Senator Debbie Stabenow (D-MI) along with Senators Charles Schumer (D-NY), Harry Reid (D-NV), et al has introduced a new bill in the Senate to get Americans back to work. The bill is entitled “The Americans Want to Work Act” (S.3706). The bill contains three basic provisions. The first provision of the bill would provide for twenty additional weeks of unemployment compensation. (I’m sorry, but did I miss something?) The second extends and increases the HIRE Act payroll tax exemptions to businesses. Finally, the bill doubles the tax credit for businesses to hire the long term unemployed.
The bill would create a fifth tier of unemployment insurance to provide twenty additional weeks of benefits for those who have exhausted their benefits and live in states with unemployment rates of 7.5% or higher. Now that’s an interesting number. Let’s look at some of the states with significantly high unemployment rates, like California (12.3%), Florida (11.4%), Illinois (10.4%), Michigan (13.2%), Nevada (14.2%), and Ohio (10.5%). One wonders if this is a benefit specifically targeted at states the Democrats are counting on to maintain control of the House and Senate after November and are electorally rich which Obama will need in 2012.
That is twenty additional weeks of unemployment benefits on top of the ninety-nine weeks that have already been approved. It is little wonder why many have started to refer to unemployment as “funemployment.” Many of the unemployed are weighing the relaxation of going to the beach or playing golf and collecting unemployment benefits against the drudgery and pay of some job that might be available.
Obviously, the loss of a job and that income is not a welcomed occurrence. However, the replacement of that income becomes a necessity and necessity is the mother of invention as my parents used to say. These extended unemployment benefit de-incentivizes people from stretching themselves, looking for work in another field or possibly starting their own business. They certainly don’t provide much incentive to take any job that is available simply because the person needs the income. To quote John Lott in an article on the Fox News website, “You subsidize something and you get more of it.” Most people are not self-starters, regardless of what their resume’ says. They need a push. It’s simply human nature. Unfortunately, our government is subsidizing laziness.
The bill would also extend the HIRE Act through the end of 2011. This act was signed into law earlier this year and provides certain tax incentives for businesses to hire the long term unemployed. Specifically, employers are exempt from their share of a new employee’s Social Security payroll taxes. The employee must still pay their share. The employer also receives an additional $1,000 in tax credits if the employee is retained for one year. The business receives these exemptions if the employee had been unemployed for at least 60 days. Additionally, this new bill would double the tax credits if the new employee had exhausted all unemployment benefits and the employee is retained for at least one year.
Senator Stabenow stated that from February to June of this year, businesses had hired 5.6 million long term unemployed people for a “potential tax savings of $10.4 billion” as evidence that the HIRE Act was creating jobs. Once again, a Democrat fails to understand basic business principles. Companies are not in business to provide jobs. They are in business to produce and market goods and services, hopefully, at a profit. Employees are a means to that end. I’m not saying that employers would not take advantage of these tax credits if they happen to hire an eligible employee, they probably would. But the need for that employee must exist first. If a business has no need for any additional employees, they will not hire no matter how many tax incentives the government offers.
If the Democrats were truly interested in creating jobs, they would cut personal and corporate taxes period, and not tie the cuts to hiring a certain type of worker. This would incentivize the purchase and thereby the production of goods and services. Businesses would need to hire more employees to keep up with increased demand (not to mention they would not be punished for making a profit) and unemployment would fall naturally.