Senate jobs bill a good start to getting people hired, but not enough

Job applicants at a job fairHere's a good line to throw out at an employer at a job interview: "In case you're on the fence in hiring me, you might want to look into the 6.2% Social Security payroll tax exemption that the government may soon give to businesses that hire unemployed workers."

And if they're still interested, remind them that employers would get an additional $1,000 tax credit for keeping those workers for more than a year.

For now it's part of the Senate jobs bill, which was expected to pass by the end of the week, but heavy snowfall is likely to cause a delay.

Is a 6.2% exemption for Social Security taxes for hiring someone who has been out of work for at least 60 days enough to get companies hiring again? Even with other provisions of the bill that expand or extend existing policies, the bill won't do enough to get more unemployed people hired, according to several business owners and business experts I spoke with.

"I don't have a lot of confidence that government helps us out of these things," said Mike Blank, who owns a small remodeling company in Lancaster, Pa., with three employees, including himself.

The tax break wouldn't help his business enough, Blank said in a telephone interview. The economy isn't strong enough to allow him to hire employees for long-term work, he said.

"Right at the moment I can use people, but I'm a little cautious because of the economy," he said.

President Obama has proposed a $5,000 per job tax credit, and even that wouldn't be enough to get David Rothstein to hire at RTi Market Research and Brand Strategy, a 50-person market research company he owns in Stamford, Conn.

"The tax break, while it would be great, would have nothing to do with the hiring decision," Rothstein said in a phone interview.

The advice from any good tax accountant is that you should always make a good business decision, and not a tax decision, holds here, said Rhonda Abrams, who has done a webinar on how to hire your first employee and is the author of "Hire Your First Employee." But that doesn't mean business owners shouldn't consider the tax breaks if they see their business growing, Abrams said in a phone interview.

"An incentive will help people who are starting to see the light in their business," she said.

"Tax breaks induce people to make decisions. That's why we have them," she said.

With job openings down and layoffs soaring, incentives may still not be what employers need to start hiring again. Congress may want to look elsewhere than a policy that is projected to cost $10 billion over 10 years.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.

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