Hiring Programs for the Long-Term Unemployed « The Washington Independent
This week, the Treasury Department delivered a report on an Obama administration program to encourage businesses to hire the long-term unemployed. It is also calling on Congress to re-up the expiring program, as it spent less than initially estimated and therefore should not be much of a deficit burden. Deborah Solomon at The Wall Street Journal explains:
The Hiring Incentives to Restore Employment, or HIRE, exempts wages paid to qualifying workers from the employer’s 6.2 percent share of Social Security payroll taxes for the remainder of this year, and gives an additional $1,000 tax credit to employers for every worker they retain for 52 weeks.
The Treasury estimates that so far 4.5 million workers are eligible for the payroll tax exemption — a potential tax savings to employers of $8.5 billion — but Treasury officials worry businesses are unaware of the credit and might not take advantage before it expires in December. The administration will likely push for an extension. Because the tax-credit program originally was budgeted to cost $13 billion, the administration would not necessarily add to the budget deficit if it succeeds in getting wider participation in the effort.
Essentially, the program makes it cheaper for businesses to hire workers that have been unemployed for more than eight weeks. The initiative’s impact on hiring is unclear, as it is impossible to tell whether the employers would have hired the workers if the tax relief were not in effect. But obviously Treasury feels that too few employers know about it, hence the public relations push.
If Congress plans to re-up the program, it might consider expanding it to tackle the problem of long-term unemployment — for instance, suspending payroll taxes for a year or 18 months for Americans who have been out of work for a year or more, thereby encouraging big employers to pick up the most out-of-luck workers.