011

Let's face it, a one time $4,000 tax break per employee may be a good sound bite, but it is small compared to the cost of hiring the worker

Firms find it costly to fire workers. A one time $4,000 payment may make some difference, but you are only going to make permanent hires if you think that the jobs will last and that depends on demand for the products. From the NY Times.

. . . many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved.

Companies are focused on jittery consumer confidence, an unstable stock market, perceived obstacles to business expansion like government regulation and, above all, swings in demand for their products.

“You still need to have the business need to hire,” said Jeffery Braverman, owner of Nutsonline, an e-commerce company in Cranford, N.J., that sells nuts and dried fruit. While a $4,000 credit could offset the cost of the company’s lowest-cost health insurance plan, he said, it would not spur him to hire someone. “Business demand is what drives hiring,” he said. . . .

Chesapeake Energy, one of the biggest explorers of oil and gas in shale fields across the country, for example, said it had 800 positions open, and had already received tax credits for hiring the long-term unemployed.

But Michael Kehs, vice president for strategic affairs and public relations, said in an e-mail that the credit “does not drive our hiring.” . . .

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