Here is what we know about President Obama's jobs madness program that he discussed, yesterday.
He wants to extend unemployment benefits, which means paying people not to work. At the same time, he wants to give a $4,000 tax credit to employers who hire those who have been unemployed for at least six months.
Thus, what he proposes to set up is a nutty tug of war program, creating incentives for people to stay out of work and simultaneously creating a program for employers to attempt to hire them. This should be fun to watch.
But where the program is really off the charts is in the damage it does to a recently laid off person who wants to immediately get back to work, since literally such a person is competing against a long term unemployed person who in a very real sense is walking into a potential employer's office with a $4,000 check, if hired.
Thus, in order to compete, a recently laid off person would have to agree to work for $4,000 less than a person who has been laid off for six months, in order to balance out the check Obama wants to give to employers who wait until an employee has been unemployed for at least six months.
I read another interesting comment about this last night. It stated that now companies have incentive to lay off underperforming employees because the tax credit basically gives employers a free look at their replacements. It was something I hadn't considered before and was an interesting thought. Not sure it works out that way, but I do think in some cases it could. Overall the speech was more of the same.
ReplyDeleteThe President referred to his "bill" numerous times in his speech last night and the need to pass it.. I had a number of people ask me if I had a copy of the "bill". Is there an actual bill?
ReplyDeleteHe could have dressed in assless chaps and crunked for half an hour because nobody watched or cared anyway.
ReplyDeleteIt also presumably means that employers now will have to ask the prospective employee how long he/she has been unemployed, a big no-no inppppppp Else,how would you know to apply for the credit?
ReplyDelete@Dikvoormekaar
ReplyDeleteIf you're a crafty resume writer and aware of this incentive, you simply write the month you were terminated on your resume. This way the employer doesn't have to ask.
If you're an employer who uses job application forms, simply create a field in the application form which asks for the date (month/year) in which the applicant worked for their previous employer.
My favorite part of the plan, as seen from the eyes of a small business owner, is how on one hand he wants to give me a credit for hiring an out of work person and then he takes it away in higher taxes on my flow through profits. I'll stick to hiring who I want and where I want and if I happen to get a credit, great but its not going to encourage me one way or the other.
ReplyDeleteThe $4000 is a tax credit, so the employer -- if paying the maximum corporate tax rate of 35% -- would have to receive $5400 for an equal effect. I believe the <6 month unemployed person would have to take $5400 less in salary to compete.
ReplyDeleteOops, that should be $6154 equivalent for a $4000 tax credit. Brain-fart (I'm blaming it on the flu ;) ).
ReplyDelete@Joe
ReplyDeleteAll true, just thought it was funny because I had to sit through HR mandated management "training", and was explicitly instructed not to ask this for PC reasons. I wonder if they will revise my training manual...