Wednesday, March 23, 2011

Is it time to rethink my economic ideas?

I'm not sure rethink is the right word, but I do believe I may change some of my ideas. I'm a supply-sider and always have been. Watching Micheal Moore's documentary on capitalism had no effect on me, I've been a capitalist since before 1973 (my first year with a W2).

But I recently did some research on the HIRE act of 2010 (Hiring Incentives to Restore Employment Act - details here). Most of the people I've talked to didn't know anything about this law, signed by President Obama a litle over a year ago. There were attempts to extend the act into 2011, but those failed.

Basically, the law gave a break to small businesses who hired an employee who had been unemployed for at least 60 days. Employers would not have to pay the 6.2% Social Security tax for those employees for the remainder of the year and would be eligible for an additional $100 tax credit if the employee stayed a year. One small businessman I talked to (who had never heard of the act) explained that if you hired two or three employees that way, you might be able to hire another worker.

Had I heard about this law early last year, I would have agreed that it was good. (Yes, I would have agreed that an Obama plan was good). I've heard of plans like this before and always thought they were good. It gets unemployed people back to work. That's good. They pay taxes. That's good. All good.

But I never heard about the act then. And neither did my small-business friend. And apparently, neither did a lot of other people. Was it a lack of publicity? Or a lack of enthusiasm? I suspect the latter. And I'm beginning to believe that acts like this have little or no impact on the economy. Unemployment went up most (all?) of last year, this act should have reduced unemployment.

So my question is, what CAN we do to increase employment?


Glenn E. Chatfield said...

Get rid of government intervention! Can you imagine how that would free up small business to hire whom they wanted (based on merit instead of skin color, sexual orientation, gender, etc)? Can you imagine how that would leave the business more of their own money?

In other words, make the government adhere to the Constitution - and no where in there does it authorize the feds to have anything to say about employment!

"The Edge" said...

Part of the problem with the idea was that it gave the COMPANY a break, but not the worker. In order to get around certain aspects of the law, a COMPANY could "lay off" a worker for 61 days and then re-hire them. During that 61 days, they owed them NOTHING, but them got the tax break re-hiring them. That's why the law died. All the folks in Wash DC who "paid attention" killed the law, and rightfully so.