One, half-hearted cheer for the jobs bill
Last night the jobs bill, officially titled the “Hiring Incentives to Restore Employment Act,” overcame a GOP filibuster by passing a procedural vote by a 62-30 margin, paving the way for a final vote in the Senate this week.
While we applaud Congress working to develop solutions to the country’s deteriorating employment situation, there is plenty of room for improvement in this particular bill.
On a positive note, the legislation acknowledges that the cost of employing a worker affects businesses’ hiring decisions. The bill’s centerpiece is a provision that exempts employers from paying their share of payroll taxes for a new employee (hired between February 4, 2010 and January 1, 2011) that had been unemployed for the last two months. The legislation also provides an additional $1,000 tax credit for any qualifying employee that remains employed for a whole year. Basically, the provision aims to make it cheaper to hire a worker.
The bill also extends provisions that allow small businesses to expense more of the spending on new business equipment. This reduces some small businesses’ tax burden.
Unfortunately, there’s also a lot that this bill gets wrong. Such targeted tax cuts for hiring will do little to really stimulate employment or improve the economic climate. And limiting the credit only to workers who were previously unemployed is simply unfair to many Americans.
The bill also dumps more money ($19.5 billion) into the highway trust fund, in an effort to encourage more infrastructure spending. This is basically a rerun of last year’s stimulus, which had dubious effects at best.
Congress can, and should, do better than this jobs bill to encourage hiring for businesses. Lowering employment costs across the board, for example, would better encourage long-term hiring and business expansion, without distorting the labor market.
Now that would be worth whole-heartedly cheering.