Will Senate’s jobs bill stimulate hiring?
TEXT OF INTERVIEW
Steve Chiotakis: Later this morning the Senate will vote on a jobs bill — the first of several that the Democratic majority is promising this election year. The bill has already passed the House, and offers tax breaks for businesses that hire unemployed workers. It would extend some of the highway and mass-transit projects that were started in last year’s stimulus package. Marketplace’s John Dimsdale joins us live this morning. from Washington. Good morning, John.
John Dimsdale: Good morning, Steve.
Chiotakis: So how expensive is this bill?
Dimsdale: Well, it’s nowhere near the $800-billion stimulus bill. This is more like $40 billion. About half the money goes to businesses that give laid-off workers a job. Those employers would save the 6 percent Social Security payroll tax that they owe on the new hires through the end of this year.
Chiotakis: What’s the thinking behind that one tax break?
Dimsdale: Well, it makes it cheaper to for businesses to add jobs, but really only a little. Six percent of a person’s salary is fairly modest and some are questioning whether this would override the squeamishness that many employers have to add to their payrolls when they still have little demand for their products. Some say, you know it’s just not enough to generate much new employment.
Chiotakis: Are there restrictions, John, on who businesses can hire?
Dimsdale: Yes, that tax credit can only be claimed if the new employee has been out of a job for over two months. And that’s being criticized by small businesses. They point out that they’re likely to have laid off their least valuable employees first. They hang on to the best ones as long as possible. So they don’t necessarily want to re-hire the workers that they laid off the earliest. But supporters of the provision say, well, this gives a well-deserved break to the long-term unemployed.
Chiotakis: Marketplace’s John Dimsdale reporting from our Washington studio. John, thanks.
Dimsdale: You’re welcome.
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