Commentary Magazine


Contentions

Would You Hire Anyone?

The Wall Street Journal reports that to a greater degree than in past recessions, employers are slow to hire workers (harboring “nagging doubts about the durability of the upturn”), suggesting that record unemployment will persist. Aside from fear that the economic recovery is fragile, one significant reason for the aversion to hiring is the Obama agenda:

Businesses also face uncertainty about the potential costs of regulatory moves — such as an expansion of health care and climate legislation — that could drive up costs. And many employers have learned how to produce more with a smaller number of people than they previously thought possible.

Businesses are operating with fewer people — the reality behind “increased productivity” — creating the prospect of high unemployment into 2017.

Given the disinclination to hire more workers, you would think the Obama team would be working overtime to come up with incentives for employers to hire more workers. A payroll-tax break is a good place to start. As Matt Continetti explains:

Cutting it would be fast, easy, and effective. Where a tax credit is complicated and invites rent-seeking, a tax cut is transparent. Last December, AEI’s John H. Makin calculated that if the payroll tax were suspended for 12 to 18 months, personal discretionary income would rise by 3.5 percent. Workers would have fatter paychecks to spend. The increase in consumption would spur demand. Meanwhile, since the payroll tax also hits employers, a reduction would lower the cost of hiring additional workers. Another way to go would be not to suspend the tax, but to reduce it–permanently.

But even better: do no harm. Put a moratorium on legislation that would make labor more expensive and/or encourage businesses to locate elsewhere.

But that, you say, would mean virtually everything on the Democrats’ agenda — cap-and-trade, ObamaCare, card check, the lapse of the Bush tax cuts — would have to be scrapped. Well yes, and so is it any wonder that employers are holding back?