Jobs Bill Won't Lead to Many New Jobs

Congress recently passed a bill designed to increase hiring of unemployed workers.

"Today, U.S. Senator Charles E. Schumer announced that his bipartisan “Hire Now Tax Cut” proposal to provide businesses that hire unemployed workers with a tax cut has cleared final passage in Congress and will now go to the President’s desk for signature.

The businesses will avoid paying the employer’s share of Social Security taxes on that worker for the duration of 2010.

The more a business pays a worker (up to the maximum Social Security wage of $106,800), and the longer a business has a worker on its payroll, the greater the tax benefit – so there is an incentive to hire people sooner, and pay them more."

Basically, this bill will enable an employer to save perhaps a total of 5% of the total compensation that it pays a given employee in 2010.

Given such a modest savings, it is extremely unlikely that the bill will make a meaningful dent in today's unemployment picture. Employers remain concerned about demand, so having slightly cheaper workers with which to produce more goods or provide more services does not alleviate that overriding concern.

More importantly, what's the principle here? Is it that tax cuts hopefully facilitate more economic activity (hiring, demand, etc.)? If that's the case, let's have more of it, and less spending and confiscation by the government.